TUTOR PERINI CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)


The following discusses our financial position as of June 30, 2022 and the
results of our operations for the three and six months ended June 30, 2022 and
should be read in conjunction with other information, including the unaudited
Condensed Consolidated Financial Statements and notes included in Part I, Item
1, Financial Information, of this Quarterly Report on Form 10­Q, the audited
consolidated financial statements and accompanying notes to our Annual Report on
Form 10­K for the year ended December 31, 2021, and the information contained
under the heading "Risk Factors" in our Annual Report on Form 10­K for the year
ended December 31, 2021 and in Part II, Item 1A below.

Forward-Looking Statements


This Quarterly Report on Form 10­Q, including the "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains
forward-looking statements regarding future events and our future results, which
are intended to be covered by the safe harbor provision for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical facts are statements that could
be deemed forward-looking statements. Words such as "achieve," "anticipate,"
"assumes," "believes," "continue," "could," "estimate," "expects," "forecast,"
"hope," "intend," "may," "plan," "potential," "predict," "should," "will,"
"would," variations of such words and similar expressions are intended to
identify such forward-looking statements. In addition, any statements that refer
to projections of our future financial performance, our anticipated growth and
trends in our businesses, and other characterizations of future events or
circumstances are forward-looking statements. Although such statements are based
on currently available financial and economic data, as well as management's
estimates and expectations, forward-looking statements are inherently uncertain
and involve risks and uncertainties that could cause our actual results to
differ materially from what may be inferred from the forward-looking statements.
Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. Factors potentially contributing to
such differences include, among others:

•Revisions of estimates of contract risks, revenue or costs; economic factors
such as inflation; the timing of new awards; or the pace of project execution,
which has resulted and may continue to result in losses or lower than
anticipated profit;
•Unfavorable outcomes of existing or future litigation or dispute resolution
proceedings against us or customers (project owners, developers, general
contractors, etc.), subcontractors or suppliers, as well as failure to promptly
recover significant working capital invested in projects subject to such
matters;
•A significant slowdown or decline in economic conditions;
•Increased competition and failure to secure new contracts;
•Contract requirements to perform extra work beyond the initial project scope,
which has and in the future could result in disputes or claims and adversely
affect our working capital, profits and cash flows;
•Risks and other uncertainties associated with assumptions and estimates used to
prepare our financial statements;
•Failure to meet contractual schedule requirements, which could result in higher
costs and reduced profits or, in some cases, exposure to financial liability for
liquidated damages and/or damages to customers, as well as damage to our
reputation;
•Inability to attract and retain our key officers, and to adequately plan for
their succession, and hire and retain personnel required to execute and perform
on our contracts;
•The COVID-19 pandemic, which has adversely impacted, and could continue to
adversely impact, our business, financial condition and results of operations
by, among other things, delaying the timing of project bids and/or awards and
the timing of dispute resolutions and associated collections;
•Risks related to our international operations, such as uncertainty of U.S.
Government funding, as well as economic, political, regulatory and other risks,
including risks of loss due to acts of war, civil unrest, security issues, labor
conditions, corruption and other unforeseeable events in countries where we do
business, resulting in unanticipated losses;
•Possible systems and information technology interruptions and breaches in data
security and/or privacy;
•Client cancellations of, or reductions in scope under, contracts reported in
our backlog;
•Failure of our joint venture partners to perform their venture obligations,
which could impose additional financial and performance obligations on us,
resulting in reduced profits or losses and/or reputational harm;
•The impact of inclement weather conditions on projects;
•Decreases in the level of government spending for infrastructure and other
public projects;
•Risks related to government contracts and related procurement regulations;
•Failure to meet our obligations under our debt agreements;
•Securities litigation and/or shareholder activism;
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•Violations of the U.S. Foreign Corrupt Practices Act and similar worldwide
anti-bribery laws;
•Adverse health events, such as an epidemic or another pandemic;
•Physical and regulatory risks related to climate change;
•Downgrades in our credit ratings;
•Impairment of our goodwill or other indefinite-lived intangible assets; and
•The exertion of influence over the Company by our chairman and chief executive
officer due to his position and significant ownership interest.

