Tutor Perini (TPC) Tops Q4 EPS by 8c, Revenues Beat; Offers FY21 EPS Guidance Below Consensus
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Tutor Perini (NYSE: TPC) reported Q4 EPS of $0.69, $0.08 better than the analyst estimate of $0.61. Revenue for the quarter came in at $1.35 billion versus the consensus estimate of $1.33 billion.
- Income from construction operations for the fourth quarter and full year of 2020 was $74.4 million and $262.3 million, respectively, both up substantially compared to the same periods in 2019, and the highest annual result since the merger of Tutor-Saliba and Perini in 2008.
- Net income attributable to the Company for the fourth quarter and full year of 2020 was $35.5 million, or $0.69 per diluted share, and $108.4 million, or $2.12 per diluted share, respectively.
- The significant growth in income from construction operations for both periods was due to contributions from various large infrastructure projects, as well as the absence of a prior-year $166.8 million pre-tax charge ($119.4 million after tax, with an impact of $2.38 per diluted share in 2019) related to the adverse jury verdict pertaining to the Alaskan Way Viaduct Replacement Project (SR 99), which the Company is appealing.
- Additionally, the growth in income from construction operations for the full year of 2020 was due to the absence of a prior-year pre-tax, non-cash goodwill impairment charge of $379.9 million ($330.5 million after tax, with an impact of $6.58 per diluted share in 2019).
- The strong increase in net income and EPS in 2020 was also driven by a favorable effective tax rate, which primarily resulted from benefits associated with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
Tutor Perini sees FY2021 EPS of $1.80-$2.20, versus the consensus of $2.21.
“We delivered strong results in 2020 despite significant negative impacts of COVID-19, as we successfully navigated the challenges presented by the pandemic,” remarked Ronald Tutor, Chairman and Chief Executive Officer. Tutor continued, “Our EPS for 2020 exceeded our guidance and we generated record operating income and operating cash, both the largest amount of any year since the merger in 2008. Demand for our construction services continues to be the strongest it has been in many years. However, the COVID-19 pandemic has caused a lack of available manpower, a reduction in field labor productivity and other inefficiencies, as well as negatively impacting project schedules, resulting in incremental costs for the year estimated to be in excess of $50 million, much of which we are seeking to recover from our customers. The pandemic has also led to delays in project bids and contract awards. These impacts could continue to negatively impact our operations, backlog and future results. I am optimistic, though, that the federal government will provide the infrastructure funding support that many state and local customers are relying upon, which should favorably support Tutor Perini's long-term success and continued profitability."
As discussed above, the COVID-19 pandemic negatively impacted the Company’s results in 2020. However, the vast majority of the Company’s projects, especially in the Civil segment, have been and continue to be designated as essential business, which has allowed the Company to continue its work on those projects. While there has been major progress achieved in the development and approval of effective vaccines and the subsequent rollout of large-scale vaccination programs worldwide, the COVID-19 pandemic continues to be a fluid situation that presents business uncertainties. Therefore, the Company is unable at this time to accurately predict the pandemic’s future impact on the Company’s business, financial condition or performance.
The Company anticipates continued revenue growth from the existing backlog of large civil infrastructure projects on the West Coast and other projects in Guam. Offsetting this growth, however, are certain large civil projects in the Northeast that are completing or will be nearing completion over the next year. The Company is pursuing several large prospective projects on the West Coast, in the Northeast and in Guam that are expected to be bid and awarded in 2021 and 2022. Importantly, the timing and magnitude of revenue contributions from these prospective projects may not be sufficient to offset revenue reductions associated with the projects that will be completed or nearing completion in 2021. In addition, as discussed earlier, the COVID-19 pandemic has resulted in, and could continue to result in, delays in the bidding and awarding of certain projects the Company is pursuing, which could further delay large new revenue streams.
For the reasons mentioned above, the Company is taking a cautious, but practical, approach in estimating its financial performance for 2021. Based on the current market assessment and business outlook, the Company is establishing its initial EPS guidance for 2021 at a range of $1.80 to $2.20. As in previous years, earnings in 2021 are expected to be weighted more heavily in the second half of the year due to the anticipated timing of large project activities, as well as typical business seasonality.
For earnings history and earnings-related data on Tutor Perini (TPC) click here.
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