TPC earnings call transcript, November 4, 2026

Good day, ladies and gentlemen, and welcome to the Tudor Perini Corporation third quarter 2026 earnings conference call. My name is Mike and I will be.

Your coordinator for today. All participants are currently in a listen only mode. Following management's prepared remarks, we will be opening the call for question and answer session. As a reminder, this conference call is being recorded for replay purposes. I'll now turn. Offense over to your host for today, Mr. Jorge Casado, Senior Vice President of Infesta Relations. Please proceed.

Hello and thank you all for joining us. With us today are Gary Smalley, CEO and President, and Ryan Soroka, Executive Director of Vice President and CFO. Before we discuss our results, I'll remind everyone that during this call we will be making forward-looking statements which are based on management's current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially. You can find our disclosures about risk factors that could contribute to such differences in our Form 10-Q, which we are filing today, and in our Form 10-K, which was filed on February 26, 2026. The company assumes no obligation to update forward-looking statements, whether due to new information, future events, or otherwise, other than as required by law. In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find information and a reconciliation of these non-GAAP financial measures in our earnings release and in our Form 10-Q, both of which can be found in the Investors section of our website.

Thank you, and with that, I will turn the call over to Gary Smalley.

Thanks, Jorge.

of our financial results.

Thanks Gary.

Good day everyone. I'll review our results for the third quarter then provide commentary on our balance sheet and assumptions related to our increased 2026 guidance. All comparative references will be against the third quarter of last year unless otherwise stated. Gary mentioned, we generated $331 million of operating cash in the third quarter, up 14%, which set a new record as the highest result of any quarter ever. For the first nine months of 2026, operating cash flow was $665 million, up 16% compared to the first nine months of 2025, and the highest of any first nine months ever. The record cash flow was driven by high outstanding project execution, record earnings, and collections on various large projects that are very profitable, as well as effective working capital management with only a negligible amount attributable to collections from legacy dispute. resolutions. We expect to continue generating solid cash flow this year and beyond, with most of our cash to be sourced from organic operations and occasionally enhanced by cash collected from dispute resolutions. Revenue for the third quarter of 2026 was a record $1.7 billion, up 22% in the highest of any quarter ever, with the growth primarily due to increased project execution activities on certain higher margin projects, including in the Northeast, California, Texas, and the Indo-Pacific region. Civil segment revenue was $894 million, the segment's highest quarterly revenue ever, and up 16% with the growth driven by increased project

execution activities on the Midtown Bus Terminal Phase 1 project, the Manhattan Tunnel, the Manhattan Jail, the Kensico Eastview Connection Tunnel, the Honolulu Rail Project, and the Opera Harbor Waterfront Repairs Project in Guam, all of which have substantial scope of work remaining. Building segment revenue was $541 million, up 29%, primarily due to increased activities on the Brooklyn and Manhattan Jail projects in New York, as well as on three large healthcare projects and a hospitality and gaming project. in California. All of our major civil and building segment projects continue to run very smoothly. Specialty segment revenue was $286 million, up 26%, with the segment's growth continuing to be primarily driven. by increased activities on various electrical and mechanical projects in New York and Texas. The strong revenue growth helped to drive our third quarter operating income to a record $125 million, up 213%. year-over-year. Civil segment operating income was $125 million, up 26% compared to $99 million. The civil segment continues to execute well and once again delivered a healthy segment operating margin of 14%. Up from 12.9% in the third quarter of last year and running well within the 12% to 15% range we expect for the segment. Building segment operating income was $27 million, up 88% compared to $14 million with the strong increase driven by contributions from certain newer, higher-margin projects in New York and California with substantial scope of work remaining. The segment's operating margin was 5%, up nicely compared to 3.4% in the third quarter of last year and also

