Tutor Perini Tops Q3 Earnings on Volume Growth, Shares Up - Analyst Blog

Shares of Tutor Perini Corporation (TPC) gained nearly 0.14% to close at $27.89 after yesterday's trading session. The rise came on the back of 49% year-over-year improvement in its third-quarter 2014 earnings, announced on Nov 5, to 73 cents per share. Increase in earnings was primarily driven by volume growth across all segments. Earnings also surpassed the Zacks Consensus Estimate of 70 cents.

Operational Updates

Total revenue went up 21% year over year to $1.25 billion, driven by increased activity on civil and building projects at Hudson Yards in New York and on certain electrical and mechanical projects on the East Coast. Revenues also came ahead of the Zacks Consensus Estimate of $1.23 billion.

Tutor Perini witnessed revenue increase in all of its segments in the reported quarter. Building segment reported 19% year-over-year growth in revenues to $412 million. Specialty Contractors recorded the highest increase in revenue of around 24% year over year to $356 million, followed by Civil which posted 21% improvement to $483 million from $496 million in the year-ago quarter.

Cost of sales went up 22% year over year to $1.1 billion. Gross profit rose 16.5% year over year to $140.8 million. Gross margin contracted 40 basis points (bps) to 11.3%.

General and administrative expenses increased 12% year over year to $70.5 million. Operating profit was $70 million, increasing 21% from $58 million in the year-ago quarter. Operating margin remained flat year over year at 5.6% in the quarter.

Financial Updates

Tutor Perini ended the quarter with cash and cash equivalents of $137 million versus $120 million as of 2013-end. Cash used in operating activities for the period of nine months ended Sep 30, 2014 was $143 million compared with cash usage of $11 million in the year-ago quarter, primarily driven by the timing of payments across all segments.

Long-term debt, excluding the current portion, amounted to $880 million as of Sep 30, 2014, compared with $619 million as of Dec 31, 2013. The debt-to-capitalization ratio was at 40% as of Sep 30, 2014 compared with 37% as of Dec 31, 2013.

Backlog and Pending Orders

Total backlog as of Sep 30, 2014, was $8.1 billion, up 17% year over year. Significant increase in backlog was primarily driven by two large new mass transit projects in New York as well as a new multi-unit residential tower project in Florida and a new healthcare facility project in California.

Outlook
 
Tutor Perini maintained its earnings per share guidance range of $2.20 to $2.40 for 2014. The company also reiterated its revenues guidance in the range of $4.5–$4.7 billion.

Tutor Perini is expected to benefit from its strong backlog and new contracts. The company continues to win contracts and shows prospects of winning future awards, given its significant volume of pending awards.

Sylmar, CA-based Tutor Perini Corporation is a leading civil and building construction company offering diversified general contracting and design-build services to private clients and public agencies globally.

Tutor Perini currently carries a Zacks Rank #3 (Hold). Other stocks worth considering in the sector include Quanta Services, Inc. (PWR), The Sherwin-Williams Company (SHW) and Trex Co. Inc. (TREX). All these stocks hold a Zacks Rank #2 (Buy).