Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or
“Company”) today announced financial results for its second quarter
ended June 30, 2013.
The company also announced that on August 2, 2013, its Board of
Directors authorized payment of a $0.035 per share cash dividend to
stockholders of record as of September 30, 2013, payable on or about
October 15, 2013.
Brian Pratt, Chairman, President and Chief Executive Officer of Primoris
commented, “Our strong second quarter results highlight the success of
Primoris’s strategy to focus on specialized end markets, as our revenue
growth was split almost evenly between our recent acquisitions and our
legacy businesses. As expected, our operating margins improved from the
first quarter, aided by both our pipeline and our industrial work. With
a solid balance sheet and a growing backlog, we are confident that our
growing momentum will provide for a strong second half.”
Mr. Pratt continued, “This is an exciting time for our business as there
are abundant prospects for continued growth across our end markets. The
demand for improvements to the U.S. energy infrastructure provides us
with multiple opportunities, and there will be a need to strengthen our
U.S. domestic capabilities as the country strives for energy
independence. In addition, we believe our industrial and water end
markets are poised for significant growth in the coming years. While we
are not insulated from changes in the macroeconomic environment, we are
focused on end markets that we believe offer exciting prospects for
enhancing shareholder value.”
2013 SECOND QUARTER RESULTS OVERVIEW
Revenues for the 2013 second quarter increased 31.9% to $445.0 million
from $337.4 million for the same period last year. Growth at legacy
companies accounted for 15.4% of the increase, and the remaining 16.5%
increase was from the acquisitions of Silva, Saxon, Q3C, and FSSI. Gross
profit increased by $15.5 million, or 35.2% , compared to the same
period in 2012. The gross profit increase from legacy companies’ growth
was $9.9 million and the acquisitions of Silva, Saxon, Q3C, and FSSI
contributed $5.6 million to the increase in profit.
SEGMENT RESULTS
-
East Construction Services – The East
Construction Services segment consists of businesses located primarily
in the southeastern United States and along the Gulf Coast. Included
in this segment are the operations of JCG’s Heavy Civil, Industrial
and Infrastructure & Maintenance divisions; Cardinal Contractor’s
water and wastewater construction activities; and the services
provided by the 2012 and 2013 acquisitions (Sprint, Silva, Saxon, and
FSSI).
-
West Construction Services – The West
Construction Services segment consists of businesses located primarily
in the western United States. The segment primarily includes the
underground and industrial operations of ARB, Inc., the operations of
Rockford (which performs its major capital underground work throughout
the United States), the operations of ARB Structures, the 2012
acquisition of Q3 Contracting, Inc., and Primoris Renewables, Inc. The
segment also includes the operations of the Blythe Power Constructors
joint venture.
-
Engineering – The Engineering segment
includes the results of OnQuest, Inc. and OnQuest Canada, ULC.
