Financial Highlights
- 2017 Q2 revenues of $631.2 million, a 38% increase over 2016 Q2
- 2017 Q2 gross profit of $84.5 million, a 95% increase over 2016 Q2
- 2017 Q2 net income attributable to Primoris of $21.5 million, a 326% increase over 2016 Q2. Earnings per share of $0.42
increased by $0.32 from 2016 Q2.
- 2017 Q2 cash flow from operations of $67.2 million, a 63% increase over 2016 Q2
- Total backlog of $2.8 billion at June 30, 2017, a 44% increase over backlog at June 30, 2016
DALLAS, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Primoris Services Corporation (NASDAQ:PRIM)
(“Primoris” or “Company”) today announced financial results for its second quarter ended June 30, 2017.
The Company also announced that on August 2, 2017 its Board of Directors declared a $0.055 per share cash
dividend to stockholders of record on September 29, 2017, payable on or about October 14, 2017.
David King, President and Chief Executive Officer of Primoris, commented, “Primoris’ second quarter revenue was
the highest quarterly revenue in the Company’s history. The main driver behind both our top and bottom line growth was the
outstanding work performed by our Pipeline & Underground segment’s Rockford division. We also saw significant year-over-year
revenue growth in our Utility & Distribution and Power, Industrial & Engineering segments. The new awards we announced in the
quarter highlight markets where we continue to see growth, such as utility Master Service Agreements and heavy civil airport and
port facility work. Even with the significant improvement in revenue, our backlog remained at approximately $2.8 billion as
we continue to see demand for our services.
“Our strong operating cash flow this year allowed us to invest for internal growth and invest over $66 million
in acquisitions. The primary acquisitions were a Florida-based utility contractor in the Utility & Distribution segment and a
Texas-based pipeline maintenance contractor in the Pipeline & Underground segment. We are proud that Primoris can achieve
growth without sacrificing our balance sheet.”
Mr. King continued, “As we look forward to the remainder of this year and into 2018, we continue to see
tremendous opportunity for Primoris. The recent acquisitions give us access to new geographies and new clients, and our
strong backlog provides our legacy companies with a solid base of work on which to grow.”
2017 SECOND QUARTER RESULTS OVERVIEW
Revenues in the second quarter 2017 increased by $174.4 million to $631.2 million from $456.8 million for the
same period in 2016. Gross profit for the second quarter 2017 increased by $41.2 million to $84.5 million from $43.3 million
for the same period in 2016. Gross profit as a percentage of revenue increased to 13.4% for the second quarter 2017, compared
to 9.5% for the same period in 2016.
SEGMENT RESULTS
Through the end of the year 2016, Primoris segregated its business into three reportable segments: the Energy
segment, the East Construction Services segment, and the West Construction Services segment. In the first quarter 2017,
Primoris changed its reportable segments to match the changes in the Company’s realigned internal organization and management
structure. A Form 8-K was filed on April 7, 2017 containing historical revenue, margin, and backlog information for the new
segments.
- Power, Industrial, and Engineering (“Power”) - The Power division of the Power segment includes ARB
Industrial, Primoris Power, ARB Structures, and Primoris Renewable Energy. The Industrial division of this segment includes
Primoris Industrial Constructors, Primoris Fabrication, Primoris Mechanical Contractors, and Primoris Coastal Field
Services. The Engineering division of this segment includes OnQuest and PD&C.
- Pipeline and Underground (“Pipeline”) – The Pipeline segment includes Rockford, Vadnais Trenchless,
Primoris Field Services, and Primoris Pipeline.
- Utilities and Distribution (“Utilities”) – The Utilities segment includes ARB Underground, Q3C,
Primoris AV, and Primoris Distribution Services.
- Civil – The Civil segment includes Primoris Heavy Civil, Primoris I&M, and BW Primoris.
