Primoris Services Corporation Announces 2014 Fourth Quarter and Full Year Financial Results
Board of Directors Declares
Financial Highlights
-
2014 revenues of
$2,086 million , a 7.3% increase over 2013 revenues and the first time Primoris has exceeded the$2 billion mark -
2014 net income attributable to Primoris of
$63.2 million , a 9.3% decrease over 2013 net income attributable to Primoris -
A record tangible net worth of
$294.8 million atDecember 31, 2014 -
A record total backlog of
$2.0 billion atDecember 31, 2014 -
A 2.6% increase over 2013's year-end
$1.9 billion backlog and -
An 11.0% sequential quarterly increase over third quarter 2014's
$1.8 billion backlog
-
A 2.6% increase over 2013's year-end
The Company also announced that on
Following the close of the fourth quarter 2014, the Company entered into the following two agreements:
-
The Company announced today that it is acquiring the assets of
Aevenia , an energy and electrical construction company. The details of the acquisition are outlined in a separate press release. -
The Company settled the
North Texas Tollway Authority ("NTTA") lawsuit. The agreement settles all claims and disputes related to 1999 work on theGeorge Bush Turnpike .
2014 FOURTH QUARTER RESULTS OVERVIEW
Revenues in the fourth quarter 2014 decreased by
SEGMENT RESULTS
In the third quarter 2014, the Company reorganized its business segments to match the change in the Company's internal organization and management structure. The new operating segments include: the West Construction Services segment (which is unchanged from the previous West segment), the East Construction Services segment (which is realigned from the previous East Construction Services segment), and the Energy segment (which includes the previous Engineering segment). All prior period amounts related to segment operations have been retrospectively reclassified throughout this press release to reflect the new operating segments.
-
West Construction Services ("West segment")
- The West segment includes the underground and industrial operations
and construction services performed by ARB, ARB Structures, Rockford,
Q3 Contracting , and Vadnais, acquired inJune 2014 . Most of the entities perform work primarily inCalifornia ; however, Rockford operates throughout the Unites States and Q3C operates inColorado and the upper Midwest United States. The segment also includes the operations of the Blythe Power Constructors joint venture. -
East Construction Services ("East segment")
- The East segment includes the
James Construction Group ("JCG") Heavy Civil division, the JCG Infrastructure and Maintenance division, BW Primoris, and Cardinal Contractors, located primarily in the southeasternUnited States and in theGulf Coast region ofthe United States , and performs heavy civil construction, infrastructure, and maintenance operations. -
Energy ("Energy segment") - The Energy
segment businesses are located primarily in the southeastern
United States and in theGulf Coast region ofthe United States . The segment includes the PES pipeline and gas facility construction and maintenance operations, theJCG Industrial division and the newly acquired Surber and Ram-Fab operations. Additionally, the segment includes theCalifornia -basedOnQuest, Inc. and OnQuest Canada, ULC operations for the design and installation of high-performance furnaces and heaters for the oil refining, petrochemical and power generation industries.
