What Tudor Perini Tells Us That the Construction Spending Data Doesn't
Here’s our thoughts on when we might add further to the Portfolio’s construction holdings.
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While it’s a bit behind us, especially with United Rentals URI and Vulcan Materials VMC having reported their December quarter results and sharing their updated outlooks, the January Construction Spending report reaffirms the difference between non-residential and residential construction activity.
Compared to December, total residential construction spending fell 0.5% in January, dragging down overall construction spending for the month. Non-residential construction spending, which is benefitting from ongoing infrastructure spending, data center buildouts and the like, rose modestly compared to December. Let’s remember that overall construction activity was impacted by winter weather during the month, and as we discussed in our earnings comments for Vulcan, as we move past winter weather, we should see a pick up in activity.
As part of our ongoing homework, when civil construction company Tudor Perini TPC reported late last week, we saw its December quarter backlog rose to $18.7 billion, up 84% year over year, driven by $12.8 billion in awards and contracts during the year. Some of those projects are ones we alluded to in our earnings notes for United Rentals and Vulcan Materials:
- $1.66 billion City Center Guideway and Stations project in Hawaii
- $1.4 billion healthcare campus project in California
- $1.13 billion Newark AirTrain Replacement project in New Jersey
- $1.1 billion Kensico-Eastview Connection Tunnel project in New York
- $479 million of additional funding for certain mass-transit projects in California
- $449 million for two healthcare facility projects in California;
- $229 million airport terminal connectors project at Fort Lauderdale-Hollywood International Airport in Florida
- Tudor’s share of the $1.3 billion Connecticut River Bridge Replacement project in Connecticut.
So far this year, Tudor announced the award of a $1.18 billion Manhattan Tunnel project in New York and shared the process of executing contract documents for the previously announced $3.76 billion Manhattan Jail Project in New York.
Moving out of the first two months of 2025, and with better temperatures as well as building conditions around the corner, we’ll monitor program wins and project start dates from Tudor Perini, but also those from similar companies like Aecom ACM, Fluor FLR and Bechtel.
With shares of United Rentals and Vulcan Materials currently oversold after posting some sharp declines, both are on our shopping list. However, given our comments from earlier on Monday, we will sit on the sidelines at least until we know whether President Trump will enact tariffs on Tuesday on Mexico, Canada and China, and the market digests Wednesday, February Service reports as well as ADP’s February Employment Change report.
At the time of publication, TheStreet Pro Portfolio was long URI and VMC.
