CORRECTING and REPLACING -- Primoris Services Corporation Announces 2009 Fourth Quarter and Year End Financial Results
LAKE FOREST, Calif., Mar 10, 2010 (GlobeNewswire via COMTEX News Network) -- In a release issued this morning by Primoris Services Corporation (Nasdaq:PRIM), please note that a correction has been made to the Condensed Consolidated Statements of Income for the Twelve Month Period Ended December 31, 2009; specifically, Basic Net Income Per Share for the period should read $0.81, not ($0.81). The corrected release follows:
Q4 2009 Financial Highlights
-- Revenues of $117.2 million compared to $142.2 million in Q4 2008
-- Gross margin rose to 17.2% of revenues from 12.8% of revenues in Q4 2008
-- Operating margin increased to 6.7% of revenues from 5.8% of revenues in
Q4 2008
-- Primoris entered into an agreement to sell its Ecuador operations,
resulting in loss from discontinued operations of $3.0 million, or $0.08
per diluted share; in Q4 2008, the discontinued operations were at
breakeven
-- Income from continuing operations of $6.8 million, or $0.18 per diluted
share compared to Q4 2008 income from continuing operations of $7.8
million, or $0.23 per diluted share and compared to Q4 2008 pro forma
income from continuing operations of $6.3 million, or $0.19 per diluted
share
-- $120.1 million in cash and short-term investments at December 31, 2009
Primoris Services Corporation (Nasdaq:PRIM) (Nasdaq:PRIMU) (Nasdaq:PRIMW) ("Primoris" or "Company"), one of the largest specialty contractors and engineering companies in the United States, today announced financial results for its fourth quarter and year ended December 31, 2009. Results for the 2009 and 2008 periods include the effect of discontinued operations from the Company's activities in Ecuador.
The Company also announced that its Board of Directors has declared a $0.025 per share cash dividend to stockholders of record as of March 31, 2010, payable on or about April 15, 2010.
Brian Pratt, Chairman, President and Chief Executive Officer of Primoris, commented, "During 2009 we focused on improving our basic business, including strengthening our relations with our clients and suppliers; securing better margined projects; managing and collecting cash; and evaluating acquisition opportunities as we sought to mitigate the impact of a lower volume year and capitalize on the opportunities that more difficult economic environments can present. With the acquisitions of James Construction Group and Cravens Partners, we nearly doubled the size of Primoris and broadened both our geographic and services reach. We also expanded our presence in the alternative energy space with the formation of Primoris Renewables. During the 2009 fourth quarter, we signed contracts totaling approximately $150 million that represented additional work in virtually all of our business lines. At the end of the year, we had built our cash position to $120.1 million, or approximately $3.67 per outstanding share, an increase of $32 million during the year."
Mr. Pratt concluded, "Although some of the issues that affected our markets and operating results during 2009 are expected to persist in the first half of 2010, we are optimistic that our greater size and resources have positioned us to capitalize on, what we believe, will be a more robust operating environment in the second half of this year and into 2011."
Q4 2009 Financial Results Overview
Consolidated revenues for the fourth quarter of 2009 decreased by $25.0 million, or 17.6% to $117.2 million from the fourth quarter of 2008. This decrease was due primarily to reductions in our California industrial business of $30.0 million, a decrease in Florida water and sewer construction of $9.0 million, a $7.8 million decrease in underground and a decrease of $4.1 million in our engineering segment, partially offset by increased revenues of $9.4 million from our cable and conduit business and $16.8 million from our two new acquisitions.
Gross profit for the fourth quarter of 2009 was $20.2 million compared to $18.3 million in the fourth quarter of 2008, primarily attributable to increased revenues and improved margins in the cable and conduit sector and contributions from our recent acquisitions. Profit margins in engineering were at higher than historical levels in the fourth quarter of 2009 as compared to the same period 2008 as we benefited from the completion of a large process project. Gross profit as a percentage of revenues for the fourth quarter of 2009 increased to 17.2% from 12.8% for the same period in 2008, due to the successful close out of projects and the benefit of more profitable fixed unit price and time and material contracts.
