TUTOR PERINI CORP

Previous wording

The following discussion and analysis of our financial position as of March 31, 2024 and the results of our operations for the three months ended March 31, 2024 should be read in conjunction with other information, including the unaudited Condensed Consolidated Financial Statements and notes included in Part I, Item 1, Financial Information, of this Quarterly Report on Form 10‑Q, the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10‑K for the year ended December 31, 2023, and the information contained under the heading “Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2023 and in Part II, Item 1A below.

Current wording

The following discussion and analysis of our financial position as of June 30, 2024 and the results of our operations for the three and six months ended June 30, 2024 should be read in conjunction with other information, including the unaudited Condensed Consolidated Financial Statements and notes included in Part I, Item 1, Financial Information, of this Quarterly Report on Form 10‑Q, the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10‑K for the year ended December 31, 2023, and the information contained under the heading “Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2023 and in Part II, Item 1A below.

Previous wording

This Quarterly Report on Form 10‑Q, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results, which are intended to be covered by the safe harbor provision for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. Words such as “achieve,” “anticipate,” “assumes,” “believes,” “continue,” “could,” “estimate,” “expects,” “forecast,” “hope,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “would,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Although such statements are based on currently available financial and economic data, as well as management’s estimates and expectations, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause our actual results to differ materially from what may be inferred from the forward-looking statements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors potentially contributing to such differences include, among others:

Current wording

This Quarterly Report on Form 10‑Q, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results, which are intended to be covered by the safe harbor provision for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. Words such as “achieve,” “anticipate,” “assumes,” “believes,” “continue,” “could,” “estimate,” “expects,” “forecast,” “hope,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “would,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statement that refers to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events, outcomes or circumstances, or the timing of those events, outcomes or circumstances are forward-looking statements. Although such statements are based on currently available financial and economic data, as well as management’s estimates and expectations, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause our actual results to differ materially from what may be inferred from the forward-looking statements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors potentially contributing to such differences include, among others:

Previous wording

Consolidated revenue for the three months ended March 31, 2024 was $1.05 billion compared to $776.3 million for the same period in 2023. The change was primarily driven by increased project execution activities on a Civil segment mass-transit project in California, a Building segment detention facility project in New York and a Building segment mass-transit project in California, as well as by the absence of certain prior-year unfavorable adjustments, as discussed in more detail below in Results of Segment Operations.

Current wording

Consolidated revenue for the three and six months ended June 30, 2024 was $1.1 billion and $2.2 billion, respectively, compared to $1.0 billion and $1.8 billion for the same periods in 2023. The growth for both periods was primarily driven by increased project execution activities on certain Building segment projects, including various healthcare and educational facility projects in California and a detention facility project in New York. The growth for both periods was also due to increased project execution activities on various Civil segment projects, including certain mass-transit projects in California, two airport projects in the Northern Mariana Islands and the tunneling component of an energy project in British Columbia, as well as the absence of certain prior-year net unfavorable adjustments, as discussed in more detail below in Results of Segment Operations. The growth for both periods was partially offset by reduced project execution activities on a completed transportation project in the Northeast.

Previous wording

Income from construction operations for the three months ended March 31, 2024 was $48.8 million, an improvement of $130.7 million compared to loss from construction operations of $81.9 million for the same period in 2023. The significant improvement was principally due to the absence of certain prior-year unfavorable adjustments, as discussed further below in Results of Segment Operations, as well as contributions related to the increased project execution activities discussed above. The improvement was also due to a favorable adjustment in the first quarter of 2024 of $10.2 million on a Civil segment mass-transit project in California related to a dispute resolution and associated expected cost savings. The results for the first quarter of 2024 were negatively impacted by an unfavorable adjustment of $12.0 million due to an arbitration ruling that only provided a partial award to the Company pertaining to a completed Specialty Contractors segment electrical project in New York.

Current wording

Income from construction operations for the three and six months ended June 30, 2024 was $40.5 million and $89.3 million, respectively, compared to income from construction operations of $2.4 million and loss from construction operations of $79.6 million for the same periods in 2023. For the second quarter of 2024, the increase was principally due to contributions related to the increased project execution activities discussed above and the absence of certain prior-year net unfavorable adjustments, as discussed further below in Results of Segment Operations. The increase was partially offset by an unfavorable adjustment in the second quarter of 2024 of $12.4 million due to the impact of a settlement on two completed Civil segment highway projects in the Northeast. For the first six months of 2024, the improvement was due to the same factors mentioned above for the second quarter, as well as a favorable adjustment in the first quarter of 2024 of $10.2 million on a Civil segment mass-transit project in California related to a dispute resolution and associated expected cost savings, partially offset by an unfavorable adjustment of $12.0 million due to an arbitration ruling that only provided a partial award to the Company pertaining to a completed Specialty Contractors segment electrical project in New York. Furthermore, income from construction operations for the three and six months ended June 30, 2024 was negatively impacted by an increase in share-based compensation expense of $14.3 million and $16.8 million, respectively, as compared to the same periods in 2023. The increase in share-based compensation expense in both 2024 periods was primarily due to a substantial increase in the Company’s stock price during the first and second quarters of 2024, which impacted the fair value of liability-classified awards. These awards are remeasured at fair value at the end of each reporting period with the change in fair value recognized in earnings.

Previous wording

The effective tax rate was 21.0% for the three months ended March 31, 2024 compared to 49.6% for the comparable period in 2023. See Corporate, Tax and Other Matters below for a discussion of the change in the effective tax rate.

