TUTOR PERINI CORP

Previous wording

The reduced loss from construction operations in 2023 was primarily due to a lower amount of net unfavorable impacts in 2023 as compared to 2022, including: 1) certain adverse legal judgments or decisions that had net unfavorable impacts totaling $122.2 million in 2023 compared to $147.8 million in 2022; and 2) various settlements that had a net favorable impact of $8.4 million in 2023 compared to a net unfavorable impact of $85.4 million in 2022. The improvement was partially offset by higher net unfavorable impacts in 2023 related to various changes in estimates for project charges, net of positive impacts from improved productivity and efficiencies on certain projects, which had an aggregate net negative impact of $117.2 million in 2023 compared to $96.8 million in 2022. Also contributing to the change between 2023 and 2022 were temporary aggregate negative project adjustments of $79.2 million in 2023 compared to $119.7 million in 2022 due to increases in unapproved work on various projects, all of which are expected to reverse themselves over the remaining lives of the projects. The material project adjustments associated with these factors are discussed below.

Current wording

Loss from construction operations for 2024 was $103.8 million compared to $114.6 million for 2023. The reduced loss from construction operations in 2024 was primarily due to contributions related to an overall net increase in project execution activities that totaled $93.2 million. The improvement was also driven by 1) various changes in estimates for project charges, net of positive impacts from improved productivity and efficiencies on certain projects, which had an aggregate net unfavorable impact of $36.4 million in 2024 compared to $117.2 million in 2023, partially offset by 2) certain legal judgments or decisions that had net unfavorable impacts totaling $167.7 million in 2024 compared to $122.2 million in 2023; 3) various settlements that had a net unfavorable impact of $45.8 million in 2024 compared to a net favorable impact of $8.4 million in 2023; and 4) temporary aggregate negative project adjustments of $97.2 million in 2024 compared to $79.2 million in 2023 due to both the successful negotiation of significant lower margin (and lower risk) change orders and increases in unapproved work on various projects, the temporary impacts to earnings of which are expected to reverse themselves over the remaining lives of the projects.

Previous wording

Adverse legal judgments or decisions during 2023 included an adverse legal ruling on a completed mixed-use project in New York, which resulted in a non-cash charge of $83.6 million, of which $72.2 million impacted the Building segment and $11.4 million impacted the Specialty Contractors segment, and a $24.7 million non-cash charge that resulted from an adverse court ruling on a Specialty Contractors segment educational facilities project in New York.

Current wording

Legal judgments or decisions during 2023 resulted in net unfavorable impacts of $122.2 million, including an adverse legal ruling on a completed mixed-use project in New York, which resulted in a non-cash charge of $83.6 million, of which $72.2 million impacted the Building segment and $11.4 million impacted the Specialty Contractors segment, and a $24.7 million non-cash charge that resulted from an adverse court ruling on a Specialty Contractors segment educational facilities project in New York.

Previous wording

Settlements during 2023 had a net favorable impact of $8.4 million, as discussed above, which included favorable adjustments totaling $58.1 million resulting from the settlement of change orders and changes in estimates due to improved performance on a Civil segment project on the West Coast. This favorable impact was mostly offset by the net unfavorable impacts from other settlements including the net unfavorable impact from a settlement that affected multiple components of a Civil segment mass-transit project in California. This settlement included the resolution of certain ongoing disputes and increased the expected profit from work to be performed in the future. The settlement resulted in an unfavorable non-cash adjustment of $23.2 million to one component of the project that is nearing completion, partially offset by a favorable adjustment of $8.8 million on the other component of the project that has substantial scope of work remaining. The net unfavorable impact in 2023 from these two adjustments is expected to be mitigated by the increased profit generated from future work on the project. Other settlements in 2023 included a $13.1 million unfavorable non-cash impact (split evenly between the Civil and Building segments) related to a completed transportation project in the Northeast, a $9.4 million unfavorable adjustment on a completed Specialty Contractors mass-transit project in California and the net unfavorable impact of various other settlements that were individually immaterial.