Segment Revenues
(in thousands, except %)
(Unaudited)
|
|
For the three months
ended June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
|
Total |
|
|
|
Total |
Segment |
|
Revenue |
|
Revenue |
|
Revenue |
|
Revenue |
|
|
|
|
|
|
|
Power |
|
$ |
157,773 |
|
25.0 |
% |
|
$ |
126,576 |
|
27.7 |
% |
Pipeline |
|
|
134,623 |
|
21.3 |
% |
|
|
56,804 |
|
12.4 |
% |
Utilities |
|
|
212,942 |
|
33.8 |
% |
|
|
157,119 |
|
34.4 |
% |
Civil |
|
|
125,827 |
|
19.9 |
% |
|
|
116,312 |
|
25.5 |
% |
Total |
|
$ |
631,165 |
|
100.0 |
% |
|
$ |
456,811 |
|
100.0 |
% |
|
|
For the six months
ended June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
|
Total |
|
|
|
Total |
Segment |
|
Revenue |
|
Revenue |
|
Revenue |
|
Revenue |
|
|
|
|
|
|
|
Power |
|
$ |
289,013 |
|
24.2 |
% |
|
$ |
265,214 |
|
29.9 |
% |
Pipeline |
|
|
318,068 |
|
26.7 |
% |
|
|
111,140 |
|
12.5 |
% |
Utilities |
|
|
329,922 |
|
27.7 |
% |
|
|
260,873 |
|
29.4 |
% |
Civil |
|
|
255,664 |
|
21.4 |
% |
|
|
250,030 |
|
28.2 |
% |
Total |
|
$ |
1,192,667 |
|
100.0 |
% |
|
$ |
887,257 |
|
100.0 |
% |
Segment Gross Profit
(in thousands, except %)
(Unaudited)
|
|
For the three months
ended June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
% of |
|
|
|
% of |
|
|
Gross |
|
Segment |
|
Gross |
|
Segment |
Segment |
|
Profit |
|
Revenue |
|
Profit |
|
Revenue |
|
|
|
|
|
|
|
Power |
|
$ |
18,132 |
|
|
11.5 |
% |
|
$ |
14,092 |
|
|
11.1 |
% |
Pipeline |
|
|
39,366 |
|
|
29.2 |
% |
|
|
6,469 |
|
|
11.4 |
% |
Utilities |
|
|
32,347 |
|
|
15.2 |
% |
|
|
22,841 |
|
|
14.5 |
% |
Civil |
|
|
(5,362 |
) |
|
(4.3 |
%) |
|
|
(117 |
) |
|
(0.1 |
%) |
Total |
|
$ |
84,483 |
|
|
13.4 |
% |
|
$ |
43,285 |
|
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
% of |
|
|
|
% of |
|
|
Gross |
|
Segment |
|
Gross |
|
Segment |
Segment |
|
Profit |
|
Revenue |
|
Profit |
|
Revenue |
|
|
|
|
|
|
|
Power |
|
$ |
33,656 |
|
|
11.6 |
% |
|
$ |
25,677 |
|
9.7 |
% |
Pipeline |
|
|
67,491 |
|
|
21.2 |
% |
|
|
11,468 |
|
10.3 |
% |
Utilities |
|
|
40,620 |
|
|
12.3 |
% |
|
|
34,726 |
|
13.3 |
% |
Civil |
|
|
(2,231 |
) |
|
(0.9 |
%) |
|
|
10,691 |
|
4.3 |
% |
Total |
|
$ |
139,536 |
|
|
11.7 |
% |
|
$ |
82,562 |
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
Power, Industrial, & Engineering Segment: Revenue in the Power segment increased by $31.2
million in the second quarter 2017, compared to the same period in 2016. The majority of the increase came from the ARB
Industrial division, where revenue increased by $26.1 million as a result of the two power plant projects in Southern
California. In addition, the Primoris Power division realized an increase in revenue of $9.6 million, primarily related to
their power plant project in the mid-Atlantic region. Gross profit in the Power segment increased by $4.0 million in the
second quarter 2017, compared to the same period in 2016. The increase is primarily due to the increased revenue. Gross
profit as a percentage of revenue increased to 11.5% in the second quarter 2017, compared to 11.1% in the same period in 2016,
primarily as a result of the progress on the Southern California power plants.
