Primoris Services Corporation Announces 2012 Fourth Quarter and Full Year Financial Results
Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or
“Company”) today announced financial results for its fourth quarter and
year ended December 31, 2012.
The Company also announced that on March 5, 2013 its Board of Directors
declared a $0.03 per share cash dividend to stockholders of record on
March 29, 2013, payable on or about April 15, 2013.
Brian Pratt, Chairman, President and Chief Executive Officer of
Primoris, commented, “2012 was a year of records for Primoris. Our
revenue for both the quarter and the year were at record levels, with a
healthy combination of both organic and acquisitive growth. Our fourth
quarter net income of $17 million is the best fourth quarter in
Primoris’ history, and is a testament to our focus on building a
balanced company with numerous sources of growth. We generated record
cash flow from operations of $98.4 million in 2012, and our balance
sheet at December 31, 2012 included $161.0 million in cash and short
term investments, our highest level to date. Our debt-to-equity ratio
increased to 46.7% as we took advantage of historic low interest rates
to raise $50 million in long-term debt. Our final record for the year
was our ending backlog value, an impressive $1.35 billion.”
Mr. Pratt continued, “Primoris is a group of specialized construction
and infrastructure companies serving diverse end markets across the
United States. Our ongoing focus is on energy infrastructure,
encompassing everything from midstream gathering and transportation
lines to power generation to downstream refining and petrochemical
facilities. Though the country at large is still experiencing the
effects of the economic turmoil of the past few years, Primoris and the
markets we focus on are benefitting from strong tailwinds. Our team of
exceptional men and women are ready to capitalize on that growth in
2013.”
2012 FOURTH QUARTER RESULTS OVERVIEW
Revenues for the 2012 fourth quarter increased 29% to $480.9 million
from $373.1 million for the same period in 2011. The increased revenues
are largely due to increased pipeline work in the West Construction
Services segment and increased industrial work in the East Construction
Services segment, as well as the impact of Primoris’ 2012 acquisitions
of Sprint, Saxon, and Q3 Contracting, which contributed $64.3 million in
revenues for the three months ended December 31, 2012. Gross profit for
the 2012 fourth quarter rose by 7.4% to $54.8 million, or 11.4% of
revenues, from $51.0 million, or 13.7% of revenues, in the 2011 fourth
quarter. The decline in gross margin percentage can be attributed
primarily to the completion of the Ruby pipeline project in 2011 and the
lower margins associated with the startup of the highway projects in the
Belton, Texas area in 2012.
SEGMENT RESULTS
-
East Construction Services - located
primarily in the southeastern United States, incorporates the
construction business of James Construction Group (JCG), Cardinal
Contractors, Inc., Sprint Pipeline Services LP, acquired March 2012,
and The Saxon Group, acquired September 2012. Silva, acquired May
2012, was merged with the operations of JCG.
-
West Construction Services - includes
construction services performed by companies headquartered in the
western United States including ARB, Inc., ARB Structures, Inc.,
Rockford, and Q3 Contracting Inc., acquired November 2012. The Blythe
Power Constructors joint venture is also included as part of West
Construction Services.
-
Engineering - incorporates the results of
OnQuest, Inc. and Born Heaters Canada, ULC.