Current wording

Income tax expense was $7.3 million and $14.6 million for the three and six months ended June 30, 2024, respectively, compared to income tax expense of $0.2 million for the three months ended June 30, 2023, and an income tax benefit of $47.9 million for the six months ended June 30, 2023. See Corporate, Tax and Other Matters below for a discussion of the changes in the effective tax rate.

Previous wording

Diluted earnings per common share for the three months ended March 31, 2024 was $0.30, compared to diluted loss per common share of $0.95 for the same period in 2023. The improvement for the first quarter of 2024, as compared to the same quarter last year, was primarily due to the factors discussed above that resulted in the change in income (loss) from construction operations.

Current wording

Diluted earnings per common share for the three and six months ended June 30, 2024 was $0.02 and $0.31, respectively, compared to diluted loss per common share of $0.72 and $1.68, respectively, for the same periods in 2023. The improvement for both periods in 2024 was primarily due to the factors discussed above that resulted in the positive change in income (loss) from construction operations for such periods.

Previous wording

Consolidated backlog as of March 31, 2024 was $10.0 billion, down slightly compared to $10.2 billion as of December 31, 2023. As of March 31, 2024, the mix of backlog by segment was approximately 41% for Civil, 42% for Building and 17% for Specialty Contractors.

Current wording

Consolidated backlog as of June 30, 2024 was $10.4 billion, up slightly compared to $10.2 billion as of December 31, 2023. As of June 30, 2024, the mix of backlog by segment was approximately 42% for Civil, 40% for Building and 18% for Specialty Contractors.

Previous wording

(b)Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 3 of the Notes to Condensed Consolidated Financial Statements. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that we will proceed with our work on the project (e.g., adequate funding is in place, we have received a notice of intent to award a contract, etc.).

Current wording

(b)Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 3 of the Notes to Condensed Consolidated Financial Statements. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog may include awards for which a contract has not yet been executed or a notice to proceed has not yet been issued, but for which there are no remaining major uncertainties that we will proceed with our work on the project (e.g., adequate funding is in place, we have received a notice of intent to award a contract, etc.).

Previous wording

In elections over the past decade, voters have approved thousands of state and local ballot measures, raising an estimated $342 billion in new and renewed revenue funding for transportation investments. The largest of these was in Los Angeles County, where Measure M, a half-cent sales tax increase, was approved in 2016 and is expected to generate $120 billion of funding over 40 years. Funding from this measure is supporting, and is expected to continue to support, several of the Company’s current and prospective projects. Despite numerous interest rate increases since March 2022, rates are still at levels that we believe are conducive to continued spending on certain types of projects that have strong end-market demand with adequate available funding, such as mass transit, transportation, bridges, and health care, educational, and correctional and detention facilities, among others. Many economists believe that interest rates will begin falling sometime during 2024, although the timing and extent of any reductions remains uncertain as a result of continued inflation volatility. Lower interest rates would likely support additional demand for continued infrastructure spending. In contrast, should interest rates rise further, they could reach levels that may negatively impact demand, especially for certain types of Building segment projects, such as commercial offices and tenant improvement projects, which tend to be more economically sensitive than projects handled by our Civil segment.

Current wording

Since 2014, voters in 43 states have approved 85 percent of over 3,000 state and local ballot measures, raising an estimated $342 billion in new and renewed revenue funding for transportation investments. The largest of these was in Los Angeles County, where Measure M, a half-cent sales tax increase, was approved in 2016 and is expected to generate $120 billion of funding over 40 years. Funding from this measure is supporting, and is expected to continue to support, several of the Company’s current and prospective projects. Despite numerous interest rate increases since March 2022, rates are still at levels that we believe are conducive to continued spending on certain types of projects that have strong end-market demand with adequate available funding, such as mass transit, transportation, bridges, and healthcare, educational, and correctional and detention facilities, among others. Many economists believe that interest rates will begin to fall as early as September 2024, though the actual timing and extent of any reductions remains uncertain. Lower interest rates could support additional demand for continued infrastructure spending. In contrast, should interest rates rise, they could reach levels that may further negatively impact demand, especially for certain types of Building segment projects that have already been experiencing such impacts, such as commercial offices and tenant improvement projects, which tend to be more economically sensitive than projects handled by our Civil segment.

Previous wording

The Bipartisan Infrastructure Law was enacted into law in November 2021, and provides for $1.2 trillion of federal infrastructure funding, including $550 billion in new spending for improvements to the country’s surface-transportation network and enhancements to core infrastructure. The law initiated the largest federal investment in public transit ever, the single largest dedicated bridge investment since the construction of the interstate highway system and the largest federal investment in passenger rail since the creation of Amtrak, all in addition to providing for regular annual spending for numerous infrastructure projects. This significant incremental funding is anticipated to be spent over the next 10 years from its enactment through 2031, and much of it is allocated for investment in end markets that are directly aligned with the Company’s market focus. Accordingly, the Company believes that this significant level of sustained, incremental funding has benefited, and will continue to favorably impact, the Company’s current work and prospective opportunities over the next decade.

