Tutor Perini Corp. closed out 2020 with a bang.

The big Los Angeles-based contractor earned net income of $108 million for the year, on $5.8 billion in revenue, compared to a loss of $387 million in 2019, due mainly to write-offs and impaired assets, on $4.7 billion in revenue. Its shares (TPC-NYSE) have climbed to $18.34 from a 52-week low of $2.61. The only problem in an otherwise strong performance is the reduced backlog, partly a reflection of the pandemic.

The fourth-quarter net income came in at $35.5 million, accounting for about a third of the year's total. The company had said earlier in the year that it was able to prosper despite new costs imposed by the pandemic.

Large projects powered the company's revenue and earnings. They included the Minneapolis Southwest Light Rail, the Los Angeles MTA Purple Lines, and Airport Terminal 1 at Newark-Liberty International Airport in N.J. The company also prospered with large building projects such as the Choctaw Casino and Resort in Oklahoma.

Backlog, a key indicator of a contractor's future, is down. At the end of 2020, the company's backlog stood at $8.3 billion, down from the $9.2-billion total at the end of the third quarter.

Ronald N. Tutor, the company's chief executive and chairman, noted in a conference call for investors on Feb. 24 that the pandemic had bred temporary funding uncertainty. An array of major projects "was simply taken from 2020 and was pushed to the end of 2021, which caused our inability to maintain our backlog growth," he said.

Backlog Shrinkage

Tutor Perini said it expects the backlog to continue to decline through the first half of 2021, but not indefinitely. "We are seeing many of those major projects we were tracking to bid in 2020 now coming back on the street," Tutor told analysts and investors, and that "should significantly increase the potential for backlog in the second half of this year."

Steven Fisher, a senior analyst who follows Tutor Perini for UBS Investment Bank, assessed the company's latest news and its reception by investors.

"The market may be mildly disappointed that revenues are expected to decline modestly" year over year later in 2021, he wrote, as "backlog is currently declining and may not be replenished until later in 2021. "

The second half of 2022 and 2023 "looks better," Fisher wrote, assuming Tutor Perini Corp. "wins its share of large project bids."