Primoris Services Corporation
Primoris Services Corp (Form: 8-K, Received: 04/07/2017 06:04:33)

 

 

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

 

April 7, 2017

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):

 

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

 

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

 

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

 

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

 

 

 



 

Item 8.01            Other Events.

 

Realignment of Reportable Segments

 

In the first quarter 2017, the Company reorganized its business segments to match the change in the Company’s internal organization and management structure.  The Company has provided a report presenting the revenue and gross margins for the years ended December 31, 2015 and 2016 and for the quarterly periods of 2016 through December 31, 2016 for the reclassified segments.  The report is included as Exhibit No. 99.1 of this Current Report on Form 8-K.

 

Item 9.01.                  Financial Statements and Exhibits.

 

(d)   Exhibits .

 

Exhibit No.

 

Description

 

 

 

99.1

 

Segment Realignment — 2016 and 2015

 

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: April 7, 2017

By:

/s/ Peter J. Moerbeek

 

 

Peter J. Moerbeek

 

 

Executive Vice President, Chief Financial Officer

 

3


Exhibit 99.1

 

 

Primoris Services Corporation

Segment Realignment — 2016 and 2015

 

Through the end of the year 2016, the Company 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, the Company reorganized its reportable segments to match the change in the Company’s realigned internal organization and management structure. The segment changes during the quarter reflect the focus of our new chief operating officer on the range of services we provide to our end user markets. The chief operating officer regularly reviews the operating and financial performance based on these revised segments.

 

The revised reportable segments include the Power, Industrial, and Engineering segment (“PI&E segment”), the Pipeline and Underground segment (“P&U segment”), the Utilities and Distribution segment (“U&D segment”), and the Civil segment. The purpose of this document is to report the revenue and gross profit for the annual periods of 2016 and 2015 and the quarterly periods for the year ended December 31, 2016 for the reclassified segments.

 

The classification of our business unit revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our business units may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses were made.

 

The following table lists the Company’s primary business units and their reportable segment:

 

Business Unit

 

New Reportable
Segment

 

Former
Reportable Segment

 

ARB Industrial (a division of ARB, Inc.)

 

PI&E

 

West

 

ARB Structures, Inc.

 

PI&E

 

West

 

Primoris Power (formerly PES Saxon division)

 

PI&E

 

Energy

 

Primoris Renewable Energy

 

PI&E

 

Energy

 

Primoris Industrial Constructors (formerly PES Industrial Division)

 

PI&E

 

Energy

 

Primoris Fabrication (a division of PES)

 

PI&E

 

Energy

 

Primoris Mechanical Contractors (a combination of a division of PES and Cardinal Contractors, Inc.)

 

PI&E

 

Energy

 

OnQuest, Inc.

 

PI&E

 

Energy

 

OnQuest Canada, ULC

 

PI&E

 

Energy

 

Primoris Design and Construction (“PD&C”); created 2017

 

PI&E

 

NA

 

Rockford Corporation (“Rockford”)

 

P&U

 

West

 

Vadnais Trenchless Services, Inc. (“Vadnais Trenchless”)

 

P&U

 

West

 

Primoris Field Services (a division of PES Primoris Pipeline)

 

P&U

 

Energy

 

Primoris Pipeline (a division of PES Primoris Pipeline)

 

P&U

 

Energy

 

ARB Underground (a division of ARB, Inc.)

 

U&D

 

West

 

Q3 Contracting (“Q3C”)

 

U&D

 

West

 

Primoris AV

 

U&D

 

Energy

 

Primoris Heavy Civil (formerly JCG Heavy Civil Division)

 

Civil

 

East

 

Primoris I&M (formerly JCG Infrastructure & Maintenance Division)

 

Civil

 

East

 

BW Primoris, LLC

 

Civil

 

East

 

 

1



 

The following is a brief description of each of the Company’s reportable segments and their operations.

 

The Power division of the PI&E segment includes ARB Industrial, Primoris Power, ARB Structures, and Primoris Renewable Energy. This division operates primarily in our California markets, with select projects performed nationwide. The Industrial division of this segment includes Primoris Industrial Constructors, Primoris Fabrication, and Primoris Mechanical Contractors. These groups are headquartered in and around Houston, TX and focus on the Southern region of the United States. The Engineering division of this segment includes OnQuest Inc., with offices in California, OnQuest Canada, ULC with offices in Calgary, and PD&C, located in Tyler, TX.