|
|
|
|
Segment Revenues
(in thousands, except %)
|
|
|
|
|
|
|
|
For the three months ended June 30,
|
|
|
|
2013
Unaudited
|
|
2012
Unaudited
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
|
|
Total
|
|
|
|
Total
|
Segment
|
|
|
Revenue
|
|
Revenue
|
|
Revenue
|
|
Revenue
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
175,398
|
|
39.4
|
%
|
|
$
|
156,057
|
|
46.2
|
%
|
West Construction Services
|
|
|
|
258,194
|
|
58.0
|
%
|
|
|
167,287
|
|
49.6
|
%
|
Engineering
|
|
|
|
11,421
|
|
2.6
|
%
|
|
|
14,092
|
|
4.2
|
%
|
Total
|
|
|
$
|
445,013
|
|
100.0
|
%
|
|
$
|
337,436
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30,
|
|
|
|
2013
Unaudited
|
|
2012
Unaudited
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
|
|
Total
|
|
|
|
Total
|
Segment
|
|
|
Revenue
|
|
Revenue
|
|
Revenue
|
|
Revenue
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
365,609
|
|
42.8
|
%
|
|
$
|
277,907
|
|
44.2
|
%
|
West Construction Services
|
|
|
|
465,880
|
|
54.4
|
%
|
|
|
325,318
|
|
51.7
|
%
|
Engineering
|
|
|
|
23,519
|
|
2.8
|
%
|
|
|
25,784
|
|
4.1
|
%
|
Total
|
|
|
$
|
855,008
|
|
100.0
|
%
|
|
$
|
629,009
|
|
100.0
|
%
|
|
|
|
|
Segment Gross Margin
(in thousands, except %)
|
|
|
|
|
|
|
|
For the three months ended June 30,
|
|
|
|
2013
Unaudited
|
|
2012
Unaudited
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
Gross
|
|
Segment
|
|
Gross
|
|
Segment
|
Segment
|
|
|
Profit
|
|
Revenue
|
|
Profit
|
|
Revenue
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
15,215
|
|
8.7
|
%
|
|
$
|
17,360
|
|
11.1
|
%
|
West Construction Services
|
|
|
|
41,926
|
|
16.2
|
%
|
|
|
24,294
|
|
14.5
|
%
|
Engineering
|
|
|
|
2,396
|
|
21.0
|
%
|
|
|
2,350
|
|
16.7
|
%
|
Total
|
|
|
$
|
59,537
|
|
13.4
|
%
|
|
$
|
44,004
|
|
13.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30,
|
|
|
|
2013
Unaudited
|
|
2012
Unaudited
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
Gross
|
|
Segment
|
|
Gross
|
|
Segment
|
Segment
|
|
|
Profit
|
|
Revenue
|
|
Profit
|
|
Revenue
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
30,210
|
|
8.3
|
%
|
|
$
|
28,778
|
|
10.4
|
%
|
West Construction Services
|
|
|
|
70,675
|
|
15.2
|
%
|
|
|
48,695
|
|
15.0
|
%
|
Engineering
|
|
|
|
4,748
|
|
20.2
|
%
|
|
|
4,127
|
|
16.0
|
%
|
Total
|
|
|
$
|
105,633
|
|
12.4
|
%
|
|
$
|
81,600
|
|
13.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Construction Services: Revenues increased by $19.3 million
in the 2013 second quarter compared to the same period in the prior
year. The acquisitions of Saxon and FSSI accounted for $14.8 million of
the revenue increase. The remainder of the revenue increase came from a
$20.7 million increase at Sprint from increased activity in the Eagle
Ford area, a $4.0 million increase at Cardinal Contractors from
increased water facility treatment work in Florida and Texas, and a $5.7
million increase at the JCG Industrial division, offset by decreases of
$17.7 million at the JCG Heavy Civil division and $8.2 million at the
JCG Infrastructure and Maintenance division. The decline in revenues at
the JCG Heavy Civil division is largely due to a $25.8 million decline
in Louisiana DOT revenues that was only partially offset by a $12.2
million increase in Texas DOT revenues. Overall gross profit decreased
by $2.1 million in the 2013 second quarter compared to the same period
in the prior year. Gross profit contributions included $0.2 from the
acquisitions of Saxon and FSSI, as well as increased gross profit of
$0.8 million at Cardinal Contractors and $1.0 million at the JCG
Industrial division. The decline in gross profit is mainly attributable
to a $4.3 million decrease at the JCG Heavy Civil division, due largely
to the reduced revenues and the transition from completed projects with
higher margins in Louisiana in 2012 to the startup of the Belton,TX area
projects.
