Earnings Call Transcript - TPC Q2 2025

Operator, Operator

Good day, ladies and gentlemen, and welcome to the Tutor Perini Corporation Q2 2025 Earnings Conference Call. My name is Carrie, and I will be your coordinator for today. As a reminder, this conference call is being recorded for replay purposes. I will now turn the conference over to your host for today, Mr. Jorge Casado, Senior Vice President of Investor Relations. Please proceed.

Jorge Casado, Senior Vice President of Investor Relations

Hello, and thank you all for joining us. With us today are Gary Smalley, CEO and President; Ron Tutor, Executive Chairman; and Ryan Soroka, Executive Vice President and CFO. Gary and Ryan will review the details of the quarter and provide commentary regarding our outlook and guidance. Ron, in his role as Executive Chairman, is joining us to help answer any project-specific questions as he remains involved in the setup of our newer major projects. Before we discuss our results, I will remind everyone that during this call, we will be making forward-looking statements, which are based on management's current assessment of existing trends and information. There is an inherent risk that our actual results could differ materially. You can find our disclosures about risk factors that could contribute to such differences in our Form 10-K, which we filed on February 27, 2025, and in our Form 10-Q that we are filing today. The company assumes no obligation to update forward-looking statements, whether due to new information, future events, or otherwise, other than as required by law. In addition, during today's call, management will be referring to certain non-GAAP financial measures. You can find information and a reconciliation of these non-GAAP financial measures in the earnings release that we issued today and in the Form 10-Q that is being filed today. Thank you. And with that, I will turn the call over to Gary Smalley.