Revenues and gross profit for the fourth quarter of 2009 and 2008 for Primoris's two reportable segments were as follows:
Three Months Ended December 31,
--------------------------------------------
($ in 000's -- Unaudited)
2009 2008
---------------------- --------------------
Percentage Percentage
of of
Amount Revenue Amount Revenue
---------- ---------- -------- ----------
Construction
Services
-----------------
Revenue $103,443 $124,324
Gross profit $18,366 17.8% $17,402 14.0%
Engineering
-----------------
Revenue $13,796 $17,874
Gross profit $1,806 13.1% $860 4.8%
A significant portion of the $20.9 million decline in Construction Services segment revenues was the result of a $10.5 million decrease in work performed at the Chevron Corporation Richmond Refinery project located in California. A state judge halted work on the project due to environmental issues in July 2009. That ruling is currently under appeal. The remaining revenue decline was a result of the substantial completion of underground and water and wastewater construction projects in 2008 which were not replaced with new projects in 2009 as customers delayed capital spending due to a slowdown in the general economy. The revenue decreases were partially offset by higher revenues in the cable and conduit sector, as well as the revenue contribution from the James Construction Group and Cravens Partners acquisitions. Revenues for the Engineering segment decreased by 22.8%, due primarily to completion this year of several large 2008 projects.
Selling, general and administrative expenses of $12.3 million for the fourth quarter of 2009 increased $2.3 million, or 23%, from $10.0 million in the same period last year. The change was primarily due to decreased SG&A allocations to cost of goods sold of $1.1 million as a result of lower engineering segment activity and transaction costs of $1.2 million associated with the acquisition of James Construction Group.
Operating income for the 2009 fourth quarter decreased to $7.8 million, or 6.7% of total revenues, compared to $8.3 million, or 5.8% of total revenues, for the same period last year.
During December 2009, the Company determined to discontinue all operations in Ecuador and a plan was put in place to sell the stock ownership of the Ecuador company. Primoris recorded a loss from discontinued operations of $3.0 million in the fourth quarter of 2009 compared to breakeven in the fourth quarter of 2008. In February 2010, the Company entered into an agreement for the sale of the Ecuador business, the consummation of which did not have a material impact to the Company's operations.
Net other income for the fourth quarter of 2009 was $3.2 million compared to $2.2 million for the fourth quarter of 2008. Other income included $3.4 million income from non-consolidated entities, $0.3 million in foreign exchange gain and $0.1 million in interest income. Other income was reduced by $0.5 million in interest expense.
Income from continuing operations before provision for income taxes for the fourth quarter of 2009 increased to $11.1 million, or 9.4% of revenues, from $10.4 million, or 7.3% of revenues, in the fourth quarter of 2008.
The provision for income taxes increased to $4.3 million for the fourth quarter of 2009 for an effective tax rate of 38.6% compared to a rate of 25.1% in the prior year quarter. The increase was the result of a change in tax status from that of Subchapter S of the Internal Revenue Code to that of Subchapter C of the Code associated with the July 2008 merger of Rhapsody Acquisition Corp. and Primoris Corporation. If the Company had been taxed for the entire fourth quarter of 2008 as a C-Corporation, on a pro forma basis, the 2008 tax provision would have been $4.2 million for an effective tax rate of 39.8%.
Net income for the fourth quarter of 2009 was $3.7 million, or $0.10 per share (reflecting a tax rate of 38.6%), compared to net income of $7.8 million, or $0.23 per share (reflecting a tax rate of 25.1%), in the same period in 2008. On a pro forma basis net income for the fourth quarter of 2008 would have been $6.3 million, or $0.19 per diluted share (reflecting a pro forma tax rate of 39.8%). The Company believes that pro forma net income for prior periods is a better indicator of performance for comparison purposes. Fully diluted shares outstanding for the fourth quarter 2009 were approximately 38.1 million compared to 33.3 million for the prior year fourth quarter, an increase of 14.3%.