Current wording

Settlements during 2023 had a net favorable impact of $8.4 million, which included favorable adjustments totaling $58.1 million resulting from the settlement of change orders and changes in estimates due to improved performance on a Civil segment project on the West Coast. This favorable impact was mostly offset by the net unfavorable impacts from other settlements including the net unfavorable impact of $14.4 million from a settlement that affected multiple components of a Civil segment mass-transit project in California. This settlement included the resolution of certain ongoing disputes and increased the expected profit from work to be performed in the future. The settlement resulted in an unfavorable non-cash adjustment of $23.2 million to one component of the project that is nearing completion, partially offset by a favorable adjustment of $8.8 million on the other component of the project that has substantial scope of work remaining. The net unfavorable impact in 2023 from these two adjustments is expected to be mitigated by the increased profit generated from future work on the project. Other settlements in 2023 included a $13.1 million unfavorable non-cash impact (split evenly between the Civil and Building segments) related to a completed transportation project in the Northeast and the net unfavorable impact of various other settlements that were individually immaterial.

Previous wording

Other significant project charges of $117.2 million in 2023 included $62.2 million of unfavorable non-cash adjustments due to changes in estimates on the electrical and mechanical scope of a transportation project in the Northeast associated with changes in the expected recovery on certain unapproved change orders resulting from ongoing negotiations; an unfavorable adjustment of $16.9 million on a Specialty Contractors segment multi-unit residential project in New York due to changes in estimates resulting from incremental costs to complete the project and ongoing negotiations on unapproved change orders; a $14.9 million unfavorable adjustment due to changes in estimates due to recent negotiations and incremental cost incurred during project closeout (split evenly between the Civil and Building segments) on the same completed transportation project in the Northeast discussed above; a $14.6 million unfavorable adjustment on a Building segment government building project in Florida primarily due to increased costs associated with an external subcontractor; unfavorable adjustments of $12.8 million on a completed Civil segment highway project in Virginia due to changes in estimates that resulted from progress in the dispute resolution process; and the net favorable impact of changes in estimates on various other projects that were individually immaterial. All of the project charges were due to changes in facts and circumstances that were identified in 2023.

Current wording

Other significant project charges during 2023 had a net unfavorable impact of $117.2 million, and included $62.2 million of unfavorable non-cash adjustments due to changes in estimates on the electrical and mechanical scope of a completed transportation project in the Northeast associated with changes in the expected recovery on certain unapproved change orders resulting from ongoing negotiations; an unfavorable adjustment of $16.9 million on a Specialty Contractors segment multi-unit residential project in New York due to changes in estimates resulting from incremental costs to complete the project and ongoing negotiations on unapproved change orders; a $14.9 million unfavorable adjustment due to changes in estimates due to recent negotiations and incremental cost incurred during project closeout (split evenly between the Civil and Building segments) on the same completed transportation project in the Northeast discussed above; a $14.6 million unfavorable adjustment on a Building segment government building project in Florida primarily due to increased costs associated with an external subcontractor; and the net unfavorable impact of changes in estimates on various other projects that were individually immaterial. All of these project charges and changes in estimates were due to changes in facts and circumstances that were identified in 2023.

Previous wording

The effective income tax rate for 2023 was 30.1% compared to 28.1% for 2022. See Corporate, Tax and Other Matters below for a discussion of the change in the effective tax rate.

Current wording

The effective income tax rate for 2024 was 29.3% compared to 30.1% for 2023. See Corporate, Tax and Other Matters below for a discussion of the change in the effective tax rate.

Previous wording

Diluted loss per common share for 2023 was $3.30 compared to diluted loss per common share of $4.09 for 2022. The change in 2023 was primarily due to the factors discussed above that led to the change in loss from construction operations.

Current wording

Diluted loss per common share for 2024 was $3.13 compared to $3.30 for 2023. The change in 2024 was primarily due to the factors discussed above that led to the change in loss from construction operations.

Previous wording

Consolidated new awards in 2023 were $6.1 billion compared to $3.5 billion in 2022. The Building and Civil segments were the primary contributors to the new award activity in 2023. Significant new awards and contract adjustments in 2023 included the $2.95 billion Brooklyn Jail project in New York; $788 million of additional funding for certain mass-transit projects in California; $287 million of additional funding for two large health care projects in California; a $222 million military facilities project at Tinian International Airport in the Commonwealth of the Northern Mariana Islands; and $127 million of additional funding for a mass-transit project in Minnesota.

Current wording

Consolidated new awards in 2024 were $12.8 billion compared to $6.1 billion in 2023. The Civil and Building segments were the primary contributors to the new award activity in 2024. Significant new awards and contract adjustments in 2024 included the $3.76 billion Manhattan Jail project in New York; the $1.66 billion City Center Guideway and Stations project in Hawaii; a $1.4 billion healthcare campus project in California; the $1.13 billion Newark AirTrain Replacement project in New Jersey; the $1.1 billion Kensico-Eastview Connection Tunnel project in New York; $479 million of additional funding for certain mass-transit projects in California; $449 million for two healthcare facility projects in California; $331 million for the Apra Harbor Waterfront Repairs project in Guam; a $229 million airport terminal connectors project at Fort Lauderdale-Hollywood International Airport in Florida; and the Company’s proportionate share of the $1.3 billion Connecticut River Bridge Replacement project in Connecticut.