|
|
|
|
Segment Revenues
(in thousands, except %)
|
|
|
|
|
|
|
|
For the three months ended December 31,
|
|
|
|
2012
Unaudited
|
|
|
2011
Unaudited
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Total
|
Segment
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
203,081
|
|
|
42.2
|
%
|
|
|
$
|
125,446
|
|
|
33.6
|
%
|
West Construction Services
|
|
|
|
265,509
|
|
|
55.2
|
%
|
|
|
|
234,093
|
|
|
62.8
|
%
|
Engineering
|
|
|
|
12,293
|
|
|
2.6
|
%
|
|
|
|
13,527
|
|
|
3.6
|
%
|
Total
|
|
|
$
|
480,883
|
|
|
100.0
|
%
|
|
|
$
|
373,066
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross Profit
(in thousands, except %)
|
|
|
|
For the three months ended December 31,
|
|
|
|
2012
Unaudited
|
|
|
2011
Unaudited
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
Gross
|
|
|
Segment
|
|
|
Gross
|
|
|
Segment
|
Segment
|
|
|
Profit
|
|
|
Revenue
|
|
|
Profit
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
16,369
|
|
|
8.1
|
%
|
|
|
$
|
11,460
|
|
|
9.1
|
%
|
West Construction Services
|
|
|
|
35,031
|
|
|
13.2
|
%
|
|
|
|
37,557
|
|
|
16.0
|
%
|
Engineering
|
|
|
|
3,419
|
|
|
27.8
|
%
|
|
|
|
2,029
|
|
|
15.0
|
%
|
Total
|
|
|
$
|
54,819
|
|
|
11.4
|
%
|
|
|
$
|
51,046
|
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Construction Services: Revenues increased by $77.6 million
in the 2012 fourth quarter, primarily due to the contribution from
Primoris Energy Services (“PES”), which includes the March 2012
acquisition of Sprint and the September 2012 acquisition of Saxon.
Excluding the impact of PES, revenues increased by $26.1 million due
primarily to increased James industrial work in petrochemical and
fertilizer facilities as a result of low natural gas prices in the Gulf
Coast. Gross profit increased by $4.9 million in the 2012 fourth
quarter, including $5.2 million of gross profit contribution from PES.
Excluding the impact of PES, gross profit decreased by $0.4 million,
primarily a result of lower profit margins on the startup projects in
the Belton, TX area. Over time, we expect these projects to generate
gross profit at historical heavy civil levels.
West Construction Services: Revenues increased by $31.4 million
in the 2012 fourth quarter, due primarily to contributions from pipeline
work and the acquisition of Q3 Contracting, which generated $12.8
million in revenue after its November 19, 2012 acquisition. Gross profit
for the 2012 fourth quarter decreased by $2.5 million, as 2011 fourth
quarter Rockford gross profit included the Ruby pipeline project.
Engineering: Revenues decreased by $1.2 million, mainly due to
lower order activity across the operation. Gross profit increased by
$1.4 million, primarily as we neared completion of a major project in
Australia.
Selling, general and administrative expenses (“SG&A”) were
$26.7 million, or 5.6% of revenues for the 2012 fourth quarter, compared
to $25.8 million, or 6.9% of revenues for the 2011 fourth quarter. The
increased SG&A included a $4.5 million increase attributable to the
acquired companies of Sprint, Saxon, and Q3 Contracting and a $2.4
million increase in compensation, legal, consulting and acquisition
related expenses, offset by a $3.5 million settlement with the sellers
of Rockford and a $2.5 million reduction from Q4 2011 in pension
withdrawal liability expense.
Operating income for the 2012 fourth quarter was $28.1 million, or 5.8%
of total revenues, compared to $25.3 million, or 6.8% of total revenues,
for the same period last year.
Net other expense in the 2012 fourth quarter was $1.2 million, which was
a $3.3 million decline from the 2011 fourth quarter. The decline was
primarily due to expenses and charges associated with the WesPac
investment in 2011.
The provision for income taxes for the 2012 fourth quarter was $9.0
million, for an effective tax rate of 33.3%, compared to $8.3 million,
for an effective tax rate of 40.1%, in the 2011 fourth quarter. The
decrease in the effective tax rate was primarily caused by the tax
treatment of the Rockford settlement.
Net income attributable to Primoris for the 2012 fourth quarter was
$17.0 million, or $0.33 per diluted share, compared to net income of
$12.5 million, or $0.24 per diluted share, in the same period in 2011.