Executive Overview

COVID-19 Update


Since its onset in early 2020, the COVID-19 pandemic has caused occasional
temporary shortages in available manpower, reductions in field labor
productivity, other inefficiencies, delays to project schedules and deferrals of
project execution. As a result, we continue to incur incremental costs, much of
which we are seeking to recover from our customers as allowed by contractual
terms. The relief sought from customers, together with certain incremental
project opportunities that resulted from the pandemic, has helped to mitigate
the pandemic's negative impact on our financial results. In addition, we have
experienced delays in certain legal proceedings, as various courts and
arbitrators process a large backlog of cases that were impacted by the pandemic.
The COVID-19 pandemic previously hindered the Company's ability to resolve
unapproved work, which has resulted in the need for the Company to temporarily
fund certain project costs that historically would have been promptly
negotiated, billed to and collected from customers. These delays in resolving
and recovering on such claims have adversely affected our liquidity and
financial results since the onset of the pandemic. However, in the latter part
of 2021 and the first half of 2022, we began to see the scheduling of settlement
conferences and trial dates and made progress in resolving certain project
disputes and unapproved change orders. We expect to make progress in the
resolution of certain other disputes and unapproved change orders during the
second half of 2022 and in 2023.

Throughout 2020 and much of 2021, the pandemic also adversely affected the
volume and timing of our new awards, which has negatively impacted our backlog
and operating results. The resulting negative impact in the first half of 2022
is expected to continue due to previously limited bidding and proposal
opportunities, as well as the relatively lower volume of new awards in 2020 and
much of 2021. In addition, many of our state and local government customers'
revenue sources have been negatively impacted by the pandemic due to a reduction
of commuter and business travel, including curtailed ridership on mass-transit
systems (buses, subways, trains, etc.), travel on commercial airlines and
driving by the general public. These impacts have resulted in reduced fare and
toll collections, lower fuel tax receipts and reduced airport and other facility
usage fees. The significant revenue reductions experienced by some of our
customers have adversely impacted their ability to pay the Company on a timely
basis for amounts due, although these impacts have begun to moderate. The
potential for continued or new pandemic-related delays in project bids and
awards could result in lower-than-expected revenue and earnings until such time
as more substantial funding from the recently enacted Infrastructure Investment
and Jobs Act, also known as the Bipartisan Infrastructure Law, is distributed to
our existing and potential customers.

Due to the continued fluidity of the COVID-19 pandemic, uncertainties as to its
scope and duration, and ongoing changes in the way that governments, businesses
and individuals respond to the pandemic, the Company is unable at this time to
accurately predict the pandemic's future impact on the Company's business,
results of operations, financial condition or liquidity.

Operating Results


Consolidated revenue for the three and six months ended June 30, 2022 was $0.9
billion and $1.8 billion, respectively, compared to $1.2 billion and
$2.4 billion for the same periods in 2021. The decrease for both periods was
primarily due to reduced project execution activities on various projects in all
three segments in the Northeast, California and Oklahoma, most of which are
completed or nearing completion, partially offset by increased activities on
certain newer Civil and Building segment projects in California and the Midwest.
The revenue decline for both periods was also the result of the follow-on impact
of the COVID-19 pandemic, which delayed bidding activities and awards of certain
new projects during 2020 and much of 2021. In addition, the decrease in revenue
for both periods of 2022 was due to the impact of an unfavorable adjustment
related to the unforeseen cost of project close-out issues, remediation work,
extended project supervision and associated labor inefficiencies on the
electrical component of a transportation project in the Northeast in the
Specialty Contractors segment, an unfavorable non-cash impact related to the
settlement of a long-disputed, completed Civil segment project in Maryland, and
the temporary unfavorable impact from the successful negotiation of significant
lower margin (and lower risk) change orders on a Civil segment mass-transit
project in California (with the majority of the impact affecting the first
quarter of 2022). These approved change orders increased the project's overall
estimated profit but reduced the project's percentage of completion and overall
margin percentage. This temporary reduction to earnings is expected to reverse
itself over the remaining life of the
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project. For the six-month period in 2022, the decrease was also attributable to
the impact of an adverse legal ruling on a dispute related to a completed Civil
segment bridge project in New York.

