Tutor Perini Corp. Q1 2010 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2010. Tutor Perini Corporation is a diversified general contractor and construction manager operating through three segments: Building, Civil, and Management Services. The company recently completed the integration of Tutor-Saliba Corporation and the massive Project CityCenter in Las Vegas, which substantially concluded in December 2009.
Key Financial Metrics
| Metric (in thousands) | Q1 2010 | Q1 2009 |
|---|---|---|
| Revenues | $865,075 | $1,518,282 |
| Net Income | $20,933 | $38,981 |
| Diluted EPS | $0.42 | $0.80 |
| Operating Cash Flow | $(60,291) | $(43,529) |
| Cash and Equivalents | $256,927 | $458,621 |
| Total Debt | $117,612 | $116,105 |
| Working Capital | $323,974 | $303,118 |
Note: Operating cash flow was negative due to increased receivables from Project CityCenter. Total debt includes current maturities of $29.9 million and long-term debt of $87.7 million.
Material Changes vs. Prior Period
- Revenue Decline: Revenues decreased 43.0% to $865.1 million, primarily driven by the completion of Project CityCenter and a slowdown in the private nonresidential building market.
- Segment Performance:
- Building: Revenues dropped 48.9% ($686.3M vs $1.34B) due to CityCenter completion.
- Civil: Revenues increased 39.6% ($124.7M vs $89.3M) due to projects awarded in 2009 ramping up.
- Management Services: Revenues decreased 37.1% ($54.1M vs $86.0M) due to the completion of projects in Iraq.
- Profitability: Income from Construction Operations fell 45.4% to $34.2 million. Net income declined 46.3% to $20.9 million.
- Liquidity: Cash and cash equivalents decreased by $91.4 million to $256.9 million. However, working capital increased by $20.9 million, and the current ratio improved to 1.26x.
Outlook, Risks, and Contingencies
Backlog: Total backlog decreased to approximately $3.8 billion from $4.3 billion at year-end 2009, reflecting the completion of large hospitality projects and a lack of new nonresidential building work.
Legal Proceedings & Contingencies:
- MGM CityCenter: The company filed a $491 million mechanic's lien and lawsuit against MGM Mirage for unpaid receivables ($410M recorded + $81M claims). MGM disputes the amount, citing offsets and Harmon Hotel claims.
- UCLA Westwood Hospital: TSP is seeking $36 million for itself and $171 million for subcontractors; the Owner has filed counterclaims totaling over $66 million.
- Fontainebleau: A subsidiary holds a lien for approximately $42 million following the project owner's bankruptcy.
- LAMTA: A False Claims Act lawsuit is set for trial in September 2010; financial impact is indeterminable.
Capital Resources: The company has $311.5 million available under its amended credit agreement. A stock repurchase program with $68.2 million remaining was extended through March 31, 2011.
Investor Verification Checklist
- CityCenter Receivables: Verify the collectability of the $491 million claimed from MGM Mirage and the status of the litigation.
- Backlog Conversion: Assess the ability to convert the $3.8 billion backlog into revenue given the current economic climate and lack of new private sector awards.
- Liquidity of Investments: Review the $100.8 million investment in auction rate securities (ARS), which are classified as long-term due to market illiquidity.
- Legal Exposure: Monitor the outcomes of the UCLA, LAMTA, and Fontainebleau disputes, which could materially impact future earnings.
- Cash Flow Trends: Watch for the normalization of operating cash flows as receivables from completed projects are collected.