Primoris Services Corporation Announces 2018 Second Quarter Financial Results
Financial Highlights
- 2018 Q2 revenues of
$648.8 million - For month of
June 2018 , revenues were$61 million for acquired Willbros entities
- For month of
- 2018 Q2 operating income of
$20.3 million - For month of
June 2018 , operating income, excluding merger and related costs, was$2.9 million for acquired Willbros entities - Q2 one-time deal and merger costs were
$7.7 million
- For month of
- 2018 Q2 net income attributable to Primoris of
$11.7 million , or$0.23 per fully diluted share- Pro-forma adjusted net income attributable to Primoris(1), excluding the impact of the Willbros acquisition, of
$15.7 million or$0.31 per fully diluted share
- Pro-forma adjusted net income attributable to Primoris(1), excluding the impact of the Willbros acquisition, of
- Total backlog of
$2.8 billion atJune 30, 2018 June 30, 2018 backlog was$432 million for acquired Willbros entities
(1) | A non-GAAP measure. See accompanying schedule that reconciles GAAP to non-GAAP measures along with a statement indicating why the Company believes the non-GAAP measure provides useful information for investors. |
The Company also announced that on
“With the delay in the start date for our large
Mr. King concluded, “As we look to the remainder of this year and in to 2019, we continue to see an extremely positive pipeline market, not just for large diameter work but also for smaller diameter projects in the
2018 SECOND QUARTER RESULTS OVERVIEW
Revenue was
SEGMENT RESULTS
- Power, Industrial, and Engineering (“Power”) - The Power segment operates throughout
the United States and specializes in a range of services that include full EPC project delivery, turnkey construction, retrofits, upgrades, repairs, outages, and maintenance for entities in the petroleum, petrochemical, water, and other industries. This segment includes the operations of Willbros Canada segment. - Pipeline and Underground (“Pipeline”) – The Pipeline segment operates throughout
the United States and specializes in a range of services, including pipeline construction, pipeline maintenance, pipeline facility work, compressor stations, pump stations, metering facilities, and other pipeline related services for entities in the petroleum and petrochemical industries. This segment includes the operations of Willbros oil and gas segment. - Utilities and Distribution (“Utilities”) – The Utilities segment operates primarily in
California , the Midwest, and the Southeast regions ofthe United States and specializes in a range of services, including utility line installation and maintenance, gas and electric distribution, streetlight construction, substation work, and fiber optic cable installation. - Transmission and Distribution (“Transmission”) – The newly formed Transmission segment operates primarily in the Southeastern and
Gulf Coast regions ofthe United States and specializes in a range of services in electric and gas transmission and distribution, including comprehensive engineering, procurement, maintenance and construction, repair, and restoration of utility infrastructure. This segment represents the operations of Willbros T&D segment. - Civil – The Civil segment operates primarily in the Southeastern and
Gulf Coast regions ofthe United States and specializes in highway and bridge construction, airport runway and taxiway construction, demolition, heavy earthwork, soil stabilization, mass excavation, and drainage projects.
