Tutor Perini Corp: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial position as of September 30, 2025 and the results of our operations for the three and nine months ended September 30, 2025 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 10‑Q, the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10‑K for the year ended December 31, 2024, and the information contained under the heading “Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2024 and in Part II, Item 1A below.

Forward-Looking Statements

This Quarterly Report on Form 10‑Q, 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 statement that refers to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events, outcomes or circumstances, or the timing of those events, outcomes or circumstances, is a forward-looking statement. 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors potentially contributing to such differences include, but are not limited to, the following:

• 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;
• Revisions of estimates of contract risks, revenue or costs;
• Economic factors, such as inflation, tariffs, the timing of new awards, or the pace of project execution, which have resulted and may continue to result in losses or lower than anticipated profit;
• 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 estimates and assumptions used to prepare our financial statements;
• A significant slowdown or decline in economic conditions, such as those presented during a recession;
• 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;
• Possible systems and information technology interruptions and breaches in data security and/or privacy;
• Decreases or delays in the level of federal, state and local government spending for infrastructure and other public projects;
• An inability to obtain bonding could have a negative impact on our operations and results;
• 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 impact of inclement weather conditions, disasters and other catastrophic events outside of our control on projects;
• 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, labor conditions and other unforeseeable events in countries where we do business, which could adversely affect our revenue and earnings;
• Client cancellations of, delays in, or reductions in scope under contracts reported in our backlog, as well as prospective project opportunities, including as a result of government-related mandates;
• 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;
• Increased competition and failure to secure new contracts;
• Risks related to government contracts (including government shutdowns) and related procurement regulations;
• Violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws;
• Significant fluctuations in the market price of our common stock, which could result in substantial losses for stockholders and potentially subject us to securities litigation;
• Failure to meet our obligations under our debt agreements (especially in a high interest rate environment);
• Downgrades in our credit ratings;
• Public health crises, such as COVID-19, have adversely impacted, and could in the future 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;
• Physical and regulatory risks related to climate change;
• Impairment of our goodwill or other indefinite-lived intangible assets;
• The exertion of influence over the Company by our executive chairman due to his position and significant ownership interests; and
• Other factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this Quarterly Report on Form 10-Q, our most recent Annual Report on Form 10‑K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”).

Executive Overview

Operating Results

Consolidated revenue for the three and nine months ended September 30, 2025 was $1.4 billion and $4.0 billion, up 30.7% and 23.8% respectively, compared to $1.1 billion and $3.3 billion for the same periods in 2024. The Company experienced strong growth in all three segments through the first nine months of 2025 compared to the same period last year, primarily driven by increased project execution activities on certain newer, larger and higher-margin projects, all of which have significant scope of work remaining. These projects are in the early stages and are expected to ramp up substantially over the next several years. The improvement for both periods of 2025 was also due to the absence of certain prior-year unfavorable adjustments, as discussed in more detail below in Results of Segment Operations.

Income from construction operations for the three months ended September 30, 2025 was $40.1 million, a significant improvement compared to a loss from construction operations of $106.8 million for the same period in 2024. For the third quarter of 2025, the significant improvement was primarily due to contributions related to the increased project execution activities discussed above and the absence of certain prior-year net unfavorable adjustments, as discussed further below in Results of Segment Operations.

Income from construction operations for the nine months ended September 30, 2025 was $181.8 million, a dramatic improvement compared to a loss from construction operations of $17.5 million for the same period in 2024. For the nine-month period of 2025, the significant improvement was due to the same factors discussed above for the third quarter of 2025, as well as favorable adjustments in the second quarter of 2025 that totaled $28.0 million due to the settlement of certain change orders and changes in estimates due to improved performance on a Civil segment mass-transit project in the Midwest.

Income from construction operations for both periods of 2025 was negatively impacted by a significant increase in share-based compensation expense of $42.2 million and $81.7 million, respectively, as compared to the same periods in 2024. The increase in share-based compensation expense was primarily due to a substantial increase in the Company’s stock price for both periods of 2025 as compared to the same periods of 2024, which impacted the fair value of liability-classified awards. These awards are remeasured at fair value at the end of each reporting period with the change in fair value recognized in earnings.

