prim_ER_8K

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

August 7, 2018 (August 2, 2018)

Date of Report (Date of earliest event reported)

 

Primoris Services Corporation

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

001-34145

 

20-4743916

(State or other jurisdiction

 

(Commission File Number)

 

(I.R.S. Employer

of incorporation)

 

 

 

Identification No.)

 

2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201

(Address of principal executive offices)

(Zip Code)

 

(214) 740-5600

Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

 


 

 

 

Item 2.02                      Results of Operations and Financial Condition.

 

On August 7, 2018, Primoris Services Corporation, a Delaware corporation (“Primoris”, the “Company”) issued a press release announcing its financial performance for the second quarter ended June  30, 2018.

 

The information contained in the press release attached hereto is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, and shall not be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 8.01            Other Events.

 

Declaration of Cash Dividend to Stockholders

 

On August 2, 2018, the Board of Directors declared a cash dividend of $0.06 per common share for stockholders of record as of September 28, 2018,  payable on or about October 15, 2018.

 

 Item 9.01.                 Financial Statements and Exhibits.

 

(d)   Exhibits.

 

 

 

 

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated August 7, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 


 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

 

 

 

 

PRIMORIS SERVICES CORPORATION

 

 

 

 

Dated: August 7, 2018

 

By:

/s/ Peter J. Moerbeek

 

 

 

Peter J. Moerbeek

 

 

 

Executive Vice President, Chief Financial Officer

 

 

3

 


prim_ER_Exhibit_99_1

 

 

Exhibit 99.1

PSC_Primoris 300

 

 

PRIMORIS SERVICES CORPORATION ANNOUNCES 2018 SECOND QUARTER FINANCIAL RESULTS

 

Board of Directors Declares $0.06 Per Share Cash Dividend

 

Financial Highlights

 

·

2018 Q2 revenues of $648.8 million

·

For month of June 2018, revenues were $61 million for acquired Willbros entities

·

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

·

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

·

Total backlog of $2.8 billion at June 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.

Dallas, TX – August 7, 2018–  Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its second quarter ended June 30, 2018.

 

The Company also announced that on August 2, 2018 its Board of Directors declared a $0.06 per share cash dividend to stockholders of record on September 28, 2018, payable on or about October 15, 2018. 

 

David King, President and Chief Executive Officer of Primoris, commented, “In the second quarter, Primoris completed the acquisition of Willbros.  We are pleased that during our one month of ownership, Willbros contributed positively to our revenues and earnings, excluding one-time expenses associated with the acquisition.  We expect that the acquisition will be accretive to our earnings during the second half of this year.

 

“With the delay in the start date for our large East Coast pipeline project to the end of the second quarter, our pipeline results were less than we had hoped, but we have started work on the project and are looking to much better results from the segment in the second half of the year.  The second quarter also included strong performance from our power jobs and continued positive results in our natural gas utility work.”

 

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 Permian Basin where we have an established presence.  Our gas utility work and the addition of the electric T&D segment should allow us to grow our MSA revenue, providing a stable revenue base as we pursue LNG and petrochemical opportunities on the Gulf Coast.  We have maintained a strong balance sheet and have over $2.8 billion in backlog.  We expect excellent financial performance not only for the next two quarters, but also for 2019.”


 

 

 

2018  SECOND QUARTER RESULTS OVERVIEW

 

Revenue was $648.8 million for the three months ended June 30, 2018, an increase of $17.6 million, or 2.8%, compared to the same period in 2017. The increase was primarily due to incremental revenue in the three months ended June 30, 2018 from acquisitions ($79.5 million combined), initial progress on a major pipeline project on the Atlantic coast, higher Louisiana DOT volumes, and a West Texas solar electric facility project. The overall increase was partially offset by the substantial completion of two large Florida pipeline projects and a petrochemical plant project in 2017. Gross profit was $71.4 million for the three months ended June 30, 2018, a decrease of $13.1 million, or 15.5%, compared to the same period in 2017.  The decrease was primarily due to the substantial completion in 2017 of two large Florida pipeline projects and a petrochemical plant project, partially offset by an increase in expected claim recovery on the Belton, Texas area Civil projects.  Incremental gross profit in the three months ended June 30, 2018 from acquisitions totaled $11.6 million. Gross profit as a percentage of revenue decreased to 11.0% in the three months ended June 30, 2018 from 13.4% in the same period in 2017 due primarily to favorable performance on the two Florida pipeline projects in 2017.

 

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 of the 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 of the 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 of the 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 $9.2 million, or 5.8%, for the three months ended June 30, 2018, compared to the same period in 2017. The growth is primarily due to a West Texas solar electric facility project that started in 2018, a refinery project in Southern California, and a monoethylene glycol plant project in Texas. In addition, a LNG plant engineering and construction project in the Northeast, and the acquisition of Willbros increased revenue for the second quarter of 2018. The overall increase was partially offset by the substantial completion of a large petrochemical plant in Louisiana and our Wilmington joint venture power plant project in 2017. Gross profit for the three months ended June 30, 2018, increased by $2.4 million, or 13.2% compared to the same period in 2017.  The increase is primarily due to the revenue growth and slightly higher margins.  Gross profit as a percentage of revenue increased to 12.3% during the three months ended June 30, 2018, compared to 11.5% in the same period in 2017 primarily due to a strong performance and favorable margins realized by our Carlsbad joint venture project.