Gary G. Smalley, CEO and President

Thanks, Jorge. Hello, everyone, and thank you for joining us. Tutor Perini had an outstanding second quarter, one of our best quarters ever, setting new records across various metrics. Operating cash flow was extraordinarily strong for the quarter at $262 million and $285 million through the first 6 months of 2025, setting new records for each respective period. And our second quarter cash flow was the second best for any quarter in the history of the company. In addition, our backlog climbed significantly to a new all-time record of $21.1 billion, up 102% year-over-year and up 9% sequentially, driven by $3.1 billion of new awards that we booked during the quarter. I will provide further details on some of these new awards in a few moments. Our second quarter revenue was up 22% from last year to $1.37 billion, and our revenue for both the second quarter and the first 6 months of 2025 was the highest for each respective period since 2009, reflecting record quarterly and first half 2025 revenue performance for the Civil segment and the best performance since 2020 for the Building segment. Operating income was up 89% to $76 million, reflecting strong operating performance and contributions from higher-margin projects in the Civil and Building segments. Our Civil segment delivered its highest segment operating income ever for both the second quarter and the first 6 months of the year with margins that were exceptionally strong. Our Building segment's operating income for both periods of 2025 was the highest since 2011, with margins that were also strong. Importantly, operating income for the quarter was very strong despite the substantial increase in share-based compensation expense that we experienced this quarter as reflected in today's earnings release. As you may recall, and as previously disclosed, over the past few years due to a depleted equity plan share pool combined with the previously low stock price, the company issued cash settled performance-based awards weighted heavily towards enhancing Tutor Perini's total shareholder return. As a result of our significant share price increase year-to-date, our share-based compensation expense also increased significantly. In an effort to provide our shareholders with a clear view of Tutor Perini's true overall business performance, starting this quarter, we have elected to report adjusted earnings, which exclude the impact of share-based compensation expense, net of associated tax benefit. It is important to note that at our recent Annual Shareholders Meeting in May, shareholders approved management's proposal to authorize additional shares for incentive awards. So going forward, the company intends to issue shares settled instead of cash-settled equity, which should limit future earnings volatility and reduce our share-based compensation expense considerably once these older cash-settled incentive compensation awards vest, some at the end of this year and the rest at the end of 2026. Returning to our results. For the second quarter of 2025, we delivered GAAP EPS of $0.38, up substantially compared to $0.02 for the same quarter of last year. Adjusted EPS for the second quarter was $1.41 compared to $0.34 for the second quarter of 2024, again demonstrating our strong core operating performance, reflecting the impact of contributions from higher-margin projects. Overall, Tutor Perini's business continues to perform extremely well and frankly, even better than we anticipated at the start of this year. We are at the beginning of the life cycle for several major higher-margin projects that are expected to drive substantial growth, profitability, and cash flow as project execution activities continue. What you are seeing now is just a preview of what these projects should produce on a larger scale in the coming years. Our record-breaking operating cash flow for the first 6 months of 2025 was primarily driven by collections from both newer and ongoing projects. I should add, however, that we have continued to make good progress and the resolution of certain disputed items that have also had a positive impact on cash generation with only a modest impact on earnings. We expect the same formula to continue to drive strong cash flow for the remainder of the year. As a result of the continued progress we have made on dispute resolutions during the quarter, our cost and estimated earnings in excess of billings, or CIE, is now down to $856 million at the end of the second quarter, which is a reduction of $91 million or 10%. Our CIE is now at the lowest level it has been in 8 years. Taking a closer look at our record $21.1 billion of backlog mentioned earlier, following the strong first quarter that featured $2 billion of new awards, our volume of bookings increased during the second quarter with an impressive $3.1 billion of new awards. This latest record backlog represents a nearly threefold increase since the end of 2022 and includes record highs in both the Civil and Specialty Contractors segments. This strong foundation gives us tremendous confidence in our ability to deliver the substantial growth, profitability, and cash flow that I just