Good day, ladies and gentlemen and welcome to Tutor Perini Corporation First Quarter 2025 Earnings Conference Call. My name is Sherry, and I will be your coordinator for today. [Operator Instructions] I will now turn the conference over to your host for today, Jorge Casado, Vice President, Investor Relations. Please proceed..

Hello, everyone and thank you for joining us. With us today are Gary Smalley, CEO and President; Ron Tutor, Executive Chairman; and Ryan Soroka, Executive Vice President and CFO.

Before we discuss our results, I will remind everyone that during this call, we will be making forward-looking statements, which are based on management’s current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially.

You can find our disclosures about risk factors that could contribute to such differences in our Form 10-K, which we filed on February 27, 2025, and in our Form 10-Q that we are filing today.

The company assumes no obligation to update forward-looking statements, whether due to new information, future events or otherwise, other than as required by law. Thank you. And with that, I will turn the call over to Gary Smalley..

Thanks, Jorge. Hello, everyone and thank you all for joining us. We are off to a great start in 2025 with outstanding first quarter results that highlight our strong growth and performance across all key metrics and that were, quite frankly, better than expected. Specifically, year-over-year, our first quarter revenue grew 19% to $1.25 billion.

Operating income was up 34% to $65 million. Earnings per share increased 77% to $0.53, and our backlog grew 94% to a new all-time record of $19.4 billion.

In addition, our operating cash flow was $23 million, a solid result for the first quarter considering that historically, our first quarter cash flow tends to be low and often negative due to seasonality.

All in all, our first quarter EPS was the second best of any first quarter in Tutor Perini’s history, and our operating cash flow was the third best first quarter result ever.

Our business is performing well and I’m pleased to report that it was a clean first quarter with solid project execution and no material project adjustments even for dispute resolutions. Ryan will go over the specifics of our financial results.

But overall, our revenue and earnings were driven by increased project execution activities on certain newer, higher-margin projects that all have substantial scope of work remaining.

Our operating cash flow for the first quarter of 2025 was driven by collections from newer and ongoing projects, unlike last year’s first quarter cash flow, which included a large amount of collections related to dispute resolutions.

We still expect to make progress this year resolving various other disputes and collecting significant associated cash, but those collections are expected later in the year. During the first quarter, we continued to win new projects, booking impressive of new awards and contract adjustments adding to our already record backlog.

Our book-to-burn ratio for the first quarter was a solid 1.6x backlog for the Civil and Specialty Contractors segments also set new records.

The most significant new awards and contract adjustments in the first quarter included the $1.18 billion Manhattan tunnel project in New York, which is a component of the broader gateway program that includes critical rail infrastructure along the Northeast corridor between Newark and New York Penn Station, $241 million of additional funding for the Apra Harbor Waterfront repairs project in Guam, which brings the current value of this project to more than $570 million, $111 million of additional funding for certain health care facility projects in California, an electrical project in Texas valued at more than $100 million and $99 million of additional funding for an existing electrical project in Texas.

The outlook is excellent for strong sustained backlog this year with the potential for further backlog growth.

Our new award bookings continue to be healthy in the second quarter as we have already won a $500 million health care project in California that was recently awarded funding for the construction phase that are having been in preconstruction for the past year.

In addition to this project, there are several other Building segment projects currently in the preconstruction phase that we expect will soon also advance to the construction phase, including another health care project also in California valued at $1 billion.

Our bidding pipeline continues to be full of opportunities this year and over the next several years. Our record backlog enables us to be even more selective than before as to which of the opportunities we will pursue and to focus on bidding projects that have favorable contractual terms, limited competition and higher margins.

Also, the Indo-Pacific region continues to be a major area of project opportunities, driven in large part by the U.S. military specific deterrence initiative which aims to enhance U.S. military infrastructure and readiness.

Platt Construction, our Guam-based subsidiary has had tremendous success in capturing new projects and continues to be well positioned to win other major projects in the region.

Tutor Perini and Platt Construction together have been successful in capturing 4 recent multiple award construction contracts or MACCs with a combined contract capacity of more than $32 billion over the next 8 years.

