Tutor Perini(TPC) - 2022 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements The company reported a net loss for Q1 2022, a significant downturn from prior year's net income, driven by a revenue decrease, while total assets slightly increased and operating cash flow improved Condensed Consolidated Statements of Operations Tutor Perini reported a significant revenue decrease to $952.2 million for Q1 2022, resulting in a net loss of $21.6 million, a sharp reversal from the prior year's net income Condensed Consolidated Statements of Operations (Unaudited) | (in thousands, except per share amounts) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | REVENUE | $ 952,154 | $ 1,207,595 | | GROSS PROFIT | $ 50,345 | $ 110,455 | | INCOME (LOSS) FROM CONSTRUCTION OPERATIONS | $ (9,907) | $ 49,704 | | INCOME (LOSS) BEFORE INCOME TAXES | $ (22,702) | $ 32,069 | | NET INCOME (LOSS) ATTRIBUTABLE TO TUTOR PERINI CORPORATION | $ (21,634) | $ 16,034 | | DILUTED EARNINGS (LOSS) PER COMMON SHARE | $ (0.42) | $ 0.31 | Condensed Consolidated Balance Sheets As of March 31, 2022, total assets slightly increased to $4.79 billion, while total liabilities rose to $3.15 billion, and total equity slightly decreased to $1.65 billion Condensed Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | As of March 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $ 3,934,998 | $ 3,862,492 | | TOTAL ASSETS | $ 4,792,158 | $ 4,724,898 | | Total current liabilities | $ 1,855,157 | $ 1,777,113 | | TOTAL LIABILITIES | $ 3,145,637 | $ 3,051,178 | | TOTAL EQUITY | $ 1,646,521 | $ 1,673,720 | Condensed Consolidated Statements of Cash Flows The company generated $120.7 million in cash from operating activities in Q1 2022, a significant improvement from the prior year, resulting in a net increase of $110.0 million in cash and equivalents Condensed Consolidated Statements of Cash Flows (Unaudited) | (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ 120,747 | $ (46,704) | | NET CASH USED IN INVESTING ACTIVITIES | $ (14,868) | $ (5,418) | | NET CASH PROVIDED BY FINANCING ACTIVITIES | $ 4,094 | $ 1,076 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $ 109,973 | $ (51,046) | | Cash, cash equivalents and restricted cash at end of period | $ 321,369 | $ 400,806 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, revenue recognition, and significant legal proceedings, highlighting a revenue decline across all segments and remaining performance obligations of $8.1 billion - Total remaining performance obligations (backlog) were $8.1 billion as of March 31, 2022, comprised of $4.6 billion for Civil, $2.2 billion for Building, and $1.3 billion for Specialty Contractors segments[23] - The company is involved in significant litigation, including the Alaskan Way Viaduct matter where a $57.2 million adverse jury verdict is under appeal, and the George Washington Bridge Bus Station matter involving claims and counterclaims exceeding $113 million[75][81] Revenue by Segment (in thousands) | Segment | Q1 2022 Revenue | Q1 2021 Revenue | | :--- | :--- | :--- | | Civil | $ 390,795 | $ 475,575 | | Building | $ 330,648 | $ 407,233 | | Specialty Contractors | $ 230,711 | $ 324,787 | | Total | $ 952,154 | $ 1,207,595 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q1 2022 revenue decline and operating loss to specific project issues and the COVID-19 pandemic, despite improved operating cash flow and a stable backlog, with a favorable long-term outlook due to infrastructure spending - The Q1 2022 loss from construction operations was significantly impacted by a non-cash, pre-tax charge of $25.5 million from an adverse legal ruling and a temporary $17.6 million unfavorable earnings impact from the negotiation of lower-margin change orders on a mass-transit project[134] - The COVID-19 pandemic has continued to cause delays in new awards, project execution, and legal proceedings, which has adversely affected revenue, liquidity, and financial results[130][131] - The company has a favorable long-term outlook due to significant infrastructure spending, including the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), which is expected to drive new project opportunities over the next decade[142][143] Backlog by Segment (in millions) | Segment | Backlog at March 31, 2022 | Backlog at Dec 31, 2021 | | :--- | :--- | :--- | | Civil | $ 4,609.6 | $ 4,553.5 | | Building | $ 2,303.5 | $ 2,308.9 | | Specialty Contractors | $ 1,366.7 | $ 1,373.2 | | Total | $ 8,279.8 | $ 8,235.6 | Results of Segment Operations All three segments experienced year-over-year revenue declines in Q1 2022, with Civil and Specialty Contractors segments reporting operating losses, while Building segment's operating income decreased Civil Segment Performance (in millions) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $ 390.8 | $ 475.6 | | Income (loss) from construction operations | $ (1.0) | $ 50.1 | Building Segment Performance (in millions) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $ 330.6 | $ 407.2 | | Income from construction operations | $ 9.5 | $ 11.2 | Specialty Contractors Segment Performance (in millions) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $ 230.7 | $ 324.8 | | Income (loss) from construction operations | $ (3.9) | $ 1.3 | Liquidity and Capital Resources The company's liquidity is supported by strong operating cash flow of $120.7 million in Q1 2022 and available credit, maintaining compliance with debt covenants - Net cash provided by operating activities was $120.7 million for Q1 2022, the largest first-quarter operating cash flow since 2008, primarily due to an improved collection cycle and resolution of some project change orders[169][170] - As of March 31, 2022, the company had $134 million available under its $175 million revolving credit facility[166] - The company was in compliance with its debt covenants as of March 31, 2022, with a first lien net leverage ratio of 1.35 to 1.00, significantly below the required maximum of 2.25 to 1.00[175] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its exposure to market risk from the information provided in its Annual Report on Form 10-K for the year ended December 31, 2021 - There has been no material change in the company's exposure to market risk since its 2021 year-end 10-K filing[179] Item 4. Controls and Procedures Based on an evaluation as of March 31, 2022, the company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[180] - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[181] Part II. Other Information Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, with detailed information on pending matters referred to in Note 10 of the Notes to Condensed Consolidated Financial Statements - For information on pending legal matters, refer to Note 10 of the Notes to Condensed Consolidated Financial Statements included in this report[182] Risk Factors The company reports that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the company's risk factors as disclosed in the 2021 Annual Report on Form 10-K[183] Mine Safety Disclosures For the quarter ended March 31, 2022, the company reports that it has no mine safety violations or other regulatory matters to disclose pursuant to the Dodd-Frank Act - The company had no mine safety violations or other regulatory matters to disclose for the quarter ended March 31, 2022[185] Exhibits This section lists the exhibits filed with the Form 10-Q, including employment agreements, forms of award agreements, officer certifications required by the Sarbanes-Oxley Act, and XBRL data files - The report lists various exhibits filed, including management contracts, compensatory plans, and certifications by the Principal Executive Officer and Principal Financial Officer[186]