Previous wording

Consolidated backlog as of December 31, 2023 was $10.2 billion, up 28% compared to $7.9 billion as of December 31, 2022. As of December 31, 2023, the mix of backlog by segment was 42% for Civil, 41% for Building and 17% for Specialty Contractors, compared to 56% for Civil, 28% for Building and 16% for Specialty Contractors at the end of 2022.

Current wording

Consolidated backlog as of December 31, 2024 was $18.7 billion, up 84% compared to $10.2 billion as of December 31, 2023, and set a new all-time record that far exceeded the previous record backlog of $14.0 billion reported for the third quarter of 2024. Backlog as of December 31, 2024 for all three segments also set new all-time records. As of December 31, 2024, the mix of backlog by segment was 47% for Civil, 38% for Building and 15% for Specialty Contractors, compared to 42% for Civil, 41% for Building and 17% for Specialty Contractors at the end of 2023.

Previous wording

Most projects in the Civil segment’s backlog typically convert to revenue over a period of three to five years and in the Building and Specialty Contractors segments over a period of one to three years. We estimate that approximately $4 billion, or approximately 40%, of our backlog as of December 31, 2023 will be recognized as revenue in 2024.

Current wording

Most projects in the Civil segment’s backlog typically convert to revenue over a period of three to five years and in the Building and Specialty Contractors segments over a period of one to three years. We estimate that approximately $4.5 billion, or approximately 24%, of our backlog as of December 31, 2024 will be recognized as revenue in 2025.

Previous wording

(b)Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 2 of the Notes to 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 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

The outlook for the Company’s revenue growth over the next several years remains favorable. However, revenue growth could be hampered by unanticipated project delays or the timing of project bids, awards, commencements, ramp-up activities and completions. We anticipate that we will continue to win our share of significant new project awards resulting from long-term, well-funded capital spending plans by state, local and federal customers, as well as limited competition for some of the largest project opportunities.

Current wording

The outlook for the Company’s revenue growth over the next several years is highly favorable, particularly due to strong new award bookings in 2024, as well as other significant new awards that have been and could be booked in 2025. For example, the Company announced in the first quarter of 2025 the award of the $1.18 billion Manhattan Tunnel project in New York and $232 million for several owner-authorized scope options on the Apra Harbor Waterfront Repairs project in Guam. The Company plans to bid various other large new projects in 2025, including the multi-billion-dollar Midtown Bus Terminal Replacement project in New York that is expected to bid in March 2025. Many of the Company’s newer projects are design-build projects that have an initial design phase over the first six to eighteen months during which smaller revenue and earnings are generated prior to the start of a multi-year construction phase that generates substantially larger revenue and earnings. Revenue growth could be impacted by unanticipated project delays or the timing of project bids, awards, commencements, ramp-up activities and completions. We anticipate that we will continue to win our share of significant new project awards resulting from long-term, well-funded capital spending plans by state, local and federal customers, as well as limited competition for many of the larger project opportunities.

Previous wording

In elections over the past decade, voters in 44 states have approved 85% of nearly 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 increases since March 2022, interest 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. Lower interest rates would likely support additional demand for continued infrastructure spending. In contrast, should interest rates climb further, they could reach levels that may negatively impact demand, especially for certain types of Building segment projects that tend to be more economically sensitive, such as commercial offices and tenant improvement projects.

Current wording

Nationally, support for transportation-related ballot measures has remained high over the last decade. Since 2014, voters in 43 states approved 84 percent of nearly 3,000 state and local measures on general election ballots. The largest of these was in Los Angeles County, where in 2016 Measure M, a half-cent sales tax increase, was approved 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. More recently, in the November 2024 elections, voters approved 77 percent of 370 transportation funding measures on state and local ballots throughout the country. These measures are expected to generate an estimated $41.4 billion in new and renewed funding for roads, bridges, rail and other infrastructure. For the first time in four years, interest rates were lowered in September 2024, and some economists expect further rate reductions in 2025, though the actual timing and extent of any future rate 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 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 BIL 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, 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 Law 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 Bipartisan Infrastructure 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

New awards in the Civil segment totaled $1.7 billion in 2023 compared to $1.6 billion in 2022. Significant new awards and contract adjustments in 2023 included $788 million of additional funding for certain mass-transit projects in California; a $222 million military facilities project at Tinian International Airport in the Commonwealth of the Northern Mariana Islands; and $127 million of additional funding for a mass-transit project in Minnesota.