Current wording

The bipartisan Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law” or “BIL”), enacted into law in November 2021, provides for $1.2 trillion of federal infrastructure funding, including $550 billion in new spending for improvements to the country’s surface-transportation network and enhancements to core infrastructure. The law initiated the largest federal investment in public transit ever, the single largest dedicated bridge investment since the construction of the interstate highway system and the largest federal investment in passenger rail since the creation of Amtrak, all in addition to providing for regular annual spending for numerous infrastructure projects. This significant incremental funding is anticipated to be spent over the 10 years from its enactment through 2031, and much of it is allocated for investment in end markets that are directly aligned with the Company’s market focus. Accordingly, the Company believes that this significant level of sustained, incremental funding has benefited, and will continue to favorably impact, the Company’s current work and prospective opportunities over the next decade.

Previous wording

Operating margin was 15.0% for the three months ended March 31, 2024 compared to 5.1% for the same period in 2023. The increase in operating margin was principally due to the above-mentioned factors that drove the changes in revenue and income from construction operations.

Current wording

Operating margin was 13.8% and 14.4% for the three and six months ended June 30, 2024, respectively, compared to 19.0% and 13.7% for the same periods in 2023. The changes in operating margin were principally due to the above-mentioned factors that drove the changes in revenue and income from construction operations.

Previous wording

Backlog for the Civil segment was $4.1 billion as of March 31, 2024 compared to $4.4 billion as of March 31, 2023. The segment continues to experience strong demand reflected in a large, multi-year pipeline of prospective projects, supported by substantial anticipated funding from various voter-approved transportation measures and the BIL, and by public agencies’ long-term spending plans. The Civil segment is well-positioned to capture its share of these prospective projects.

Current wording

Backlog for the Civil segment was $4.4 billion as of June 30, 2024 compared to $4.6 billion as of June 30, 2023. The segment continues to experience strong demand reflected in a large, multi-year pipeline of prospective projects, supported by substantial anticipated funding from various voter-approved transportation measures, the BIL, and by public agencies’ long-term spending plans. We believe that the Civil segment is well-positioned to capture its share of these prospective projects, but the timing of new awards remains uncertain.

Previous wording

Revenue andincome (loss) from construction operations for the Building segment are summarized as follows:

Current wording

Revenue and income (loss) from construction operations for the Building segment are summarized as follows:

Previous wording

Revenue for the three months ended March 31, 2024 increased 79% compared to the same period in 2023 primarily due to increased project execution activities on a detention facility project in New York, a mass-transit project in California and a health care facility project in California, as well as the absence of a prior-year unfavorable adjustment related to an adverse legal ruling on a completed mixed-use project in New York.

Current wording

Revenue for the three months ended June 30, 2024 increased 26% compared to the same period in 2023, primarily due to increased project execution activities on various healthcare and educational facility projects in California and a detention facility project in New York. Revenue for the six months ended June 30, 2024 increased 48% compared to the same period in 2023, primarily due to contributions from the increased project execution activities mentioned above, as well as the absence of a prior-year unfavorable adjustment related to an adverse legal ruling on a completed mixed-use project in New York.

Previous wording

Income from construction operations for the three months ended March 31, 2024 was $16.1 million compared to loss from construction operations of $70.2 million for the same period in 2023. The significant improvement was principally due to the absence of the aforementioned unfavorable adjustment related to the adverse legal ruling on a completed mixed-use project in New York that resulted in a non-cash charge of $83.6 million, of which $72.2 million impacted the Building segment. The improvement was also driven by contributions related to increased project execution activities in revenue discussed above, as well as an immaterial favorable adjustment in the 2024 period resulting from a legal ruling related to a completed hospitality and gaming project.

Current wording

Income from construction operations for the three and six months ended June 30, 2024 was $5.0 million and $21.2 million, respectively, compared to loss from construction operations of $13.8 million and $84.0 million for the same periods in 2023. For the second quarter of 2024, the improvement was primarily due to the increased project execution activities discussed above, as well as the absence of a prior-year unfavorable adjustment of $13.1 million on a completed transportation project in the Northeast, split evenly between the Civil and Building segments, due to the settlement of certain change orders during project closeout. For the first six months of 2024, the significant improvement was principally due to the absence of the aforementioned prior-year unfavorable adjustment related to the adverse legal ruling on a completed mixed-use project in New York that resulted in a non-cash charge of $83.6 million, of which $72.2 million impacted the Building segment, as well as contributions related to the increased project execution activities discussed above.

Previous wording

Operating margin was 3.9% for the three months ended March 31, 2024 compared to (30.6)% for the same period in 2023. The change in operating margin was principally due to the aforementioned factors that drove the changes in revenue and income (loss) from construction operations.

Current wording

Operating margin was 1.2% and 2.6% for the three and six months ended June 30, 2024, respectively, compared to (4.2)% and (15.0)% for the same periods in 2023. The improvements in operating margin were principally due to the aforementioned factors that drove the changes in revenue and income (loss) from construction operations.

Previous wording

New awards in the Building segment totaled $404.3 million for the three months ended March 31, 2024 compared to $233.5 million for the same period in 2023. The most significant new awards and contract adjustments in the first quarter of 2024 included a $243 million health care facility project in California; a $73 million airport hangar project in Florida; and $66 million of additional funding for several other health care projects in California. The lingering effects of COVID-19, including the proliferation of remote and hybrid work for many businesses, as well as slowed economic conditions caused by inflation and higher interest rates, could continue to result in certain delayed or even canceled Building segment project opportunities, particularly in the corporate office end market. However, other Building segment end markets, such as correctional and detention facilities, health care, education, industrial/manufacturing, and hospitality and gaming, continue to show strong demand for new and renovated facilities.