Segment Revenues
(in thousands, except %)
(Unaudited)
For the three months ended June 30, | ||||||||||||
2018 | 2017 | |||||||||||
% of | % of | |||||||||||
Total | Total | |||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | ||||||||
Power | $ | 167,001 | 25.7% | $ | 157,773 | 25.0% | ||||||
Pipeline | 90,605 | 14.0% | 134,623 | 21.3% | ||||||||
Utilities | 228,852 | 35.3% | 212,942 | 33.8% | ||||||||
Transmission | 42,454 | 6.5% | — | 0.0% | ||||||||
Civil | 119,875 | 18.5% | 125,827 | 19.9% | ||||||||
Total | $ | 648,787 | 100.0% | $ | 631,165 | 100.0% |
For the six months ended June 30, | ||||||||||||
2018 | 2017 | |||||||||||
% of | % of | |||||||||||
Total | Total | |||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | ||||||||
Power | $ | 333,556 | 28.9% | $ | 289,013 | 24.2% | ||||||
Pipeline | 148,188 | 12.9% | 318,068 | 26.7% | ||||||||
Utilities | 395,562 | 34.3% | 329,922 | 27.7% | ||||||||
Transmission | 42,454 | 3.7% | — | 0.0% | ||||||||
Civil | 233,146 | 20.2% | 255,664 | 21.4% | ||||||||
Total | $ | 1,152,906 | 100.0% | $ | 1,192,667 | 100.0% | ||||||
Segment Gross Profit
(in thousands, except %)
(Unaudited)
For the three months ended June 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
% of | % of | |||||||||||||
Segment | Segment | |||||||||||||
Segment | Gross Profit | Revenue | Gross Profit | Revenue | ||||||||||
Power | $ | 20,526 | 12.3% | $ | 18,132 | 11.5% | ||||||||
Pipeline | 10,678 | 11.8% | 39,366 | 29.2% | ||||||||||
Utilities | 34,564 | 15.1% | 32,347 | 15.2% | ||||||||||
Transmission | 5,721 | 13.5% | — | 0.0% | ||||||||||
Civil | (70) | (0.1%) | (5,362) | (4.3%) | ||||||||||
Total | $ | 71,419 | 11.0% | $ | 84,483 | 13.4% | ||||||||
For the six months ended June 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
% of | % of | |||||||||||||
Segment | Segment | |||||||||||||
Segment | Gross Profit | Revenue | Gross Profit | Revenue | ||||||||||
Power | $ | 44,597 | 13.4% | $ | 33,656 | 11.6% | ||||||||
Pipeline | 18,569 | 12.5% | 67,491 | 21.2% | ||||||||||
Utilities | 43,615 | 11.0% | 40,620 | 12.3% | ||||||||||
Transmission | 5,721 | 13.5% | — | 0.0% | ||||||||||
Civil | 3,477 | 1.5% | (2,231) | (0.9%) | ||||||||||
Total | $ | 115,979 | 10.1% | $ | 139,536 | 11.7% |
Power, Industrial, & Engineering Segment: Revenue increased by
Pipeline & Underground Segment: Revenue decreased by
Utilities & Distribution Segment: Revenue increased by
Transmission & Distribution Segment: The Transmission segment was created in connection with the acquisition of Willbros. Revenue and gross profit represent results from the
Civil Segment: Revenue decreased by
OTHER INCOME STATEMENT INFORMATION
Selling, general and administrative (“SG&A”) expenses were
Merger and related costs were
The effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 24.0% for the six months ended
OUTLOOK
Based on anticipated levels of customer maintenance spending, MSA spending, new project awards, and an expected corporate tax rate of 24.0%, the Company re-affirms our estimate that for the fiscal year ending
BACKLOG
Expected Next Four | ||||||||||||
Quarters Total | ||||||||||||
Backlog at June 30, 2018 (in millions) | Backlog Revenue | |||||||||||
Segment | Fixed Backlog | MSA Backlog | Total Backlog | Recognition | ||||||||
Power | $ | 275 | $ | 112 | $ | 387 | 92% | |||||
Pipeline | 863 | 48 | 911 | 85% | ||||||||
Utilities | 31 | 652 | 683 | 100% | ||||||||
Transmission | 25 | 301 | 326 | 100% | ||||||||
Civil | 527 | — | 527 | 74% | ||||||||
Total | $ | 1,721 | $ | 1,113 | $ | 2,834 | 89% |
At
At
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)
Presentation slides to accompany the conference call are available for download in the Investor Relations section of Primoris’ website at www.prim.com. Once at the Investor Relations section, please click on “Events & Presentations”.