Income tax expense was $15.2 million and $50.0 million for the three and nine months ended September 30, 2025, respectively, compared to income tax benefit of $33.9 million and $19.4 million for the same periods in 2024. See Corporate, Tax and Other Matters below for a discussion of the changes in the effective tax rate.

Diluted earnings per common share for the three and nine months ended September 30, 2025 was $0.07 and $0.97, respectively, compared to diluted loss per common share of $1.92 and $1.61 for the same periods in 2024. Adjusted diluted earnings per common share, which is a non-GAAP financial measure and excludes share-based compensation expense (and the associated tax benefit), for the three and nine months ended September 30, 2025 was $1.15 and $3.22, respectively, compared to adjusted diluted loss per common share of $1.61 and $0.88 for the same periods in 2024. The improvement for both periods in 2025 was primarily due to the factors discussed above that resulted in the positive change in income from construction operations for such periods. Refer to the Non-GAAP Financial Measures section below for further information and a reconciliation of the Company's financial results reported under generally accepted accounting principles in the United States (“GAAP”) to the reported adjusted results.

Consolidated new awards for the three and nine months ended September 30, 2025 totaled $2.0 billion and $7.0 billion, respectively, compared to $4.7 billion and $7.1 billion for the same periods in 2024. The Building segment was the primary contributor to the new awards activity in the third quarter of 2025. The most significant new awards and contract adjustments in the third quarter of 2025 included a healthcare facility project in California valued at approximately $1 billion; a $182 million military defense project in Guam; a $155 million education facility project in California; four mechanical projects in Florida collectively valued at $123 million; $53 million of additional funding for a mass-transit project in California; and $51 million of additional funding for another healthcare project in California. The Company has continued to be successful in winning its share of major new project opportunities due to a combination of its strategic bidding approach and favorable market dynamics, including limited competition in select markets for some of the larger projects. This environment, which is supported by strong public funding and demand, has allowed the Company to differentiate itself and deliver compelling proposals that align with the customer’s goals and expectations. The Company expects that this environment will continue for the foreseeable future.

Consolidated backlog as of September 30, 2025 was a record $21.6 billion, up 3% compared to the previous record backlog of $21.1 billion at the end of the second quarter of 2025 and up 54% compared to the backlog at the end of the third quarter of 2024. As of September 30, 2025, the mix of backlog by segment was approximately 49% for Civil, 36% for Building and 15% for Specialty Contractors. Backlog for the Building and Specialty Contractors segments as of September 30, 2025 also set new records.

The following table presents the Company’s backlog by business segment, reflecting changes from December 31, 2024 to September 30, 2025:

(in millions)

(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.

(b) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 3 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 may include awards for which a contract has not yet been executed or a notice to proceed has not yet been issued, but for which there are no remaining major uncertainties that we will proceed with our work on the project (e.g., adequate funding is in place, we have received a notice of intent to award a contract, etc.).

With respect to potential concerns regarding the U.S. government’s increased scrutiny and curtailment of federal funding for certain projects, as well as concerns about the recent federal government shutdown and varying new tariff policies that have been and may continue to be implemented, the Company does not currently anticipate any significant impacts to its business related to these factors. From a project funding perspective, the Company does not currently foresee any of its major projects in backlog being cancelled, delayed or defunded. Most of the Company’s major projects are funded at the state or local level, or with some combination of federal, state and local funding. For projects that are wholly or partially funded with federal dollars, the funding for those projects has already been committed and/or those projects are strategically important to the United States.

Specifically related to potential tariff impacts, the Company utilizes a pre-award and post-award strategy. As part of its pre-award strategy, the Company’s detailed estimating process includes consideration of anticipated cost increases over the performance period of the contract, as well as additional contingencies to address other potential incremental costs related to unforeseen risks. Prior to its bid or proposal submission, the Company also works to negotiate favorable contract provisions that provide entitlement for certain compensable events, which may include price escalation and allowances. Once the project is awarded, the Company’s strategy shifts to entering into purchase orders or “buy-outs” of materials, such as steel and concrete, as well as large pieces of equipment at the onset of projects, which mitigate the risk of future equipment and commodity price increases by passing that risk to vendors. Also at that time, the Company enters into fixed-price contracts with its key project subcontractors whereby the risk of unforeseen escalation is transferred to the subcontractors. The Company benefits from its long-term relationships with key suppliers, vendors and subcontractors, which minimize supply chain disruptions that could arise as a result of tariffs. While the Company believes this strategy appropriately mitigates the current risk of potential tariff impacts, there could be other unforeseen future developments. The Company will continue to monitor and assess its exposure to the economic environment.