Loss from construction operations for the three and six months ended June 30,
2022 was $90.6 million and $100.5 million, respectively, compared to income from
construction operations of $68.8 million and $118.5 million for the same periods
in 2021. For the second quarter of 2022, the change was primarily due to lower
profitability associated with the reduced revenue, as discussed above, including
the $33.5 million impact from the unfavorable adjustment related to the
unforeseen cost of project close-out issues, remediation work, extended project
supervision and associated labor inefficiencies on the aforementioned
transportation project in the Northeast in the Specialty Contractors segment,
and a $16.2 million unfavorable non-cash impact related to the settlement of a
long-disputed, completed Civil segment project in Maryland. The change for the
second quarter of 2022 was, to a lesser extent, also due to the impact of the
aforementioned successful negotiation of significant lower margin (and lower
risk) change orders on a Civil segment mass-transit project in California, which
resulted in a temporary unfavorable impact to earnings. These approved change
orders increased the project's overall estimated profit but reduced the
project's percentage of completion and overall margin percentage. This temporary
reduction to earnings is expected to reverse itself over the remaining life of
the project. In addition, the change for the second quarter of 2022 was due to a
non-cash charge of $17.8 million that increased cost of operations associated
with an unexpected partial reversal by an appellate court of previously awarded
legal damages related to a completed electrical project in New York in the
Specialty Contractors segment, as well as the absence of a $20.1 million
prior-year favorable adjustment related to this same completed electrical
project in New York that resulted from damages awarded by the trial court's
ruling. For the first six months of 2022, the change was principally due to the
aforementioned factors that drove the reduction in revenue and income from
construction operations for the second quarter of 2022, including the temporary
unfavorable impact of $29.1 million from the successful negotiation of
significant lower margin (and lower risk) change orders on the Civil segment
mass-transit project mentioned above, with $17.6 million impacting the first
quarter of 2022. This temporary reduction to earnings is expected to reverse
itself over the remaining life of the project. For the six-month period in 2022,
the decrease was also attributable to a $25.5 million non-cash charge from the
adverse legal ruling on a Civil segment bridge project in New York, as well as a
$14.6 million unfavorable adjustment split evenly between the Civil and Building
segments due to changes in estimates on a transportation project in the
Northeast.

The effective tax rate was 41.3% and 37.1% for the three and six months ended
June 30, 2022, respectively, compared to 20.4% and 20.9% for the comparable
periods in 2021. See Corporate, Tax and Other Matters below for a discussion of
the change in the effective tax rate.

Loss per common share for the three and six months ended June 30, 2022 was $1.23
and $1.65, respectively, compared to diluted earnings per common share of $0.61
and $0.92 for the same periods in 2021. The decline for both periods was
primarily due to the factors discussed above that caused the changes in income
(loss) from construction operations.

Consolidated new awards for the three and six months ended June 30, 2022 totaled
$1.1 billion and $2.1 billion, respectively, compared to $0.6 billion and
$1.6 billion for the same periods in 2021. The Civil segment was the primary
contributor to the new award activity in the second quarter of 2022. The most
significant new awards and contract adjustments in the second quarter of 2022
included $293 million of additional funding for a mass-transit project in
California; $95 million for an educational facility project in California; an
$85 million military housing project in Alaska; and several projects in Guam,
including a $107 million military housing project, an $84 million wharf
improvement project and two other military facilities projects valued at
$73 million and $49 million, respectively.

Consolidated backlog as of June 30, 2022 was $8.5 billion, up 4% compared to
$8.2 billion as of December 31, 2021. As of June 30, 2022, the mix of backlog by
segment was approximately 58% for Civil, 26% for Building and 16% for Specialty
Contractors.

The following table presents the Company’s backlog by business segment,
reflecting changes from December 31, 2021 to June 30, 2022:

                             Backlog at          New         Revenue        Backlog at
(in millions)            December 31, 2021     Awards(a)    Recognized   June 30, 2022(b)
Civil                   $          4,553.5   $  1,167.5$    (794.4)  $         4,926.6
Building                           2,308.9        531.9        (597.6)            2,243.2
Specialty Contractors              1,373.2        414.3        (421.2)            1,366.3
Total                   $          8,235.6   $  2,113.7$  (1,813.2)  $         8,536.1

____________________________________________________________________________________________________

(a)New awards consist of the original contract price of projects added to
backlog plus or minus subsequent changes to the estimated total contract price
of existing contracts.