Current wording

New awards in the Building segment totaled $436.7 million and $841.0 million for the three and six months ended June 30, 2024, respectively, compared to $2.6 billion and $2.8 billion for the same periods in 2023. The 2023 periods included the award of the Brooklyn Jail project in New York. The most significant new awards and contract adjustments in the second quarter of 2024 included a $216 million airport terminal connectors project at Fort Lauderdale-Hollywood International Airport in Florida; $71 million of additional funding for various healthcare projects in California; and a $49 million government facility rehabilitation project in California. The proliferation of remote and hybrid work settings at many companies, along with continued higher interest rates, could continue to result in certain delayed or even canceled Building segment project opportunities, particularly in the corporate office end market. However, other Building segment end markets, such as correctional and detention facilities, healthcare, education, industrial/manufacturing, and hospitality and gaming, continue to show strong demand for new and renovated facilities.

Previous wording

Backlog for the Building segment was $4.2 billion as of March 31, 2024, up 87% compared to $2.2 billion as of March 31, 2023. The Building segment continues to experience strong customer demand as reflected by a large volume of prospective projects across various end markets and geographic locations.

Current wording

Backlog for the Building segment was $4.2 billion as of June 30, 2024, down 6% compared to $4.5 billion as of June 30, 2023. We believe that the Building segment continues to experience strong customer demand as reflected by a large volume of prospective projects across various end markets and geographic locations, but the timing of new awards remains uncertain.

Previous wording

Loss from construction operations for the three months ended March 31, 2024 was $18.3 million compared to $12.4 million for the same period in 2023. The change was primarily the result of an unfavorable adjustment in the first quarter of 2024 of $12.0 million due to the above-mentioned arbitration ruling on a completed electrical project in New York, as well as an immaterial unfavorable adjustment due to a settlement on a completed mass-transit project in California. The impact of these unfavorable adjustments was largely offset by the absence of a prior-year unfavorable adjustment related to the adverse legal ruling on a completed mixed-use project in New York that resulted in a non-cash charge of $83.6 million, of which $11.4 million impacted the Specialty Contractors segment.

Current wording

Loss from construction operations for the three and six months ended June 30, 2024 was $7.8 million and $26.2 million, respectively, compared to loss from construction operations of $69.8 million and $82.3 million for the same periods in 2023. For the second quarter of 2024, the improvement was primarily due to the absence of prior-year unfavorable adjustments, including $35.8 million due to changes in estimates on the electrical and mechanical scope of the above-mentioned transportation project in the Northeast, as well as a non-cash charge of $24.7 million on an educational facilities project in New York that resulted from an adverse court ruling. For the first six months of 2024, the improvement was primarily due to the absence of the same prior-year unfavorable adjustments as discussed above for the second quarter of 2024, as well as the absence of a prior-year unfavorable adjustment related to the adverse legal ruling on a completed mixed-use project in New York that resulted in a non-cash charge of $83.6 million, of which $11.4 million impacted the Specialty Contractors segment. The improvement was partially offset by an unfavorable adjustment of $12.0 million in the first quarter of 2024 due to an arbitration ruling pertaining to a completed electrical project in New York that only provided a partial award to the Company.

Previous wording

Operating margin was (11.1)% for the three months ended March 31, 2024 compared to (6.3)% for the same period in 2023. The change in operating margin was principally due to the aforementioned factors that drove the changes in revenue and loss from construction operations.

Current wording

Operating margin was (4.8)% and (8.0)% for the three and six months ended June 30, 2024, respectively, compared to (51.2)% and (24.7)% for the same periods in 2023. The changes in operating margin were principally due to the aforementioned factors that drove the changes in revenue and loss from construction operations.

Previous wording

Backlog for the Specialty Contractors segment was $1.7 billion as of March 31, 2024, up 37.6% compared to $1.2 billion as of March 31, 2023. The Specialty Contractors segment continues to be primarily focused on servicing the Company’s current and prospective large Civil and Building segment projects, particularly in the Northeast and California. The segment remains well-positioned to capture its share of new projects, leveraging the size and scale of our business units that operate in New York, Texas, Florida and California and the strong reputation held by these business units for high-quality work on large, complex projects.

Current wording

Backlog for the Specialty Contractors segment was $1.9 billion as of June 30, 2024, up 2.1% compared to $1.8 billion as of June 30, 2023. The Specialty Contractors segment continues to be primarily focused on servicing the Company’s current and prospective large Civil and Building segment projects, particularly in the Northeast and California. We believe that the segment remains well-positioned to capture its share of new projects, leveraging the size and scale of our business units that operate in New York, Texas, Florida and California and the strong reputation held by these business units for high-quality work on large, complex projects.

Previous wording

Corporate general and administrative expenses were $19.7 million and $16.4 million during the three months ended March 31, 2024 and 2023, respectively. The increase in the three months ended March 31, 2024 was primarily due to higher compensation-related expenses, mainly attributable to higher share-based compensation expense on liability-classified awards resulting from the impact of the increase in the Company’s stock price during the 2024 period.

Current wording

Corporate general and administrative expenses were $31.5 million and $51.3 million during the three and six months ended June 30, 2024, respectively, compared to $18.6 million and $35.0 million for the same periods in 2023. The increase in the three and six months ended June 30, 2024 was primarily due to higher compensation-related expenses, mainly attributable to higher share-based compensation expense. The increase in share-based compensation expense was primarily due to a substantial increase in the Company’s stock price during the 2024 periods, which impacted the fair value of liability-classified awards. These awards are remeasured at fair value at the end of each reporting period with the change in fair value recognized in earnings.

