Tutor Perini Corp.

Tutor Perini Corporation  is a leading civil and building construction company offering diversified general contracting and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets by executing large complex projects on time and within budget while adhering to strict quality control measures.

We offer general contracting, pre-construction planning and comprehensive project management services, including the planning and scheduling of the manpower, equipment, materials, and subcontractors required for a project. We also offer self-performed construction services including excavation, concrete forming and placement, steel erection, electrical and mechanical services, plumbing, and HVAC. We are known for our major complex building project commitments as well as our capacity to perform large and complex transportation and heavy civil construction for government agencies and private clients throughout the world.

Second-Quarter and Six-Month Results

Revenues were $1,053.1 million and $2,046.0 million for the second quarter and six months ended June 30, 2013, respectively, compared to $985.3 million and $1,897.9 million for the same periods last year. Income from construction operations was $39.5 million and $75.6 million for the second quarter and six months ended June 30, 2013, respectively, compared to a loss from construction operations of $354.2 million and $337.2 million for the same periods last year. Net income was $15.5 million and $30.3 million for the second quarter and six months ended June 30, 2013, respectively, compared to a net loss of $348.4 million and $349.6 million for the same periods last year. Diluted earnings per share (EPS) were $0.32 and $0.62 for the second quarter and six months ended June 30, 2013, respectively, compared to a diluted loss per share of $7.35 and $7.38 for the same periods last year. Excluding a $376.6 million goodwill and intangible assets impairment charge and a $20.7 million tax benefit provided on the impairment charge, both of which were recorded in the second quarter of 2012, net income for the second quarter of 2012 was $7.5 million, or $0.16 per diluted share. Excluding the impairment charge and related tax benefit, together with a $2.7 million realized loss on the sale of certain auction rate securities and $3.6 million in discrete tax adjustments recorded in the first quarter of 2012, net income for the six months ended June 30, 2012 was $11.6 million, or $0.24 per diluted share. Net income and diluted EPS excluding these adjustments are non-GAAP financial measures, which are discussed below and are reconciled to the most directly comparable GAAP measures in the financial tables attached hereto.

Revenues increased 6.9% and 7.8% in the second quarter and six months ended June 30, 2013, respectively, compared to the same periods last year due primarily to activity in new hospitality and gaming projects in California, Arizona, and Nevada. The increase in net income in the current second quarter and six-month periods was due primarily to the increased revenues described above and contributions from higher-margin pipeline work in the Midwest, and Hurricane Sandy-related projects performed in New York in the first quarter.

The Company generated $45.9 million of cash from operating activities in the second quarter of 2013 compared to the use of $6.8 million in the same quarter last year. At June 30, 2013, working capital was $791.8 million, an increase of $44.2 million from $747.6 million at December 31, 2012. The Company believes its financial position and available borrowing under existing credit arrangements are sufficient to support the Company’s current backlog and anticipated new work.

Backlog up to $6.6 Billion on Strong Volume of New Awards

The backlog of uncompleted construction work at June 30, 2013 was $6.6 billion, an increase of $1.0 billion from $5.6 billion reported at December 31, 2012 and an increase of $0.7 billion from $5.9 billion reported at June 30, 2012. Revenues earned during the second quarter partially offset a strong volume of new awards and adjustments to contracts in process, which together added approximately $2.1 billion. Significant additions to backlog included an $840 million San Francisco Central Subway construction project and the following projects in New York: a $143 million concrete placement contract, a $133 million underground concrete casing project, and a $56 million electrical subcontract, all for work at Hudson Yards; a $103 million bridge replacement project; a $100 million bus terminal renovation project; and the Company’s share of a $61 million joint venture runway rehabilitation project. Importantly, the $6.6 billion backlog excludes more than $400 million of work related to construction of the South Tower at Hudson Yards, for which the Company will earn a profit despite not recognizing revenue due to the customer’s direct contracts for certain externally subcontracted services. The Company continues to target a number of attractive civil infrastructure and building projects which could be awarded in the balance of this year or first half of next year.

Outlook

Ronald Tutor, Chairman and Chief Executive Officer, remarked, “I am satisfied with the Company’s second-quarter results—in particular our 12% backlog growth, which was driven by $1.3 billion of new awards in our Civil segment. Our Civil business fuels our growth, and this quarter’s strong Civil backlog growth provides the foundation needed for higher revenue and improved margins over the next few years. Our backlog now stands at the highest level since 2008. In addition, we anticipate a continued strong volume of new awards in the third quarter, driven by our share of the $1 billion joint venture California High-Speed Rail project and both the platform and North Tower contracts for Hudson Yards. Our second-quarter financial results were in-line with our projections and we continue to foresee stronger results in the second half of 2013 and in 2014 as we ramp up work on several mega-projects.” Tutor continued, “Based on our outlook for the remainder of this year, we are re-affirming our fiscal 2013 guidance for revenue in the range of $4.5 billion to $5.0 billion and diluted EPS in the range of $1.65 to $1.90.”