This capacity will be shared among us and the other firms that have been awarded these MACCs and the MACCs essentially put us on the bidders list enabling us to pursue the numerous project task orders that will be ultimately awarded.

Ron, would you take a couple of minutes to discuss some of our other civil bidding opportunities on the horizon and also what you are seeing in the early stages of project execution as we kick off work on the major projects that have been awarded over the last few quarters?.

Certainly, Gary. We’re about to submit our bid for the multibillion dollar Midtown bus terminal replacement project in New York and will await contractor selection by the owner during the next 30 days. If we are successful, this will add substantially to our existing record backlog.

Apart from this, the most significant upcoming project opportunities include the $12 billion [indiscernible] transit quarter, the $3.8 billion Southeast Gateway line, the $1 billion North Valley Rail project, the $900 million Foothill Gold Line light rail project, all of which, by the way, are in California, and the $1.8 billion South Jersey light rail Glassboro to Camden line in New Jersey.

I continue to work with Gary and our operations executives to help ensure that our newer major projects, including the Brooklyn and Manhattan Jails, the Honolulu Rail Transit line, the Kensico and Manhattan tunnels, the Apra Harbor breakwater in the Newark AirTrain are properly set up to maximize the likelihood of success.

We’re still in the early stages of many of these projects, but they are all going extremely well, and I anticipate this will continue to be the case. Thank you. And I will now hand it back to you, Gary..

Thanks, Ron. As a result for a strong start to the year and continued confidence in what we expect to achieve for the rest of this year, we are increasing our 2025 EPS guidance to the range of $1.60 to $1.95 up from the initial guidance of $1.50 to $1.90 that we provided in late February.

It is important to note that our increased guidance continues to factor in a significant amount of contingency for various unknown or unexpected outcomes and developments in 2025, including the potential for slower ramp-ups on our newer projects, project delays for existing or prospective work, lower-than-expected win rates for future bids and settlements or adverse legal decisions associated with the resolution of disputes.

The future continues to look very bright for Tutor Perini beyond 2025, and we are still anticipating that our earnings in ‘26 and ‘27 will be more than double our increased EPS guidance for 2025. We also continue to expect strong operating cash flow for 2025 and beyond. Now with respect to potential concerns regarding U.S.

trade policy and various federal spending programs, I will reiterate that we do not currently anticipate any significant impacts to our business related to these factors. From a project funding perspective, we do not currently foresee the risk of any of our major projects in backlog being canceled, delayed or defunded.

Most of our major projects are funded at the state or local level or with some combination of federal state and local funding. For projects that are wholly or partly funded with federal dollars, the funding for these projects has already been committed and/or these projects are strategically important to the United States.

Specifically related to potential tariff impacts, we utilize a pre-award and post-award strategy.

As part of our pre-award strategy, our detailed estimating process includes consideration of anticipated cost increases over the performance period of our contracts as well as additional contingencies to address other potential incremental costs related to unforeseen risks.

Prior to our bid or proposal submission, we also worked to negotiate favorable contract provisions that provide entitlement for certain compensable events, which may include price escalations and allowances.

Once the project is awarded, our strategy shifts to entering into purchase orders or buyouts of materials such as steel and concrete as well as large pieces of equipment which mitigates the risk of future equipment and commodity price increases.

Also at the onset of projects, we enter into fixed price contracts with our key project subcontractors, whereby the risk of unforeseen escalation is transferred to the subcontractor. Thank you. And with that, I will now turn the call over to Ryan to discuss the details of our first quarter results..

Thanks, Gary. Good afternoon, everyone. I will begin by discussing our results for the first quarter, after which I will provide some commentary on our balance sheet and our updated 2025 guidance assumptions. Revenue for the first quarter of 2025 was $1.25 billion, up 19% compared to $1.05 billion for the first quarter of 2024.

Civil segment revenue was $610 million, up a strong 29% compared to $472 million last year. Building segment revenue was $460 million, up 12% compared to $412 million last year and Specialty Contractors segment revenue was $177 million, up 7% compared to $165 million last year.

Our revenue growth was broad-based and driven by increased project execution activities on certain newer, higher-margin projects that all have substantial scope of work remaining.

