Primoris Services Corporation Announces 2017 Second Quarter Financial Results
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 atJune 30, 2017 , a 44% increase over backlog atJune 30, 2016
The Company also announced that on
"Our strong operating cash flow this year allowed us to invest for internal growth and invest over
2017 SECOND QUARTER RESULTS OVERVIEW
Revenues in the second quarter 2017 increased by
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
- Power,
Industrial, and Engineering ("Power") - The Power division of the Power segment includesARB 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 includesOnQuest 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 | ||||||||||||
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 | ||||||||||||
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 | ||||||||||||||
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 | |||||||||||||
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
Pipeline & Underground Segment: Revenue in the Pipeline segment increased by
Utilities & Distribution
Segment: Revenue in the Utilities segment increased by
Civil Segment: Revenue in the Civil segment
increased by
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
BACKLOG
Backlog at | |||||||||
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
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.
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 13666612, 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
Company Contact
Executive Vice President, Chief Financial Officer
(214) 740-5602
pmoerbeek@prim.com
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 | ||||||||||||||
| |||||||||||||||
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) | |||||
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 | |||
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 | |||||||
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 |
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