If you are unable to participate in the live call, a replay may be accessed by dialing (877) 660-6853, conference ID 13682319, 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
Company Contact | |
Peter J. Moerbeek | Kate Tholking |
Executive Vice President, Chief Financial Officer | Vice President, Investor Relations |
(214) 740-5602 | (214) 740-5615 |
pmoerbeek@prim.com | 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, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 648,787 | $ | 631,165 | $ | 1,152,906 | $ | 1,192,667 | |||||||
Cost of revenue | 577,368 | 546,682 | 1,036,927 | 1,053,131 | |||||||||||
Gross profit | 71,419 | 84,483 | 115,979 | 139,536 | |||||||||||
Selling, general and administrative expenses | 43,489 | 44,881 | 80,445 | 84,514 | |||||||||||
Merger and related costs | 7,668 | 1,096 | 9,363 | 1,317 | |||||||||||
Operating income | 20,262 | 38,506 | 26,171 | 53,705 | |||||||||||
Other income (expense): | |||||||||||||||
Foreign exchange gain | 1,256 | 109 | 1,513 | 132 | |||||||||||
Other income (expense), net | (771 | ) | (13 | ) | (783 | ) | (13 | ) | |||||||
Interest income | 340 | 114 | 612 | 183 | |||||||||||
Interest expense | (3,191 | ) | (2,145 | ) | (5,189 | ) | (4,407 | ) | |||||||
Income before provision for income taxes | 17,896 | 36,571 | 22,324 | 49,600 | |||||||||||
Provision for income taxes | (3,705 | ) | (14,175 | ) | (3,917 | ) | (18,692 | ) | |||||||
Net income | $ | 14,191 | $ | 22,396 | $ | 18,407 | $ | 30,908 | |||||||
Less net income attributable to noncontrolling interests | (2,476 | ) | (851 | ) | $ | (6,004 | ) | $ | (1,672 | ) | |||||
Net income attributable to Primoris | $ | 11,715 | $ | 21,545 | $ | 12,403 | $ | 29,236 | |||||||
Dividends per common share | $ | 0.060 | $ | 0.055 | $ | 0.120 | $ | 0.110 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.23 | $ | 0.42 | $ | 0.24 | $ | 0.57 | |||||||
Diluted | $ | 0.23 | $ | 0.42 | $ | 0.24 | $ | 0.56 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 51,531 | 51,437 | 51,505 | 51,515 | |||||||||||
Diluted | 51,793 | 51,688 | 51,770 | 51,771 | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) |
|||||
June 30, | December 31, | ||||
2018 | 2017 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 139,404 | $ | 170,385 | |
Restricted cash | 35,492 | — | |||
Accounts receivable, net | 375,763 | 291,589 | |||
Contract assets | 360,710 | 265,902 | |||
Prepaid expenses and other current assets | 40,103 | 15,338 | |||
Total current assets | 951,472 | 743,214 | |||
Property and equipment, net | 356,843 | 311,777 | |||
Deferred tax assets | 8,887 | — | |||
Intangible assets, net | 94,089 | 44,800 | |||
Goodwill | 197,071 | 153,374 | |||
Other long-term assets | 5,639 | 2,575 | |||
Total assets | $ | 1,614,001 | $ | 1,255,740 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ | 219,180 | $ | 140,943 | |
Contract liabilities | 195,326 | 169,377 | |||
Accrued liabilities | 130,479 | 76,027 | |||
Dividends payable | 3,092 | 3,087 | |||
Current portion of long-term debt | 65,376 | 65,464 | |||
Total current liabilities | 613,453 | 454,898 | |||
Long-term debt, net of current portion | 354,910 | 193,351 | |||
Deferred tax liabilities | — | 13,571 | |||
Other long-term liabilities | 68,451 | 31,737 | |||
Total liabilities | 1,036,814 | 693,557 | |||
Commitments and contingencies | |||||
Stockholders’ equity | |||||
Common stock | 5 | 5 | |||
Additional paid-in capital | 162,928 | 160,502 | |||
Retained earnings | 402,158 | 395,961 | |||
Accumulated other comprehensive income | 377 | — | |||
Non-controlling interest | 11,719 | 5,715 | |||
Total stockholders’ equity | 577,187 | 562,183 | |||
Total liabilities and stockholders’ equity | $ | 1,614,001 | $ | 1,255,740 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) |
|||||||
Six Months Ended | |||||||
June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 18,407 | $ | 30,908 | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities (net of effect of acquisition): |
|||||||
Depreciation | 30,014 | 28,139 | |||||
Amortization of intangible assets | 5,161 | 3,611 | |||||
Intangible asset impairment | — | 477 | |||||
Stock-based compensation expense | 430 | 690 | |||||
Gain on sale of property and equipment | (1,580 | ) | (3,208 | ) | |||
Other non-cash items | 68 | 87 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 18,331 | 53,650 | |||||
Contract assets | (64,074 | ) | (22,627 | ) | |||
Other current assets | (6,036 | ) | 4,604 | ||||
Other long-term assets | (499 | ) | 381 | ||||