These projects included the Brooklyn Jail, which contributed to the revenue growth across all three segments, the Honolulu Rail project and certain mass transit projects in California.

Civil segment income from construction operations was $80 million in the first quarter of 2025 compared to $71 million for the first quarter last year, with the increase driven by contributions related to the strong revenue growth I mentioned for the segment.

Building segment income from construction operations was $10 million in the first quarter of 2025 compared to $16 million last year, with the decrease primarily due to the absence of a prior year immaterial favorable adjustment that resulted from a legal ruling related to a completed hospitality and gaming project offset by contributions associated with the higher first quarter revenue for the segment this year.

The Specialty Contractors segment posted a loss of $7 million in the first quarter of 2025 compared to a loss of $18 million last year.

The improvement was primarily due to the absence of a prior year immaterial unfavorable adjustment pertaining to an arbitration ruling on the completed electrical project in New York and, to a lesser extent, contributions related to the higher first quarter revenue for the segment this year.

We still anticipate improved operating income over the course of this year for the Specialty segment as our revenue volume is expected to gradually increase, which will help to cover the segment’s G&A growth. Segment operating margins were 13%, 2.3% and negative 4% for the Civil, Building and Specialty contract rents, respectively.

These margins are trending well, and we anticipate further margin improvement ahead this year especially for the Building and Specialty Contractors segment. Other income was $5 million, level with the other income reported for the first quarter last year.

Interest expense was $14 million, down 26% and compared to $19 million for the same period last year due to our substantial debt reduction completed since last year.

Income tax expense for the first quarter of 2025 was $13 million with a corresponding effective tax rate of 23.2% compared to $7 million for the same period last year, with a corresponding effective tax rate of 21%.

Net income attributable to Tutor Perini for the first quarter of 2025 was $28 million or $0.53 of earnings per share compared to $16 million or $0.30 of earnings per share in last year’s first quarter. As Gary indicated, our operating cash flow for the first quarter was solid at $23 million.

Looking back historically at the period between 2009 and 2024, on average, we have reported a usage of cash of approximately $22 million in the first quarter. So a positive cash flow of $23 million for the first quarter of this year was certainly another highlight, and it was our third best first quarter result ever.

We expect that our operating cash flow will be strong for 2025 as well as for the next several years, driven largely by organic cash collections. That is from new and existing projects and augmented from time to time by collections related to dispute resolutions. Now I’ll address the balance sheet.

Our total debt as of March 31, 2025, was $406 million, down 24% compared to $534 million at the end of 2024. As we mentioned on last quarter’s earnings call, we paid off the remaining balance of our Term Loan B in February. With our near-term debt reduction goals now completed, our balance sheet remains healthier than it has ever been.

And as we mentioned last quarter, as we accumulate more cash this year, we will be looking at shifting our capital allocation priorities towards returning capital to our shareholders. Finally, all the assumptions we provided last quarter regarding our guidance remain the same. Thank you. And with that, I’ll turn the call back over to Gary..

Thanks, Ryan. To summarize, we delivered excellent first quarter results that exceeded our expectations with strong revenue, operating income, and earnings growth, solid operating cash flow and backlog that nearly doubled year-over-year to a new all-time record of $19.4 billion.

As I mentioned last quarter, our record backlog has been largely built on new awards with better margins and improved contractual terms.

And we believe that this backlog will drive significant double-digit revenue growth and generate strong earnings for the foreseeable future while also serving as a catalyst for continued strong cash flow as our newer projects progress through design and into construction.

Our strong performance to-date, combined with our confidence in how the rest of the year should unfold, has enabled us to increase our 2025 EPS guidance while still maintaining what we believe is an appropriate amount of contingency for unknown or unanticipated developments.

Our business is performing well and I am encouraged by what we have accomplished in the first quarter and excited for what should be a very bright future.

Reiterating what I recently stated in my shareholder letter published with our annual report, there has never been a better time to be a Tutor Perini shareholder as we believe we are at the dawn of a new era for the company. Thank you. And with that, I will turn the call over to the operator for your questions..

Thank you. [Operator Instructions] Our first question is from Steven Fisher with UBS. Please proceed..