The outlook for the Company’s revenue growth over the next several years remains highly favorable due to strong new award bookings of large, long-duration projects over the past two years, as well as other new awards that are expected to be booked over the remainder of 2025 and beyond. For example, the Company has certain building projects in California, mostly in the healthcare sector, that are in the preconstruction phase. A few of these projects are expected to move from preconstruction to construction later this year, and others are expected to do so in 2026 and 2027. Many of the Company’s newer projects are design-build projects that have an initial design phase over the first six to eighteen months during which smaller revenue and earnings are generated prior to the start of a multi-year construction phase that generates substantially larger revenue and earnings. We anticipate that we will continue to win our share of significant new project awards resulting from long-term, well-funded capital spending plans by state, local and federal customers, as well as limited competition for many of the larger project opportunities.

Nationally, support for transportation-related ballot measures has remained high over the last decade. Since 2014, voters in 43 states approved 84 percent of nearly 3,000 state and local measures on general election ballots. The largest of these was in Los Angeles County, where in 2016 Measure M, a half-cent sales tax increase, was approved and is expected to generate $120 billion of funding over 40 years. Funding from this measure is supporting, and is expected to continue to support, several of the Company’s current and prospective projects. More recently, in the November 2024 elections, voters approved 77 percent of 370 transportation funding measures on state and local ballots throughout the country. These measures are expected to generate an estimated $41.4 billion in new and renewed funding for roads, bridges, rail and other infrastructure. Additionally, interest rates were lowered in the fall of 2024 and have been further reduced twice in the fall of 2025, and some economists expect continued rate reductions in 2025 and 2026, though the actual timing and extent of such rate reductions remains uncertain. Lower interest rates could support additional demand for continued general construction spending. In contrast, should interest rates rise, they could reach levels that may negatively impact demand, especially for certain types of Building segment projects that have already been experiencing such impacts, such as commercial offices and tenant improvement projects, which tend to be more economically sensitive than projects handled by our Civil segment.

The bipartisan Infrastructure Investment and Jobs Act (enacted in 2021) 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 initiated 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. The Company anticipates that this significant incremental funding will continue to be allocated through the end of 2026 with the funds spent over the 10 years from the law’s enactment (through 2031), and much of the funding is allocated for investments in end markets that are directly aligned with the Company’s market focus. The Company believes that Congress is working on continuation funding for various critical infrastructure programs through annual appropriations and extensions. Accordingly, the significant level of sustained funding has benefited, and should continue to favorably impact, the Company’s current work and prospective opportunities over the next decade.

For a more detailed discussion of the 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.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented under GAAP, we are presenting certain non-GAAP financial measures. These non-GAAP financial measures are intended to provide additional insights that facilitate the comparison of our past and present performance, and they are among the indicators management uses to assess the Company’s financial performance and to forecast future performance. By including these non-GAAP financial measures, we aim to provide investors and stakeholders a clearer understanding of our operating results and enhance transparency with respect to the key financial metrics used by our management in its financial and operational decision-making.

These non-GAAP financial measures, which exclude share-based compensation expense for the three and nine months ended September 30, 2025 and 2024 (as well as the tax benefit associated with the expense), include adjusted net income (loss) attributable to the Company and adjusted earnings (loss) per share. We exclude share-based compensation expense because this expense could result in significant volatility in our reported earnings, driven primarily by fluctuations in the expense recognized for certain long-term incentive compensation awards with payouts that are indexed to the Company’s common stock. By adjusting for share-based compensation, our non-GAAP measures present a supplemental depiction of our operational performance and financial health. This approach allows stakeholders to focus on our core operational efficiency and profitability without the variable impact to earnings caused by significant changes in our stock price. Our non-GAAP measures are intended to offer a consistent basis for evaluating the Company’s performance, which management believes is meaningful to stakeholders.

