Primoris Services Corporation Announces 2016 Third Quarter Financial Results
Financial Highlights
- 2016 Q3 revenues of
$507.8 million , a 9% decrease over 2015 Q3 - 2016 Q3 SG&A of
$36.0 million , a 7% improvement over 2015 Q3- 2016 YTD SG&A improvement of
$9.7 million
- 2016 YTD SG&A improvement of
- 2016 Q3 net income attributable to Primoris of
$4.5 million , a 76% decrease over 2015 Q3. Earnings per share of$0.09 decreased by$0.28 from 2015 Q3. 2016 Q3 net income includes significant, unusual events:$37.3 million pre-tax charge for the Texas Heavy Civil unit planned for divestiture$2.7 million pre-tax goodwill impairment resulting from the planned divestiture of the Texas Heavy Civil unit$26.7 million pre-tax increase in gross profit as a result of a settlement of a collection dispute
- 2016 Q3 cash flow from operations of
$45.1 million , compared to$0.6 million in 2015 Q3, resulting in ending cash balance of$148.7 million at 2016 Q3. - Record Total Backlog of
$2.7 billion at September 30, 2016- 41% sequential increase compared to 2016 Q2
- 31% increase compared to 2015 Q3
- MSA backlog increase of
$29.7 million compared to 2016 Q2
The Company also announced that on
2016 THIRD QUARTER RESULTS OVERVIEW
Revenues in the third quarter 2016 decreased by
Included in the third quarter 2016 results are two significant, discrete events: the planned divestiture of the Texas Heavy Civil unit and the settlement of a dispute receivables collection related to a pipeline project. The Texas Heavy Civil unit, which we are planning to divest, recorded a charge of
SEGMENT RESULTS
-
West Construction Services ("West segment") - The West segment includes the underground and industrial operations and construction services performed by ARB, ARB Structures, Rockford, Q3C, and Vadnais. Most of the entities perform work primarily in
California ; however, Rockford operates throughoutthe United States and Q3C operates inColorado and the upper Midwest United States. The segment also includes the operations of theBlythe ,Wilmington andCarlsbad joint ventures.
-
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 .
-
Energy ("Energy segment") - The Energy segment businesses includes the PES pipeline and gas facility construction and maintenance operations and the
PES Industrial division, whose operations are located primarily in the southeasternUnited States and in theGulf Coast region. The segment also includes the Aevenia, Surber, and Ram-Fab operations, as well as theOnQuest, Inc. and OnQuest Canada, ULC operations for the design and installation of liquefied natural gas facilities and high-performance furnaces and heaters for the oil refining, petrochemical and power generation industries.
Segment Revenues
(in thousands, except %)
For the three months ended |
|||||||||||||
2016 Unaudited |
2015 Unaudited |
||||||||||||
% of | % of | ||||||||||||
Total | Total | ||||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | |||||||||
West | $ | 264,463 | 52.1 | % | $ | 258,414 | 46.5 | % | |||||
East | 122,854 | 24.2 | % | 183,635 | 33.0 | % | |||||||
Energy | 120,511 | 23.7 | % | 113,896 | 20.5 | % | |||||||
Total | $ | 507,828 | 100.0 | % | $ | 555,945 | 100.0 | % | |||||
For the nine months ended |
|||||||||||||
2016 Unaudited |
2015 Unaudited |
||||||||||||
% of | % of | ||||||||||||
Total | Total | ||||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | |||||||||
West | $ | 652,850 | 46.8 | % | $ | 684,798 | 47.8 | % | |||||
East | 398,304 | 28.6 | % | 462,222 | 32.3 | % | |||||||
Energy | 343,931 | 24.6 | % | 285,250 | 19.9 | % | |||||||
Total | $ | 1,395,085 | 100.0 | % | $ | 1,432,270 | 100.0 | % | |||||
Segment Gross Profit
(in thousands, except %)
For the three months ended |
||||||||||||||
2016 Unaudited |
2015 Unaudited |
|||||||||||||
% of | % of | |||||||||||||
Gross | Segment | Gross | Segment | |||||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||||
West | $ | 42,191 | 16.0 | % | $ | 39,810 | 15.4 | % | ||||||
East | (27,253 | ) | (22.2 | %) | 15,400 | 8.4 | % | |||||||
Energy | 35,191 | 29.2 | % | 16,437 | 14.4 | % | ||||||||
Total | $ | 50,129 | 9.9 | % | $ | 71,647 | 12.9 | % | ||||||
For the nine months ended |
||||||||||||||
2016 Unaudited |
2015 Unaudited |
|||||||||||||
% of | % of | |||||||||||||
Gross | Segment | Gross | Segment | |||||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||||
West | $ | 87,390 | 13.4 | % | $ | 91,718 | 13.4 | % | ||||||
East | (15,357 | ) | (3.9 | %) | 33,623 | 7.3 | % | |||||||
Energy | 60,658 | 17.6 | % | 30,807 | 10.8 | % | ||||||||
Total | $ | 132,691 | 9.5 | % | $ | 156,148 | 10.9 | % | ||||||
West Segment: Revenues for the West segment increased by
East Segment: Revenues in the East segment decreased by
Energy Segment: Revenue for the Energy segment increased by
Selling, general and administrative expenses ("SG&A") were
The decision to potentially divest the Texas Heavy Civil unit triggered a goodwill analysis, which resulted in a pretax, non-cash goodwill impairment charge of
Operating income for the third quarter 2016 was
Net non-operating items in the third quarter 2016 resulted in expense of
The provision for income taxes for the third quarter 2016 was
Net income attributable to Primoris for the third quarter 2016 was
Fully diluted weighted average shares outstanding for the third quarter 2016 increased slightly to 52.03 million from 51.8 million in the third quarter 2015.