Fully diluted shares outstanding for the 2012 fourth quarter increased
by 0.2% to 51.4 million from 51.3 million in 2011’s fourth quarter. The
increase in shares was due to shares issued as part of the Sprint
acquisition, for director compensation and for the company’s long-term
incentive program, offset by shares repurchased under a share repurchase
plan. During the 2012 fourth quarter, the Company did not purchase any
shares of stock under its 2012 share repurchase program, which expired
on December 31, 2012.
|
|
|
|
|
2012 FULL YEAR RESULTS OVERVIEW
Segment Revenues
(in thousands, except %)
|
|
|
|
|
|
|
|
|
|
For the twelve months ended December 31,
|
|
|
|
|
2012
Unaudited
|
|
|
2011
Unaudited
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Total
|
Segment
|
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
|
$
|
662,248
|
|
|
43.0
|
%
|
|
|
$
|
528,745
|
|
|
36.2
|
%
|
West Construction Services
|
|
|
|
|
832,860
|
|
|
54.0
|
%
|
|
|
|
881,733
|
|
|
60.4
|
%
|
Engineering
|
|
|
|
|
46,626
|
|
|
3.0
|
%
|
|
|
|
49,672
|
|
|
3.4
|
%
|
Total
|
|
|
|
$
|
1,541,734
|
|
|
100.0
|
%
|
|
|
$
|
1,460,150
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross Profit
(in thousands, except %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the twelve months ended December 31,
|
|
|
|
|
2012
Unaudited
|
|
|
2011
Unaudited
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
Gross
|
|
|
Segment
|
|
|
Gross
|
|
|
Segment
|
Segment
|
|
|
|
Profit
|
|
|
Revenue
|
|
|
Profit
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
|
$
|
63,811
|
|
|
9.6
|
%
|
|
|
$
|
57,118
|
|
|
10.8
|
%
|
West Construction Services
|
|
|
|
|
119,328
|
|
|
14.3
|
%
|
|
|
|
118,385
|
|
|
13.4
|
%
|
Engineering
|
|
|
|
|
9,571
|
|
|
20.5
|
%
|
|
|
|
9,700
|
|
|
19.5
|
%
|
Total
|
|
|
|
$
|
192,710
|
|
|
12.5
|
%
|
|
|
$
|
185,203
|
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER FINANCIAL INFORMATION
Primoris’s balance sheet at December 31, 2012 included cash and cash
equivalents of $157.6 million, working capital of $144.0 million, total
debt and capital leases of $155.4 million and stockholders’ equity of
$332.6 million. The balance sheet included a $23.4 million liability
representing the estimated fair value for earnout payments for
Rockford’s financial performance for 2012 and Sprint’s performance for
2012 and potential earnout payments for Sprint’s financial performance
for 2013, Saxon’s performance for 2013 or 2014, and Q3C’s financial
performance for the 13 ½ month period ending December 31, 2013 and for
2014.
BACKLOG
At December 31, 2012, total backlog was $1.35 billion compared to $1.16
billion at December 31, 2011. Primoris expects that approximately 57% of
total backlog at December 31, 2012 will be recognized as revenue in
2013, with $435 million expected for the East Construction Services
segment, $320 million for the West Construction Services segment and $14
million for the Engineering segment.
Backlog should not be considered a comprehensive indicator of future
revenues, as a significant portion of Primoris’s revenues are derived
from projects that are not part of a backlog calculation and projects
that are considered a part of backlog may be cancelled by our customers.
In 2012, approximately $292.6 million of revenue was generated by
projects that were not included in backlog.
CONFERENCE CALL
Brian Pratt, Chairman, President and Chief Executive Officer, and Peter
J. Moerbeek, Executive Vice President and Chief Financial Officer will
host a conference call today, Thursday, March 7, 2013 at 11:30 am
Eastern Time / 10:30 am Central Time to discuss the results.
Interested parties may participate in the call by dialing:
-
(877) 407-8293 (Domestic)
-
(201) 689-8349 (International)
The conference call will also be broadcasted live via the Investor
Relations section of Primoris’s website at www.prim.com.
Once at the Investor Relations section, please click on “Events &
Presentations”. If you are unable to participate in the live call, the
conference call will be archived and can be accessed for approximately
90 days.