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(b)Backlog may differ from the transaction prices allocated to the remaining
performance obligations as disclosed in Note 2 of the Notes to Condensed
Consolidated Financial Statements. Such differences relate to the timing of
executing a formal contract or receiving a notice to proceed. More specifically,
backlog sometimes 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 the project will proceed (e.g., adequate
funding is in place).

The outlook for the Company's growth over the next several years remains
favorable, but it could be negatively impacted by future project delays or the
timing of project bids, awards, commencements, ramp-up activities and
completions, as well as by any adverse follow-on consequences of the COVID-19
pandemic. We anticipate that we will continue to win our share of significant
new awards resulting from long-term capital spending plans by state, local and
federal customers, as well as limited competition for some of the largest
project opportunities.

In elections over the past several years, voters in numerous states approved
dozens of long-term transportation funding measures totaling approximately $200
billion in long-term funding. The largest of these was in Los Angeles County,
where Measure M, a half-cent sales tax increase, was approved and is expected to
generate $120 billion of funding over 40 years. In addition, California'sSenate
Bill 1, which was signed into law in 2017, is providing an average of $5.4
billion annually through 2027 for various transportation, mass-transit and
bridge projects. Despite recent increases, which have been anticipated, interest
rates still remain relatively attractive, which may be conducive to continued
spending on various types of infrastructure projects. However, if borrowing
rates continue to increase significantly, they could reach levels that may begin
to negatively impact infrastructure demand, although this is more likely to
impact Building segment projects, as those projects tend to be more directly
correlated to economic conditions.

The Bipartisan Infrastructure Law was enacted into law on November 15, 2021, and
it 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 marks 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
will favorably impact the Company's current work and prospective opportunities
over the next decade, as some initial funds have begun flowing to project
owners, and substantially increased funding from the Bipartisan Infrastructure
Law is expected to occur over the next several years.

The Company had certain large Civil segment projects in the Northeast that were
completed or were nearing completion in 2021. The Company is pursuing several
large prospective projects in various locations, including the Northeast, the
West Coast and Guam, which are expected to be bid and/or awarded in 2022 and
2023. However, the timing and magnitude of revenue contributions from these
prospective projects may not fully offset revenue reductions associated with the
projects that have been completed or are nearing completion.

For a more detailed discussion of operating performance of each business
segment, corporate general and administrative expenses and other items, see
Results of Segment Operations, Corporate, Tax and Other Matters and Liquidity
and Capital Resources below.

Results of Segment Operations

The results of our Civil, Building and Specialty Contractors segments are
discussed below.

Civil Segment

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


                                              Three Months Ended June 30,          Six Months Ended June 30,
(in millions)                                      2022            2021                2022           2021
Revenue                                      $        403.6$   555.4$      794.4$ 1,030.9
Income (loss) from construction operations             (9.8)        75.1                 (10.7)       125.2


Revenue for the three and six months ended June 30, 2022 decreased 27% and 23%,
respectively, compared to the same periods in 2021. The decrease for both
periods was primarily due to reduced project execution activities on certain
mass-transit and transportation projects in California and the Northeast, most
of which are completed or nearing completion, partially offset by
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increased activities on certain newer projects in the Midwest and California.
The revenue decline for both periods was also the result of the follow-on impact
of the COVID-19 pandemic, which delayed bidding activities and awards of certain
new projects during 2020 and much of 2021. In addition, the decrease for both
periods was due to the unfavorable non-cash impact related to the aforementioned
settlement of a long-disputed, completed project in Maryland and the temporary
unfavorable impact from the successful negotiation of significant lower margin
(and lower risk) change orders on a mass-transit project in California (with the
majority of the impact affecting the first quarter of 2022). These approved
change orders increased the project's overall estimated profit but reduced the
project's percentage of completion and overall margin percentage. This temporary
reduction to earnings is expected to reverse itself over the remaining life of
the project. For the six-month period, the decrease was also attributable to the
impact of the adverse legal ruling on a dispute related to a bridge project in
New York, as discussed above in the section titled Executive Overview.