mentioned we are expecting to generate over the coming years. Not surprisingly, our book-to-burn ratio for the second quarter was an impressive 2.2x. The most significant new awards and contract adjustments in the second quarter included the $1.87 billion Midtown Bus Terminal Replacement Phase 1 project in New York, a $538 million health care project in California, 2 civil works projects in the Midwest collectively valued at $127 million, $90 million of additional funding for a mass transit project in California and $54 million of additional funding for another health care project in California. As we look ahead, we believe that our backlog will remain strong as our bidding pipeline for the Civil and Building segments remains full of opportunities this year and over the next several years with key near- and medium-term prospects located mostly on the West Coast, in the Midwest and in the Indo-Pacific region. Among these opportunities are several Building segment projects currently in the preconstruction phase that are expected to advance to the construction phase later this year, including another California health care project valued at nearly $1 billion. Some of our major upcoming project opportunities include the $12 billion Sepulveda Transit Corridor, the $3.8 billion Southeast Gateway line, the $1.2 billion Valley Link Phase 1 rail project, and the $650 million Foothill Gold Line light rail project, all of which are in California and the $1.4 billion I-535 Blatnik Bridge project in Minnesota. As we have discussed previously, there are also significant Indo-Pacific opportunities driven in large part by the U.S. Defense Department's Pacific Deterrence Initiative. Black Construction, our Guam-based subsidiary has had extraordinary success in capturing various new projects in the region and continues to be well positioned to win other major projects there over the next several years. Our record backlog continues to enable us to be highly selective as to which opportunities we will pursue and to focus on bidding projects that have favorable contractual terms, limited competition, and higher margins. We are committed to pursuing projects where we can showcase Tutor Perini's differentiated approach, depth of operational talent, and history of outstanding project execution. As Jorge mentioned at the start of this call, Ron Tutor, in his role as Executive Chairman, continues to help drive the setup of our newer major projects that we were awarded over the past several quarters. The importance of proper project setup of these mega projects cannot be understated as it is the first key step towards the successful execution of this work. These projects are in the early stages, but are going very well thus far, and Ron is here to help answer any project-specific questions that may come up during the Q&A. As a result of our strong performance to date and greater confidence in what we expect to achieve for the rest of the year, I am pleased to announce that we are increasing our guidance for the second time this year and for just the second time in our history. Our GAAP EPS for 2025 is now expected to be in the range of $1.70 to $2, up from the previous guidance of $1.60 to $1.95. Adjusted EPS for 2025 is expected in the range of $3.65 to $3.95, which compares to $2.45 to $2.80, the range we would have provided last quarter had we provided non-GAAP EPS guidance. Importantly, our increased guidance continues to factor in a significant amount of contingency for various remaining unknown or unexpected outcomes and developments in 2025, including the potential for slower ramp-ups on our newer projects, project delays for existing and prospective work, lower-than-expected win rates for future bids, higher than currently anticipated share-based compensation expenses, and settlements or adverse legal decisions associated with the resolution of disputes. Moreover, the outlook for Tutor Perini remains very bright beyond 2025. We anticipate that both our GAAP EPS and adjusted EPS in 2026 and 2027 will be significantly higher than the upper end of our increased guidance for 2025, and we continue to expect strong operating cash flow for 2025 and beyond. And to reiterate, while we expect share-based compensation expense to be higher than previously anticipated for the full year of 2025, it is projected to decrease considerably in 2026 and further in 2027 once certain awards have vested. Finally, let me provide a quick update with respect to the broader macro environment. As we mentioned last quarter, we do not currently anticipate that tariffs will have a significant impact on our business. We also do not currently foresee the risk of any of our major projects in backlog being canceled, delayed, or defunded, including our work on the first phase of the California High-Speed Rail project. In recent discussions with this customer regarding the federal government's decision to reduce funding on the overall program, the customer confirmed that our project is funded and authorized and is not expected to be adversely impacted. Thank you. And with that, I will turn the call over to Ryan to discuss the details of our first quarter results.