The non-GAAP financial measures included in this Quarterly Report on Form 10‑Q as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for the most directly comparable measures prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis.

Reconciliations of these non-GAAP financial measures are found in the table below:

Reconciliation of Non-GAAP Financial Measures

(in millions, except per common share amounts)

(a) The amount represents share-based compensation expense recorded during the three and nine months ended September 30, 2025 and 2024. This includes expense associated with certain long-term incentive compensation awards that have payouts indexed to the Company’s common stock. As such, significant fluctuations in the price of the Company’s common stock during any reporting period have caused and could continue to cause significant fluctuations in the reported expense. The increase in the expense for the three and nine months ended September 30, 2025 as compared to the prior-year periods was driven by the substantial increase in the price of the Company’s stock during the 2025 periods.

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:

(in millions)

Revenue for the three and nine months ended September 30, 2025 increased 41.1% and 35.1%, respectively, compared to the same periods in 2024, and set new records for the segment for both respective periods. For both periods of 2025, the substantial growth was primarily due to increased project execution activities on certain newer, larger and higher-margin projects, all of which have substantial scope of work remaining. The increase for both periods of 2025 was also due to the absence of a prior-year unfavorable adjustment related to an unexpected adverse arbitration decision on a legacy dispute related to a completed bridge project in California, which the Company is appealing.

Income from construction operations for the three months ended September 30, 2025 was $99.2 million compared to a loss from construction operations of $12.5 million for the same period in 2024. The significant improvement for the third quarter of 2025 was primarily due to contributions related to the increased project execution activities discussed above and the absence of certain prior-year net unfavorable adjustments, including a $101.6 million unfavorable adjustment related to the adverse arbitration decision on the abovementioned completed bridge project in California, partially offset by an $18.4 million prior-year favorable adjustment due to the settlement of a claim associated with a completed highway tunneling project in the Western United States.

Income from construction operations for the nine months ended September 30, 2025 was $318.9 million compared to $133.8 million for the same period in 2024. The significant increase was due to the same factors discussed above for the third quarter of 2025 and favorable adjustments in the second quarter of 2025 totaling $28.0 million due to the settlement of certain change orders and changes in estimates due to improved performance on a mass-transit project in the Midwest.

Operating margin was 12.9% and 15.1% for the three and nine months ended September 30, 2025, respectively, compared to (2.3)% and 8.6% for the same periods in 2024. The increased operating margins were principally due to the above-mentioned factors that drove the increases in revenue and income (loss) from construction operations.

New awards in the Civil segment totaled $112.0 million and $3.8 billion for the three and nine months ended September 30, 2025 compared to $3.1 billion and $4.2 billion for the same periods in 2024. The most significant new awards and contract adjustments in the third quarter of 2025 included $182 million for a military defense project in Guam and $53 million of additional funding for a mass-transit project in California. The new awards total for the Civil segment in the third quarter of 2025 was partially offset by components of work that have been subcontracted to other segments. The nine-month period of 2025 included the awards of the $1.87 billion Midtown Bus Terminal Replacement - Phase 1 project and the $1.18 billion Manhattan Tunnel project, both in New York. The three and nine-month periods of 2024 included the awards of a $1.66 billion mass-transit project in Hawaii and a $1.1 billion water conveyance tunnel project in New York.

Backlog for the Civil segment was $10.5 billion as of September 30, 2025, up 52% compared to $6.9 billion as of September 30, 2024. The segment continues to experience strong demand reflected in a large, multi-year pipeline of prospective projects, and supported by substantial anticipated funding from various voter-approved state and local transportation measures, the bipartisan Infrastructure Investment and Jobs Act, and by public agencies’ long-term spending plans. We believe that the Civil segment is well-positioned to continue capturing its share of these prospective projects, with the majority of near-term opportunities on the West Coast, in the Midwest, and in the Indo-Pacific region.

Building Segment

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

(in millions)

Revenue for the three months ended September 30, 2025 decreased a modest 3.9% compared to the same period in 2024.

Revenue for the nine months ended September 30, 2025 increased 5.9% compared to the same period in 2024, primarily due to increased project execution activities on two large detention facility projects in New York, both of which have substantial scope of work remaining.