Loss from construction operations for the three and six months ended June 30,
2022 was $9.8 million and $10.7 million, respectively, compared to income from
construction operations of $75.1 million and $125.2 million for the same periods
in 2021. For the second quarter of 2022, the change was primarily due to lower
profitability associated with the reduced revenue, as discussed above, including
the $16.2 million unfavorable non-cash impact related to the settlement of a
long-disputed, completed project in Maryland, and, to a lesser extent, the
impact of the aforementioned successful negotiation of significant lower margin
(and lower risk) change orders on a mass-transit project in California, which
resulted in a temporary unfavorable impact to earnings. For the first six months
of 2022, the change was principally due to the aforementioned factors that drove
the reduction in revenue and income from construction operations for the second
quarter of 2022, including the temporary unfavorable impact of $29.1 million
from the successful negotiation of significant lower margin (and lower risk)
change orders on a mass-transit project mentioned above, with $17.6 million
impacting the first quarter of 2022. This temporary reduction to earnings is
expected to reverse itself over the remaining life of the project. For the
six-month period, the decrease was also due to a $25.5 million non-cash charge
from the adverse legal ruling on a dispute related to a bridge project in New
York.

Operating margin was (2.4)% and (1.4)% for the three and six months ended
June 30, 2022, respectively, compared to 13.5% and 12.1% for the same periods in
2021. The operating margin decreases were due to the above-mentioned factors
that drove the changes in revenue and income (loss) from construction
operations.

New awards in the Civil segment totaled $721 million and $1.2 billion for the
three and six months ended June 30, 2022, respectively, compared to $119 million
and $576 million for the same periods in 2021. The most significant new awards
and contract adjustments in the second quarter of 2022 included $293 million of
additional funding for a mass-transit project in California, as well as several
projects in Guam, including a $107 million military housing project, an
$84 million wharf improvement project and two other military facilities projects
valued at $73 million and $49 million, respectively. The COVID-19 pandemic has
resulted in significant revenue shortfalls for many state and local government
agencies since 2020, and it could continue to cause deferrals or cancellations
of certain new projects, depending on the allocation and prioritization of state
and local funding, as well as the availability, timing and magnitude of funding
from the federal government, including anticipated funding from the recently
enacted Bipartisan Infrastructure Law.

Backlog for the Civil segment was $4.9 billion as of June 30, 2022 compared to
$4.3 billion as of June 30, 2021, with the increase primarily due to the new
awards and contract adjustments discussed above. 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 Bipartisan Infrastructure Law,
and by public agencies' long-term spending plans. The Civil segment is
well-positioned to capture its share of these prospective projects, but the
timing of new awards remains uncertain.

Building Segment

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


                                              Three Months Ended June 30,           Six Months Ended June 30,
(in millions)                                      2022            2021                 2022           2021
Revenue                                      $        266.9$   382.7$       597.6$   789.9
Income (loss) from construction operations             (0.1)        (2.5)                   9.4          8.7


Revenue for the three and six months ended June 30, 2022 decreased 30% and 24%,
respectively, compared to the same periods in 2021, primarily due to reduced
project execution activities on various projects in California, Oklahoma and the
Northeast that are substantially complete, partially offset by contributions
from certain newer projects in California. For the six-month period, the
decrease was partially offset by increased activity on a hospitality and gaming
project in Arkansas. Revenue for both periods was also reduced by the follow-on
impact of the COVID-19 pandemic, which delayed certain project bids and awards.
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Loss from construction operations for the second quarter of 2022 was $0.1
million compared to $2.5 million for the second quarter of 2021, and income from
construction operations for the six months ended June 30, 2022 was $9.4 million
compared to $8.7 million for the six months ended June 30, 2021. The improvement
for both periods was primarily due to the absence of prior-year unfavorable
adjustments on certain projects, which were immaterial individually and in the
aggregate, partially offset by a current-year immaterial unfavorable adjustment
on a transportation project in the Northeast, as discussed above in the section
titled Executive Overview, and the reduced profit associated with the overall
revenue reduction discussed above.

Operating margin was (0.03)% and 1.6% for the three and six months ended
June 30, 2022, respectively, compared to (0.7)% and 1.1% for the same periods in
2021. The changes in operating margin were principally due to the aforementioned
factors that drove the changes in revenue and income (loss) from construction
operations.

New awards in the Building segment totaled $207 million and $532 million for the
three and six months ended June 30, 2022, respectively, compared to $386 million
and $730 million for the same periods in 2021. The most significant new awards
in the second quarter of 2022 included $95 million for an educational facility
project in California and an $85 million military housing project in Alaska.