OTHER FINANCIAL INFORMATION
Primoris' balance sheet at
Based on the information available, the Company estimates that for the four quarters ending
BACKLOG
Backlog at (in millions) |
||||||||||||
Segment | Fixed Backlog | MSA Backlog | Total Backlog | Expected Next Four Quarters Total Backlog Revenue Recognition | ||||||||
West | $ | 1,264 | $ | 521 | $ | 1,785 | 57% | |||||
East | 648 | 4 | 652 | 63% | ||||||||
Energy | 221 | 37 | 258 | 93% | ||||||||
Total | $ | 2,133 | $ | 562 | $ | 2,695 | 62% |
At
At the end of the third quarter 2016, backlog for the JCG Texas heavy civil division totaling
At
Total Backlog at
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.
SHARE REPURCHASE PLAN
The Company's Board of Directors has authorized a share repurchase program under which Primoris may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of
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, conference ID 13641808, and will be available for approximately two weeks. The conference call will also be broadcast live over the
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 | Nine Months Ended | ||||||||||||||||
|
|
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenues | $ | 507,828 | $ | 555,945 | $ | 1,395,085 | $ | 1,432,270 | |||||||||
Cost of revenues | 457,699 | 484,298 | 1,262,394 | 1,276,122 | |||||||||||||
Gross profit | 50,129 | 71,647 | 132,691 | 156,148 | |||||||||||||
Selling, general and administrative expenses | 35,994 | 38,545 | 101,150 | 110,852 | |||||||||||||
Impairment of |
2,716 | - | 2,716 | - | |||||||||||||
Operating income | 11,419 | 33,102 | 28,825 | 45,296 | |||||||||||||
Other income (expense): | |||||||||||||||||
Foreign exchange gain (loss) | (92 | ) | (721 | ) | 288 | (425 | ) | ||||||||||
Other income (expense) | (278 | ) | 361 | (278 | ) | 272 | |||||||||||
Interest income | 31 | 4 | 122 | 22 | |||||||||||||
Interest expense | (2,246 | ) | (1,903 | ) | (6,754 | ) | (5,563 | ) | |||||||||
Income before provision for income taxes | 8,834 | 30,843 | 22,203 | 39,602 | |||||||||||||
Provision for income taxes | (4,078 | ) | (11,764 | ) | (9,244 | ) | (15,159 | ) | |||||||||
Net income | 4,756 | 19,079 | 12,959 | 24,443 | |||||||||||||
Net income attributable to noncontrolling interests | (252 | ) | (72 | ) | (706 | ) | (126 | ) | |||||||||
Net income attributable to Primoris | $ | 4,504 | $ | 19,007 | $ | 12,253 | $ | 24,317 | |||||||||
Earnings per share: | |||||||||||||||||
Basic: | $ | 0.09 | $ | 0.37 | $ | 0.24 | $ | 0.47 | |||||||||
Diluted: | $ | 0.09 | $ | 0.37 | $ | 0.24 | $ | 0.47 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 51,780 | 51,672 | 51,759 | 51,637 | |||||||||||||
Diluted | 52,304 | 51,824 | 51,978 | 51,789 | |||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In Thousands, Except Share Amounts) | ||||||||
(Unaudited) | ||||||||
|
|
|||||||
2016 | 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 148,667 | $ | 161,122 | ||||
Customer retention deposits and restricted cash | 3,049 | 2,598 | ||||||
Accounts receivable, net | 293,495 | 320,588 | ||||||
Costs and estimated earnings in excess of billings | 156,391 | 116,455 | ||||||
Inventory and uninstalled contract materials | 55,294 | 67,796 | ||||||
Prepaid expenses and other current assets | 16,965 | 18,265 | ||||||
Total current assets | 673,861 | 686,824 | ||||||
Property and equipment, net | 286,886 | 283,545 | ||||||
Deferred tax asset - long-term | 1,075 | 1,075 | ||||||
Intangible assets, net | 31,423 | 36,438 | ||||||
123,445 | 124,161 | |||||||
Other long-term assets | 2,174 | 211 | ||||||
Total assets | $ | 1,118,864 | $ | 1,132,254 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 134,486 | $ | 124,450 | ||||