Income from construction operations for the three months ended September 30, 2025 was $14.4 million compared to a loss from construction operations of $3.9 million for the same period in 2024. The improvement for the third quarter of 2025 was primarily due to the absence of a prior-year unfavorable adjustment of $20.0 million related to the settlement of a legacy dispute on a completed government facility project in Florida.

Income from construction operations for the nine months ended September 30, 2025 was $47.4 million compared to $17.3 million for the same period in 2024. The increase was primarily due to contributions related to the increased project execution activities for the first nine months of 2025 discussed above and the absence of the aforementioned prior-year unfavorable adjustment of $20.0 million on the completed government facility project in Florida.

Operating margin was 3.4% and 3.5% for the three and nine months ended September 30, 2025 compared to (0.9)% and 1.4% for the same periods in 2024. The increased operating margins were principally due to the above-mentioned factors that drove the changes in revenue and income (loss) from construction operations.

New awards in the Building segment totaled $1.4 billion and $2.2 billion for the three and nine months ended September 30, 2025, level with the new awards in the same periods in 2024. The most significant new awards and contract adjustments in the third quarter of 2025 included a healthcare facility project in California valued at approximately $1 billion; a $155 million education facility project in California; and $51 million of additional funding for another healthcare facility project in California.

Certain Building segment end markets, such as healthcare, education, industrial/manufacturing, and hospitality and gaming, continue to demonstrate strong demand for new and renovated facilities. However, the current level of interest rates combined with increases in materials and equipment costs due to recently implemented or future tariff policies could negatively impact this demand.

Backlog for the Building segment was $7.9 billion as of September 30, 2025 up 54% compared to $5.1 billion as of September 30, 2024, and set a new all-time record for the segment. The Building segment continues to experience strong customer demand as reflected by a large volume of prospective projects across various end markets and geographic locations. In addition, there are certain healthcare and education projects underway in California that are in the preconstruction phase, with only a portion of their full anticipated value included in our reported backlog. A few of these projects are expected to advance to the construction phase later this year, and others are expected to do so in 2026 and 2027. Consequently, we anticipate that we will book additional backlog for these projects during those periods.

Specialty Contractors Segment

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

(in millions)

Revenue for the three and nine months ended September 30, 2025 increased 123.8% and 35.3%, respectively, compared to the same periods in 2024, primarily due to increased project execution activities on the electrical and mechanical components of various newer projects across diverse end markets, all with substantial scope of work remaining and driven by overall strong market demand.

Income from construction operations for the three months ended September 30, 2025 was $6.2 million compared to a loss from construction operations of $56.9 million for the same period of 2024, marking a return to this segment’s profitability. Loss from construction operations for the nine months ended September 30, 2025 was $19.0 million compared to $83.1 million for the same period of 2024. The improvement for both periods of 2025 was primarily due to the absence of certain prior-year unfavorable adjustments that totaled $43.4 million in the aggregate on several completed projects due to the impact of judgments and settlements, including $17.7 million related to an unfavorable judgment on a completed mass-transit project in California, and certain other adjustments that were individually immaterial. The improvement for both periods of 2025 was also due to contributions related to the increased project execution activities discussed above. Many of these projects are in the early stages and are expected to ramp up substantially over the next several years.

Operating margin was 2.7% and (3.3)% for the three and nine months ended September 30, 2025 compared to (56.2)% and (19.4)% for the same periods in 2024. 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 $464.7 million and $1.0 billion for the three and nine months ended September 30, 2025 compared to $227.8 million and $681.1 million for the same periods in 2024. The most significant new awards and contract adjustments in the third quarter of 2025 included the segment’s electrical subcontract component of a mass-transit project in the Northeast and four mechanical projects in Florida collectively valued at $123 million.

Backlog for the Specialty Contractors segment was $3.2 billion as of September 30, 2025, up 63% compared to $2.0 billion as of September 30, 2024, and set a new all-time record for the segment. The Specialty Contractors segment continues to be primarily focused on servicing the Company’s current and prospective large Civil and Building segment projects, particularly in the Northeast and California. We believe that the segment remains well-positioned to continue capturing its share of other new projects, leveraging the strong reputation held by the business units in this segment for high-quality work on large, complex projects.