Previous wording

Other income, net for the three months ended March 31, 2024 decreased by $1.1 million compared to the same period in 2023.

Current wording

Other income, net for the three and six months ended June 30, 2024 increased $2.7 million and $1.6 million, respectively, compared to the same periods in 2023.

Previous wording

The Company recognized an income tax expense for the three months ended March 31, 2024 of $7.3 million resulting in an effective income tax rate of 21.0%. The effective income tax rate for the three months ended March 31, 2024 was consistent with the 21.0% federal statutory rate as the impacts of rate reductions from earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company) and federal income tax credits were offset by non-deductible expenses, share-based compensation adjustments and state income taxes (net of federal tax benefit).

Current wording

The Company recognized an income tax expense of $7.3 million and $14.6 million for the three and six months ended June 30, 2024, respectively. The effective income tax rate was 31.3% and 25.1% for the three and six months ended June 30, 2024, respectively. The effective income tax rate for both the three and six months ended June 30, 2024 was higher than the 21.0% federal statutory income tax rate primarily due to non-deductible expenses and state income taxes (net of the federal tax benefit), partially offset by the earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company).

Previous wording

The effective income tax rate was 49.6% for the three months ended March 31, 2023. The effective income tax rate for the 2023 period was higher than the 21.0% federal statutory rate primarily due to the pre-tax loss for the period and projected for the year. In periods reporting pre-tax losses, a tax benefit increases the effective income tax rate because it increases the tax benefit generated from the pre-tax loss. The tax benefits that caused a higher effective tax rate were primarily the earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company) and state income taxes (net of the federal tax benefit), partially offset by non-deductible expenses.

Current wording

The Company recognized an income tax expense of $0.2 million for the three months ended June 30, 2023 and an income tax benefit of $47.9 million for the six months ended June 30, 2023. The effective income tax rate was (1.2)% and 42.2% for the three and six months ended June 30, 2023, respectively. The effective income tax rate for the three months ended June 30, 2023 was lower than the 21.0% federal statutory rate primarily due to the impact of a cumulative catch-up adjustment associated with the change in the Company’s projected 2023 effective tax rate that resulted from the revision of the Company’s forecast. The effective income tax rates for both periods were impacted by relatively large tax benefits generated against a forecasted pre-tax loss for the year, which magnified the impact these tax benefits had on the effective income tax rate. In periods with pre-tax losses, tax benefits generated during the period increase the effective income tax rate (and, thus, the income tax benefit to the Company) rather than decreasing the effective rate, as in periods with pre-tax income. The tax benefits that caused a higher effective tax rate primarily included the earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company) and state income taxes (net of the federal tax benefit), partially offset by non-deductible expenses.

Previous wording

Liquidity is provided by available cash and cash equivalents, cash generated from operations, credit facilities and access to capital markets. We have a committed line of credit totaling $175.0 million (to be reduced to $170.0 million as discussed further in Debtand in Note 19 of the Notes to Condensed Consolidated Financial Statements), which may be used for revolving loans, letters of credit and/or general purposes. We believe that cash generated from operations, along with our unused credit capacity and available cash balances as of March 31, 2024, will be sufficient to fund working capital needs and debt maturities for the next 12 months and beyond, as discussed further in Debt below. We generated significant operating cash flow in the first quarter of 2024 as discussed below in Cash and Working Capital. We expect strong operating cash flow to continue for the remainder of 2024, based on projected cash collections, both from project execution activities and the resolution of additional outstanding claims and unapproved change orders, including COVID-19-related cost recoveries from certain customers. In addition, we expect to benefit from the utilization of available net operating loss carryforwards to reduce our cash outflows for income taxes.

Current wording

Liquidity is provided by available cash and cash equivalents, cash generated from operations, credit facilities and access to capital markets. We have a committed line of credit totaling $170.0 million, which may be used for revolving loans, letters of credit and/or general purposes. We believe that cash generated from operations, along with our unused credit capacity and available cash balances as of June 30, 2024, will be sufficient to fund working capital needs and debt maturities for the next 12 months and beyond, as discussed further in Debt below. We generated significant operating cash flow in the first six months of 2024 as discussed below in Cash and Working Capital. We expect strong operating cash flow to continue for the remainder of 2024, based on projected cash collections, both from project execution activities and the resolution of additional outstanding claims and unapproved change orders, including COVID-19-related cost recoveries from certain customers. For example, the cash collections associated with the above-mentioned settlement on two completed Civil segment highway projects in the Northeast are expected to have a significant positive impact on the Company’s third-quarter cash generated from operations. In addition, we expect to benefit from the utilization of available net operating loss carryforwards to reduce our cash outflows for income taxes.

Previous wording

Cash and cash equivalents were $358.3 million as of March 31, 2024 compared to $380.6 million as of December 31, 2023. Cash immediately available for general corporate purposes was $128.9 million and $145.1 million as of March 31, 2024 and December 31, 2023, respectively, with the remainder being amounts held by our consolidated joint ventures and also our proportionate share of cash held by our unconsolidated joint ventures. Cash held by our joint ventures is available only for joint venture-related uses, including distributions to joint venture partners. In addition, our restricted cash and restricted investments totaled $145.2 million as of March 31, 2024 compared to $144.4 million as of December 31, 2023. Restricted cash and restricted investments at March 31, 2024 were primarily held to secure insurance-related contingent obligations and deposits.