Current wording

New awards and contract adjustments in 2023 included $788 million of additional funding for certain mass-transit projects in California; a $222 million military facilities project at Tinian International Airport in the Commonwealth of the Northern Mariana Islands; and $127 million of additional funding for a mass-transit project in Minnesota.

Previous wording

Backlog for the Civil segment was $4.2 billion as of December 31, 2023, down slightly compared to $4.4 billion as of December 31, 2022. 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 $8.8 billion as of December 31, 2024, up 108% compared to $4.2 billion as of December 31, 2023, and set a new all-time record for the segment. 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 Bipartisan Infrastructure Law, 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.

Previous wording

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

Current wording

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

Previous wording

Revenue for 2023 increased 5% compared to 2022, with the growth driven by increased project execution activities on various projects in California and a detention facility project in New York, all with substantial scope of work remaining, mostly offset by the impact of the aforementioned unfavorable adjustment related to the adverse legal ruling on a completed mixed-use project in New York, and reduced project execution activities on substantially completed projects, including two commercial and industrial facilities in California and two hospitality and gaming projects in Arkansas and California. As discussed above in Executive Overview, revenue for both years was adversely impacted by the follow-on impacts of COVID-19, which delayed certain project bids and awards in 2020 and 2021.

Current wording

Revenue for 2024 increased 24% compared to 2023, with the growth driven by increased project execution activities on various healthcare and educational facility projects in California and a detention facility project in New York with substantial scope of work remaining, 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

Loss from construction operations for 2023 was $91.2 million compared to income from construction operations of $7.2 million for 2022. For 2023, the loss was primarily due to 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, pre-tax charge of $83.6 million, of which $72.2 million impacted the Building segment and $11.4 million impacted the Specialty Contractors segment, and an unfavorable adjustment of $14.6 million on a government building project in Florida primarily due to increased costs associated with an external subcontractor. The impact of these unfavorable adjustments was partially offset by the absence of a prior-year unfavorable adjustment of $11.3 million related to an adverse legal decision on a hospitality project in Florida. In addition, income (loss) from construction operations for both 2023 and 2022 was similarly unfavorably impacted by adjustments due to changes in estimates on the Building segment’s portion of the aforementioned completed transportation project in the Northeast primarily due to the settlement of certain change orders, changes in estimates due to recent negotiations and incremental cost incurred during project closeout ($14.2 million in 2023 and $15.7 million in 2022).

Current wording

Loss from construction operations for 2024 was $24.1 million compared to a loss of $91.2 million for 2023. The significant improvement was principally due to the absence of prior-year unfavorable adjustments, including 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, a $14.6 million unfavorable adjustment on a government building project in Florida primarily due to increased costs associated with an external subcontractor, and a $14.2 million unfavorable adjustment due to changes in estimates on the Building segment’s portion of the aforementioned completed transportation project in the Northeast. The improvement was also due to contributions related to the increased project execution activities discussed above that totaled $26.6 million, partially offset by the impact of unfavorable adjustments in 2024 of $25.9 million on the government building project in Florida mentioned above, which is now nearing completion, primarily due to increased costs associated with external subcontractors and resolution of certain delay change orders, and $20.0 million associated with the settlement of a legacy dispute related to a completed government facility project in Florida.

Previous wording

Operating margin was (7.0)% in 2023 compared to 0.6% in 2022. The decrease in operating margin was driven by the factors mentioned above that drove the lower revenue and income (loss) from construction operations.

Current wording

Operating margin was (1.5)% in 2024 compared to (7.0)% in 2023. The increase in operating margin was driven by the factors mentioned above that drove the improved revenue and loss from construction operations.

Previous wording

The proliferation of remote and hybrid work for many businesses that began during COVID-19, as well as weaker current 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 commercial 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

Certain Building segment end markets, such as healthcare, education, industrial/manufacturing, and hospitality and gaming, continue to show strong demand for new and renovated facilities. However, the proliferation of remote and hybrid work settings at many companies, along with continued elevated interest rates, could continue to result in delayed or canceled Building segment project opportunities, particularly in the corporate office end market.