Corporate, Tax and Other Matters

Corporate General and Administrative Expenses

Corporate general and administrative expenses were $79.7 million and $165.4 million during the three and nine months ended September 30, 2025, respectively, compared to $32.5 million and $83.8 million for the same periods in 2024. The increase in corporate general and administrative expenses in 2025 compared to 2024 was primarily due to a substantial increase in share-based compensation expense that resulted from a higher stock price, which impacted the fair value of liability-classified awards. The Company expects share-based compensation expense to be higher than previously anticipated for the full year of 2025, but it is projected to decrease considerably in 2026 and further in 2027 once certain awards have vested. Going forward, the Company intends to issue equity-classified, rather than liability-classified, long-term incentive compensation awards, which should help to reduce future earnings volatility.

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

(in millions)

Other income, net, for the three and nine months ended September 30, 2025 increased $3.0 million and $2.7 million, respectively, compared to the same periods in 2024.

Interest expense for the three and nine months ended September 30, 2025 decreased $7.7 million and $22.1 million compared to the same periods in 2024 primarily due to lower outstanding debt driven by the early payoff of the Term Loan B in the first quarter of 2025, as discussed further in Liquidity and Capital Resources.

The Company recognized income tax expense of $15.2 million and $50.0 million for the three and nine months ended September 30, 2025 resulting in an effective income tax rate of 44.6% and 31.5%, respectively. The effective income tax rate for the three and nine months ended September 30, 2025 was higher than the 21.0% federal statutory income tax rate primarily due to non-deductible expenses and state income taxes (net of the federal tax benefit), partially offset by earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company) and federal income tax credits.

The Company recognized an income tax benefit of $33.9 million and $19.4 million for the three and nine months ended September 30, 2024, respectively. The effective income tax rate was 27.5% and 29.6% for the three and nine months ended September 30, 2024, respectively. The effective income tax rate for both the three and nine months ended September 30, 2024 was higher than the 21.0% federal statutory income tax rate primarily due to earnings attributable to noncontrolling interests (for which income taxes are not the responsibility of the Company) and state income taxes (net of the federal tax benefit), partially offset by non-deductible expenses.

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 $170.0 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 and available cash balances as of September 30, 2025, will be sufficient to fund working capital needs and debt maturities for the next 12 months and beyond, as discussed further below in Debt below. During the first quarter of 2025, we voluntarily repaid the remaining $121.9 million outstanding balance of the Term Loan B. We generated a record amount of operating cash in the first nine months of 2025, as discussed below in Cash and Working Capital. We expect strong annual operating cash flow to continue well beyond 2025, both from project execution activities and the resolution of outstanding claims and change orders. In addition, we expect to continue to benefit from the utilization of available net operating loss carryforwards to reduce our cash outflows for income taxes.

Cash and Working Capital

Cash and cash equivalents were $695.7 million as of September 30, 2025 compared to $455.1 million as of December 31, 2024. Cash immediately available for general corporate purposes was $201.7 million and $265.6 million as of September 30, 2025 and December 31, 2024, 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 is available only for joint venture-related uses, including distributions to joint venture partners. In addition, our restricted cash and restricted investments totaled $235.8 million as of September 30, 2025 compared to $149.1 million as of December 31, 2024. Restricted cash and restricted investments at September 30, 2025 were primarily held to secure insurance-related contingent obligations and deposits.

During the nine months ended September 30, 2025, net cash provided by operating activities was $574.4 million, the largest result for the first nine months of any year. The operating cash flow for the first nine months of 2025 is already larger than any full-year result, exceeding the previous full-year record achieved in 2024. The record operating cash flow for the first nine months of 2025 was largely driven by collections from newer and ongoing projects and, to a much lesser extent, from collections related to recent dispute resolutions. During the nine months ended September 30, 2024, net cash provided by operating activities was $174.0 million, primarily driven by collections associated with dispute resolutions.