Current wording

Cash and cash equivalents were $267.1 million as of June 30, 2024 compared to $380.6 million as of December 31, 2023. Cash immediately available for general corporate purposes was $84.1 million and $145.1 million as of June 30, 2024 and December 31, 2023, respectively, with the remainder being amounts held by our consolidated joint ventures and also our proportionate share of cash held by our unconsolidated joint ventures. Cash held by our joint ventures is available only for joint venture-related uses, including distributions to joint venture partners. In addition, our restricted cash and restricted investments totaled $146.6 million as of June 30, 2024 compared to $144.4 million as of December 31, 2023. Restricted cash and restricted investments at June 30, 2024 were primarily held to secure insurance-related contingent obligations and deposits.

Previous wording

During the three months ended March 31, 2024, net cash provided by operating activities was $98.3 million, the second-largest result for the first three months of any year since the merger between Tutor-Saliba Corporation and Perini Corporation in 2008. The net cash provided by operating activities for the 2024 period was primarily due to cash generated by earnings sources and a decrease in investment in project working capital. The decrease in investment in project working capital was primarily due to an increase in accounts payable, as a result of the timing of payments to subcontractors and vendors, partially offset by a decrease in billings in excess of costs and estimated earnings (“BIE”). During the three months ended March 31, 2023, net cash provided by operating activities was $21.3 million. The net cash provided by operating activities for the 2023 period was primarily due to a decrease in investments in project working capital, partially offset by cash utilized by earnings sources. The decrease in investments in project working capital was primarily due to a decrease in costs and estimated earnings in excess of billings (“CIE”) and decreases in accounts receivable and retention receivable that resulted from improved collection activity.

Current wording

During the six months ended June 30, 2024, net cash provided by operating activities was $151.4 million, the second-largest result for the first six months of any year since the merger between Tutor-Saliba Corporation and Perini Corporation in 2008. The net cash provided by operating activities for the 2024 period was primarily due to cash generated by earnings sources and a reduction in net project working capital. The reduction in net project working capital was primarily due to an increase in accounts payable, as a result of the timing of payments to subcontractors and vendors, partially offset by a decrease in billings in excess of costs and estimated earnings (“BIE”). During the six months ended June 30, 2023, net cash provided by operating activities was $77.7 million. The net cash provided by operating activities for the 2023 period was primarily due to a reduction in net project working capital, partially offset by cash utilized by earnings sources. The reduction in net project working capital was primarily due to a decrease in costs and estimated earnings in excess of billings (“CIE”) and an increase in BIE, partially offset by an increase in accounts receivable.

Previous wording

Cash flow from operating activities increased $76.9 million when comparing the first three months of 2024 with the same period in 2023. The increase in cash flow from operating activities for the first three months of 2024 compared to 2023 primarily reflects cash generated by earning sources in the current period compared to cash used by earnings sources in the same period last year, partially offset by a smaller decrease in investment in working capital in the current period compared to the prior-year period. The smaller decrease in investment in working capital in the 2024 period was primarily due to a current- year decrease in BIE compared to an increase last year, a current-year increase in CIE compared to a decrease last year and a current-year increase in accounts receivable compared to a decrease last year, partially offset by a current-year increase in accounts payable compared to a decrease last year. Both periods were positively impacted by collections associated with previously disputed matters.

Current wording

Cash flow from operating activities for the first six months of 2024 increased $73.8 million compared to the same period in 2023. The increase in cash flow from operating activities for the first six months of 2024 compared to 2023 primarily reflects cash generated by earning sources in the current period compared to cash used by earnings sources in the same period last year, partially offset by a smaller reduction in net project working capital in the current period compared to the prior-year period. The smaller reduction in net project working capital in the 2024 period was primarily due to a current-year increase in CIE compared to a decrease last year, and a current-year decrease in BIE compared to an increase last year, partially offset by a current-year increase in accounts payable compared to a decrease last year. Both periods were positively impacted by collections associated with previously disputed matters.

Previous wording

Net cash used in investing activities during the first three months of 2024 was $10.3 million primarily due to the acquisition of property and equipment for projects (i.e., capital expenditures) totaling $10.4 million. Net cash used in investing activities during the first three months of 2023 was $6.9 million primarily due to the acquisition of property and equipment for projects totaling $17.8 million, partially offset by proceeds from the sale of property and equipment of $6.5 million and net proceeds from investment transactions of $4.4 million.

Current wording

Net cash used in investing activities during the first six months of 2024 was $24.0 million primarily due to the acquisition of property and equipment for projects (i.e., capital expenditures) totaling $21.4 million and net cash used in investment transactions of $4.1 million. Net cash used in investing activities during the first six months of 2023 was $29.2 million primarily due to the acquisition of property and equipment for projects totaling $30.6 million, as well as net cash used in investment transactions of $5.3 million, partially offset by proceeds from the sale of property and equipment of $6.8 million.

Previous wording

Net cash used in financing activities was $109.6 million for the first three months of 2024, which was primarily driven by $100.2 million of repayments of debt (including the $91.0 million principal repayment on the Term Loan B as discussed below in Debt) and $7.4 million of distributions to noncontrolling interests. Net cash provided by financing activities was $14.4 million for the first three months of 2023, which was primarily driven by $21.4 million of net proceeds from borrowings, partially offset by $6.5 million of net distributions to noncontrolling interests.