Ryan Joseph Soroka, Executive Vice President and CFO

Thanks, Gary. Good afternoon, everyone. I'll start off by discussing our results for the second quarter, after which I will provide some commentary on our balance sheet and our updated 2025 guidance assumptions. Revenue for the second quarter of 2025 was $1.37 billion, up 22% compared to $1.13 billion for the second quarter of 2024. Civil segment revenue was $734 million, up 34% compared to $546 million last year. Building segment revenue was $462 million, up 11% compared to $418 million last year. And Specialty Contractors segment revenue was $177 million, up 9% compared to $163 million last year. Our revenue growth was driven by increased project execution activities on various newer, higher-margin projects that all have substantial scope of work remaining. These projects included the Brooklyn Jail, the Honolulu Rail project, the Manhattan tunnel, the Newark AirTrain replacement, and the Purple Line Section 3 Stations project in California. Civil segment income from construction operations was $140 million in the second quarter of 2025, up 85% compared to $76 million for the second quarter last year, with the increase driven by contributions related to the strong revenue growth I mentioned for the settlement as well as favorable adjustments totaling $28 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. Building segment income from construction operations was $22 million in the second quarter of 2025 compared to $5 million last year, with the increase primarily due to contributions related to the increased project execution activities I mentioned. The Specialty Contractors segment posted a loss of $18 million for the second quarter of 2025 compared to a loss of $8 million last year. The increased loss was primarily due to unfavorable adjustments this quarter that totaled about $15 million related to the settlement of certain legacy claims in the Northeast, partially offset by contributions associated with the revenue growth for the segment. We anticipate improved operating income over the rest of this year and next year for the Specialty segment as our revenue is expected to increase due to their involvement in several of our newer large projects that are ramping up, which will help to cover the segment's G&A costs. Segment operating margins for the second quarter of 2025 were strong for the Civil and Building segments at 19.1% and 4.9%, respectively. Other income was $6 million, level with other income reported in the second quarter last year. Interest expense was $14 million, down 41% compared to $23 million for the same period last year, because of our substantial debt reduction since last year. Income tax expense for the second quarter of 2025 was $22 million, with a corresponding effective tax rate of 31.8% compared to $7 million for the same period last year, with a corresponding effective tax rate of 31.3%. We had to true up our tax provision this quarter and our new projected effective tax rate for 2025 is now higher than previously anticipated, all due to the significant increase in share-based compensation expense that Gary mentioned and the fact that nearly all the higher expense is nondeductible. On a GAAP basis, net income attributable to Tutor Perini for the second quarter of 2025 was $20 million or $0.38 of earnings per share, up substantially compared to $1 million or $0.02 of earnings per share for last year's second quarter. For the first 6 months of 2025, net income attributable to Tutor Perini was $48 million or $0.90 of earnings per share, also up substantially compared to $17 million or $0.31 of earnings per share for the same period last year. Our second quarter GAAP EPS was ahead of our expectations, even with the impact of the significantly higher-than-anticipated share-based compensation expense. Adjusted net income attributable to Tutor Perini, which again excludes the impact of share-based compensation expense, net of the related tax benefit was $75 million, or $1.41 of adjusted earnings per share for the second quarter of 2025, up very meaningfully compared to $18 million or $0.34 of adjusted earnings per share from last year's second quarter. For the first 6 months of 2025, adjusted net income attributable to Tutor Perini was $110 million or $2.06 of adjusted earnings per share, also up substantially compared to $39 million or $0.73 of adjusted earnings per share for the same period last year. As Gary mentioned, our operating cash flow for the second quarter and first 6 months of 2025 was stellar at $262 million and $285 million, respectively, with both results setting new records for the period. We expect that our operating cash flow will continue to be strong in 2025 as well as over the next several years, driven largely by organic cash collections. That is from new and existing projects and occasionally enhanced by collections associated with dispute resolutions. Now I will address the balance sheet. Our total debt as of June 30, 2025, was $419 million, down 21% compared to $534 million at the end of 2024, but perhaps more impressive is that due to our record operating cash flow in the second quarter, for the first time since 2010, our cash exceeded our total debt. As of June 30, 2025, our cash was $526 million or $107 million greater than total debt. As Gary noted, our CIE was $856 million at the end of the second quarter, down $91 million or 10% compared to the balance at the end of the first quarter of 2025. It stands at its lowest level it has been since the second quarter of 2017. The CIE decrease was mostly due to billing and collections activity and to a much lesser extent, from charges related to litigation and settlements on older disputes. Finally, let me provide you with our latest updated assumptions regarding our increased earnings guidance. G&A expense for 2025 is now expected to be between $360 million and $380 million with the increase from our previous assumption due entirely to increased share-based compensation expense. Depreciation and amortization expense is still anticipated to be approximately $55 million in 2025, with depreciation at $53 million and amortization at $2 million. Interest expense for 2025 is still expected to be approximately $55 million, of which about $5 million will be noncash. This is $34 million or 38% lower than our interest expense of $89 million in 2024. Our effective income tax rate for 2025 is now expected to be approximately 26% to 28%, higher than previously anticipated due to the increase in share-based compensation expense, nearly all of which is nondeductible. We now anticipate noncontrolling interest to be between $75 million and $85 million, significantly higher than last year due to increased contributions from certain joint ventures. We still expect approximately 53 million weighted average diluted shares outstanding for 2025, and capital expenditures are still anticipated to be approximately $140 million to $150 million, with the vast majority of the CapEx in 2025 now estimated at approximately $120 million to $130 million to be owner-funded for large equipment items on certain large new projects such as tunnel boring machines. Thank you. And with that, I will turn the call back over to Gary.

Gary G. Smalley, CEO and President

Thank you, Ryan. To briefly recap, we delivered extraordinary results for the second quarter that once again exceeded our expectations with record operating cash flow and continued strong revenue, operating income, and earnings growth, and with backlog that has doubled year-over-year to a new all-time record of $21.1 billion. This record backlog should enable us to generate double-digit revenue growth and strong earnings for the foreseeable future, while also serving as a catalyst for continued strong cash flow as the newer projects progress through design and into construction. Our outstanding performance to date, combined with our greater confidence in how the second half of this year should conclude, has enabled us to increase our 2025 EPS guidance for the second time this year, while still maintaining what we believe is an appropriate level of contingency for unknown or unanticipated developments. More specifically, we are raising the midpoint of our 2025 adjusted EPS guidance by a staggering $1.17 or 45% with the latest increase. Our strong results so far this year reflect the impact of contributions from higher-margin civil and building projects, many of which are still in the early stages but are ramping up. Last quarter, I concluded my earnings call commentary on May 7 by stating that "There has never been a better time to be a Tutor Perini shareholder as we believe we are at the dawn of a new era for the company." With the stock price doubling since then, combined with our outstanding second quarter results that we are reporting today, I think it is easy to see why I was so optimistic then. With what we continue to see on the horizon for this year and beyond, I still believe that statement to be true, and there remain tremendous opportunities ahead for further substantial shareholder value creation. Thank you. And with that, I will turn the call over to the operator for your questions.