Cash flow from operating activities for the first nine months of 2025 increased $400.4 million compared to the same period in 2024. The increase in cash flow from operating activities for the first nine months of 2025 compared to 2024 primarily reflects higher cash generated by earning sources in the current period compared to the prior-year period, as well as a larger decrease in net project working capital in the current period compared to the prior-year period. The decrease in net project working capital in the 2025 period was primarily due to a current-year increase in billings in excess of costs and estimated earnings compared to a decrease last year, partially offset by a current-year increase in other current assets compared to a decrease last year, as well as a smaller current-year increase in accounts payable as compared to last year. While both periods were positively impacted by collections associated with previously disputed matters as mentioned above, such collections in the 2024 period were significant whereas such collections in 2025 were comparatively lower.

Net cash used in investing activities during the first nine months of 2025 was $130.9 million primarily due to the acquisition of property and equipment for projects (i.e., capital expenditures) totaling $105.9 million and other net cash used in investment transactions of $30.2 million. Net cash used in investing activities during the first nine months of 2024 was $27.3 million primarily due to the acquisition of property and equipment for projects totaling $28.3 million and net cash used in investment transactions of $2.0 million, partially offset by proceeds from the sale of property and equipment of $2.9 million.

Net cash used in financing activities was $149.6 million for the first nine months of 2025, which was primarily driven by a $124.0 million net repayment of debt (including the $121.9 million repayment of the remaining balance on the Term Loan B discussed below in Debt). Net cash used in financing activities was $240.0 million for the first nine months of 2024, which was primarily driven by a $199.3 million net repayment of debt and $25.1 million of payments for debt issuance costs related to debt transactions during the period.

At September 30, 2025, we had working capital of $1.0 billion, a ratio of current assets to current liabilities of 1.30 and a ratio of debt to equity of 0.33, compared to working capital of $1.0 billion, a ratio of current assets to current liabilities of 1.41 and a ratio of debt to equity of 0.46 at December 31, 2024.

Debt

2024 Senior Notes Issuance and 2017 Senior Notes Redemption

On April 22, 2024, the Company issued $400.0 million in aggregate principal amount of 11.875% Senior Notes due April 30, 2029 (the “2024 Senior Notes”) in a private placement offering. Interest on the 2024 Senior Notes is payable in arrears semi-annually in April and October of each year, beginning in October 2024.

Prior to April 30, 2026, the Company may redeem the 2024 Senior Notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium described in the indenture. In addition, prior to April 30, 2026, the Company may redeem up to 40% of the original aggregate principal amount of the 2024 Senior Notes at a redemption price of 111.875% of their principal amount with the “net cash proceeds” received by the Company from one or more equity offerings, as described in the indenture. On or after April 30, 2026, the Company may redeem the 2024 Senior Notes at specified redemption prices described in the indenture. If the Company experiences certain change of control events, holders of the 2024 Senior Notes may require the Company to repurchase all or part of the 2024 Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the redemption date.

The 2024 Senior Notes are senior unsecured obligations of the Company and are guaranteed by the Company’s existing and future subsidiaries that also guarantee obligations under the Company’s 2020 Credit Agreement. In addition, the indenture for the 2024 Senior Notes provides for customary covenants and includes customary events of default.

The proceeds of the 2024 Senior Notes, together with cash on hand, were used to redeem in full, all of the outstanding obligations in respect of the 2017 Senior Notes. The redemption of the 2017 Senior Notes occurred on May 2, 2024 (the “2017 Senior Notes Redemption”).

2020 Credit Agreement

On August 18, 2020, the Company entered into a credit agreement (as amended, the “2020 Credit Agreement”) with BMO Bank N.A. (f/k/a BMO Harris Bank N.A.), as Administrative Agent, Swing Line Lender and L/C Issuer and other lenders. The 2020 Credit Agreement originally provided for a $425.0 million term loan B facility (the “Term Loan B”) and a $175.0 million revolving credit facility (the “Revolver”), which was subsequently reduced to $170.0 million following the effectiveness of the 2024 Amendment (as defined and discussed below), with sub-limits 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. Prior to the 2017 Senior Notes Redemption, if any of the 2017 Senior Notes had remained outstanding beyond certain dates, the maturities of the Term Loan B and the Revolver would have been subject to acceleration (“spring-forward maturity”). However, following the 2017 Senior Notes Redemption and the consummation of the 2024 Amendment, the spring-forward maturity of the Term Loan B is no longer in effect and the spring-forward maturity of the Revolver has been extended (as described below).