Previous wording

New awards in the Building segment totaled $3.3 billion in 2023 compared to $1.2 billion in 2022. Significant new awards and contract adjustments in 2023 included the $2.95 billion Brooklyn Jail project in New York (which includes more than $630 million of electrical and mechanical subcontract work to be performed by the Specialty Contractors segment) and $287 million of additional funding for two large health care projects in California.

Current wording

New awards and contract adjustments in 2023 included the $2.95 billion Brooklyn Jail project in New York (which includes more than $630 million of electrical and mechanical subcontract work to be performed by the Specialty Contractors segment) and $287 million of additional funding for two large healthcare projects in California.

Previous wording

Backlog for the Building segment was $4.2 billion as of December 31, 2023, up 88% compared to $2.2 billion as of December 31, 2022, with the increase largely driven by the award of the Brooklyn Jail project mentioned above. 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 $7.0 billion as of December 31, 2024, up 68% compared to $4.2 billion as of December 31, 2023, and set a new all-time record for the segment, with the increase largely driven by the award of the Manhattan Jail project mentioned above. 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. In addition, there are various healthcare and education projects underway in California that are in the preconstruction phase, with only a small amount of current backlog recorded for them. Some of these projects are soon expected to advance into the construction phase, and we anticipate that we will book significant additional backlog for these projects as a result.

Previous wording

Loss from construction operations for 2023 was $144.8 million compared to $168.0 million for 2022, a decrease of $23.2 million. The reduced loss from construction operations was primarily due to the absence of certain prior-year unfavorable adjustments, mostly offset by unfavorable adjustments in 2023. The unfavorable prior-year adjustments included a $46.2 million unfavorable adjustment on the aforementioned transportation project in the Northeast related to the unforeseen cost of project close-out issues, remediation work, extended project supervision and associated labor inefficiencies; the $43.2 million non-cash impact from an unfavorable adjustment related to an adverse appellate court decision involving the electrical component of a completed mass-transit project in New York; a non-cash charge of $17.8 million that increased cost of operations associated with the partial reversal by an appellate court of previously awarded legal damages related to a completed electrical project in New York; the $11.3 million non-cash impact related to settlement negotiations on a mechanical project in New York; and the $11.1 million unfavorable non-cash adjustment related to another mechanical project in New York. The impact from the absence of these prior-year adjustments was mostly offset by unfavorable adjustments in 2023 including $62.2 million of unfavorable non-cash adjustments due to changes in estimates on the electrical and mechanical scope of the above-mentioned completed transportation project in the Northeast associated with changes in the expected recovery on certain unapproved change orders resulting from ongoing negotiations; a non-cash charge of $24.7 million on the educational facilities project in New York that resulted from an adverse court ruling; an unfavorable adjustment of $16.9 million on a multi-unit residential project in New York due to changes in estimates resulting from incremental costs to complete the project and ongoing negotiations on unapproved change orders; and a $9.4 million unfavorable adjustment due to a settlement on a completed mass-transit project in California.

Current wording

Loss from construction operations for 2024 was $103.3 million compared to a loss of $144.8 million for 2023. The improvement was primarily due to the absence of certain prior-year unfavorable adjustments, including $62.2 million of unfavorable non-cash adjustments due to changes in estimates on the electrical and mechanical scope of a completed transportation project in the Northeast associated with changes in the expected recovery on certain unapproved change orders resulting from ongoing negotiations; a non-cash charge of $24.7 million on an educational facilities project in New York that resulted from an adverse court ruling; an unfavorable adjustment of $16.9 million on a multi-unit residential project in New York due to changes in estimates resulting from incremental costs to complete the project and ongoing negotiations on unapproved change orders; and an 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 certain 2024 unfavorable adjustments on several completed projects due to the impact of judgments and settlements totaling $57.2 million, including $17.7 million due to an unfavorable judgment on a completed mass-transit project in California and certain other adjustments that were individually immaterial. The improvement was also offset by the reduced project execution activities discussed above.

Previous wording

Operating margin was (20.9)% in 2023 compared to (20.7)% in 2022. The change in operating margin was mainly attributable to the aforementioned factors that drove the lower loss from construction operations in 2023.

Current wording

Operating margin was (17.5)% in 2024 compared to (20.9)% in 2023. The change in operating margin was mainly attributable to the aforementioned factors that drove the lower loss from construction operations in 2024.