Backlog for the Building segment was $2.2 billion as of June 30, 2022 compared
to $1.6 billion as of June 30, 2021. The strong increase was partly due to the
new awards discussed above, but even more attributable to certain other large
new awards that were booked in the third quarter of 2021. The Building segment
continues to have a large volume of prospective projects across various end
markets and geographic locations. We expect continued strong demand as economic
conditions remain conducive to customer spending on new building facilities and
renovations to existing buildings, supported by a still relatively favorable
interest rate environment. However, higher interest rates and the effects of
higher inflation, as well as any adverse follow-on effects of the COVID-19
pandemic, could result in reduced demand for our building construction services.

Specialty Contractors Segment

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


                                              Three Months Ended June 30,           Six Months Ended June 30,
(in millions)                                      2022            2021                 2022           2021
Revenue                                      $        190.5$   281.2$       421.2$   606.0
Income (loss) from construction operations            (66.7)        10.0                  (70.6)        11.3


Revenue for the three and six months ended June 30, 2022 decreased 32% and 31%,
respectively, compared to the same periods in 2021. The decrease for both
periods was principally driven by reduced project execution activities on
various electrical and mechanical projects in the Northeast and California that
are completed or nearing completion, as well as the impact of an unfavorable
adjustment on the aforementioned transportation project in the Northeast, as
discussed above in the section titled Executive Overview. Revenue for both
periods was also reduced by the follow-on impact of the COVID-19 pandemic, which
delayed certain project bids and awards.

Loss from construction operations for the three and six months ended June 30,
2022 was $66.7 million and $70.6 million, respectively, compared to income from
construction operations of $10.0 million and $11.3 million for the same periods
in 2021. The decrease for both periods was largely due to the $33.5 million
impact of an 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, as well as a non-cash charge of $17.8 million that increased
cost of operations associated with an unexpected partial reversal by an
appellate court of previously awarded legal damages related to a completed
electrical project in New York. The decrease for both periods was also due to
the absence of a $20.1 million prior-year favorable adjustment that resulted
from damages awarded by the trial court's ruling on the same completed
electrical project in New York, and, to a lesser extent, the decrease was also
due to reduced profitability for the segment related to the overall revenue
reduction.

Operating margin was (35.0)% and (16.8)% for the three and six months ended
June 30, 2022, respectively, compared to 3.5% and 1.9% for the same periods in
2021. The changes in operating margin were principally due to the aforementioned
factors that drove the changes in revenue and income (loss) from construction
operations.

New awards in the Specialty Contractors segment totaled $190 million and
$414 million for the three and six months ended June 30, 2022, respectively,
compared to $137 million and $295 million for the same periods in 2021. The
COVID-19 pandemic has resulted in, and could continue to result in, reduced
demand from certain commercial and government customers that have been
experiencing funding constraints.

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Backlog for the Specialty Contractors segment was $1.4 billion as of June 30,
2022 compared to $1.5 billion as of June 30, 2021. The Specialty Contractors
segment continues to be increasingly focused on servicing the Company's backlog
of large Civil and Building segment projects, particularly in the Northeast and
California. In addition, the segment remains well-positioned to capture its
share of new projects for external customers, 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.

Corporate, Tax and Other Matters

Corporate General and Administrative Expenses

Corporate general and administrative expenses were $14.0 million and $28.5
million
during the three and six months ended June 30, 2022, respectively,
compared to $13.8 million and $26.7 million for the same periods in 2021.

Other Income, Net, Interest Expense and Income Tax (Expense) Benefit


                                             Three Months Ended June 30,           Six Months Ended June 30,
(in millions)                                    2022            2021                  2022           2021
Other income, net                          $          1.0    $      1.4          $         4.7    $      1.6
Interest expense                                    (16.2)        (17.9)                 (32.7)        (35.7)
Income tax (expense) benefit                         43.7         (10.6)                  47.6         (17.6)


Other income, net for the six months ended June 30, 2022 improved by $3.1
million
compared to the same period in 2021 primarily due to interest earned on
federal income tax receivable balances.


Interest expense decreased $1.7 million and $3.0 million for the three and six
months ended June 30, 2022, respectively, compared to the same periods in 2021.
The decreases in the 2022 periods were substantially due to the absence of
amortization of discount and debt issuance costs on convertible notes that were
repaid in 2021.