Billings in excess of costs and estimated earnings | 98,291 | 139,875 | ||||||
Accrued expenses and other current liabilities | 111,473 | 93,596 | ||||||
Dividends payable | 2,848 | 2,842 | ||||||
Current portion of capital leases | 353 | 974 | ||||||
Current portion of long-term debt | 53,632 | 54,436 | ||||||
Total current liabilities | 401,083 | 416,173 | ||||||
Long-term capital leases, net of current portion | 17 | 22 | ||||||
Long-term debt, net of current portion | 213,790 | 219,853 | ||||||
Other long-term liabilities | 12,790 | 12,741 | ||||||
Total liabilities | 627,680 | 648,789 | ||||||
Stockholders' equity | ||||||||
Common stock | 5 | 5 | ||||||
Additional paid-in capital | 166,662 | 163,344 | ||||||
Retained earnings | 323,594 | 319,899 | ||||||
Non-controlling interest | 923 | 217 | ||||||
Total stockholders' equity | 491,184 | 483,465 | ||||||
Total liabilities and stockholders' equity | $ | 1,118,864 | $ | 1,132,254 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In Thousands) | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | |||||||||||
|
|||||||||||
2016 | 2015 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 12,959 | $ | 24,443 | |||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Depreciation | 46,430 | 43,452 | |||||||||
Amortization of intangible assets | 5,015 | 5,082 | |||||||||
Impairment of goodwill | 2,716 | - | |||||||||
Gain on sale of property and equipment | (3,361 | ) | (901 | ) | |||||||
Stock-based compensation expense | 1,169 | 787 | |||||||||
Changes in assets and liabilities: | |||||||||||
Customer retention deposits and restricted cash | (451 | ) | (1,583 | ) | |||||||
Accounts receivable | 27,093 | (45,968 | ) | ||||||||
Costs and estimated earnings in excess of billings | (39,936 | ) | (47,561 | ) | |||||||
Other current assets | 13,865 | (5,453 | ) | ||||||||
Accounts payable | 10,036 | 4,669 | |||||||||
Billings in excess of costs and estimated earnings | (41,584 | ) | (14,657 | ) | |||||||
Contingent earnout liabilities | - | (5,271 | ) | ||||||||
Accrued expenses and other current liabilities | 18,580 | 31,712 | |||||||||
Other long-term assets | (1,963 | ) | (2,385 | ) | |||||||
Other long-term liabilities | 49 | (3,067 | ) | ||||||||
Net cash provided by (used in) operating activities | $ | 50,617 | $ | (16,701 | ) | ||||||
Cash flows from investing activities: | |||||||||||
Purchase of property and equipment | (52,137 | ) | (52,440 | ) | |||||||
Proceeds from sale of property and equipment | 7,763 | 6,139 | |||||||||
Sale of short-term investments | - | 30,992 | |||||||||
Cash paid for acquisitions | (4,108 | ) | (22,302 | ) | |||||||
Net cash used in investing activities | $ | (48,482 | ) | $ | (37,611 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | 30,000 | 42,328 | |||||||||
Repayment of capital leases | (626 | ) | (1,086 | ) | |||||||
Repayment of long-term debt | (36,867 | ) | (31,597 | ) | |||||||
Proceeds from issuance of common stock purchased by management under long-term incentive plan | 1,439 | 1,621 | |||||||||
Dividends paid | (8,536 | ) | (6,966 | ) | |||||||
Cash distribution to non-controlling interest holder | - | (29 | ) | ||||||||
Net cash provided (used in) by financing activities | $ | (14,590 | ) | $ | 4,271 | ||||||
Net change in cash and cash equivalents | (12,455 | ) | (50,041 | ) | |||||||
Cash and cash equivalents at beginning of the period | 161,122 | 139,465 | |||||||||
Cash and cash equivalents at end of the period | $ | 148,667 | $ | 89,424 | |||||||
Company Contact
Executive Vice President, Chief Financial Officer
(214) 740-5602
pmoerbeek@prim.com
Director of Investor Relations
(214) 740-5615
ktholking@prim.com
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