ABOUT PRIMORIS
Founded in 1946, Primoris, through various subsidiaries, has grown to
become one of the largest specialty contractors and infrastructure
companies in the United States. Serving diverse end markets, Primoris
provides a wide range of construction, fabrication, maintenance,
replacement, water and wastewater, and engineering services to major
public utilities, petrochemical companies, energy companies,
municipalities, and other customers. Since December 2009, Primoris has
tripled its revenue and the Company’s national footprint now extends
from Florida, along the Gulf Coast, through California, into the Pacific
Northwest and Canada. For additional information, please visit www.prim.com
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking statements,
including with regard to the Company’s future performance. Words such as
"estimated," "believes," "expects," "projects," “may,” and "future" or
similar expressions are intended to identify forward-looking statements.
Forward-looking statements inherently involve risks and uncertainties,
including without limitation, those described in this press release and
those detailed in the "Risk Factors" section and other portions of our
Annual Report on Form 10-K for the period ended December 31, 2012, and
other filings with the Securities and Exchange Commission. Primoris does
not undertake any obligation to publicly 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.
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
480,883
|
|
|
|
$
|
373,066
|
|
|
|
$
|
1,541,734
|
|
|
|
$
|
1,460,150
|
|
Cost of revenues
|
|
|
|
426,064
|
|
|
|
|
322,020
|
|
|
|
|
1,349,024
|
|
|
|
|
1,274,947
|
|
Gross profit
|
|
|
|
54,819
|
|
|
|
|
51,046
|
|
|
|
|
192,710
|
|
|
|
|
185,203
|
|
Selling, general and administrative expenses
|
|
|
|
26,740
|
|
|
|
|
25,779
|
|
|
|
|
96,424
|
|
|
|
|
86,204
|
|
Operating income
|
|
|
|
28,079
|
|
|
|
|
25,267
|
|
|
|
|
96,286
|
|
|
|
|
98,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from non-consolidated entities
|
|
|
|
(709
|
)
|
|
|
|
(3,287
|
)
|
|
|
|
186
|
|
|
|
|
4,018
|
|
Foreign exchange loss
|
|
|
|
(6
|
)
|
|
|
|
154
|
|
|
|
|
(36
|
)
|
|
|
|
(96
|
)
|
Other expense
|
|
|
|
91
|
|
|
|
|
(171
|
)
|
|
|
|
(870
|
)
|
|
|
|
(1,088
|
)
|
Interest income
|
|
|
|
14
|
|
|
|
|
34
|
|
|
|
|
157
|
|
|
|
|
331
|
|
Interest expense
|
|
|
|
(575
|
)
|
|
|
|
(1,191
|
)
|
|
|
|
(3,619
|
)
|
|
|
|
(5,431
|
)
|
Income before provision for income taxes
|
|
|
|
26,894
|
|
|
|
|
20,806
|
|
|
|
|
92,104
|
|
|
|
|
96,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
(8,962
|
)
|
|
|
|
(8,335
|
)
|
|
|
|
(33,837
|
)
|
|
|
|
(38,174
|
)
|
Net income
|
|
|
|
17,932
|
|
|
|
|
12,471
|
|
|
|
|
58,267
|
|
|
|
|
58,559
|
|
Net income attributable to noncontrolling interests
|
|
|
|
(911
|
)
|
|
|
|
-
|
|
|
|
|
(1,511
|
)
|
|
|
|
-
|
|
Net income attributable to Primoris
|
|
|
$
|
17,021
|
|
|
|
$
|
12,471
|
|
|
|
$
|
56,756
|
|
|
|
$
|
58,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
$
|
0.33
|
|
|
|
$
|
0.24
|
|
|
|
$
|
1.10
|
|
|
|
$
|
1.15
|
|
Diluted:
|
|
|
$
|
0.33
|
|
|
|
$
|
0.24
|
