Dive Brief:
- More money, more problems. That’s the takeaway from megaproject and infrastructure contractor Tutor Perini’s year-end financial results, as charges from disputes and settlements on several of its billion-dollar jobs led to red ink.
- The Los Angeles-based firm reported a loss of $47.5 million for the fourth quarter and $171.2 million for the full year in 2023, due to adverse legal judgments and write-downs for dispute settlements throughout the year. The losses were smaller than in the year-ago period.
- Positives came in the form of slightly higher revenue, which was $1.02 billion for the quarter and $3.88 billion for the year, or 12.7% and 2.4% higher, respectively. Backlog also grew by 28% to $10.16 billion at year’s end.
Dive Insight:
Going forward, the contractor said it believes most of its challenges are in the rear view mirror.
“We expect to continue resolving most of our remaining legacy disputes in 2024, with only a handful going into 2025, and thereby, collecting substantial amounts of associated cash throughout this year and a certain amount in next year before all of our legacy issues will be resolved and brought current,” said Ronald Tutor, the firm’s chairman and CEO, in an earnings call Wednesday.
Some of the contractor’s problems stem from momentum it lost during the pandemic. For instance, Tutor highlighted $11 billion in contracts over the last 18 months on which it was the low bidder, but which were rescinded due to budget concerns.
“We’re just coming back from COVID and two years of virtually nothing happening in the civil business,” Tutor said. “It’s like the world stopped and it’s back going again.”
Although some of those issues were specific to COVID-19, other ongoing disputes in the contractor’s workload are more illustrative of the complex, risk-laden and contentious nature of yearslong, multibillion dollar infrastructure projects with prolonged timelines that make them harder to estimate accurately and manage smoothly.
While some contractors, such as Granite Construction, have eschewed those types of megaprojects in favor of smaller, more predictable jobs that can be completed in shorter time frames, Tutor Perini has been doubling down on pursuing these types of trophy projects.
For example, a big portion of its backlog gain in 2023 came from its $2.95 billion win of the Brooklyn Facility in the New York City Borough-Based Jails System. The contractor said it will continue to pursue projects of that scope, as it is usually one of just two or three bidders on those jobs.
“We’re bidding these major jobs as significant with never more than two other bidders and in most cases, one other bidder,” Tutor said. “So the competition is diminished and it’s certainly seen as an opportunity.”
Tutor said he anticipates the firm returning to profitability in 2024, with $32 billion in bidding opportunities this year and next.