Other Financial Information
Primoris's balance sheet at December 31, 2009 reported cash and cash equivalents of $90.0 million, short-term investments of $30.1 million, working capital of $43.3 million, total long-term debt secured by equipment of $34.1 million, long-term subordinated acquisition debt of $43.9 million and stockholders' equity of $144.0 million. Additionally, the balance sheet included a $9.3 million liability representing the estimated fair value for earn-out payments relating to the 2009 acquisitions.
Backlog
Total backlog at December 31, 2009 was $795.4 million, an increase of $444.4 million, or 126.6%, from $351.0 million at December 31, 2008, excluding Ecuador's discontinued operations. The December 31, 2009 amount includes $546.9 million added by the acquisitions of James Construction Group and Cravens Partners. In addition, the total backlog amount at December 31, 2009 included approximately $40.0 million, compared to $88.0 million at December 31, 2008, related to the previously disclosed demobilization at Chevron Corp's Richmond Refinery project located in California. Excluding any work for the Chevron project, Primoris expects that approximately 60% of the total backlog at December 31, 2009, will be recognized as revenue during 2010.
Backlog should not be considered a comprehensive indicator of future revenues, as a significant portion of Primoris' revenues are derived from projects that are not part of a backlog calculation. During 2009, approximately $135.3 million of revenue - $78.9 million attributable to Primoris and $56.4 million attributable to James Construction Group -- was generated by projects completed under master service agreements, time and material contracts, and fixed unit price contracts.
Conference Call
Brian Pratt, Chairman, President and Chief Executive Officer, and Peter J. Moerbeek, Executive Vice President, Chief Financial Officer will host a conference call on Wednesday, March 10, 2010 at 11:30 am Eastern Time / 8:30 am Pacific Time to discuss the results. Interested parties may participate in the call by dialing (866) 255-7436 (Domestic) or (706) 634-4739 (International). The conference call will also be broadcast live via the Investor Relations section of Primoris's website at www.primoriscorp.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
Primoris, through various subsidiaries, is one of the largest specialty contractors and engineering companies in the United States. Primoris provides a wide range of construction, fabrication, maintenance and replacement services, as well as engineering services to major public utilities, petrochemical companies, energy companies, municipalities and other customers. With the addition of the James Construction Group, Primoris has a significant presence in the Gulf States region where it provides heavy civil construction services. Primoris is also a leading water and wastewater contractor in the state of Florida, and a specialist in designing and constructing complex commercial and industrial concrete structures in California. For additional information on Primoris, please visit www.primoriscorp.com.
The Primoris Services Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5527
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," 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 year ended December 31, 2008 and other filings with the Securities and Exchange Commission, including the Company's Form 10-K to be filed on or before March 12, 2010. 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)
Twelve Months
Three Months Ended Ended
------------------ ------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- --------
Revenues $117,239 $142,198 $467,010 $597,822
Cost of revenues 97,067 123,936 391,435 527,380
-------- -------- -------- --------
Gross profit 20,172 18,262 75,575 70,442
Selling, general and administrative
expenses 11,956 9,616 34,781 30,544
Merger related stock expense 390 375 390 4,050
-------- -------- -------- --------
Operating income 7,826 8,271 40,404 35,848
Other income (expense):
Income from non-consolidated entities 3,411 1,564 8,753 6,065
Foreign exchange gain (loss) 260 788 293 855
Interest income 86 361 640 1,710
Interest expense (516) (543) (1,979) (2,250)
-------- -------- -------- --------
Income from continuing operations