Segment Revenues |
||||||||||||
(in thousands, except %) |
||||||||||||
|
||||||||||||
For the three months ended |
||||||||||||
2014 | 2013 | |||||||||||
Unaudited | Unaudited | |||||||||||
% of | % of | |||||||||||
Total | Total | |||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | ||||||||
West | $ | 216,270 | 44.4 | % | $ | 323,191 | 60.1 | % | ||||
East | 128,951 | 26.4 | % | 114,221 | 21.2 | % | ||||||
Energy | 142,371 | 29.2 | % | 100,467 | 18.7 | % | ||||||
Total | $ | 487,592 | 100.0 | % | $ | 537,879 | 100.0 | % | ||||
Segment Gross Profit |
||||||||||||
(in thousands, except %) |
||||||||||||
For the three months ended |
||||||||||||
2014 | 2013 | |||||||||||
Unaudited | Unaudited | |||||||||||
% of | % of | |||||||||||
Gross | Segment | Gross | Segment | |||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||
West | $ | 27,745 | 12.8 | % | $ | 57,551 | 17.8 | % | ||||
East | 1,154 | 0.9 | % | 4,734 | 4.1 | % | ||||||
Energy | 20,717 | 14.6 | % | 12,632 | 12.6 | % | ||||||
Total | $ | 49,616 | 10.2 | % | $ | 74,917 | 13.9 | % | ||||
West Segment: Revenues in the West segment decreased by
East Segment: Revenues in the East segment increased by
Energy Segment: Revenues in the Energy segment increased
by
OTHER INCOME STATEMENT INFORMATION
Selling, general and administrative expenses ("SG&A") were
Operating income for the 2014 fourth quarter was
Net non-operating items in the 2014 fourth quarter resulted in expenses
of
The provision for income taxes for the 2014 fourth quarter was
Net income attributable to Primoris for the 2014 fourth quarter was
Fully diluted weighted average shares outstanding for the 2014 fourth
quarter increased slightly to 51.71 million from 51.67 million in 2013's
fourth quarter. The increase in shares was due to shares issued to
certain senior managers and executives as part of the Primoris Long-Term
Retention Plan and as compensation to the non-employee members of the
Board of Directors. The increase in shares was offset by the repurchase
of 100,000 shares by the Company in
2014 FULL YEAR RESULTS OVERVIEW
Segment Revenues |
||||||||||||
(in thousands, except %) |
||||||||||||
For the twelve months ended |
||||||||||||
2014 | 2013 | |||||||||||
Unaudited | Unaudited | |||||||||||
% of | % of | |||||||||||
Total | Total | |||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | ||||||||
West | $ | 964,093 | 46.2 | % | $ | 1,151,433 | 59.2 | % | ||||
East | 489,926 | 23.5 | % | 430,438 | 22.1 | % | ||||||
Energy | 632,175 | 30.3 | % | 362,349 | 18.7 | % | ||||||
Total | $ | 2,086,194 | 100.0 | % | $ | 1,944,220 | 100.0 | % | ||||
Segment Gross Profit |
||||||||||||
(in thousands, except %) |
||||||||||||
For the twelve months ended |
||||||||||||
2014 | 2013 | |||||||||||
Unaudited | Unaudited | |||||||||||
% of | % of | |||||||||||
Gross | Segment | Gross | Segment | |||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||
West | $ | 143,468 | 14.9 | % | $ | 190,747 | 16.6 | % | ||||
East | 25,749 | 5.3 | % | 24,309 | 5.6 | % | ||||||
Energy | 66,823 |
10.6 |
% |
40,959 | 11.3 | % | ||||||
Total | $ | 236,040 | 11.3 | % | $ | 256,015 | 13.2 | % | ||||
OTHER FINANCIAL INFORMATION
Primoris' balance sheet at
BACKLOG |
|||||||||
Backlog at |
|||||||||
Segment | Fixed Backlog | MSA Backlog | Total Backlog | ||||||
West | $ | 237 | $ | 396 | $ | 633 | |||
East | 1,010 | 4 | 1,014 | ||||||
Energy | 301 | 45 | 346 | ||||||
Total | $ | 1,548 | 445 | 1,993 | |||||
At
At
Total Backlog at
Backlog, including estimated MSA revenues, should not be considered a comprehensive indicator of future revenue, as a portion of Primoris' revenue is still derived from projects that are not part of backlog, including time-and-equipment, time-and-materials, and cost-reimbursable-plus-fee contracts. Projects that are considered a part of Total Backlog may be still be cancelled by our customers.
FORM 10-K
Starting in the fourth quarter of 2014 and through the date of this
release, the Company's management, independent outside counsel and the
Audit Committee of the Board of Directors have spent considerable time
and resources reviewing and analyzing various issues relating to the
methods used by the Company's subsidiaries to recognize revenues and
estimate contingencies for ongoing projects. The review is not yet
completed, but based on the results to date, the Company does not
anticipate any adjustments to its previously reported financial results.
