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Dive brief:
- More money, more problems. That’s the result of year-end financial results for megaproject and infrastructure contractor Tutor Perini, as dispute and settlement charges on several of its billion-dollar jobs led to red ink.
- The Los Angeles-based company 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 the resolution of disputes throughout the year. The losses were lower than in the period last year.
- The 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 up 12.7% and 2.4%, respectively. The portfolio also grew 28% to $10.16 billion at the end of the year.
Diving knowledge:
Looking ahead, the contractor said he believes most of his challenges are in the rear view mirror
“We expect to continue to resolve the majority of our remaining legacy disputes in 2024, with only a handful of entries in 2025, and therefore raise substantial amounts of associated cash during that year and some next year before all of our legacy issues are resolved. resolved and updated,” said Ronald Tutor, the company’s president and CEO, on an earnings call Wednesday.
Some of the contractor’s problems stem from the momentum it lost during the pandemic. For example, Tutor highlighted $11 billion in contracts over the last 18 months in which it was the low bidder, but which were terminated due to budget issues.
“We just came back from COVID and two years of virtually nothing happening in the civilian business,” Tutor said. “It’s as if the world stopped and started again.”
While some of these issues were specific to COVID-19, other ongoing disputes over contractor workload are more illustrative of the complex, risk-laden and contentious nature of for years, multimillionaire dollar infrastructure projects with extended timelines that make them more difficult to estimate accurately and manage smoothly.
Although some contractors, such as Granite Construction, have avoided this type mega projects in favor of smaller, more predictable jobs that can be completed in less time time framesTutor Perini has been doubling down to carry out these types of trophy projects.
For example, a large portion of his portfolio gains in 2023 came from his $2.95 billion win from the Brooklyn facility in the New York City prison system. The contractor said it will continue to develop projects of this scope, as it is usually one of two or three bidders for such work.
“We are bidding these major jobs as major with never more than two other bidders and in most cases one other bidder,” Tutor said. “So the competition is reduced and it’s certainly seen as an opportunity.”
Tutor said he expects the company to return to profitability by 2024, with $32 billion in tender opportunities this year and next.