West Construction Services: Revenues increased by $90.9 million
in the 2013 second quarter compared to the same period in the prior
year. The Q3C acquisition accounted for $40.7 million of the revenue
increase. The remainder of the revenue increase came from a $60.6
million increase at Rockford, primarily from increased pipeline
construction projects in the Pennsylvania shale area, and a $2.3 million
increase at ARB Structures. These increases in revenues were offset by a
decrease in the ARB Underground division of $9.3 million that was
primarily a result of fewer MSA work authorizations for its largest
customer and a decrease of $3.3 million in the ARB Industrial division
due to completion of power plant projects in 2012 and a current power
plant project nearing completion. Gross profit increased by $17.6
million in the 2013 second quarter compared to the same period in the
prior year. This includes a gross profit contribution of $5.4 million
from the acquisition of Q3C, as well as increased gross profit of $5.6
million at Rockford as a result of its increased revenues, an increase
of $9.7 million at ARB Industrial as the result of the approaching
completion of a major power plant project, and an increase of $0.6
million at ARB Structures. Offsetting these was a decline at ARB
Underground in gross profit of $3.7 million, mainly due to lower
revenues.
Engineering: Revenues decreased by $2.7 million, and gross profit
remained nearly unchanged. Gross profit as a percentage of revenues was
21.0%, compared to 16.7% for the same period in 2012. The increase was
due primarily to project closeouts in the current year.
Selling, general and administrative expenses (“SG&A”) were
$31.6 million, or 7.1% of revenues for the second quarter of 2013,
compared to $23.4 million, or 6.9% of revenues for the second quarter of
2012, an increase of $8.2 million. The acquisitions of Silva, Saxon,
Q3C, and FSSI accounted for roughly half the increase in SG&A expense,
while the other half was primarily due to increased compensation and
compensation-related expenses.
Operating income for the 2013 second quarter was $28.0 million, or 6.3%
of total revenues, compared to $20.6 million, or 6.1% of total revenues,
for the same period last year.
Net other income and expenses in the 2013 second quarter was an expense
of $2.1 million, a $0.7 million increase from net other expense of $1.4
million in the 2012 second quarter. The decline was primarily due to a
loss recorded at the WesPac joint venture.
The provision for income taxes for the 2013 second quarter was $10.0
million, or an effective tax rate on net income attributable to Primoris
of 39.1%, compared to $7.3 million, or an effective tax rate on net
income attributable to Primoris of 38.5%, in the prior year quarter.
Net income attributable to Primoris for the 2013 second quarter was
$15.6 million, or $0.30 per diluted share, compared to net income
attributable to Primoris of $11.7 million, or $0.23 per diluted share,
in the same period in 2012.
Fully diluted shares outstanding for the 2013 second quarter increased
by 0.3% to 51.6 million from 51.4 million in last year’s second quarter.
OTHER FINANCIAL INFORMATION
Primoris’s balance sheet at June 30, 2013 included cash and cash
equivalents of $117.2 million, working capital of $146.5 million, total
debt and capital leases secured by equipment of $174.4 million, and
stockholders’ equity of $358.3 million. The balance sheet included a
$14.0 million liability representing the estimated fair value for unpaid
earnout amounts from acquisitions. Primoris’ tangible net worth at June
30, 2013, was $190.4 million.
BACKLOG
|
|
|
|
|
|
|
Backlog at June 30, 2013 (in millions)
|
Segment
|
|
|
Historic
Calculation
|
|
|
Estimated
Annual MSA
Revenues
|
|
|
Revised Backlog
|
|
|
|
|
|
|
|
|
|
|
|
East Construction Services
|
|
|
$
|
999
|
|
$
|
92
|
|
$
|
1,091
|
West Construction Services
|
|
|
|
361
|
|
|
329
|
|
|
690
|
Engineering
|
|
|
|
22
|
|
|
-
|
|
|
22
|
Total
|
|
|
$
|
1,382
|
|
|
421
|
|
|
1,803
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2013, total backlog using our historical calculation was
$1.38 billion compared to $1.35 billion at December 31, 2012. For the
three months ended June 30, 2013, approximately $82.0 million of revenue
was generated by projects that were not included in the historical
backlog calculation.
As previously discussed, we are changing our backlog calculation to
better reflect the company’s increasing percentage of revenues derived
from MSAs as a result of the acquisitions of Sprint and Q3C. The new
calculation includes estimated MSA revenues for the next four quarters.