Pipeline & Underground Segment: Revenue in the Pipeline segment increased by $77.8 million in the second
quarter 2017, compared to the same period in 2016. The increase is primarily from the Rockford division’s two large pipeline
projects in Florida. Gross profit in the Pipeline segment increased by $32.9 million in the second quarter 2017, compared to
the same period in 2016 on higher revenue. Gross profit as a percentage of revenue increased to 29.2% in the second quarter
2017, compared to 11.4% in the same period in 2016. The increase is primarily due to the increased gross profit at the
Rockford division.
Utilities & Distribution Segment: Revenue in the Utilities segment increased by $55.8 million in the
second quarter 2017, compared to the same period in 2016. Approximately $46.9 million is due to increased volumes at the ARB
Underground division, and $8.1 million is due to increased volumes at the Q3C division. Gross profit in the Utilities segment
increased by $9.5 million in the second quarter 2017, compared to the same period in 2016. The increase is primarily due to
the increased revenue at the ARB Industrial and Q3C divisions. Gross profit as a percentage of revenue increased to 15.2% in
the second quarter 2017, compared to 14.5% in the same period in 2016. The increase is primarily due to increased
profitability in the ARB Underground division.
Civil Segment: Revenue in the Civil segment increased by $9.5 million in the second quarter 2017,
compared to the same period in 2016. The majority of the increase came from the Primoris I&M division, as increased
revenue at a new Louisiana methanol project more than offset declines at a large southern Louisiana petrochemical project that had
been a revenue driver for several quarters. Gross profit in the Civil segment decreased by $5.2 million in the second quarter
2017, compared to the same period in 2016. The decrease was primarily the result of productivity issues at the Primoris Heavy
Civil division in Arkansas and Louisiana. Gross profit as a percentage of revenue decreased to (4.3%) in the second
quarter 2017, compared to (0.1%) in the same period in 2016, as a result of the Arkansas DOT and Louisiana DOT productivity issues
at Primoris Heavy Civil.
OUTLOOK
Based on an expected second quarter 2018 start date for a major pipeline project in backlog, anticipated levels
of customer maintenance, MSA spending, and new project awards, and given the continued uncertainty caused by the energy markets,
the Company estimates that for the four quarters ending June 30, 2018, net income attributable to Primoris will be between $1.05
and $1.25 per fully diluted share.
BACKLOG
|
|
Backlog at June 30, 2017 (in
millions) |
|
Segment |
|
Fixed Backlog |
|
MSA Backlog |
|
Total Backlog |
Expected Next Four
Quarters Total
Backlog Revenue
Recognition |
|
|
|
|
|
|
|
|
|
Power |
|
$ |
449 |
$ |
42 |
$ |
491 |
82% |
Pipeline |
|
|
848 |
|
79 |
|
927 |
38% |
Utilities |
|
|
94 |
|
570 |
|
664 |
100% |
Civil |
|
|
665 |
|
3 |
|
668 |
66% |
Total |
|
$ |
2,056 |
$ |
694 |
$ |
2,750 |
68% |
At June 30, 2017, Fixed Backlog was $2.1 billion, compared to $2.1 billion at December 31, 2016.
At June 30, 2017, MSA Backlog was $694 million, compared to $672 million at December 31, 2016. MSA Backlog
represents estimated MSA revenues for the next four quarters.
Total Backlog at June 30, 2017 was $2.8 billion, compared to $2.8 billion at December 31, 2016.
Backlog, including estimated MSA revenues, should not be considered a comprehensive indicator of future revenues. There is
a certain percentage of total revenues, from projects such as cost reimbursable and time-and-materials projects, that do not flow
through backlog. Any project may still be cancelled at the convenience of our customers.
CONFERENCE CALL
David King, President and Chief Executive Officer, and Peter J. Moerbeek, Executive Vice President and Chief
Financial Officer will host a conference call today, Tuesday, August 8, 2016 at 10:00 am Eastern Time / 9:00 am Central Time to
discuss the results.