Operator, Operator

And our first question will come from Michael Dudas with Vertical Research.

Michael Stephan Dudas, Analyst

Gary, great job to the operating team on the impressive results. It's clear, and you articulated it well. As we look at this quarter and into 2025, are there any significant project closeouts that you foresee? Additionally, what are your expectations regarding the win rate for the new business, considering some of the larger projects that might be announced in the coming weeks or quarters? Do you have a percentage expectation or probability estimation, and how do you believe this will help counterbalance any closeouts we may encounter in the next six to nine months?

Gary G. Smalley, CEO and President

Yes, Mike, thanks. I'll take the first part and then let Ron help out also. Look, it's not really about projects wrapping up for us at this point. It's about projects starting up, ramping up and generating even more revenue and profit and cash than what they've done so far. So we don't see in the next quarter or so or any short-term period of time, anything of significance winding down. On the proposal front, Ron, with the prospects that we have out there, we feel good about our chances. Anything else you want to add to that?

Ronald N. Tutor, Executive Chairman

Yes. There's only 2 jobs of any consequence that are in the final stages, and those would be defined as finishing by the end of next year. So any reduction in revenue on those 2 jobs as they work toward their completion is more than offset by the tremendous ramping up of all of these new jobs, where they will continue to explode revenue-wise this year, next year, and the following year, and you will see dramatic revenue increases from all these major new jobs hitting us in the next quarters and continuing.

Gary G. Smalley, CEO and President

Yes. So Mike, to your question on the prospects, look, we feel really good about all the prospects. We're not going to get them all, these major ones, but we know that we're one of a few bidding for them. And so we expect to land 1 or 2 of them, and that should help as they ramp up, as they materialize, they will replace the work that Ron just mentioned that work winding down next year at the end of '26 and early in '27.

Michael Stephan Dudas, Analyst

Gary, you mentioned in your prepared remarks that even the first half results are better than you anticipated. Maybe you can assess how that occurred or what were some of the drivers of that relative to the plan and how the execution certainly came through this first half?

Gary G. Smalley, CEO and President

Yes. I think there are a couple of things. One, the project execution, the ramp-up of some of these projects was a little quicker than we anticipated. We factored in some contingency or some expectation that things would not go as brilliantly, let's say, as they did. So that certainly was a factor. We also had a really good quarter, as we talked about in the prepared remarks of reducing CIE, cost in excess of billings. That came down further than what we thought, what we anticipated for the first quarter anyway. We also benefited by the fact that there were a lot fewer write-downs than what we had seen recently. We had put contingency in for that possibility, and we did not have to use much of that contingency there. And then overall, work in some of the units, some of the smaller work, it came in, we'll say, more timely than what we anticipated. And so that also helped. And I'll just say that we have contingency that we have for the year. We don't disclose, of course, what that is. But for half of the year, we've used about 1/3 of the contingency. So I think that even with these outstanding results, we didn't use the contingency that we had anticipated that we would use for the first 6 months.

Michael Stephan Dudas, Analyst

That's well said, Gary. My final question, maybe for Ryan. The cash flow will continue to be quite strong in the next couple of quarters into next year. Will the pace track with earnings, and do you foresee any adjustments there? And Gary, where does the Board stand on determining how to utilize the benefits your company is generating, particularly as you bring this cash into the company?