With this addition to the backlog calculation, the new total backlog at
June 30, 2013 was $1.8 billion. We expect that during the next four
quarters, using the revised backlog calculation, we will recognize as
revenue approximately 50% of the East Construction Services segment
backlog, approximately 98% of the West Construction Services segment
backlog, and approximately 100% of the Engineering segment.
Backlog, including estimated MSA revenues, should not be considered a
comprehensive indicator of future revenues, as a portion of Primoris’s
revenues are still derived from projects that are not part of backlog
and the estimated MSA revenues calculation, including
time-and-equipment, time-and-materials, and cost-reimbursable-plus-fee
contracts. Additionally, projects that are considered a part of backlog
or MSA contracts may be cancelled by our customers.
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, Wednesday, August 7 at 11:00 am Eastern
Time / 10:00 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 known and unknown risks,
uncertainties, and other factors, including without limitation, those
described in this press release and those detailed in the "Risk Factors"
section and other portions of our Quarterly Report on Form 10-Q for the
period ended June 30, 2013, and other filings with the Securities and
Exchange Commission. Given these uncertainties, you should not place
undue reliance on forward-looking statement. 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
June 30,
|
|
|
|
Six Months Ended,
June 30,
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
445,013
|
|
|
$
|
337,436
|
|
|
|
|
$
|
855,008
|
|
|
$
|
629,009
|
|
|
Cost of revenues
|
|
|
|
|
385,476
|
|
|
|
293,432
|
|
|
|
|
|
749,375
|
|
|
|
547,409
|
|
|
Gross profit
|
|
|
|
|
59,537
|
|
|
|
44,004
|
|
|
|
|
|
105,633
|
|
|
|
81,600
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
31,560
|
|
|
|
23,396
|
|
|
|
|
|
60,179
|
|
|
|
43,670
|
|
|
Operating income
|
|
|
|
|
27,977
|
|
|
|
20,608
|
|
|
|
|
|
45,454
|
|
|
|
37,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from non-consolidated entities
|
|
|
|
|
(213
|
)
|
|
|
(47
|
)
|
|
|
|
|
56
|
|
|
|
1,054
|
|
|
Foreign exchange loss
|
|
|
|
|
(29
|
)
|
|
|
(6
|
)
|
|
|
|
|
(88
|
)
|
|
|
(48
|
)
|
|
Other expense
|
|
|
|
|
(377
|
)
|
|
|
(371
|
)
|
|
|
|
|
(433
|
)
|
|
|
(579
|
)
|
|
Interest income
|
|
|
|
|
23
|
|
|
|
25
|
|
|
|
|
|
63
|
|
|
|
47
|
|
|
Interest expense
|
|
|
|
|
(1,498
|
)
|
|
|
(1,006
|
)
|
|
|
|
|
(2,922
|
)
|
|
|
(2,107
|
)
|
|
Income before provision for income taxes
|
|
|
|
|
25,883
|
|
|
|
19,203
|
|
|
|
|
|
42,130
|
|
|
|
36,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
|
(9,990
|
)
|
|
|
(7,346
|
)
|
|
|
|
|
(16,197
|
)
|
|
|
(13,910
|
)
|
|
Net income
|
|
|
|
|
15,893
|
|
|
|
11,857
|
|
|
|
|
|
25,933
|
|
|
|
22,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
(329
|
)
|
|
|
(124
|
)
|
|
|
|
|
(599
|
)
|
|
|
(168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Primoris
|
|