The effective income tax rate was 41.3% and 37.1% for the three and six months
ended June 30, 2022, respectively, compared to 20.4% and 20.9% for the same
periods in 2021. The effective income tax rates for the 2022 periods were higher
than the same periods in 2021 primarily due to pre-tax losses incurred in both
2022 periods and projected for the year. In periods reporting pre-tax losses, a
tax benefit increases the effective income tax rate because it increases the tax
benefit generated from the pre-tax loss. The tax benefits in the 2022 periods
that caused a higher tax rate were primarily the earnings attributable to
noncontrolling interests (for which income taxes are not the responsibility of
the Company) and state income tax benefits (net of federal tax benefits). The
effective income tax rates for both 2022 periods reflect the impact of a
relatively low projected pre-tax loss for the year, which magnifies the impact
of tax benefits on the effective income tax rate. The 2021 periods reported
pre-tax income and pre-tax income was projected for the 2021 year, thereby
resulting in tax benefits reducing the effective income tax rate. For a further
discussion of income taxes, refer to Note 6 of the Notes to Condensed
Consolidated Financial Statements.

Liquidity and Capital Resources


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 June 30, 2022, will be sufficient to fund any
working capital needs and debt maturities for the next 12 months and beyond,
provided that we are not adversely impacted by unanticipated future events,
including further impacts related to the COVID-19 pandemic as discussed above in
Executive Overview - COVID-19 Update. Despite our record operating cash flow for
the six months ended June 30, 2022 (as discussed below in Cash and Working
Capital), liquidity has been, and could continue to be, adversely impacted by
our inability to collect cash due to the follow-on impacts of the COVID-19
pandemic, which have constrained certain customers' funding sources and delayed
their ability to make payments on approved contract work. In addition, as
discussed above in Executive Overview - COVID-19 Update, the COVID-19 pandemic
delayed court and arbitration schedules and also hindered the Company's ability
to resolve certain unapproved work. We believe that future funding from the
Bipartisan Infrastructure Law and increasing revenue to government customers as
travel and commuting levels rise, as discussed above, could offset or mitigate
future negative impacts from the COVID-19 pandemic, though it remains difficult
to predict any of these factors. Furthermore, the bottleneck of accumulated
court and arbitration proceedings that grew during the early years of the
pandemic is receding, with certain disputes having been resolved in the first
six months of 2022 and other settlement conferences and trial dates now
scheduled or being scheduled. In addition, certain disputes and related
collection delays were resolved during the latter part of 2021 and the first
half of 2022. We experienced substantially improved operating cash flows in the
first half of 2022, and also anticipate improved
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operating cash generation for the remainder of 2022 compared to 2021, based on
projected cash collections, both from project execution activities and the
resolution of additional outstanding claims and unapproved change orders.

Cash and Working Capital


Cash and cash equivalents were $309.3 million as of June 30, 2022 compared to
$202.2 million as of December 31, 2021. Cash immediately available for general
corporate purposes was $85.1 million and $60.2 million as of June 30, 2022 and
December 31, 2021, 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 was available
only for joint venture-related uses, including distributions to joint venture
partners. In addition, our restricted cash and restricted investments totaled
$89.0 million as of June 30, 2022 compared to $93.6 million as of December 31,
2021. Restricted cash and restricted investments at June 30, 2022 were primarily
held to secure insurance-related contingent obligations.

During the six months ended June 30, 2022, net cash provided by operating
activities was $178.7 million, which was the largest operating cash flow for the
first six months of any year since the merger between Tutor-Saliba Corporation
and Perini Corporation in 2008. The operating cash flow for the first six months
of 2022 is already larger than any full-year result since that same time. In
addition, the operating cash flow of $58.0 million for the second quarter of
2022 was the third-largest operating cash result of any second quarter since the
2008 merger, and was an increase of $142.6 million compared to the operating
cash usage of $84.6 million in the second quarter of 2021. The increase for the
six months of 2022 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 an increase in billings in excess of costs
and estimated earnings ("BIE") and a decrease in accounts receivable. During the
six months ended June 30, 2021, net cash used in operating activities was
$131.3 million, due primarily to investments in project working capital,
partially offset by cash generated from earnings sources. The increase in
working capital for the first six months of 2021 primarily reflected an increase
in costs and estimated earnings in excess of billings ("CIE"), a decrease in
accounts payable due to timing of payments to suppliers and subcontractors and a
decrease in BIE. The increase in CIE in the 2021 period was primarily due to the
follow-on impacts of the COVID-19 pandemic, which caused delays in the
negotiation and resolution of certain claims and unapproved change orders (due
to the postponement or deferrals of certain legal and arbitration proceedings
and settlement discussions), and constrained customers' revenue and funding
sources, thereby limiting their budgetary discretion to pay the Company for
changes approved in scope but for which pricing is pending.

