After the fall

The Framingham construction firm fell out of the rankings of the state's top performing public companies this year, hurt by an epic recession that is battering the entire construction industry as well as Perini's particular niche: casinos.

In Las Vegas, where Perini's growth has been centered in recent years, tourism has slumped, gambling revenues have fallen, and major casino-resort construction projects have been suspended or canceled.

Just last month, Perini's signature Las Vegas project, the $8.6 billion MGM Mirage CityCenter, teetered near bankruptcy because its owners ran into financing problems. Ultimately, MGM Mirage, one of the two partners in the project, was able to reach a deal with lenders and keep the sprawling complex of hotels, casinos, condominiums, and shops on track.

"Perini's biggest end market is casinos in Las Vegas," said Richard Paget, an analyst at Morgan Joseph & Co., a New York investment firm. "The big question mark for Perini going forward is once the casino work winds down, what's going to replace it?"

That uncertainty has contributed to a sharp decline for Perini stock, which plunged to $10.21 a share in March from a 52-week high of $44.80 in May 2008. It has since rebounded above $15 a share.

In February, the company reported a $75.1 million loss in 2008 and warned 2009 would be a tough year, with delays in construction starts and lower than expected revenues and earnings.

Perini's 2008 loss was the result of a $202.8 million write-down of the value of Tutor-Saliba Corp., a civil construction firm it acquired last year.

Tutor-Saliba was the privately held company of Perini chief executive Ronald Tutor.

The write-down, an accounting rather than cash loss, reflected the declining value of construction firms in the face of a deep recession, according to financial reports.

The acquisition, however, may prove timely for Perini, analysts said.

Tutor-Saliba has long specialized in public works projects, which could better position Perini to win road, bridge, and other government contracts as federal stimulus spending pumps tens of billions of dollars into the nation's aging infrastructure.

"Like everyone else, they are trying to shift to markets that offer some potential," said John Rogers, an analyst at D.A. Davidson & Co., a financial advisory firm in Montana.

"You're likely to see opportunity on the government side." (Davidson disclosed that he owns Perini stock.)

Still, Perini is holding up well considering the hard times for the construction industry, analysts said. The firm enjoyed another year of record revenues, which rose to $5.7 billion last year, up 22 percent from 2007. Perini still has a large backlog of projects, $6.7 billion at the end of last year, plus lots of cash and ample credit, according to analysts.

"We have a strong balance sheet," said chief financial officer Kenneth Burk. "We're obviously in extraordinary times and we just have to weather this storm."

Robert Gavin can be reached at rgavin@globe.com.