Perini Corporation,
one of the most versatile and successful contractors in the U.S., reported a net income of $34.1 million for the third
quarter 2008, as compared to net income of $24.0 million for the third quarter of 2007. Diluted earnings per common share
were $1.01, as compared to $0.87 for the third quarter of 2007.
Revenues from construction operations were $1.41 billion for the quarter, compared to revenues of $1.24 billion for the
third quarter of 2007. The increase in revenues is primarily due to an increased volume of work in the hospitality and gaming market in Las Vegas.
Perini's acquisition of Tutor-Saliba Corporation was completed on September 8, 2008 and the above results include one month
of operating results for the combined company.
Robert Band, President and Chief Operating Officer, said: "We are pleased to report another record quarter for both revenues
and net income, again led by our building and management services segments and an improved profit contribution from our civil segment.
We continue to benefit in the marketplace from our ability to complete complex projects on time and on budget. We look forward to
the contribution that Tutor-Saliba will make in all of our operating segments."
For the first nine months of 2008, net income was $87.8 million, as compared to net income of $74.2 million for the first
nine months of 2007. Diluted earnings per common share were $2.96 for the first nine months of 2008, as compared to $2.71 for
the first nine months of 2007.
Revenues from construction operations were $4.06 billion for the first nine months of 2008, compared to revenues of $3.38
billion for the first nine months of 2007. The increase in revenues is primarily due to an increased volume of work in the
hospitality and gaming, healthcare and office building markets in Las Vegas and California.
Backlog at $8.3 billion
The backlog of uncompleted construction work as of September 30, 2008 was $8.3 billion, an increase of $700 million from the $7.6 billion backlog reported on December 31, 2007. The September 30, 2008 backlog includes approximately $1.2 billion of backlog, before elimination of intercompany amounts, added in the third quarter of 2008 due to the acquisition of Tutor-Saliba. The September 30, 2008 backlog also includes new contract awards and adjustments to contracts in process added during the third quarter of 2008 totaling approximately $1.95 billion, including a $1.2 billion contract to build the new Terminal 3 at McCarran International Airport in Las Vegas and approximately $193 million of additional work in the hospitality and gaming market in Las Vegas. The Company's management services segment added $360 million of new awards primarily for work in Iraq, including continued overhead cover protection projects and a runway project in Guam. The Company's civil segment was awarded a $73 million contract for a new roadway project in Virginia.
Financial Condition Remains Strong in 2008
The Company's financial condition remains strong. As of September 30, 2008, working capital decreased to $254.9 million from $293.5 million at December 31, 2007. The decrease was primarily due to the classification of $100.3 million of the Company's investments in auction-rate securities as long-term investments. In addition, the Company has $137 million available to borrow under its credit facility and an additional $111.3 million available to borrow under its temporary supplementary credit facility as of September 30, 2008. The Company believes its financial position and credit arrangements are sufficient to support the Company's substantial backlog and planned
Outlook
Guidance for the full year of 2008 is estimated to be within the ranges previously provided. Revenues are estimated to be in the range of $5.6 to $5.8 billion and diluted earnings per share are estimated to be in the range of $3.55 to $3.65 per share.
Based on current economic conditions, including the challenges in credit markets that some customers are experiencing, the Company believes there will be delays in new construction starts in 2009 that will likely impact its financial results for next year. Accordingly, the Company is lowering its full-year 2009 guidance for revenues from a range of $7.3 to $7.8 billion to an estimated range of $6 to $6.5 billion and diluted earnings per share from a range of $4.00 to $4.20 per share to an estimated range of $2.80 to $3.00 per share. Beyond 2009, the Company is still evaluating the longer term impacts and will defer providing a growth target until more data is available. The Company is currently in the process of its annual impairment testing to assess the potential amount of impairment, if any, of the value of goodwill and indefinite-lived intangible assets initially recorded in connection with the September 2008 acquisition of Tutor-Saliba. The 2008 earnings estimate, noted above, does not reflect the impact of any impairment charge, should it be determined that one is required.
Ronald Tutor, Chairman and Chief Executive Officer of Perini, said: "The hospitality and gaming markets in the United States and the building market in Dubai are experiencing delays in their plans to start new construction in 2009. However, we remain optimistic that the U.S. government will recognize the need to accelerate spending in public works building and civil infrastructure projects. We are well positioned to capture our share of opportunities when this happens."
Building Operations
Our building operations, comprised of Perini Building Company, Inc., James A. Cummings, Inc., and Rudolph and Sletten, Inc. focus on large, complex projects in the hospitality and gaming, sports and entertainment, educational, transportation and healthcare markets. We are recognized as the top builder of hospitality and gaming projects in the U.S. 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.
Management Services
Perini Management Services Inc. provides diversified construction and design-build services to the U.S. military and
government agencies, surety companies and multi-national corporations. We are well known for our ability to plan and
execute rapid response assignments and multi-year contracts through diversified construction and design-build abilities.
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.
Most recently, we have been selected by the federal government for significant projects related to
defense and reconstruction projects in Iraq and Afghanistan. We are 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.
Civil Construction
Our civil construction operation, comprised of Tutor-Saliba Corporation, Perini Civil Construction and Cherry Hill Construction, Inc., is engaged in public works construction in the eastern United States, 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.