Previous wording

New awards in the Specialty Contractors segment totaled $1.1 billion in 2023 compared to $729.3 million in 2022. The most significant new awards in 2023 included more than $630 million of electrical and mechanical subcontract work to be performed on the Brooklyn Jail project in New York; a $67 million communications systems integration project in New York; and the Central District Wastewater Treatment Plant electrical project in Florida, valued at more than $40 million.

Current wording

New awards in 2023 included more than $630 million of electrical and mechanical subcontract work to be performed on the Brooklyn Jail project in New York; a $67 million communications systems integration project in New York; and the Central District Wastewater Treatment Plant electrical project in Florida, valued at more than $40 million.

Previous wording

Backlog for the Specialty Contractors segment was $1.7 billion as of December 31, 2023, up 35% compared to $1.3 billion as of December 31, 2022, with the increase largely driven by the significant amount of subcontract work booked as part of the Brooklyn Jail project mentioned above. 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 $2.8 billion as of December 31, 2024, up 62% compared to $1.7 billion as of December 31, 2023, and set a new all-time record for the segment. 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

Other income, net increased by $10.5 million in 2023 compared to 2022 primarily due to a gain on sale of property in 2023.

Current wording

Other income, net increased by $2.7 million in 2024 compared to 2023 primarily due to an increase in interest income associated with a larger amount of cash on hand in 2024 compared to the prior year.

Previous wording

The effective income tax rate was 30.1% for 2023 compared to 28.1% for 2022. The items that caused a higher effective tax rate in 2023 as compared to 2022 were primarily higher earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company), partially offset by lower state income taxes (net of the federal tax benefit). For a further discussion of income taxes, refer to Note 5 of the Notes to Consolidated Financial Statements.

Current wording

The effective income tax rate was 29.3% for 2024 compared to 30.1% for 2023. The items that caused a lower effective tax rate in 2024 as compared to 2023 were primarily non-deductible compensation expenses and an increase in the valuation allowance, offset by higher state income taxes. For a further discussion of income taxes, refer to Note 5 of the Notes to Consolidated Financial Statements.

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 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 of $175 million and available cash balances as of December 31, 2023, 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 a record operating cash flow in 2023 which was greater than the previous record set in 2022, as discussed below in Cash and Working Capital. We expect strong operating cash flow to continue in 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. We expect to benefit from the utilization of 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 December 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 record cash flow from operations in 2024 which was greater than the previous record set in 2023, as discussed below in Cash and Working Capital. This represented the third consecutive year in which we generated record cash flows from operations. We expect strong operating cash flow to continue in 2025 based on projected cash collections, both from project execution activities and the resolution of outstanding claims and change orders. We utilized some of our record cash flow from operations in 2024 to repay a total of $245.3 million of our outstanding Term Loan B during 2024. During the first quarter of 2025, we voluntarily repaid the remaining $121.9 million outstanding balance of the Term Loan B. 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 $380.6 million as of December 31, 2023 compared to $259.4 million as of December 31, 2022. Cash immediately available for general corporate purposes was $145.1 million and $47.7 million as of December 31, 2023 and 2022, 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

Current wording

Cash and cash equivalents were $455.1 million as of December 31, 2024 compared to $380.6 million as of December 31, 2023. Cash immediately available for general corporate purposes was $265.6 million and $145.1 million as of December 31, 2024 and 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 $149.1 million as of December 31, 2024 compared to $144.4 million as of December 31, 2023. Restricted cash and restricted investments at December 31, 2024 were primarily held to secure insurance-related contingent obligations and deposits.

Previous wording

During the year ended December 31, 2023, net cash provided by operating activities was $308.5 million, compared to $207.0 million in 2022, representing an increase of $101.5 million. The operating cash flow for 2023 was the largest result for any year since the merger between Tutor-Saliba Corporation and Perini Corporation in 2008, exceeding the previous record achieved in 2022. The record operating cash flow in 2023 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 improved collection activity, as reflected by a decrease in costs and estimated earnings in excess of billings and accounts receivable, and an increase in billings in excess of costs and estimated earnings (“BIE”). During the year ended December 31, 2022, net cash provided by operating activities was $207.0 million 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 improved collection activity, as reflected by a decrease in accounts receivable and an increase in BIE.