Cash flow from operating activities increased $310.0 million when comparing the
first six months of 2022 with the same period in 2021. As discussed above, the
significant increase was primarily driven by improved collection activity,
including collections associated with the continued resolution of certain claims
and unapproved change orders that previously required the use of cash. The
increase in cash flow from operating activities was also due to an increase in
accounts payable compared to a decrease in the prior year due to timing of
payments to vendors and subcontractors. Despite the increase in accounts payable
in the first six months of 2022, the balance as of June 30, 2022 was $137.5
million lower compared to the balance as of June 30, 2021.

Net cash used in investing activities during the first six months of 2022 was
$27.9 million due to the acquisition of property and equipment for projects
totaling $28.8 million, as well as net cash used in investment transactions of
$5.5 million, partially offset by proceeds from the sale of property and
equipment of $6.4 million. Net cash used in investing activities during the
first six months of 2021 was $22.8 million primarily due to the acquisition of
property and equipment for projects totaling $18.9 million, as well as net cash
used in investment transactions of $7.6 million.

Net cash used in financing activities was $48.4 million for the first six months
of 2022, which was primarily driven by a $26.9 million net repayment of debt and
$20.5 million of net distributions to noncontrolling interests. Net cash used in
financing activities was $63.7 million for the first six months of 2021, which
was primarily driven by a $58.8 million net repayment of borrowings, including
the repayment of the remaining principal balance of the Convertible Notes (as
defined in Note 8 of the Notes to Condensed Consolidated Financial Statements),
and $3.2 million of net distributions to noncontrolling interests.

At June 30, 2022, we had working capital of $1.9 billion, a ratio of current
assets to current liabilities of 1.97 and a ratio of debt to equity of 0.62,
compared to working capital of $2.1 billion, a ratio of current assets to
current liabilities of 2.17 and a ratio of debt to equity of 0.59 at
December 31, 2021.
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Debt

2020 Credit Agreement

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 "2020 Revolver"), with sublimits 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. The Term Loan B will mature on
August 18, 2027 and the 2020 Revolver will mature on August 18, 2025, in each
case, unless any of the 2017 Senior Notes are outstanding on January 30, 2025
(which is 91 days prior to the maturity of the 2017 Senior Notes), in which
case, both the Term Loan B and the 2020 Revolver will mature on January 30, 2025
(subject to certain further exceptions). For more information regarding the
terms of our 2020 Credit Agreement, refer to Note 8 of the Notes to Condensed
Consolidated Financial Statements.

The table below presents our actual and required consolidated first lien net
leverage ratio under the 2020 Credit Agreement for the period, which is
calculated on a rolling four-quarter basis:

                                    Trailing Four Fiscal Quarters Ended
                                               June 30, 2022
                                        Actual              Required
First lien net leverage ratio        1.78 to 1.00        ? 2.25 : 1.00

As of June 30, 2022, we were in compliance and expect to continue to be in
compliance with the covenants under the 2020 Credit Agreement.

Contractual Obligations


There have been no material changes in our contractual obligations from those
described in our Annual Report on Form 10­K for the year ended December 31,
2021.

Critical Accounting Policies and Estimates


Our significant accounting policies are described in Note 1 of the Notes to
Consolidated Financial Statements included in our Annual Report on Form 10­K for
the year ended December 31, 2021. Our critical accounting estimates are also
identified and discussed in Part II, Item 7 of our Annual Report on Form 10­K
for the year ended December 31, 2021.

Recently Issued Accounting Pronouncements


There were no new accounting pronouncements issued by the Financial Accounting
Standards Board during the three and six months ended June 30, 2022 and through
the date of filing of this report that had or are expected to have a material
impact on the Company's financial position, results of operations or cash flows.

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