Ryan Joseph Soroka, Executive Vice President and CFO

Yes, previously we indicated that we anticipated cash levels to be between what we produced in 2022 and 2023, which is around $200 million to $300 million in operating cash. Currently, with $285 million of operating cash year-to-date, we expect to exceed that range, possibly ending up around $350 million on the lower side and approaching $500 million on the higher side, similar to what we achieved last year.

Gary G. Smalley, CEO and President

Yes, somewhere in that range. And then what was your last question, sorry?

Michael Stephan Dudas, Analyst

Just the Board and figuring out an allocation policy.

Gary G. Smalley, CEO and President

Yes. Look, we continue to talk to the Board. We will, next week, when we reconvene with them. There's still, of course, a lot of alternatives out there for us. One thing I will say, we are going to be fiscally conservative in this. We want to accumulate more cash. We're not quite ready to go down a path. We're still looking at all options. We will do something someday, but that day is not quite upon us. So we ask for everyone's continued patience in that. Everyone has been patient for a long time to see the results that we've generated. We want to stock away some more cash, again, to be fiscally conservative than just start paying a dividend, let's say, or something. We also recognize that we need cash for working capital. We're growing the business at a very significant clip. So that adds to the reason for our conservatism in coming up with some type of capital allocation decision.

Michael Stephan Dudas, Analyst

Well, the patience has been rewarded in 2025, Gary. Thanks for your time, and appreciate it.

Gary G. Smalley, CEO and President

Yes. Thank you, Mike.

Operator, Operator

Our next question comes from Adam Thalhimer with Thompson, Davis.

Adam Robert Thalhimer, Analyst

Congrats on all the success here.

Gary G. Smalley, CEO and President

Thanks, Adam. Thank you.

Adam Robert Thalhimer, Analyst

Can you comment just on the project funnel and the project outlook? I'm just curious, you're obviously being more selective than you've been in the past, but do you still see a good flow of projects that meet your criteria?

Gary G. Smalley, CEO and President

Yes, we can be more selective than before, and there aren't as many large projects available since we've secured a significant portion of those. However, we are seeing larger projects emerging in L.A., opportunities in the Indo-Pacific region, and some in the Midwest. There are substantial opportunities out there, and we will focus on projects that are geographically favorable for us and offer higher margins with less competition. We don’t feel the need to be aggressive with pricing as we haven’t seen that necessity in the past couple of years.

Adam Robert Thalhimer, Analyst

Great. Ryan, could you please elaborate on your expectations for Specialty moving forward? I'd like you to provide more details about the revenue and margins in that area.

Ryan Joseph Soroka, Executive Vice President and CFO

Yes. As we look towards the second half of the year, we expect Specialty to end up around breakeven or possibly slightly above breakeven as they begin to execute some of the new projects, particularly those in the Northeast that are associated with Tutor Perini. We have valuable insights into these projects. As production expands and ramps up looking forward into 2026 and beyond, we anticipate growth from these larger projects and expect margins to continue to improve. Ultimately, once we resolve some of the legacy disputes, we expect Specialty to reach a margin range of 5% to 8%.

Operator, Operator

Moving next to Steven Fisher with UBS.

Steven Michael Fisher, Analyst

Congrats on the continued good progress. Just wanted to come back to the change in guidance again. It sounds like it's a combination of less contingency needs and maybe things ramping up a little bit faster. Are there any other things that you can call out that sort of bridge the guidance to the extent that you can talk about whether it's in Civil, whether it's in Building? And is it the work that you've now put in the backlog in Q2 that might already have some impact in the second half? Just any of the other factors that drove the change here in the guidance?

Gary G. Smalley, CEO and President

Yes, as we look forward, Civil will continue to be a significant driver of the company's results, just as it always has been. Building will also make a substantial contribution, particularly because we are nearing the completion of one of the large jail projects, with the other expected to follow within a year. In terms of our current results, we have made good progress on some settlements, which have not notably impacted earnings. One specific project has been very successful, and we have made strides in settlement discussions that are close to being finalized, allowing us to release some contingency reserves connected to that project. We don't foresee any major items affecting the latter half of the year. However, the adjusted EPS guidance reflects the uncertainties surrounding the executive compensation awards, which have introduced some volatility. Once we account for that in the adjusted EPS, we believe the remaining contingency is robust enough to meet the guidance we are presenting today. I hope that answers your question.

