Ronald N. Tutor, president and CEO of Tutor Perini Corp., reassured investors in a Nov. 9 conference call for analysts that happy days and black ink will return once the big contractor settles most of its outstanding claims and disputes and refinances its high-interest debt.
"Thank you, everyone, for joining us and stay patient. We're getting there," he said, in concluding the call.
For the nine months of 2023, Tutor Perini (TPC-NYSE) recorded a net loss of $123 million, compared to a loss of $117 million for the same period of 2022. The company reported revenue for the first nine months of this year of $2.85 billion, compared to $2.88 billion in the same period a year ago.
The firm ranks at No. 23 on ENR's Top 400 Contractors list, reporting $4.65 billion in 2022 revenue, down from No. 13 on last year's list.
During the call, Tutor and Gary Smalley, chief financial officer and executive vice president, explained other reasons for the losses being booked by the company since last year. Some of the claims were disputed delays or inflation-related cost adjustments tied to the pandemic.
Also, Tutor Perini's New York-based specialty contracting units, which include mechanical and electrical subcontractors, have been a sore point. They are now restricted to performing work only on projects where they are subcontractors to Tutor Perini's general contractors and construction managers, Tutor said.
That restriction "will limit our exposure, and generate a fairly stabilized margin in the 4% to 5% category," he said, and "the issues of litigation with their general contractors or owners will hopefully disappear."
Several days later, Tutor-Perini announced that Smalley has been elevated to President, and that the company also will name him CEO, effective on Jan. 1, 2025. He had served in his prior positions since 2015 and previously held financial management roles at Fluor Corp. Tutor becomes Executive Board Chairman, "consistent with the timing of the leadership succession plan previously disclosed," the firm said. Chief Accounting Officer Ryan Soroka takes on the added roles of CFO and senior vice president.
Meanwhile, the company has generated a healthy $181 million of operating cash so far this year, and its backlog of new projects remains robust.
Tutor Perini has 21 operating units, among them Rudolph and Sletten Inc., Lunda Construction Co. and Frontier-Kemper Constructors.
It is not clear which units have remained consistently profitable and which sustained losses. But the majority of Tutor Perini's large claims in recent years have involved heavy/civil construction.
Tutor indicated he was willing to go to court to battle for fair resolution of disputes. With the resolutions and planned refinancing, and the company's improved collection of cash, he foresees a financial turnaround.
"We have made continuing and significant progress" and "expect to continue resolving the balance of long-standing disputes, and collecting significant amounts of related cash over the next 12 months," Tutor told the analysts. "We expect there to be a very limited number of outstanding disputes at the end of 2024, all of which should be resolved in the first two quarters of 2025."
He said the company is "optimistic that 2024 will even be a stronger year than 2023 in the resolve and generation of cash."