|
|
|
$
|
1.10
|
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
51,404
|
|
|
|
|
51,059
|
|
|
|
|
51,391
|
|
|
|
|
50,707
|
|
Diluted
|
|
|
|
51,418
|
|
|
|
|
51,292
|
|
|
|
|
51,406
|
|
|
|
|
51,153
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
157,551
|
|
|
|
|
|
$
|
120,306
|
Short term investments
|
|
|
|
3,441
|
|
|
|
|
|
|
23,000
|
Customer retention deposits and restricted cash
|
|
|
|
35,377
|
|
|
|
|
|
|
31,490
|
Accounts receivable, net
|
|
|
|
268,095
|
|
|
|
|
|
|
187,378
|
Costs and estimated earnings in excess of billings
|
|
|
|
41,701
|
|
|
|
|
|
|
41,866
|
Inventory and uninstalled contract materials
|
|
|
|
37,193
|
|
|
|
|
|
|
31,926
|
Deferred tax assets
|
|
|
|
10,477
|
|
|
|
|
|
|
10,659
|
Prepaid expenses and other current assets
|
|
|
|
10,800
|
|
|
|
|
|
|
13,252
|
Total current assets
|
|
|
|
564,635
|
|
|
|
|
|
|
459,877
|
Property and equipment, net
|
|
|
|
184,840
|
|
|
|
|
|
|
129,649
|
Investment in non-consolidated entities
|
|
|
|
12,831
|
|
|
|
|
|
|
12,687
|
Intangible assets, net
|
|
|
|
51,978
|
|
|
|
|
|
|
32,021
|
Goodwill
|
|
|
|
116,941
|
|
|
|
|
|
|
94,179
|
Total assets
|
|
|
$
|
931,207
|
|
|
|
|
|
$
|
728,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
151,546
|
|
|
|
|
|
$
|
106,725
|
Billings in excess of costs and estimated earnings
|
|
|
|
158,892
|
|
|
|
|
|
|
137,729
|
Accrued expenses and other current liabilities
|
|
|
|
76,152
|
|
|
|
|
|
|
59,923
|
Dividends payable
|
|
|
|
--
|
|
|
|
|
|
|
1,532
|
Current portion of capital leases
|
|
|
|
3,733
|
|
|
|
|
|
|
6,623
|
Current portion of long-term debt
|
|
|
|
19,446
|
|
|
|
|
|
|
13,870
|
Current portion of subordinated debt
|
|
|
|
--
|
|
|
|
|
|
|
15,167
|
Current portion of contingent earnout liabilities
|
|
|
|
10,900
|
|
|
|
|
|
|
3,450
|
Total current liabilities
|
|
|
|
420,669
|
|
|
|
|
|
|
345,019
|
Long-term capital leases, net of current portion
|
|
|
|
3,831
|
|
|
|
|
|
|
4,047
|
Long-term debt, net of current portion
|
|
|
|
128,367
|
|
|
|
|
|
|
55,852
|
Long-term subordinated debt, net of current portion
|
|
|
|
--
|
|
|
|
|
|
|
7,334
|
Long-term contingent earnout liabilities, net of current portion
|
|
|
|
12,531
|
|
|
|
|
|
|
9,268
|
Deferred tax liabilities
|
|
|
|
20,018
|
|
|
|
|
|
|
21,079
|
Other long-term liabilities
|
|
|
|
13,153
|
|
|
|
|
|
|
10,882
|
Total liabilities
|
|
|
$
|
598,569
|
|
|
|
|
|
$
|
453,481
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
Preferred Stock - $0001 par value, 1,000,000 shares authorized, none
issued and outstanding at December 31, 2012 and 2011, respectively
|
|
|
|
--
|
|
|
|
|
|
|
--
|
Common stock-$.0001 par value; 90,000,000 shares authorized,
51,403,686 and 51,059,132 issued and outstanding at December 31,
2012 and December 31, 2011
|
|
|
|
5
|
|
|
|
|
|
|
5
|
Additional paid-in capital
|
|
155,605
|
|
|
|
|
|
|
150,003
|
Retained earnings
|
|
175,517
|
|
|
|
|
|
|
124,924
|
Noncontrolling interest
|
|
1,511
|
|
|
|
|
|
|
--
|
Total stockholders’ equity
|
|
|
|
332,638
|
|
|
|
|
|
|
274,932
|
Total liabilities and stockholders’ equity
|
|
|
$
|
931,207
|
|
|
|
|
|
$
|
728,413
|