Steven Michael Fisher, Analyst

Yes, that's helpful. I guess, I'm wondering, as we think about the modeling out the Civil segment for the second half of the year, are the margins that you embed in there now higher than what you had previously for the second half specifically?

Gary G. Smalley, CEO and President

Yes. I would say they probably have ticked up a point higher. It depends geographically, and that's why we always quote a range, but we're probably up to 15% now for Civil segment margin, where years ago, we were 8% to 10%, then we're 10% to 12%. And recently, we've signaled 12% to 14%. I'd say 12% to 15% is probably a good range for Civil margins. We'd like to expand on that further. But in the short term, it looks like 12% to 15% probably is the best range.

Steven Michael Fisher, Analyst

Okay. That's helpful. And then you mentioned that you don't expect any real impacts from the tariffs. I guess, I'm just thinking that the tariffs really haven't hit construction costs yet from what I can tell and in chatting with folks in the industry. And so I'm wondering what happens if it's by the end of this year and as we get into next year, if we really start to see costs picking up a little bit, how much wiggle room is there and contingency in your backlog to account for a few higher percentage points of overall construction cost?

Gary G. Smalley, CEO and President

Yes. Let me explain. First of all, when we were talking about tariffs not having an impact, we're not just talking about up to now. We're talking about looking forward as well. For each of our major projects, what we did, we renewed or revisited an analysis that we had done last quarter, and we looked at every one of these major projects to see any possible exposure that we might have for tariffs. And I can tell you that it was even less exposure than what we had seen last quarter. We've done a very good job in these projects, what we call buying out the materials and also subs such that the risk is just not there because now we pass the risk on to, let's say, vendors where we've locked in steel prices for various projects or other pricing. So we will not have an issue with the current projects that we have in backlog. We're absolutely confident of that. As we look ahead with future projects, then we'll, of course, bid at the higher rates. And then we'll do our best to mitigate that risk primarily through buyout and then also through contingency. And we just don't foresee that being the impact. So yes, the impact on the pricing is like what you said. It has not materialized, at least not in a significant way. But when it does, we're protected or we will be protected.

Operator, Operator

Our next question comes from Liam Burke with B. Riley Securities.

Liam Dalton Burke, Analyst

In earlier discussions, you talked about your larger projects, and you've worked yourself into a significant competitive advantage in terms of your bidding. But are you seeing less competitive bidding on the bidding front?

Ronald N. Tutor, Executive Chairman

What do you mean by less competitive bidding?

Liam Dalton Burke, Analyst

Are you seeing fewer competitors looking to bid against you on larger projects?

Ronald N. Tutor, Executive Chairman

I have mentioned this for the past two to three years. In the last two years, we've only seen one other bidder at most. On two occasions, we were the sole bidder. So, nothing has changed; the competition remains minimal.

Liam Dalton Burke, Analyst

Fair enough. And there seems to be a little more support from the Department of Transportation on transit investment. Are you seeing any of that now? Or are you just working on the funded projects?

Ronald N. Tutor, Executive Chairman

Well, all of our work is funded and a great deal of which by the FDA and the federal administration. Our AirTrain is a typical transit-funded project. There's more and more money going into transit, which is our biggest strength. So you're right. So we're the beneficiary of that, and hopefully, it continues.

Operator, Operator

There are no further questions at this time. I would like to turn the floor back over to Gary Smalley for closing comments.

Gary G. Smalley, CEO and President

Thank you very much. So we are, what, 6 months, really 7 months into the year and things are going better than what we thought. There's an expression so far, so good. I'd like to modify that expression at this point and say so far, so excellent because we know that we still have a long way to go, but I think you can see the exceptional progress that we're making here at Tutor Perini really across the board. So we look forward to demonstrating that this excellence will continue as we move forward. I want to thank you for your continued support in what we are doing, and we look forward to talking to you again next quarter.

Operator, Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.