Interested parties may participate in the call by dialing:
- (877) 407-8293 (Domestic)
- (201) 689-8349 (International)
If you are unable to participate in the live call, a replay may be accessed by dialing (877) 660-6853,
conference ID 13666612, and will be available for approximately two weeks. The conference call will also be broadcast live over the
Internet and can be accessed and replayed through the Investor Relations section of Primoris' website at www.prim.com. Once at the Investor Relations section, please click on "Events &
Presentations”.
ABOUT PRIMORIS
Founded in 1960, Primoris, through various subsidiaries, has grown to become one of the largest construction service enterprises
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. The Company's national footprint 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 Annual Report on Form 10-K for the period ended December 31, 2016, and other filings with the Securities and
Exchange Commission. Given these uncertainties, you should not place undue reliance on forward-looking statements.
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.
Company Contact
Peter J. Moerbeek
Executive Vice President, Chief Financial Officer
(214) 740-5602
pmoerbeek@prim.com
Kate Tholking
Director of Investor Relations
(214) 740-5615
ktholking@prim.com
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Six Months
Ended |
|
June 30, |
|
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
631,165 |
|
|
$ |
456,811 |
|
|
$ |
1,192,667 |
|
|
$ |
887,257 |
|
Cost of revenue |
|
546,682 |
|
|
|
413,526 |
|
|
|
1,053,131 |
|
|
|
804,695 |
|
Gross profit |
|
84,483 |
|
|
|
43,285 |
|
|
|
139,536 |
|
|
|
82,562 |
|
Selling, general and administrative
expenses |
|
45,977 |
|
|
|
32,498 |
|
|
|
85,831 |
|
|
|
65,156 |
|
Operating income |
|
38,506 |
|
|
|
10,787 |
|
|
|
53,705 |
|
|
|
17,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain |
|
109 |
|
|
|
21 |
|
|
|
132 |
|
|
|
380 |
|
Other expense |
|
(13 |
) |
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
Interest income |
|
114 |
|
|
|
52 |
|
|
|
183 |
|
|
|
91 |
|
Interest expense |
|
(2,145 |
) |
|
|
(2,240 |
) |
|
|
(4,407 |
) |
|
|
(4,508 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes |
|
36,571 |
|
|
|
8,620 |
|
|
|
49,600 |
|
|
|
13,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
(14,175 |
) |
|
|
(3,333 |
) |
|
|
(18,692 |
) |
|
|
(5,166 |
) |
Net income |
$ |
22,396 |
|
|
$ |
5,287 |
|
|
$ |
30,908 |
|
|
$ |
8,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less net income attributable to
noncontrolling interests |
|
(851 |
) |
|
|
(231 |
) |
|
|
(1,672 |
) |
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Primoris |
$ |
21,545 |
|
|
$ |
5,056 |
|
|
$ |
29,236 |
|
|
$ |
7,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic: |
$ |
0.42 |
|
|
$ |
0.10 |
|
|
$ |
0.57 |
|
|
$ |
0.15 |
|
Diluted: |
$ |
0.42 |
|
|
$ |
0.10 |
|
|
$ |
0.56 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
51,437 |
|
|
|
51,772 |
|
|
|
51,515 |
|
|
|
51,749 |
|
Diluted |
|
51,688 |
|
|
|
52,022 |
|
|
|
51,771 |
|
|
|
51,950 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
(Unaudited) |
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
2017 |
|
|
2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
111,676 |
|
$ |
135,823 |
Customer retention deposits |
|
906 |
|
|
481 |
Accounts receivable, net |
|
355,231 |
|
|
388,000 |
Costs and estimated earnings in excess of billings |
|
158,741 |
|
|
138,618 |
Inventory and uninstalled contract materials |
|
42,318 |
|
|
49,201 |
Prepaid expenses and other current assets |
|
16,082 |
|
|
19,258 |
Total current assets |
|
684,954 |
|
|
731,381 |
Property and equipment, net |