On April 15, 2024, the Company entered into an amendment in respect of the 2020 Credit Agreement (the “2024 Amendment”) which, among other changes, (1) extends the existing Revolver maturity date from August 18, 2025 to (a) if any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof) remains outstanding, the earlier of (i) May 20, 2027 and (ii) the date that is ninety (90) days prior to the final maturity of any tranche of the Term Loan B, any incremental term loan or any refinancing term loan (or any refinancing or replacement thereof), as applicable, and (b) if no obligations are outstanding with respect to any tranche of the Term Loan B, any incremental term loan or any refinancing term loan, August 18, 2027 and (2) permanently reduces the aggregate commitments in respect of the Revolver by $5.0 million from $175.0 million to $170.0 million. The 2024 Amendment became effective on May 2, 2024 upon the completion of the 2017 Senior Notes Redemption.

Subject to certain exceptions, at any time prior to maturity, the 2020 Credit Agreement provides the Company with the right to increase the commitments under the Revolver and/or to establish one or more term loan facilities in an aggregate amount up to (i) the greater of $173.5 million and 50% LTM EBITDA (as defined in the 2020 Credit Agreement) plus (ii) additional amounts if (A) in the case of pari passu first lien secured indebtedness, the First Lien Net Leverage Ratio (as defined in the 2020 Credit Agreement) does not exceed 1.35:1.00, (B) in the case of junior lien secured indebtedness, the Total Net Leverage Ratio, as defined in the 2020 Credit Agreement, does not exceed 3.50:1.00, and (C) in the case of unsecured indebtedness, (x) the Total Net Leverage Ratio does not exceed 3.50:1.00 or (y) the Fixed Charge Coverage Ratio (as defined in the 2020 Credit Agreement) is no less than 2.00:1.00. The balances of indebtedness used in the calculations of the First Lien Net Leverage Ratio and the Total Net Leverage Ratio include offsets for cash and cash equivalents available for general corporate purposes.

As of September 30, 2025, the Revolver had unused available borrowing capacity of $170.0 million, and the outstanding balance of the 2024 Senior Notes was $400.0 million. During the first quarter of 2025, the Company voluntarily repaid the remaining $121.9 million outstanding balance of the Term Loan B.

Borrowings under the 2020 Credit Agreement bear interest at variable rates, which have increased since the latter part of 2022 due to changes in market conditions that resulted in increases in the Secured Overnight Financing Rate (“SOFR”) (and the London Interbank Offered Rate (“LIBOR”) prior to the transition to SOFR), in the case of the Term Loan B, and the administrative agent’s prime lending rate, in the case of the Revolver. Effective May 2, 2023, the 2020 Credit Agreement was amended to transition the Company’s original LIBOR option in respect of the Term Loan B to Adjusted Term SOFR. The average borrowing rates on the Term Loan B and the Revolver for the nine months ended September 30, 2025 were approximately 9.2% and 10.8%, respectively. At September 30, 2025, the borrowing rate on the Revolver was 10.5%. For more information regarding the terms of our 2020 Credit Agreement, refer to Note 10 of the Notes to Condensed Consolidated Financial Statements.

The table below presents our actual and required First Lien Net Leverage ratio under the 2020 Credit Agreement for the period, which is calculated on a rolling four-quarter basis:

(a) The ratio was negative because the Company’s cash and cash equivalents available for general corporate purposes exceeded secured Indebtedness, resulting in negative First Lien Net Indebtedness, both as defined in the 2020 Credit Agreement.

As of September 30, 2025, 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 10‑K for the year ended December 31, 2024.

Critical Accounting Policies and Estimates

There has been no material change in our significant accounting policies and estimates disclosed in Note 1 of the Notes to Consolidated Financial Statements and in Part II, Item 7 of our Annual Report on Form 10‑K for the year ended December 31, 2024.

Recently Issued Accounting Pronouncements

See Note 2 of the Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

There has been no material change in our exposure to market risk from that described in Part II, Item 7A of our Annual Report on Form 10‑K for the year ended December 31, 2024.

Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10‑Q was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (a) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to our risk factors as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.