 

Pipeline & Underground Segment:  Revenue decreased by $44.0 million, or 32.7%, for the three months ended June 30, 2018, compared to the same period in 2017. The decrease is primarily due to the completion of two large pipeline jobs in Florida and a pipeline job in West Texas in 2017, partially offset by the initial work on a major pipeline project on the Atlantic Coast and incremental revenue from the Willbros and Coastal acquisitions. Gross profit for the three months ended June 30, 2018 decreased by $28.7 million, or 72.9%, compared to the same period in 2017. The decrease is primarily attributable to the higher revenue and gross profit from the two pipeline jobs in Florida in 2017.  Gross profit as a percent of revenue decreased to 11.8% during the three months ended June 30, 2018, compared to 29.2% in the same period in 2017. The decrease is primarily due to our strong performance on the two Florida jobs in 2017, which benefited from good weather conditions and no weather delays and high productivity. The higher gross margins experienced in 2017 is not common and not expected to occur again in the future.

 

Utilities & Distribution Segment:   Revenue increased by $15.9 million, or 7.5%, for the three months ended June 30, 2018, compared to the same period in 2017. The increase is primarily attributable to higher revenue with a major utility customer in the Midwest and the impact of the acquired FGC operations late in the second quarter of 2017. The overall increase was partially offset by lower revenue from a collaboration Master Service Agreement (“MSA”) for a major utility customer in California. Gross profit for the three months ended June 30, 2018 increased by $2.2 million, or 6.9%, compared to the same period in 2017. The increase is primarily due to the impact of higher revenue.  Gross profit as a percentage of revenue decreased slightly to 15.1% during the three months ended June 30, 2018, compared to 15.2% in the same period in 2017.

 

Transmission & Distribution Segment:  The Transmission segment was created in connection with the acquisition of Willbros. Revenue and gross profit represent results from the June 1, 2018 acquisition date to June 30, 2018.

 

Civil Segment:   Revenue decreased by $6.0 million, or 4.7%, for the three months ended June 30, 2018, compared to the same period in 2017. The decrease is primarily due to the substantial completion of a methanol plant project and a large petrochemical plant project as well as lower Texas DOT volumes. The overall decrease was partially offset by higher Louisiana DOT volumes.  Gross profit increased by $5.3 million for the three months ended June 30, 2018, compared to the same period in 2017 primarily due to higher profit on Louisiana DOT projects and increases in expected claim recovery on the Belton area projects. The overall increase was partially offset by higher costs on an airport project in the second quarter of 2018.  Gross profit as a percent of revenue increased to (0.1%) during the three months ended June 30, 2018, compared to (4.3%) in the same period in 2017 primarily due to the reasons noted above.

 

OTHER INCOME STATEMENT INFORMATION

 

Selling, general and administrative (“SG&A”) expenses were $43.5 million during the three months ended June 30, 2018, a decrease of $1.4 million, or 3.1%, compared to the second quarter of 2017. The primary reason for the decrease was a reduction in compensation related expenses, including incentive compensation accruals and a decrease in legal fees. The overall decrease is partially offset by incremental expense from businesses acquired. SG&A expense as a percentage of revenue decreased to 6.7% compared to 7.1% for the corresponding period in 2017 due to lower expenses and increased revenue.

 

Merger and related costs were $7.7 million for the three months ended June 30, 2018, compared to $1.1 million in the same period in 2017. The increase is primarily related to higher costs associated with the acquisition of Willbros. Such costs primarily consisted of severance and retention bonus costs for certain employees of Willbros and professional fees paid to advisors.

 

 

 


 

 

The effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 24.0% for the six months ended June 30, 2018.  The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, investment tax credits, and nondeductible components of per diem expenses.

 

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 December 31, 2018, net income attributable to Primoris will be between $1.50 and $1.70 per fully diluted share.  This estimate anticipates receiving timely notices to proceed for a major pipeline project in backlog which would allow for a significant increase in revenues and profitability in the second half of 2018.

 

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 June 30, 2018, Fixed Backlog was $1.7 billion, compared to $1.8 billion at December 31, 2017.

 

At June 30, 2018, MSA Backlog was $1.1 billion, compared to $775 million at December 31, 2017.  MSA Backlog represents estimated MSA revenues for the next four quarters.

 

At June 30, 2018, Total Backlog was $2.8 billion, compared to $2.6 billion at December 31, 2017.

 

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

 

David King, President and Chief Executive Officer, and Peter J. Moerbeek, Executive Vice President and Chief Financial Officer will host a conference call today, Tuesday, August 7, 2018 at 10:00 am Eastern Time / 9:00 am Central Time to discuss the results. 

 

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 the United States. Serving diverse end markets, Primoris provides a wide range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services to major public utilities, petrochemical companies, energy companies, municipalities, and other customers. The Company's national footprint extends from Florida, along the Gulf Coast, through California, into the Pacific Northwest and Canada. For additional information, please visit www.prim.com.

 

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 December 31, 2017, and other filings with the Securities and Exchange Commission.  Given these uncertainties, you should not place undue reliance on forward-looking statements.  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.

 

 

 

 

 

Company Contact

    

 

    

Peter J. Moerbeek

 

Kate Tholking

 

Executive Vice President, Chief Financial Officer

 

Director of 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 acquisitions):

 

 

 

 

 

 

 

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%.