Thanks. Good afternoon and congratulations on the strong results. Gary, I thought I heard you say that this quarter was clean and there wasn’t any kind of particular closeouts or kind of contract settlements or arbitration awards or anything like that.

Can you just confirm that? Because I thought you were supposed to have maybe one that was coming to fruition there.

And if not, if it was clean, then I guess I’m curious how as we compare Q1 with what you might expect for Q2 given that it sounds like more of the closeout activity might be later in the year, what do you think would be different between Q1 versus Q2 other than typical seasonality where Q2 should theoretically be even better than Q1?.

Yes. Thanks, Steve. When I was talking about the quarter being clean, it’s really clean from any significant impact of the dispute resolution activity that we had underway. We actually made very good progress on some of our larger claims. We settled up some things. The cash didn’t flow in the first quarter.

That’s coming in the second quarter, but we were able to do that with, in some cases, a slight uptick in earnings in one case, a slight downtick in earnings, but net neutral impact to earnings for really three fairly sizable resolutions. So it’s quiet from, again, the impact on earnings, but not quiet from effort and progress being made.

Also, on the second quarter, a lot of that is continuing. A lot of the progress is continuing. We would expect – we’re close in a couple of matters. We expect to resolve some more things in the second quarter. Our expectation is similar with respect to the earnings outcome. We feel really good about how things are progressing there.

I’d like to say one other thing that’s a little off from your question, but make sure that everyone understands this is that the profits that we budgeted by quarter for the year, the progress that we made in the first quarter is not from an acceleration of the profits later in the year, bringing them forward. The quarter really was strong on its own.

The strength is real. So it’s not a shift forward of profits to come. Much of the improvement over – of budget is really due to the large projects that are cranking up, ramping up a lot faster than we expected and that as well as we were maybe a little bit more conservative with what we expected on these speed resolutions.

So, all those things together provided this type of quarter. And we hope to have similar type results, if not better in the second quarter..

That’s really helpful. And then you mentioned you have a number of things in preconstruction. And I guess I’m wondering just generally, what has to happen to get those moving to construction phase? We know in the broader construction economy today, there is a lot of things in preconstruction.

And given some of the uncertain macro environment, and costs, I guess there is some hesitation in some parts of the market. And maybe I think as you pointed out in your release, some places where there is more confidence.

So I guess, what has to happen to get those projects into actual construction phase, how much kind of concern from your customers is there? And I guess I’m curious, related to this, what are you seeing in terms of construction costs in the last, let’s say, since the end of March, have those been kind of rising in line with what we’re seeing in terms of materials and tariff impact? And how is that affecting the decisions kind of moving from preconstruction into construction?.

Yes. Okay, good. I’ll do the first part of the question, Steve, on the preconstruction and then let Ron comment on the cost. But on the preconstruction, I don’t want to trivialize it, but it’s almost like just the passage of time has to occur.

We’ve got we do certain preconstruction activities, but these are solid projects that we expect with the passage of time to – for those to materialize into backlog. As an example, the last half of 2024, we had about $1.5 billion in total of projects that moved into backlog.

In the second quarter, what we said on our earlier comments, in the second quarter, we have already recorded from – out of preconstruction into construction and into backlog over $0.5 billion in one of the projects.

We also expect the latter part of the second quarter and it could shift – it could slip a little bit into the third quarter, but we anticipate a project close to $1 billion to come out of preconstruction into construction. So we’re not seeing in this market, and these are all building segment projects.

We are not seeing the concern about these projects not materializing that you might be concerned about. We are not. And then on the cost side, Ron, I’ll let you address that if you want..

Well costs are constantly rising particularly in New York, which is one of our biggest markets. But I can say just turning a bit for a multibillion-dollar project this week in New York. There is nothing to do with tariffs that is affected as of yet other than threats.

Our pricing remains the same we have favorable contract terms that we believe protect us even if there was tariff impact. And there just hasn’t been anything in a negative tone on any of our existing work. Now I can’t predict what impact, if any, it will have on future work that we’re tracking, coming out to bid the latter part of this year and next.

But with the existing work programs, we’re under contracts or purchase orders on most of the work and haven’t felt any pain from tariffs or any major increases that were unanticipated..