The Company is unable to determine at this time whether the results of
the review will indicate that its internal controls over financial
reporting were operating effectively or the impact of the review on the
Company's annual report on internal control over financial reporting
included in the Form 10-K. As permitted by the
CONFERENCE CALL
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, passcode 13602654, 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
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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended, | |||||||||||||||
|
|
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues | $ | 487,592 | $ | 537,879 | $ | 2,086,194 | $ | 1,944,220 | ||||||||
Cost of revenues | 437,976 | 462,962 | 1,850,154 | 1,688,205 | ||||||||||||
Gross profit | 49,616 | 74,917 | 236,040 | 256,015 | ||||||||||||
Selling, general and administrative expenses | 33,161 | 34,121 | 132,248 | 130,778 | ||||||||||||
Operating income | 16,455 | 40,796 | 103,792 | 125,237 | ||||||||||||
Other income (expense): | ||||||||||||||||
Income (loss) from non-consolidated entities | - | (5,005 | ) | 5,264 | (4,836 | ) | ||||||||||
Foreign exchange gain (loss) | 300 | 150 | 374 | 153 | ||||||||||||
Other income (expense) | (115 | ) | 5,613 | (757 | ) | 4,804 | ||||||||||
Interest income | 8 | 15 | 88 | 110 | ||||||||||||
Interest expense | (1,791 | ) | (1,391 | ) | (6,433 | ) | (5,892 | ) | ||||||||
Income before provision for income taxes | 14,857 | 40,178 | 102,328 | 119,576 | ||||||||||||
Provision for income taxes | (5,833 | ) | (14,624 | ) | (38,646 | ) | (44,896 | ) | ||||||||
Net income | 9,024 | 25,554 | 63,682 | 74,680 | ||||||||||||
Net income attributable to noncontrolling interests | (94 | ) | (3,073 | ) | (526 | ) | (5,020 | ) | ||||||||
Net income attributable to Primoris | 8,930 | 22,481 | 63,156 | 69,660 | ||||||||||||
Dividends per common share | $ | 0.035 | $ | 0.035 | $ | 0.150 | $ | 0.135 | ||||||||
Earnings per share attributable to Primoris: | ||||||||||||||||
Basic: | $ | 0.17 | $ | 0.44 | $ | 1.22 | $ | 1.35 | ||||||||
Diluted: | $ | 0.17 | $ | 0.44 | $ | 1.22 | $ | 1.35 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 51,561 | 51,571 | 51,607 | 51,540 | ||||||||||||
Diluted | 51,710 | 51,671 | 51,747 | 51,610 | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In Thousands, Except Share Amounts) | |||||||
(Unaudited) | |||||||
|
|
||||||
2014 | 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 139,465 | $ | 196,077 | |||
Short-term investments | 30,992 | 18,686 | |||||
Customer retention deposits and restricted cash | 481 | 5,304 | |||||
Accounts receivable, net | 337,382 | 304,955 | |||||
Costs and estimated earnings in excess of billings | 68,654 | 57,146 | |||||
Inventory and uninstalled contract materials | 58,116 | 51,829 | |||||
Deferred tax assets | 13,555 | 13,133 | |||||
Prepaid expenses and other current assets | 31,720 | 12,654 | |||||
Total current assets | 680,365 | 659,784 | |||||
Property and equipment, net | 271,431 | 226,512 | |||||
Intangible assets, net | 39,581 | 45,303 | |||||
Goodwill | 119,410 | 118,626 | |||||
Other long-term assets | 400 | 468 | |||||
Total assets | $ | 1,111,187 | $ | 1,050,693 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 128,793 | $ | 127,302 | |||
Billings in excess of costs and estimated earnings | 158,595 | 173,365 | |||||
Accrued expenses and other current liabilities | 83,401 | 91,079 | |||||
Dividends payable | 2,062 | 1,805 | |||||
Current portion of capital leases | 1,650 | 3,288 | |||||
Current portion of long-term debt | 38,909 | 28,475 | |||||
Current portion of contingent earnout liabilities | 5,901 | 5,000 | |||||
Total current liabilities | 419,311 | 430,314 | |||||
Long-term capital leases, net of current portion | 657 | 2,295 | |||||