before provision for income taxes 11,067 10,441 48,111 42,228
Provision for income taxes (4,273) (2,625) (18,350) (4,926)
-------- -------- -------- --------
Income from continuing operations 6,794 7,816 29,761 37,302
Loss on discontinued operations, net
of income taxes (3,048) (20) (3,849) (869)
-------- -------- -------- --------
Net income $3,745 $7,796 $25,912 $36,433
======== ======== ======== ========
Earnings (loss) per share:
Basic:
--------------------------------------
Income from continuing operations $0.21 $0.26 $0.93 $1.42
(Loss) on discontinued operations $(0.10) $0.00 $(0.12) $(0.03)
-------- -------- -------- --------
Net income $0.11 $0.26 $0.81 $1.39
======== ======== ======== ========
Diluted:
--------------------------------------
Income from continuing operations $0.18 $0.23 $0.86 $1.32
(Loss) on discontinued operations $(0.08) $0.00 $(0.11) $(0.03)
-------- -------- -------- --------
Net income $0.10 $0.23 $0.75 $1.29
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 32,644 29,977 31,937 26,258
======== ======== ======== ========
Diluted 38,113 33,344 34,418 28,156
======== ======== ======== ========
Pro forma net income data -- Unaudited
2008:
Income from continuing operations,
before provision for income tax, as
reported $10,441 $42,228
Pro forma provision for income tax (4,161) (16,797)
-------- --------
Pro forma income from continuing
operations $6,280 $25,431
======== ========
Pro forma income (loss) on
discontinued operations 2 (592)
-------- --------
Pro forma net income $6,282 $24,839
======== ========
Pro forma earnings per share
Basic -- income from continuing
operations $0.21 $0.97
Basic -- (loss) on discontinued
operations $0.00 ($0.02)
Basic -- net income $0.21 $0.95
Diluted - income from continuing
operations $0.19 $0.90
Diluted - (loss) on discontinued
operations $0.00 ($0.02)
Diluted - net income $0.19 $0.88
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
December December
31, 31,
2009 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $90,004 $72,848
Short-term investments 30,058 15,036
Restricted cash 6,845 8,556
Accounts receivable, net 108,492 90,622
Costs and estimated earnings in
excess of billings 11,378 19,793
Inventory 22,275 2,349
Deferred income taxes 5,630 5,591
Prepaid expenses and other
current assets 5,501 798
Current assets from
discontinued operations 5,304 6,862
-------- --------
Total current assets 285,487 222,455
Property and equipment, net 92,568 24,820
Other assets -- 139
Investment in non-consolidated
ventures 5,599 500
Other intangible assets, net 32,695 52
Goodwill 59,678 2,842
Non-current assets of
discontinued operations -- 1,404
-------- --------
Total assets $476,027 $252,212
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $62,568 $50,991
Billings in excess of costs and
estimated earnings 114,035 71,193
Accrued expenses and other
current liabilities 34,992 25,171
Distributions and dividends
payable 2,987 5,696
Current portion of capital
leases 4,220 2,198
Current portion of long-term
debt 6,482 5,679
Current portion of subordinated
debt 10,397 --
Current liabilities of
discontinued operations 6,511 7,464
-------- --------
Total current liabilities 242,192 168,392
Long-term debt, net of current
portion 26,368 26,624
Long-term capital leases, net
of current portion 7,734 341
Long-term subordinated debt,
net of current portion 43,853 --
Deferred tax liabilities 2,643 1,425
Other long-term liabilities 9,278 --
-------- --------
Total liabilities 332,068 196,782
-------- --------
Commitments and contingencies
Stockholders' equity
Common stock 3 3
Additional paid-in capital 100,644 34,796
Retained earnings 42,982 20,528
Accumulated other comprehensive
income 330 103
-------- --------
Total stockholders' equity 143,959 55,430
-------- --------
Total liabilities and
stockholders' equity $476,027 $252,212
======== ========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Primoris Services Corporation
CONTACT: Primoris Services Corporation Peter J. Moerbeek, Executive Vice President, Chief Financial Officer (949) 454-7121 pmoerbeek@primoriscorp.com The Equity Group Inc. Devin Sullivan, Senior Vice President (212) 836-9608 dsullivan@equityny.com Gerrard Lobo, Senior Account Executive (212) 836-9610 globo@equityny.com
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