Okay. I will turn it over. Thank you very much..

Thank you..

Our next question is from Adam Thalhimer with Thompson Davis. Please proceed..

Hey, good afternoon, guys. Great quarter..

Hi, Adam. Thank you..

Can you give a little more color on the comment about doubling the EPS guidance for 2025 and 2026 and ‘27? Is that basically based on the timing of existing projects?.

Yes. It’s really the new projects as they continue to ramp up and these new larger projects with the better margins, better contractual terms that we’ve been talking about as they really get going, then they’re going to contribute even more and we’re building backlog and so that will contribute to some of it as well.

But look, the best way to look at that is to look at the midpoint and then double that. Obviously, if we continue to perform like we expect to, in future quarters, then we’ll have to soften that charge because we can’t keep saying we are going to be doubling what the midpoint is right now.

That still is the case, similar to what we had said last quarter. We still feel that when we look at ‘26 and ‘27, where we are right there, we would expect to double what our midpoint is with this guidance..

Okay. And then when you – so that would imply EPS obviously above $3 per share.

What segment level operating margins would you expect to see associated with that level of EPS?.

I am sorry could you repeat that, please?.

I am just curious, so the ‘26 and ‘27 guidance would imply EPS above $3. And I’m just curious to get to that level, where the segment level margins need to be.

So the Civil margins, the building margins and specialty margins?.

Yes, the margins are similar to what we have talked about in the past. Of course, civil margins have been building from before we used to guide 8% to 10% and then we were 8% to 12%. And now we’re seeing north of that. The building margins will be higher than the 1%, 2%, 3% that we have historically had. We’ve been guiding towards 3% to 5% now.

And some of that is due to some of the work that we are doing is more complex. The margins are better. And also some of it is fixed price in nature with some of the building works that we are doing with the jails.

On specialty, we hope to make those margins positive, okay, which would be a big positive since they have dragged down earnings for some time now. But we are looking at somewhat around 1% or 2%, something like that as we go forward into the end of ‘25 into ‘26..

Okay.

So, 1% to 2% for now is your thought on specialty?.

Yes, that’s right. And I should say, Adam, that more than half of our expected earnings in 2025 will be in the second half of the year, that’s similar to what we have always seen in the past sometimes it’s two-thirds, but we are looking at somewhere around half at this point because we are out of the gate so strong with the first quarter..

Okay. And then, Gary, I think it was a comment and I think you made it about deploying cash to shareholders. Can you just expand on that, because obviously, the net debt at the end of the quarter was only $129 million, and I think you said strong operating cash, particularly in the back half of this year? Maybe just talk about the options there..

Yes. Well, really, there are two major options. One would be to pay dividends and the other would be to buy back shares. And we are not quite at that point yet. We need to accumulate more cash before we feel comfortable. We have had conversations with the Board. We have a Board meeting next week, and we will talk further about that, it’s on the agenda.

So, those are the options available, and we are – we want to do the right thing, but we also want to make sure that we don’t go down a path and have to pull back because we want to make sure that we have cash reserves in hand that make it a long-term play..

I will turn it over. Thank you..

Thank you..

Our next question is from Liam Burke with B. Riley Securities. Please proceed..

Thank you. Good afternoon Gary. Good afternoon Ron..

Hi Liam..

Gary, everyone was talking about tariffs and regulatory uncertainty, but flipping the coin, the current policy now is less regulation.

Are you seeing any speed up in project planning due to less regulation?.

No, we haven’t seen any speed up in planning, engineering or anything in the process as of yet. But remember, no matter how decisive government is it takes a certain period of time before the words become impact in real life. I am sure it’s impacting many of the environmental restrictions, but we haven’t seen any speed up.

But yet at this point, we are so selective in what we are bidding. We are not looking for any speed up. Our challenge over the next few years is to manage the huge backlog that we have already got..

Liam, one thing that is somewhat related to that, but really more on the tariff front, one of the things that we have seen is that with the talk of tariffs and where tariffs are, we have seen a few projects, some of our smaller ones, actually, the timeline has sped up as our owners, our customers have wanted to push those along at an even quicker pace.