|
|
|
15,564
|
|
|
|
11,733
|
|
|
|
|
|
25,334
|
|
|
|
22,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
$
|
0.30
|
|
|
$
|
0.23
|
|
|
|
|
$
|
0.49
|
|
|
$
|
0.43
|
|
|
Diluted:
|
|
|
|
$
|
0.30
|
|
|
$
|
0.23
|
|
|
|
|
$
|
0.49
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
51,562
|
|
|
|
51,435
|
|
|
|
|
|
51,510
|
|
|
|
51,386
|
|
|
Diluted
|
|
|
|
|
51,626
|
|
|
|
51,435
|
|
|
|
|
|
51,547
|
|
|
|
51,386
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
113,777
|
|
|
|
|
|
$
|
157,551
|
Short term investments
|
|
|
|
|
3,428
|
|
|
|
|
|
|
3,441
|
Customer retention deposits and restricted cash
|
|
|
|
|
27,503
|
|
|
|
|
|
|
35,377
|
Accounts receivable, net
|
|
|
|
|
251,092
|
|
|
|
|
|
|
268,095
|
Costs and estimated earnings in excess of billings
|
|
|
|
|
70,288
|
|
|
|
|
|
|
41,701
|
Inventory and uninstalled contract materials
|
|
|
|
|
38,339
|
|
|
|
|
|
|
37,193
|
Deferred tax assets
|
|
|
|
|
10,477
|
|
|
|
|
|
|
10,477
|
Prepaid expenses and other current assets
|
|
|
|
|
12,719
|
|
|
|
|
|
|
10,800
|
Total current assets
|
|
|
|
|
527,623
|
|
|
|
|
|
|
564,635
|
Property and equipment, net
|
|
|
|
|
215,659
|
|
|
|
|
|
|
184,840
|
Investment in non-consolidated entities
|
|
|
|
|
12,724
|
|
|
|
|
|
|
12,813
|
Intangible assets, net
|
|
|
|
|
49,893
|
|
|
|
|
|
|
51,978
|
Goodwill
|
|
|
|
|
118,028
|
|
|
|
|
|
|
116,941
|
Other long-term assets
|
|
|
|
|
1,158
|
|
|
|
|
|
|
-
|
Total assets
|
|
|
|
$
|
925,085
|
|
|
|
|
|
$
|
931,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
102,026
|
|
|
|
|
|
$
|
151,546
|
Billings in excess of costs and estimated earnings
|
|
|
|
|
162,570
|
|
|
|
|
|
|
158,892
|
Accrued expenses and other current liabilities
|
|
|
|
|
80,349
|
|
|
|
|
|
|
76,152
|
Dividends payable
|
|
|
|
|
1,805
|
|
|
|
|
|
|
--
|
Current portion of capital leases
|
|
|
|
|
4,335
|
|
|
|
|
|
|
3,733
|
Current portion of long-term debt
|
|
|
|
|
21,967
|
|
|
|
|
|
|
19,446
|
Current portion of contingent earnout liabilities
|
|
|
|
|
8,048
|
|
|
|
|
|
|
10,900
|
Total current liabilities
|
|
|
|
|
381,100
|
|
|
|
|
|
|
420,669
|
Long-term capital leases, net of current portion
|
|
|
|
|
3,584
|
|
|
|
|
|
|
3,831
|
Long-term debt, net of current portion
|
|
|
|
|
144,546
|
|
|
|
|
|
|
128,367
|
Deferred tax liabilities
|
|
|
|
|
20,018
|
|
|
|
|
|
|
20,018
|
Long-term contingent earnout liabilities, net of current portion
|
|
|
|
|
5,924
|
|
|
|
|
|
|
12,531
|
Other long-term liabilities
|
|
|
|
|
11,568
|
|
|
|
|
|
|
13,153
|
Total liabilities
|
|
|
|
$
|
566,740
|
|
|
|
|
|
$
|
598,569
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
5
|
|
|
|
|
|
|
5
|
Additional paid-in capital
|
|
|
158,730
|
|
|
|
|
|
|
155,605
|
Retained earnings
|
|
|
197,500
|
|
|
|
|
|
|
175,517
|
Noncontrolling interests
|
|
|
2,110
|
|
|
|
|
|
|
1,511
|
Total stockholders’ equity
|
|
|
|
|
358,345
|
|
|
|
|
|
|
332,638
|
Total liabilities and stockholders’ equity
|
|
|
|
$
|
925,085
|
|
|
|
|
|
$
|
931,207
|
Copyright Business Wire 2013