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01/10 16:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with significant improvements in EPS, reduced debt, and increased segment income. The Q&A section reveals positive sentiment from analysts, with expectations of continued revenue growth and improved margins. The company's robust backlog and bidding pipeline further support a positive outlook. Despite some uncertainties in cash flow timing, overall guidance and financial health are optimistic, suggesting a positive stock price movement in the short term.
Operating Cash Flow $289 million for the third quarter and $574 million for the first 9 months of 2025, setting new records for both periods. This was driven by collections from newer and ongoing projects.
Backlog $21.6 billion, up 54% year-over-year. This increase was due to $2 billion of new awards and contract adjustments in the third quarter.
Revenue $1.42 billion for the third quarter of 2025, up 31% year-over-year. Civil segment revenue was $770 million (up 41%), Building segment revenue was $419 million (down slightly), and Specialty Contractors segment revenue was $226 million (up 124%). Growth was driven by increased project execution activities on newer, larger, and higher-margin projects.
Operating Income Significantly increased in the third quarter due to contributions from newer, higher-margin projects in the Civil and Building segments. Civil segment income was $99 million (up from a loss of $13 million last year), Building segment income was $14 million (up from a loss of $4 million last year), and Specialty Contractors segment income was $6 million (up from a loss of $57 million last year).
Adjusted Earnings Per Share (EPS) $1.15 for the third quarter, up significantly from an adjusted loss per share of $1.61 in the same quarter last year. This reflects strong core operating performance and contributions from newer, larger, and higher-margin projects.
GAAP EPS $0.07 for the third quarter, a substantial improvement from a loss of $1.92 per share in the same quarter last year. This was impacted by increased share-based compensation expense but still showed significant improvement.
Debt $413 million as of September 30, 2025, down 23% compared to $534 million at the end of 2024. This reduction was due to significant debt repayment.
Interest Expense $14 million for the third quarter, down 36% compared to $21 million last year. This decrease was due to significant debt reduction.
New Awards: Added $2 billion of new awards and contract adjustments in Q3, including UCSF Benioff New Children's Hospital ($1 billion), a $182 million defense system project in Guam, and a $155 million education facility project in California.
Revenue Growth: Revenue for Q3 2025 was $1.42 billion, up 31% year-over-year, driven by newer, larger, and higher-margin projects.
Backlog: Backlog reached a record $21.6 billion, up 54% year-over-year, with significant contributions from the Building and Specialty Contractors segments.
Future Opportunities: Over $25 billion in upcoming bidding opportunities in the next 12-18 months, including major projects like the $12 billion Sepulveda Transit Corridor and $5 billion Penn Station transformation.
Cash Flow: Record operating cash flow of $289 million in Q3 and $574 million for the first 9 months of 2025, driven by collections from newer and ongoing projects.
Debt Reduction: Total debt reduced by 23% to $413 million, with cash balance exceeding debt by $283 million.
Capital Allocation: Plans to initiate a recurring dividend and/or share repurchase program once cash reserves reach a comfortable level.
Geographic Focus: Significant new project opportunities in California, New York, the Midwest, and the Indo-Pacific region.
Share-based compensation expense: The company experienced a substantial increase in share-based compensation expense due to the dramatic growth in its stock price. This expense is expected to remain high for 2025, impacting profitability, although it is projected to decrease in 2026 and 2027.
Building segment revenue: Revenue for the Building segment was down slightly compared to last year, although it is expected to increase in the coming quarters. This could pose a short-term challenge to overall revenue growth.
Tax rate increase: The effective tax rate for 2025 is now higher than previously anticipated due to the significant increase in nondeductible share-based compensation expense, which could impact net income.
Legacy disputes and CIE: The company continues to resolve legacy disputes, which have contributed to a decline in costs and estimated earnings in excess of billings (CIE). While progress is being made, unresolved disputes could still pose a financial risk.
Specialty Contractors segment: Although the Specialty Contractors segment returned to profitability earlier than expected, its operating margin remains relatively low at 2.7%, which could limit its contribution to overall profitability.