The following are some key estimated assumptions which factor into the above EPS guidance:

• $56 million ($0.70 per share) in depreciation and amortization expense
• $43 million ($0.53 per share) in interest expense
• 39% to 40% effective tax rate
• 49 million diluted shares outstanding

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented based on accounting principles generally accepted in the United States of America (“GAAP”), we sometimes use non-GAAP measures of income from operations, net income, EPS and other measures that we believe are appropriate to enhance an overall understanding of our historical financial performance and future prospects. The Company is providing these measures to provide additional information to facilitate the comparison of past and present operations, and they are among the indicators management uses as a basis for evaluating its financial performance as well as for forecasting future periods. For these reasons, management believes these non-GAAP measures can be useful operating performance measures to be considered by investors, potential investors, and others. These measures are not intended to replace the presentation of our financial results in accordance with GAAP, and they should be considered in addition to, and not in lieu of, our GAAP results. The non-GAAP financial measures that we provide may not be comparable to other similarly titled measures of other companies. A table reconciling reported income/loss from construction operations, net income/loss, and diluted earnings/loss per share under GAAP to adjusted income from operations, net income and diluted EPS in 2012 is attached. Included in the adjustments to GAAP are the impacts of: (i) the $376.6 million goodwill and intangible assets impairment charge and related $20.7 million tax benefit, both recorded in the second quarter of 2012, (ii)  $3.6 million of discrete tax expense items related to an increase in unrecognized tax benefits and an adjustment, both associated with certain stock-based compensation items identified during the first quarter of 2012, and (iii) the $2.7 million realized loss on the sale of auction rate securities in the first quarter of 2012.

Civil Group

Our Civil Group is comprised of the operations of Tutor-Saliba Corporation, Tutor Perini Corporation, Cherry Hill Construction, Inc., Lunda Construction Company, Frontier-Kemper Constructors and Becho, Inc. and is engaged in public works construction throughout the U.S., including the repair, replacement, and reconstruction of public infrastructure such as highways, bridges, and mass transit systems. We have been active in civil construction since 1894 and believe we are expert at managing large, complex civil construction projects. Our corporate integrity, financial strength, and outstanding record of performance on challenging civil works projects pre-qualifies us for projects in situations where smaller, less diversified contractors are unable to do so. This is a competitive advantage that makes us an attractive partner on the largest infrastructure projects and prestigious DBOM (design-build-operate-maintain) contracts, which combine the nation's top contractors with engineering firms, equipment manufacturers, and project development consultants in a competitive bid selection process to execute highly sophisticated public works projects.

Building Group

Our Building Group is comprised of Tutor Perini Building Corp., Tutor-Saliba Corporation, James A. Cummings, Inc., Rudolph and Sletten, Inc., Keating Building Corporation, and Anderson Companies and focuses on large, complex projects in the hospitality and gaming, sports and entertainment, educational, transportation, and healthcare markets. We believe our success results from our proven philosophy, "Building Relationships on Trust," and our ability to manage large, complex projects with aggressive fast-track schedules, elaborate designs, and advanced systems while providing accurate budgeting and strict quality control. Although price is a key competitive factor, our strong reputation, long-standing customer relationships and significant level of repeat and referral business have enabled us to achieve our leading position. Our reputation for completing projects on time is a significant competitive advantage in the building market, as any delay in project completion may result in significant loss of revenues for the owner.

Specialty Contractors Group

Our Specialty Contractors Group is comprised of Five Star Electric, Fisk Electric, WDF, Desert Mechanical, Nagelbush Mechanical, and Superior Gunite and serves to complement and enhance our mechanical and electrical capabilities. The Specialty Contractors group has a sizable presence in New York, Texas, and California and partners with other Tutor Perini companies on projects throughout the United States.

Management Services Group

Comprised of Perini Management Services Inc. (PMSI) and Black Construction, our Management Services Group provides diversified construction and design-build services to the U.S. military and government agencies, surety companies, and multi-national corporations. PMSI and Black are well known for their ability to plan and execute rapid response assignments and multi-year contracts through diversified construction and design-build capabilities. We have consistently demonstrated superior performance on competitively bid or negotiated multi-year, multi-trade, task order and ID/IQ (Indefinite Delivery/Indefinite Quantity) construction programs.

We have been selected by the federal government for significant projects related to defense, reconstruction, and international development projects in Iraq, Afghanistan, and Haiti. Black Construction Corporation of Guam is one of the most successful contractors in Guam and the Western Pacific.

The Management Services Group is also under agreement with major North American surety companies to provide rapid response, contract completion services. Upon notification from the surety of a contractor bond default, we provide management or general contracting services to fulfill the contractual and financial obligations of the surety.