Tutor Perini Corporation (NYSE:TPC) Q4 2018 Earnings Conference Call Transcript

Feb 27, 2019 • 05:00 pm ET

Previous

Tutor Perini Corporation (NYSE:TPC) Q4 2018 Earnings Conference Call Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
Gary G. Smalley

be at the upper end of the 10% to 12% margin range that we have historically seen in Civil Group, if not slightly higher.

Building segment income from construction operations was $16 million, up 76% compared to $9 million in the fourth quarter of last year. The increase was largely due to contributions from the Newark Airport Terminal 1 project and a technology project in California, as well as favorable adjustments associated with the closeout of a courthouse project in California and progress toward completion on a healthcare project also in California. These factors resulted in somewhat elevated operating margin of 3.4% for the quarter compared to 2% for the fourth quarter of 2017.

Specialty Contractor segment income from construction operations was $17 million, more than quadrupled the $4 million reported in the fourth quarter of last year, reflecting overall improved performance on various mechanical projects as well as favorable adjustments associated with progress towards completion on certain electrical and mechanical projects. The segment's fourth quarter operating margin was strong at 7.6% compared to 1.2% for the same quarter last year and exceeded the 5% to 7% range we target for the segment. Contributions from higher margin projects added to backlog over the past year are now beginning to have a positive impact on the Specialty segment's operating results.

Interest expense for the fourth quarter of 2018 was $16 million, about level with the prior year's fourth quarter. Tax expense for the fourth quarter was $20 million. Effective tax rate for the quarter was 26.3%, the same effective tax rate as for the full year of 2018. Net income attributable to Tutor Perini for the fourth quarter was $49 million, or $0.98 per diluted share, compared to $81 million or $1.60 per diluted share for the fourth quarter of last year, which again included the $53 million, or $1.05 per share tax benefit.

Shifting gears, let's discuss our balance sheet and operating cash. Our project working capital grew slightly in the fourth quarter, principally because of an increase in unbilled cost and the decrease in billings in excess of costs. We continue our focus on reducing our unbilled cost and expect more progress to be made in 2019 as Ron noted earlier. We generated $56 million of operating cash in fourth quarter and $21 million for the full year of 2018. Our fourth quarter operating cash was strong as a result of strong collections. The amount generated in the quarter was insufficient to overcome the cumulative shortfall for the year that resulted from the growth in unbilled costs. However, we believe that our operating cash generation in 2019 will be substantially improved, and we are again targeting operating cash for the year to be in excess of net income as it was in both 2016 and 2017. Our total debt as of December 31st, 2018 was $762 million compared to $736 million at the end of 2017, reflecting a modest increase in our revolver from it's zero balance at the