Accounts payable | 2,115 | (37,060 | ) | ||||
Contract liabilities | (18,220 | ) | 45,647 | ||||
Accrued liabilities | 13,647 | 8,298 | |||||
Other long-term liabilities | 1,520 | 2,692 | |||||
Net cash (used in) provided by operating activities | (716 | ) | 116,289 | ||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (46,107 | ) | (44,697 | ) | |||
Issuance of a note receivable | (15,000 | ) | — | ||||
Proceeds from a note receivable | 15,000 | — | |||||
Proceeds from sale of property and equipment | 5,811 | 4,664 | |||||
Cash paid for acquisitions, net of cash and restricted cash acquired | (111,030 | ) | (66,205 | ) | |||
Net cash used in investing activities | (151,326 | ) | (106,238 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under revolving line of credit | 170,000 | — | |||||
Proceeds from issuance of long-term debt | 19,467 | — | |||||
Repayment of long-term debt and capital leases | (28,048 | ) | (24,679 | ) | |||
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,498 | 1,148 | |||||
Repurchase of common stock | — | (4,999 | ) | ||||
Dividends paid | (6,179 | ) | (5,668 | ) | |||
Net cash provided by (used in) financing activities | 156,738 | (34,198 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (185 | ) | — | ||||
Net change in cash, cash equivalents and restricted cash | 4,511 | (24,147 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of the period | 170,385 | 135,823 | |||||
Cash, cash equivalents and restricted cash at end of the period | $ | 174,896 | $ | 111,676 | |||
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURE
(In Thousands, Except Per Share Amounts)
(Unaudited)
Reconciliation of net income attributable to Primoris (GAAP measure) to pro-forma adjusted net income attributable to Primoris (non-GAAP measure)
Pro-forma adjusted net income attributable to Primoris is a non-GAAP measure provided as a supplement to present an alternative net income measure which excludes the impact of Willbros’ operations and merger and related costs. Management believes that pro-forma adjusted net income attributable to Primoris provides useful information to investors in assessing the comparability of the Company’s ongoing operational results and trends. Pro-forma adjusted net income should not be considered in isolation, as a substitute for, or more meaningful than, net income or any other measure reported in accordance with GAAP, but rather to provide additional information useful in evaluating the Company’s operational trends and performance.
Three Months Ended June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Amount | Per Diluted Share |
Amount | Per Diluted Share |
||||||||||
Net income attributable to Primoris (GAAP measure) | $ | 11,715 | $ | 0.23 | $ | 21,545 | $ | 0.42 | |||||
Adjustments to reconcile to pro-forma net income attributable to Primoris (non-GAAP measure) | |||||||||||||
Willbros operations, net of tax (1) | (2,201 | ) | (0.04 | ) | — | — | |||||||
Merger and related costs, net of tax (2) | 6,178 | 0.12 | 669 | 0.01 | |||||||||
Pro-form adjusted net income attributable to Primoris (non-GAAP measure) | $ | 15,692 | $ | 0.31 | $ | 22,214 | $ | 0.43 | |||||
Six Months Ended June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Amount | Per Diluted Share |
Amount | Per Diluted Share |
||||||||||
Net income attributable to Primoris (GAAP measure) | $ | 12,403 | $ | 0.24 | $ | 29,236 | $ | 0.56 | |||||
Adjustments to reconcile to pro-forma net income attributable to Primoris (non-GAAP measure) | |||||||||||||
Willbros operations, net of tax (1) | (2,201 | ) | (0.04 | ) | — | — | |||||||
Merger and related costs, net of tax (2) | 7,466 | 0.14 | 803 | 0.02 | |||||||||
Pro-form adjusted net income attributable to Primoris (non-GAAP measure) | $ | 17,668 | $ | 0.34 | $ | 30,039 | $ | 0.58 |
(1) | Represents results from the June 1, 2018 acquisition date of Willbros to June 30, 2018, net of our estimated effective tax rate of 24%. |
(2) | For the three and six months ended June 30, 2018, merger and related costs represents primarily one-time severance and retention bonus costs for certain employees of Willbros, professional fees paid to advisors, and the net interest expense impact of financing the acquisition, net of our estimated effective tax rate of 24%. For the three and six months ended June 30, 2017, merger and related costs represents primarily professional fees paid to advisors, net of our estimated effective tax rate of 39%. |
Source: Primoris Services Corporation