|
309,013 |
|
|
277,346 |
Intangible assets, net |
|
51,228 |
|
|
32,841 |
Goodwill |
|
150,672 |
|
|
127,226 |
Other long-term assets |
|
1,624 |
|
|
2,004 |
Total assets |
$ |
1,197,491 |
|
$ |
1,170,798 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
134,091 |
|
$ |
168,110 |
Billings in excess of costs and estimated earnings |
|
158,698 |
|
|
112,606 |
Accrued expenses and other current liabilities |
|
116,244 |
|
|
108,006 |
Dividends payable |
|
2,829 |
|
|
2,839 |
Current portion of capital leases |
|
186 |
|
|
188 |
Current portion of long-term debt |
|
58,031 |
|
|
58,189 |
Current portion of contingent earnout liabilities |
|
1,213 |
|
|
- |
Total current liabilities |
|
471,292 |
|
|
449,938 |
Long-term capital leases, net of current portion |
|
170 |
|
|
15 |
Long-term debt, net of current portion |
|
183,140 |
|
|
203,381 |
Deferred tax liabilities |
|
9,830 |
|
|
9,830 |
Other long-term liabilities |
|
11,623 |
|
|
9,064 |
Total liabilities |
|
676,055 |
|
|
672,228 |
Commitments and contingencies |
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
Common stock |
|
5 |
|
|
5 |
Additional paid-in capital |
|
159,761 |
|
|
162,128 |
Retained earnings |
|
358,779 |
|
|
335,218 |
Non-controlling interest |
|
2,891 |
|
|
1,219 |
Total stockholders’ equity |
|
521,436 |
|
|
498,570 |
Total liabilities and stockholders’ equity |
$ |
1,197,491 |
|
$ |
1,170,798 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In Thousands)
(Unaudited) |
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2017 |
|
|
2016 |
Cash flows from operating activities: |
|
|
|
|
|
Net income |
$ |
30,908 |
|
|
$ |
8,203 |
|
Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation |
|
28,139 |
|
|
|
30,850 |
|
Amortization of intangible assets |
|
3,611 |
|
|
|
3,239 |
|
Intangible asset impairment |
|
477 |
|
|
|
- |
|
Stock-based compensation expense |
|
690 |
|
|
|
710 |
|
Gain on sale of property and equipment |
|
(3,208 |
) |
|
|
(2,293 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
Customer retention deposits |
|
(425 |
) |
|
|
(435 |
) |
Accounts receivable |
|
43,792 |
|
|
|
2,514 |
|
Costs and estimated earnings in excess of billings |
|
(19,572 |
) |
|
|
(17,151 |
) |
Other current assets |
|
11,920 |
|
|
|
2,708 |
|
Other long-term assets |
|
380 |
|
|
|
(747 |
) |
Accounts payable |
|
(37,060 |
) |
|
|
(11,065 |
) |
Billings in excess of costs and estimated earnings |
|
45,791 |
|
|
|
(17,584 |
) |
Accrued expenses and other current liabilities |
|
8,154 |
|
|
|
7,337 |
|
Other long-term liabilities |
|
2,692 |
|
|
|
(788 |
) |
Net cash provided by operating activities |
|
116,289 |
|
|
|
5,498 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Purchase of property and equipment |
|
(44,697 |
) |
|
|
(42,140 |
) |
Proceeds from sale of property and equipment |
|
4,664 |
|
|
|
5,723 |
|
Cash paid for acquisitions |
|
(66,205 |
) |
|
|
(4,108 |
) |
Net cash used in investing activities |
|
(106,238 |
) |
|
|
(40,525 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Repayment of capital leases |
|
(117 |
) |
|
|
(468 |
) |
Repayment of long-term debt |
|
(24,562 |
) |
|
|
(24,262 |
) |
Proceeds from issuance of common stock purchased under a long-term
incentive plan |
|
1,148 |
|
|
|
1,439 |
|
Repurchase of common stock |
|
(4,999 |
) |
|
|
- |
|
Dividends paid |
|
(5,668 |
) |
|
|
(5,689 |
) |
Net cash used in financing activities |
|
(34,198 |
) |
|
|
(28,980 |
) |
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
(24,147 |
) |
|
|
(64,007 |
) |
Cash and cash equivalents at beginning of the period |
|
135,823 |
|
|
|
161,122 |
|
Cash and cash equivalents at end of the period |
$ |
111,676 |
|
|
$ |
97,115 |
|