Current wording

Net cash used in financing activities was $242.6 million for the first six months of 2024, which was primarily driven by a $202.9 million net repayment of debt (including the 2024 Senior Notes issuance of $400.0 million and the 2017 Senior Notes redemption of $500.0 million, as well as the $91.0 million principal repayment on the Term Loan B, all of which are discussed below in Debt), $25.1 million of payments for debt issuance costs related to debt transactions during the period and $12.4 million of distributions to noncontrolling interests. Net cash used in financing activities was $47.9 million for the first six months of 2023, which was primarily driven by a $33.8 million net repayment of debt and $13.3 million of net distributions to noncontrolling interests.

Previous wording

At March 31, 2024, we had working capital of $1.4 billion, a ratio of current assets to current liabilities of 1.70 and a ratio of debt to equity of 0.61, compared to working capital of $1.4 billion, a ratio of current assets to current liabilities of 1.66 and a ratio of debt to equity of 0.70 at December 31, 2023.

Current wording

At June 30, 2024, we had working capital of $1.3 billion, a ratio of current assets to current liabilities of 1.65 and a ratio of debt to equity of 0.51, compared to working capital of $1.4 billion, a ratio of current assets to current liabilities of 1.66 and a ratio of debt to equity of 0.70 at December 31, 2023.

Previous wording

Prior to April 30, 2026, the Company may redeem the 2024 Senior Notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium described in the indenture. In addition, prior to April 30, 2026, the Company may redeem up to 40% of the original aggregate principal amount of the notes at a redemption price of 111.875% of their principal amount with the proceeds received by the Company from any offering of the Company’s equity. On or after April 30, 2026, the Company may redeem the 2024 Senior Notes at specified redemption prices described in the indenture. Upon a change of control, holders of the 2024 Senior Notes may require the Company to repurchase all or part of the 2024 Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the redemption date.

Current wording

Prior to April 30, 2026, the Company may redeem the 2024 Senior Notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium described in the indenture. In addition, prior to April 30, 2026, the Company may redeem up to 40% of the original aggregate principal amount of the 2024 Senior Notes at a redemption price of 111.875% of their principal amount with the “net cash proceeds” received by the Company from one or more equity offerings, as described in the indenture. On or after April 30, 2026, the Company may redeem the 2024 Senior Notes at specified redemption prices described in the indenture. If the Company experiences certain change of control events, holders of the 2024 Senior Notes may require the Company to repurchase all or part of the 2024 Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the redemption date.

Previous wording

The 2024 Senior Notes are senior unsecured obligations of the Company and are guaranteed by the Company’s existing and future subsidiaries that also guarantee obligations under the Company’s 2020 Credit Agreement. In addition, the indenture for the 2024 Senior Notes provides for customary covenants on certain payments and includes customary events of default.

Current wording

The 2024 Senior Notes are senior unsecured obligations of the Company and are guaranteed by the Company’s existing and future subsidiaries that also guarantee obligations under the Company’s 2020 Credit Agreement. In addition, the indenture for the 2024 Senior Notes provides for customary covenants and includes customary events of default.

Previous wording

The proceeds of the 2024 Senior Notes, together with cash on hand, will be used to redeem in full, all of the outstanding obligations in respect of the 2017 Senior Notes, resulting in a total net reduction to the Company’s outstanding principal debt balance of $100.0 million. A Notice of Conditional Full Redemption was delivered to holders of the 2017 Senior Notes on April 17, 2024, and the redemption of the 2017 Senior Notes will occur on May 2, 2024.

Current wording

The proceeds of the 2024 Senior Notes, together with cash on hand, were used to redeem in full, all of the outstanding obligations in respect of the 2017 Senior Notes. The redemption of the 2017 Senior Notes occurred on May 2, 2024 (the “2017 Senior Notes Redemption”).

Previous wording

On August 18, 2020, the Company entered into a credit agreement (as amended, the “2020 Credit Agreement”) with BMO Bank N.A. (f/k/a BMO Harris Bank N.A.), as Administrative Agent, Swing Line Lender and L/C Issuer and other lenders. The 2020 Credit Agreement provides for a $425.0 million term loan B facility (the “Term Loan B”) and a $175.0 million revolving credit facility (the “Revolver”), which will be reduced to $170.0 million following the effectiveness of the amendment to the 2020 Credit Agreement entered into on April 15, 2024, as described further detail below and in Note 19 of the Notes to Condensed Consolidated Financial Statements, with sub-limits for the issuance of letters of credit and swing line loans up to the aggregate amounts of $75.0 million and $10.0 million, respectively.

Current wording

On August 18, 2020, the Company entered into a credit agreement (as amended, the “2020 Credit Agreement”) with BMO Bank N.A. (f/k/a BMO Harris Bank N.A.), as Administrative Agent, Swing Line Lender and L/C Issuer and other lenders. The 2020 Credit Agreement originally provided for a $425.0 million term loan B facility (the “Term Loan B”) and a $175.0 million revolving credit facility (the “Revolver”), which was subsequently reduced to $170.0 million following the effectiveness of the 2024 Amendment (as defined and discussed below), with sub-limits for the issuance of letters of credit and swing line loans up to the aggregate amounts of $75.0 million and $10.0 million, respectively. Prior to the 2017 Senior Notes Redemption, if any of the 2017 Senior Notes had remained outstanding beyond certain dates, the maturities of the Term Loan B and the Revolver would have been subject to acceleration (“spring-forward maturity”). However, following the 2017 Senior Notes Redemption and the consummation of the 2024 Amendment, the spring-forward maturity of the Term Loan B is no longer in effect and the spring-forward maturity of the Revolver has been extended (as described below).