running well within the 3% to 6% margin range we expect for the segment. Specialty contractor segment operating income was $10 million for the third quarter, up 64% compared to $6 million for this same quarter last year. The specialty segment operating margin was 3.5% this quarter, up from 2.7% in the third quarter last year. We are pleased with the specialty segment's continued margin expansion this year, which has been primarily driven by contribution related to the increased volume on the New York and Texas electrical and mechanical projects that I mentioned earlier. We expect to see further margin expansion as we continue toward our goal of eventually sustaining specialty margins in the 5% to 8% range. Corporate G&A expense for the third quarter of 2026 was $37 million, compared to $80 million last year, with a decrease largely due to a $40 million reduction in share-based compensation expense this year, as some of the liability-classified awards that previously caused elevated share-based compensation expense vested at the end of 2025. As a reminder, most, but not all, of the remaining liability-classified awards will vest at the end of this year. So next year, we expect that our share-based compensation expense will be significantly reduced compared to this year. Other income was $16 million for the third quarter of 2026 compared to $7 million last year. with the increase primarily due to higher interest income earned on larger cash balances this year compared to last year.

Interest expense for the third quarter was $7 million compared to $14 million last year, primarily due to the successful refinancing of our senior notes that we completed in July, which reduced the coupon rate of our senior notes from 11.875% to 6.625% and will save us $21 million in interest expense annually. We are now in a net interest income position. And expect this trend to continue. We recorded two significant non-operating adjustments in the third quarter of 2026 that we previously signaled would occur in the second half of this year. First, a $51 million loss on the distinct of debt tied to the recent successful refinancing we completed in early July, of which $16 million was non-cash. And second, a non-cash $34 million charge associated with the settlement of our former pension. plan obligations. We terminated our pension plan because we wanted to eliminate future cash contributions and ongoing administrative expenses. Income tax expense for the quarter was $11 million with a corresponding effective tax rate of $22.7 million. 7% for the period compared to $15 million last year with a corresponding effective tax rate of 44.6% in that period. The lower effective tax rate this year is mostly attributable to the lower non-deductible share. Based compensation expenses estimated for 2026 relative to 2025, debt income attributable to Tudor Perrini for the third quarter of 2026 was $21 million, or $39.

of gap earnings per share, up more than five times compared to $4 million, or $0.07 of gap earnings per share in the third quarter of last year. Excluding the impacts of share-based compensation expense, the loss on extinguishment of debt, and the pension settlement charge net of all the associated tax benefits, adjusted net income attributable to Tudor Perini for the third quarter of 2026 was $98 million, or $1.83 of adjusted earnings per share, compared to $62 million, or $1. and $0.15 of adjusted earnings per share in the same quarter last year. This was a 59% improvement in our adjusted EPS compared to last year's third quarter, reflecting the high margin contributions and operational excellence. We continue to see as we execute our project's backlog. Now I'll address the balance sheet. Our total debt stood at $404 million at the end of the third quarter. We ended the quarter with cash. In cash equivalents exceeding total debt by $707 million, a very robust net cash position and $425 million better than we were one year ago. Our cash available for general corporate purposes was $504 million. at the end of the third quarter of 2026, up 150% compared to the year-ago level. In addition, our cost and estimated earnings in excess of billings, or CIE, as of September 30th, 20- 26, was 767 million, the lowest bounce since the end of 2014, and a decline of 9% compared to 848 million as of September 30th, 2025, reflecting our significant continued progress in-

resolving and collecting on a reduced number of disputed matters. Our balance sheet has continued to strengthen throughout this year, and our sizable net cash position provides us with tremendous flexibility to allocate our capital efficiently and strategically. Lastly, let me update you on our latest assumptions related to our increased 2026 guidance. GNA expense for 2026 is expected to be between $380 million and $400 million. Depreciation and amortization expense is anticipated to be approximately $45 million in 2026, with depreciation at $43 million and amortization at $2 million. Interest expense for 2026 is now expected to be between $40 million and $42 million, of which about $3 million will be non-cash. Our effective income tax rate for 2026 is expected to be approximately 26% to 29%. We now anticipate non-controlling interest to be between $65 million and $75 million. We expect approximately 54 million weighted average diluted shares outstanding for 2026. And capital expenditures are anticipated to be approximately $125 million to $135 million, with the majority of the CapEx in 2026, or approximately $75 million to $85 million, being owner-funded for large equipment items. on certain large new projects. Thank you. And with that, I'll turn the call back over to Gary.

Thanks, Ryan.

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