Current wording

During the year ended December 31, 2024, net cash provided by operating activities was $503.5 million, compared to $308.5 million in 2023, representing an increase of $195.1 million, or 63%. The operating cash flow for 2024 was the largest result for any year since the merger between Tutor-Saliba Corporation and Perini Corporation in 2008, exceeding the previous records achieved in 2023 and 2022. The record operating cash flow in 2024 was primarily due to a decrease in costs and estimated earnings in excess of billings (“CIE”) largely associated with the resolution of various legacy disputed matters, an increase in accounts payable resulting from the timing of payments to subcontractors and vendors, and an increase in billings in excess of costs and estimated earnings (“BIE”) primarily due to advanced payments on newer projects for mobilization and other initial project costs, partially offset by cash utilized by earnings sources. During the year ended December 31, 2023, net cash provided by operating activities was $308.5 million 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 improved collection activity, as reflected by a decrease in CIE and accounts receivable, and an increase in BIE.

Previous wording

As noted above, cash flow from operating activities increased $101.5 million when comparing 2023 with 2022. The increase was primarily driven by higher collections in 2023 compared to 2022, as well as a larger decrease in investments in working capital in 2023 compared to the prior year. Both periods generated significant cash from decreased investments in working capital as collection activities were strong in both 2023 and 2022, which included the positive impacts of collections associated with previously disputed matters.

Current wording

As noted above, cash flow from operating activities increased $195.1 million when comparing 2024 with 2023. The increase was primarily driven by a larger decrease in investments in working capital and a lower use of cash from earnings sources in

Previous wording

During 2023, net cash used in investing activities was $78.2 million, which was primarily due to the acquisition of property and equipment (i.e., capital expenditures), which totaled $53.0 million, as well as net cash used in investment transactions of $35.4 million, partially offset by proceeds from the sale of property and equipment of $10.1 million. During 2022, net cash used in investing activities was $65.6 million, which was primarily due to the acquisition of property and equipment of $59.8 million, as well as net cash used in investment transactions of $14.5 million, partially offset by proceeds from the sale of property and equipment of $8.6 million.

Current wording

Net cash used in investing activities during 2024 was $40.7 million, which was primarily due to the acquisition of property and equipment (i.e., capital expenditures) totaling $37.4 million and net cash used in investment transactions of $8.0 million, partially offset by proceeds from the sale of property and equipment of $4.8 million. Net cash used in investing activities during 2023 was $78.2 million, which was primarily due to the acquisition of property and equipment totaling $53.0 million and net cash used in investment transactions of $35.4 million, partially offset by proceeds from the sale of property and equipment of $10.1 million.

Previous wording

During 2023, net cash used in financing activities was $109.4 million, which was primarily driven by net repayment of borrowings of $61.7 million and $46.5 million of cash distributions to noncontrolling interests, partially offset by $2.0 million of cash contributions from noncontrolling interests. During 2022, net cash used in financing activities was $78.9 million, which was primarily driven by net repayment of borrowings of $38.3 million and $47.4 million of cash distributions to noncontrolling interests, partially offset by $8.7 million of cash contributions from noncontrolling interests.

Current wording

Net cash used in financing activities during 2024 was $393.3 million, which was primarily driven by a $354.6 million net repayment of debt (including the 2024 Senior Notes issuance of $400 million and the 2017 Senior Notes redemption of $500 million, as well as additional principal prepayments 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 year and $23.3 million of cash distributions to noncontrolling interests, partially offset by $15.2 million of cash contributions from noncontrolling interests. Net cash used in financing activities during 2023 was $109.4 million, which was primarily driven by net repayment of borrowings of $61.7 million and $46.5 million of cash distributions to noncontrolling interests, partially offset by $2.0 million of cash contributions from noncontrolling interests.

Previous wording

As of December 31, 2023, we had 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 compared to working capital of $1.7 billion, a ratio of current assets to current liabilities of 1.87 and a ratio of debt to equity of 0.66 at December 31, 2022.

Current wording

As of December 31, 2024, we had working capital of $1.0 billion, a ratio of current assets to current liabilities of 1.41 and a ratio of debt to equity of 0.46 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

On April 20, 2017, the Company issued $500 million in aggregate principal amount of 6.875% Senior Notes due May 1, 2025 (the “2017 Senior Notes”) in a private placement offering. Interest on the 2017 Senior Notes is payable in arrears semi-annually in May and November of each year, beginning in November 2017.

Current wording

On April 22, 2024, the Company issued $400.0 million in aggregate principal amount of 11.875% Senior Notes due April 30, 2029 (the “2024 Senior Notes”) in a private placement offering. Interest on the 2024 Senior Notes is payable in arrears semi-annually in April and October of each year, beginning in October 2024.