Previous wording

The Revolver will mature on August 18, 2025, unless any of the 2017 Senior Notes are outstanding on January 30, 2025, in which case any extensions of credit under the Revolver will mature and the commitments available under the Revolver will be reduced to zero, in each case, on January 30, 2025, subject to certain further exceptions. However, following the effectiveness of the April 15, 2024 amendment discussed below, the Revolver will mature (a) if any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof) remains outstanding, the earlier of (i) May 20, 2027 and (ii) the date that is ninety (90) days prior to the final maturity of any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof), as applicable and (b) if no obligations are outstanding with respect to any tranche of the Term Loan B, any incremental term loan or any refinancing term loan, August 18, 2027.

Current wording

On April 15, 2024, the Company entered into an amendment in respect of the 2020 Credit Agreement (the “2024 Amendment”) which, among other changes, (1) extends the existing Revolver maturity date from August 18, 2025 to (a) if any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof) remains outstanding, the earlier of (i) May 20, 2027 and (ii) the date that is ninety (90) days prior to the final maturity of any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof), as applicable, and (b) if no obligations are outstanding with respect to any tranche of the Term Loan B, any incremental term loan or any refinancing term loan, August 18, 2027 and (2) permanently reduces the aggregate commitments in respect of the Revolver by $5.0 million from $175.0 million to $170.0 million. The 2024 Amendment became effective on May 2, 2024 upon the completion of the 2017 Senior Notes Redemption.

Previous wording

As of March 31, 2024, the Revolver had unused available borrowing capacity of $175.0 million, and the outstanding balance of the Term Loan B and the 2017 Senior Notes were $275.1 million and $500.0 million, respectively.

Current wording

As of June 30, 2024, the Revolver had unused available borrowing capacity of $170.0 million, and the outstanding balance of the Term Loan B and the 2024 Senior Notes were $274.0 million and $400.0 million, respectively.

Previous wording

Borrowings under the 2020 Credit Agreement bear interest at variable rates, which have increased since the latter part of 2022 due to changes in market conditions that resulted in increases in the Secured Overnight Financing Rate (“SOFR”) (and the London Interbank Offered Rate (“LIBOR”) prior to the transition to SOFR), in the case of the Term Loan B, and the administrative agent’s prime lending rate, in the case of the Revolver. Effective May 2, 2023, the 2020 Credit Agreement was amended to transition the Company’s original LIBOR option in respect of the Term Loan B to Adjusted Term SOFR. The average borrowing rates on the Term Loan B for the three months ended March 31, 2024 was approximately 9.2%. There were no borrowings under the Revolver during the three months ended March 31, 2024. At March 31, 2024, the borrowing rates on the Term Loan B and the Revolver were 10.2% and 12.3%, respectively. For more information regarding the terms of our 2020 Credit Agreement, refer to Note 9 of the Notes to Condensed Consolidated Financial Statements.

Current wording

Borrowings under the 2020 Credit Agreement bear interest at variable rates, which have increased since the latter part of 2022 due to changes in market conditions that resulted in increases in the Secured Overnight Financing Rate (“SOFR”) (and the London Interbank Offered Rate (“LIBOR”) prior to the transition to SOFR), in the case of the Term Loan B, and the administrative agent’s prime lending rate, in the case of the Revolver. Effective May 2, 2023, the 2020 Credit Agreement was amended to transition the Company’s original LIBOR option in respect of the Term Loan B to Adjusted Term SOFR. The average borrowing rates on the Term Loan B and the Revolver for the six months ended June 30, 2024 were approximately 10.2% and 12.0%, respectively. At June 30, 2024, the borrowing rates on the Term Loan B and the Revolver were 10.2% and 12.0%, respectively. For more information regarding the terms of our 2020 Credit Agreement, refer to Note 9 of the Notes to Condensed Consolidated Financial Statements.

Previous wording

On October 31, 2022, the 2020 Credit Agreement was amended to increase the maximum First Lien Net Leverage Ratio covenant level for certain fiscal quarters. On March 10, 2023, the 2020 Credit Agreement was further amended to set the maximum First Lien Net Leverage Ratio covenant level to 3.50:1.00, effective the fiscal quarter ended December 31, 2022, and increasing to 3.75:1.00 for the fiscal quarter ending March 31, 2023 and subsequently stepping down to 3.00:1.00 for the fiscal quarter ending June 30, 2023, 2.50:1.00 for the fiscal quarter ending September 30, 2023 and 2.25:1.00 for the fiscal quarter ending December 31, 2023 and each fiscal quarter thereafter. As of March 31, 2024, we were in compliance and expect to continue to be in compliance with the covenants under the 2020 Credit Agreement.

Current wording

The 2020 Credit Agreement requires, solely with respect to the Revolver, the Company and its restricted subsidiaries to maintain a maximum First Lien Net Leverage Ratio of 3.50:1.00, effective the fiscal quarter ended December 31, 2022 and increasing to 3.75:1.00 for the fiscal quarter ending March 31, 2023 and subsequently stepping down to 3.00:1.00 for the fiscal quarter ending June 30, 2023, 2.50:1.00 for the fiscal quarter ending September 30, 2023 and 2.25:1.00 for the fiscal quarter ending December 31, 2023 and each fiscal quarter thereafter. As of June 30, 2024, we were in compliance and expect to continue to be in compliance with the covenants under the 2020 Credit Agreement.