Long-term debt, net of current portion | 204,029 | 191,051 | |||||
Deferred tax liabilities | 19,484 | 10,092 | |||||
Long-term contingent earnout liabilities, net of current portion | 1,021 | 4,233 | |||||
Other long-term liabilities | 12,899 | 14,260 | |||||
Total liabilities | 657,401 | 652,245 | |||||
Stockholders' equity | |||||||
Common stock | 5 | 5 | |||||
Additional paid-in capital | 160,186 | 159,196 | |||||
Retained earnings | 293,628 | 238,216 | |||||
Noncontrolling interests | (33 | ) | 1,031 | ||||
Total stockholders' equity | 453,786 | 398,448 | |||||
Total liabilities and stockholders' equity | $ | 1,111,187 | $ | 1,050,693 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In Thousands) | ||||||||
(Unaudited) | ||||||||
Twelve Months Ended, | ||||||||
|
||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 63,682 | $ | 74,680 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 50,918 | 42,421 | ||||||
Amortization of intangible assets | 7,504 | 7,467 | ||||||
Intangible asset impairment | — | 808 | ||||||
Stock-based compensation expense | 934 | 367 | ||||||
Loss (gain) on sale of property and equipment | (1,895 | ) | (1,406 | ) | ||||
(Income) loss from non-consolidated entities | (5,264 | ) | (97 | ) | ||||
Impairment expense for non-consolidated entities | — | 4,932 | ||||||
Other than temporary basis difference for non-consolidated entities |
— | 3,975 | ||||||
Distributions received from non-consolidated entities | — | 2,821 | ||||||
Net deferred tax liabilities (assets) | 8,970 | (12,582 | ) | |||||
Changes in assets and liabilities: | ||||||||
Customer retention deposits and restricted cash | 4,823 | 30,073 | ||||||
Accounts receivable | (29,659 | ) | (36,860 | ) | ||||
Costs and estimated earnings in excess of billings | (11,508 | ) | (15,445 | ) | ||||
Other current assets | (25,767 | ) | (14,774 | ) | ||||
Other long term assets | 72 | — | ||||||
Accounts payable | 921 | (25,131 | ) | |||||
Billings in excess of costs and estimated earnings | (14,770 | ) | 14,473 | |||||
Contingent earnout liabilities | (4,145 | ) | (14,900 | ) | ||||
Accrued expenses and other current liabilities | (7,354 | ) | 15,824 | |||||
Other long-term liabilities | (1,361 | ) | 1,107 | |||||
Net cash provided by operating activities | 36,101 | 77,753 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (87,954 | ) | (87,050 | ) | ||||
Proceeds from sale of property and equipment | 5,814 | 7,865 | ||||||
Purchase of short-term investments | (33,770 | ) | (23,110 | ) | ||||
Sale of short-term investments | 21,464 | 7,448 | ||||||
Cash received from the sale of equity method investments |
6,439 | -- | ||||||
Cash paid for acquisitions | (14,596 | ) | (2,273 | ) | ||||
Net cash used in investing activities | (102,603 | ) | (97,120 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 58,519 | 107,609 | ||||||
Repayment of capital leases | (3,276 | ) | (4,618 | ) | ||||
Repayment of long-term debt | (35,107 | ) | (35,896 | ) | ||||
Repayment of subordinated debt | — | — | ||||||
Purchase of Unit Purchase Option | — | — | ||||||
Proceeds from issuance of common stock purchased by management under long-term incentive plan | 1,671 | 1,455 | ||||||
Cash distribution to non-controlling interest holder | (1,590 | ) | (5,500 | ) | ||||
Repurchase of common stock | (2,844 | ) | — | |||||
Dividends paid | (7,483 | ) | (5,157 | ) | ||||
Net cash provided by (used in) financing activities | 9,890 | 57,893 | ||||||
Net change in cash and cash equivalents | (56,612 | ) | 38,526 | |||||
Cash and cash equivalents at beginning of year | 196,077 | 157,551 | ||||||
Cash and cash equivalents at end of the year | $ | 139,465 | $ | 196,077 | ||||
Executive
Vice President, Chief Financial Officer
pmoerbeek@prim.com
or
Director of Investor Relations
ktholking@prim.com
Source:
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