So, that’s interesting, right..

Great. Thank you.

And on transit, mass transit, has there been any sentiment change on funding either repairs or new builds on mass transit?.

No, there has not been any funding changes as it relates to transit..

Great. Thank you..

Thanks Liam..

Our next question is from Michael Dudas with Vertical Research Partners. Please proceed..

Good afternoon gentlemen..

Hi there.

How are you doing Mike?.

Great. Thank you. I know you guys are doing well keeping the good results just for forth. Maybe you talked about Guam and I think the Indo-Pacific region certainly for in several reasons, could be a lot more active as we move forward.

The – how is the visibility or the appetite to – for Black to continue to really maybe step change some of the opportunities in that part of the world, as it fits into what you have in capacity and where you are relative to your new bidding opportunities elsewhere and some of the discipline you guys report..

Well, there is tremendous opportunities in Guam and throughout the islands. We are monitoring $700 million and $800 million jobs on the island of Palau and Crozier, all U.S. government funded. So, there is no question, the amount of major jobs as well as the routine government jobs that contribute to the multibillion dollar fundings that’s taken place.

There is almost no limit to what we can do there other than our capacities to hire and train people and management. But make no bones about it between Diego Garcia, the entire Pacific. And even the Philippines, we are undated with opportunities.

In fact, Gary and I are making a trip with management to Guam in the near future to discuss how we man and support Guam as they face more and more demands in a marketplace where they are, by far the most dominant player..

Mike, in our prepared comments, we talked about four MACCs and that was four out of four MACCs that we have qualified for with the total of $32 billion of potential work for those contractors that are participants in the MACC.

I think that’s indicative of the type of work that’s the volume of work that’s going through Guam, but also our capabilities to be able to qualify for all four of those. Obviously, we can’t support that much work. But we are not going to get that much work.

That’s just the total round of programs that we feel like we are well positioned – better positioned than anybody else in the region..

I agree. Thank you for that.

As you look through new bookings, these project bids that are coming with the port authority a month or so, maybe a mix of like the preconstruction flow that you talked about in this quarter and some of what you have versus the new business and how that can structure what backlog could be as we move towards year-end and for that baseline to move forward for ‘26 beyond..

Yes. The $19.4 billion based on the activity that we have seen so far, we think that it’s likely to grow from the 19.4% at the end of the first quarter. It depends on success on the award that Ron indicated that we – the multi-billion dollar bid that we released this week. Look, we have the potential to hold where we are probably long-term in the year.

We could also grow it. It really depends on some of these bidding opportunities. But look, if it does grow, it’s not going to grow, significantly if it does – it has more chance to grow significantly than it does to decline significantly.

We think that the more likely scenario is that we are going to maintain backlog where it is somewhere within maybe $1 billion or $2 billion as we go into ‘26.

Is that clear?.

Yes, that’s clear. No, that’s very helpful. Thank you, Gary. And then maybe my final one is as you look at your backlog and you are ramping up on some of these earlier projects with long scope.

As you look at the rollouts today, where do you see a kind of peaking or a real strong period of revenue conversion relative to where your – the book of business and where you are positioning in that?.

Yes. This is Ron Tutor. There is no question that 2025 is the beginning of ramping up revenue, ‘26 should be considerably more, ‘27, even more than ‘26. I think we will see peak revenues in ‘27 with significant increases in ‘26 as those billions of dollars of lump sum high-margin work ramps up and generates the revenue.

And if you have got a 5-year to 6-year contract and/or $3 billion a piece, you don’t have to be great with numbers to see they generate $500 million to $600 million of revenue each of them. So, that’s what’s taking place. So, you will see that ramp up in ‘26 and again in ‘27. And then it levels into ‘28 and ‘29..

I think the math works. And Ron, thank you very much..

There are no further questions at this time. I would like to turn the floor back over to Gary Smalley for closing comments..

Yes. Thank you very much. I appreciate everyone’s time and your patience over the years with us. Look, this is the first time we have ever raised guidance at Tutor Perini first time ever. And we hope it’s not the last time this year. We look forward to talking to you again next quarter when we hope to have more good news to share with you..

Thank you. This will conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation..