Tutor Perini Corporation Q3 FY2025 earnings call

• Tutor Perini delivered excellent Q3 results with record operating cash flow: $289 million in Q3 and $574 million YTD. Backlog reached a new record of $21.6 billion, up 54% Y/Y. - New awards in Q3 included the UCSF Benioff New Children's Hospital ($1B), a $182M defense system project in Guam, and a $155M education facility project in CA. - Anticipates well over $25B of upcoming bidding opportunities in 12-18 months, including major projects in CA, NY, Midwest, and Indo-Pacific. - Favorable macroeconomic tailwinds driving strong market demand for construction services, with no significant impact from tariffs or project cancellations/defunding as per management.

Civil segment: Revenue was $770 million in Q3 2025, up 41% year-over-year. Operating income from construction operations was $99 million in Q3 2025, the highest ever for the segment in Q3 and first 9 months, with margins sustainably above the historical range. Building segment: Revenue was $419 million in Q3 2025, down slightly Y/Y but expected to increase in coming quarters. Operating income from construction operations was $14 million in Q3 2025, the highest since 2011. Specialty Contractors segment: Revenue was $226 million in Q3 2025, up 124% year-over-year. The segment returned to profitability in Q3 2025, with an operating margin of 2.7%.

• Raised 2025 adjusted EPS guidance to $4 to $4.20, up from previous guidance of $3.65 to $3.95. - Anticipates adjusted EPS in 2026 and 2027 to be significantly higher than the upper end of 2025's increased guidance. - Expects strong operating cash flow for the rest of 2025 and beyond.

Q: Can you give a little more color on specialty turning positive? What drove that? And what's your expectation for the next few quarters?

A: Yes, Adam, look, what's really driving specialty performance is the work that we have, the non-claim resolution or dispute resolution work is just going extremely well. We're making a heck of a lot of money, and that is the work that we're primarily doing is for Tutor Perini, but also the work that we're not doing for Tutor Perini is just doing extremely well. So we have a quarter that had very little noise from dispute resolutions, and that's what's really driving it. So whenever we have quarters like that throughout the business, but especially for specialty at this point, you're going to see much improved results.

Q: Does the specialty revenue trend up from the Q3 level?

A: Yes. It will because keep in mind that most of the work that they're doing is for these larger projects that we've been announcing awards of over the last 1.5 years or so. And as those projects continue to ramp up, their participation will continue to ramp up. So their revenue is going to go up significantly, particularly New York-based revenue.

Q: As you move on with better terms and better margins on these contracts rolling over as we can see in your operating margins, is your bidding activity staying robust? Or have you been seeing less interest in certain areas?

A: No, it's still very robust. We've got a load of work that's coming up in different geographies, really led by New York still and a lot of things happening in California. We still have Indo-Pacific that's looking very strong as well as the Midwest. So we're -- in all of our major geographies, there's still a really strong pipeline of work yet to be bid.

Q: Congratulations on another strong quarter and guidance raise. So you went through your $12 billion kind of near-term bid pipeline pretty quickly. I know the awards and backlog can be kind of lumpy from time to time. But based on that pipeline and just the timing of the pipeline, do you -- could you exit the fourth quarter at another record? Or are we expecting something a little bit more flattish?

A: Yes, it's probably a little bit more flattish in the fourth quarter. It's going to be lumpier. Lately, it's been every quarter, it seems increased new record, new record, new record. And we're not going to see that going forward in the short term. We may have new records, but it won't be consistently quarter after quarter. So a little bit lumpy, but flattish over the short term -- short to medium term anyway.

Q: Congratulations also on the cash generation there. Just curious on that point, what's the outlook for sort of the mobilization payments or upfront payments that you're getting? Is that now mostly kind of happened as your sort of backlog is flattening before this next wave? And is cash going forward for the next handful of quarters going to be more related. It's just sort of ongoing project burn?

A: Yes, there's -- most of the mobilization payments have happened. There's still a couple of fragments to go. I would look at cash continue to be strong, not as strong as what we had in the third quarter, that's just really phenomenal, the $289 million. So it will still be very strong compared to where we've been historically. And we look for continued strong cash going into '26 and '27 and beyond that, too.

Q: Just curious to hear what you think about the dynamics with the mayor elect in New York City here versus the Trump administration and what that could mean for ongoing projects and perhaps importantly, something like Port Authority, which you have, it sounds like another slug coming. So what do you think about those dynamics and how they could play out?

A: Yes. Look, it's hard to predict what the future might hold, but we're not expecting any significant impacts. And you mentioned the Port Authority. Look, the Port Authority is not a city agency. It's a state agency between 2 states, New Jersey and New York. And we don't -- we just don't anticipate any impacts and nor do our owners, our customers. We're having active dialogue with them as developments occur. And so far, we don't see any impact at all.