Previous wording

On August 18, 2020, the Company entered into a credit agreement (the “2020 Credit Agreement”) with 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”), 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

Subject to certain exceptions, at any time prior to maturity, the 2020 Credit Agreement provides the Company with the right to increase the commitments under the Revolver and/or to establish one or more term loan facilities in an aggregate amount up to (i) the greater of $173.5 million and 50% LTM EBITDA (as defined in the 2020 Credit Agreement) plus (ii) additional amounts if (A) in the case of pari passu first lien secured indebtedness, the First Lien Net Leverage Ratio (as defined in the 2020 Credit Agreement) does not exceed 1.35:1.00, (B) in the case of junior lien secured indebtedness, the Total Net Leverage Ratio, as defined in the 2020 Credit Agreement (which is 5.95:1.00 for the year ended December 31, 2023), does not exceed 3.50:1.00, and (C) in the case of unsecured indebtedness, (x) the Total Net Leverage Ratio does not exceed 3.50:1.00 or (y) the Fixed Charge Coverage Ratio (as defined in the 2020 Credit Agreement) is no less than 2.00:1.00. The balances of indebtedness used in the calculations of the First Lien Net Leverage Ratio and the Total Net Leverage Ratio include offsets for cash and cash equivalents available for general corporate purposes.

Current wording

Subject to certain exceptions, at any time prior to maturity, the 2020 Credit Agreement provides the Company with the right to increase the commitments under the Revolver and/or to establish one or more term loan facilities in an aggregate amount up to (i) the greater of $173.5 million and 50% LTM EBITDA (as defined in the 2020 Credit Agreement) plus (ii) additional amounts if (A) in the case of pari passu first lien secured indebtedness, the First Lien Net Leverage Ratio (as defined in the 2020 Credit Agreement) does not exceed 1.35:1.00, (B) in the case of junior lien secured indebtedness, the Total Net Leverage Ratio, as defined in the 2020 Credit Agreement, does not exceed 3.50:1.00, and (C) in the case of unsecured indebtedness, (x) the Total Net Leverage Ratio does not exceed 3.50:1.00 or (y) the Fixed Charge Coverage Ratio (as defined in the 2020 Credit Agreement) is no less than 2.00:1.00. The balances of indebtedness used in the calculations of the First Lien Net Leverage Ratio and the Total Net Leverage Ratio include offsets for cash and cash equivalents available for general corporate purposes.

Previous wording

The 2020 Credit Agreement requires the Company to make prepayments on the Term Loan B in connection with certain asset sales, receipts of insurance proceeds, incurrences of certain indebtedness and annual excess cash flow (in each case, subject to certain customary exceptions). At December 31, 2023 and 2022, current maturities of long-term debt in the accompanying Consolidated Balance Sheets included $91.0 million and $44.0 million, respectively, of principal on the Term Loan B, relating to the mandatory prepayment provision of the 2020 Credit Agreement in respect of annual excess cash flow. The $91.0 million principal prepayment, which was due by the first week of April 2024, was paid in February 2024, and the $44.0 million principal prepayment was made in April 2023. After the February 2024 prepayment, the Company still has significant cash available, which is anticipated to be used for further debt reduction in conjunction with the expected refinancing.

Current wording

The 2020 Credit Agreement requires the Company to make prepayments on the Term Loan B in connection with certain asset sales, receipts of insurance proceeds, incurrences of certain indebtedness and annual excess cash flow (in each case, subject to certain customary exceptions). At December 31, 2023, current maturities of long-term debt in the accompanying Consolidated Balance Sheets included $91.0 million of principal on the Term Loan B relating to the mandatory prepayment provision of the 2020 Credit Agreement in respect of annual excess cash flow, which was due by the first week of April 2024 and paid in February 2024. In addition to the mandatory prepayment discussed above, the Company made voluntary, early prepayments totaling $150.0 million of the Term Loan B during 2024. During the first quarter of 2025, the Company voluntarily repaid the remaining $121.9 million outstanding balance of the Term Loan B.

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 and the Revolver for the year ended December 31, 2023 were approximately 10.1% and 11.8%, resp ectively. At December 31, 2023, 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 7 of the Notes to 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 year ended December 31, 2024 were approximately 10.0% and 11.8%, resp ectively. At December 31, 2024, the borrowing rates on the Term Loan B and the Revolver were 9.2% and 10.8%, respectively. For more information regarding the terms of our 2020 Credit Agreement, refer to Note 7 of the Notes to Consolidated Financial Statements.