Interest expense: Interest expense for 2025 is expected to be $55 million, which, while lower than last year, still represents a significant cost.
Capital expenditures: Capital expenditures for 2025 are anticipated to be between $170 million and $180 million, with a large portion being owner-funded for equipment on new projects. This could strain cash flow if not managed effectively.
Project execution risks: The company is engaged in numerous large-scale projects, including the Midtown Bus Terminal and various infrastructure projects. Delays or execution issues in these projects could impact revenue and profitability.
Regulatory and funding risks: While the company does not currently foresee risks from federal funding cuts or government shutdowns, any changes in these areas could adversely affect major projects.
Revenue Growth: The company expects a very strong period of double-digit revenue growth over the next several years, driven by newer, larger, and higher-margin projects.
Profitability: Profitability is projected to increase significantly, with adjusted EPS for 2025 now expected to be in the range of $4 to $4.20, up from the previous guidance of $3.65 to $3.95. Adjusted EPS for 2026 and 2027 is anticipated to be significantly higher than the upper end of the 2025 guidance.
Cash Flow: Strong operating cash flow is expected to continue beyond 2025, driven by organic cash collections and dispute resolutions.
Backlog and Bidding Opportunities: The backlog reached a record $21.6 billion, with over $25 billion of upcoming bidding opportunities in the next 12 to 18 months. Major projects include the $12 billion Sepulveda Transit Corridor, $3.8 billion Southeast Gateway Line, and $5 billion Penn Station transformation project.
Capital Expenditures: Capital expenditures for 2025 are anticipated to be approximately $170 million to $180 million, with a significant portion allocated to owner-funded large equipment items for new projects.
Market Conditions: Favorable macroeconomic tailwinds and strong public and private funding are expected to sustain market demand for construction services across all segments.
Segment Performance: The Civil segment is expected to maintain strong margins of 13% to 15% for 2025, while the Building segment's margins are projected to increase over the next several quarters. The Specialty Contractors segment has returned to profitability ahead of expectations.
Geographic Opportunities: Significant new project opportunities are expected in California, New York, the Midwest, and the Indo-Pacific region over the next several years.
Recurring Dividend: The company plans to initiate a recurring dividend program once their general corporate purpose cash reaches a comfortable level.
Share Repurchase Program: The company is considering initiating a share repurchase program as part of their strategic capital allocation alternatives, contingent on achieving a healthy cash position.
The earnings call indicates strong financial performance with significant improvements in EPS, reduced debt, and increased segment income. The Q&A section reveals positive sentiment from analysts, with expectations of continued revenue growth and improved margins. The company's robust backlog and bidding pipeline further support a positive outlook. Despite some uncertainties in cash flow timing, overall guidance and financial health are optimistic, suggesting a positive stock price movement in the short term.
The earnings call shows strong financial performance with increased revenue, reduced debt, and positive cash flow. The company has a record backlog and a full bidding pipeline, enhancing future prospects. Despite a loss in the Specialty Contractors segment, other segments show robust margins. Management's confidence in project wins and minimal competition further supports a positive outlook. However, the lack of clear capital allocation plans may temper enthusiasm. Given the market cap, the predicted stock price movement is Positive (2% to 8%) over the next two weeks.
The earnings call presents a positive outlook with strong financial performance, including record backlog, revenue growth, and significant debt reduction. The Q&A section confirms clean quarterly results and positive future expectations. Despite rising costs, favorable contract terms mitigate risks. The increased EPS guidance and plans for shareholder returns further enhance the sentiment. The market cap indicates moderate stock reaction, leading to a prediction of a positive stock price movement of 2% to 8%.
The earnings report shows strong financial performance with significant revenue and EPS growth. The company has a record backlog, indicating future revenue potential. Although construction costs are rising, favorable contract terms mitigate impacts. The Q&A reveals optimism about future EPS growth and strong opportunities in Guam. However, some uncertainties remain regarding regulation impacts and dispute resolutions. Overall, the positive financials and optimistic guidance outweigh the uncertainties, suggesting a positive stock price movement.
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