 

The P&U segment includes Rockford, Vadnais Trenchless, Primoris Field Services, and Primoris Pipeline. Rockford operates throughout the United States. Vadnais Trenchless provides specialized trenchless solutions in California and other select areas. Presently, both Primoris Field Services and Primoris Pipeline operate in Texas and surrounding states.

 

The U&D segment is comprised of ARB Underground, Q3C, and Primoris AV. ARB Underground operates primarily in California, while Q3C and Primoris AV are present throughout the Midwest region of the United States.

 

The Civil segment includes Primoris Heavy Civil, Primoris I&M, and BW Primoris, LLC. These business units are located primarily in the Southeastern and Gulf Coast regions of the United States.

 

Each of the four segments specializes in a range of services that include engineering, designing, building/installing, replacing, repairing/rehabilitating, and providing management services for construction and construction-related projects. Our services include:

 

·                   Providing installation of underground pipeline, cable, and conduits for entities in the petroleum, petrochemical, and water industries;

 

·                   Providing maintenance services to utilities for installation and repair of gas distribution lines;

 

·                   Providing engineering, installation, and maintenance of industrial facilities for entities in the petroleum, petrochemical, water, and other industries;

 

·                   Providing installation of commercial and industrial cast-in-place structures;

 

·                   Providing construction of highways and bridges; and

 

·                   Providing industrial and environmental construction.

 

Revenue and Gross Profit — Annual 2016 and 2015

 

The following tables provide a summary of the revenues and gross profit for the twelve month periods ending December 31, 2016 and 2015 (unaudited and in thousands):

 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

12 Months

 

12 Months 2016

 

Segment

 

Segment

 

Segment

 

Segment

 

2016

 

Gross Revenue

 

$

482,858

 

$

402,619

 

$

637,212

 

$

479,416

 

$

2,002,105

 

Eliminations

 

(4,205

)

(688

)

 

(264

)

(5,157

)

Net Revenue

 

$

478,653

 

$

401,931

 

$

637,212

 

$

479,152

 

$

1,996,948

 

Gross Profit

 

$

49,807

 

$

68,100

 

$

100,071

 

$

(16,671

)

$

201,307

 

% of Net Revenues

 

10.4

%

16.9

%

15.7

%

-3.5

%

10.1

%

 

2



 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

12 Months

 

12 Months 2015

 

Segment

 

Segment

 

Segment

 

Segment

 

2015

 

Gross Revenue

 

$

489,741

 

$

299,412

 

$

587,047

 

$

577,205

 

$

1,953,405

 

Eliminations

 

(23,449

)

(47

)

 

(494

)

(23,990

)

Net Revenue

 

$

466,292

 

$

299,365

 

$

587,047

 

$

576,711

 

$

1,929,415

 

Gross Profit

 

$

53,620

 

$

24,685

 

$

96,450

 

$

45,118

 

$

219,873

 

% of Net Revenues

 

11.5

%

8.2

%

16.4

%

7.8

%

11.4

%

 

Revenue and Gross Profit — Quarterly 2016

 

The following tables provide a summary of the revenues and gross profit for each 2016 quarterly period (unaudited and in thousands):

 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

1st Quarter

 

1st Quarter 2016

 

Segment

 

Segment

 

Segment

 

Segment

 

2016

 

Gross Revenue

 

$

140,471

 

$

54,386

 

$

103,754

 

$

133,718

 

$

432,329

 

Eliminations

 

(1,833

)

(50

)

 

 

(1,883

)

Net Revenue

 

$

138,638

 

$

54,336

 

$

103,754

 

$

133,718

 

$

430,446

 

Gross Profit

 

$

11,585

 

$

4,999

 

$

11,885

 

$

10,808

 

$

39,277

 

% of Net Revenues

 

8.4

%

9.2

%

11.5

%

8.1

%

9.1

%

 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

2nd Quarter

 

2nd Quarter 2016

 

Segment

 

Segment

 

Segment

 

Segment

 

2016

 

Gross Revenue

 

$

127,867

 

$

57,044

 

$

157,119

 

$

117,089

 

$

459,119

 

Eliminations

 

(1,291

)

(240

)

 

(777

)

(2,308

)

Net Revenue

 

$

126,576

 

$

56,804

 

$

157,119

 

$

116,312

 

$

456,811

 

Gross Profit

 

$

14,092

 

$

6,469

 

$

22,841

 

$

(117

)

$

43,285

 

% of Net Revenues

 

11.1

%

11.4

%

14.5

%

-0.1

%

9.5

%

 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

3rd Quarter

 

3rd Quarter 2016

 

Segment

 

Segment

 

Segment

 

Segment

 

2016

 

Gross Revenue

 

$

102,678

 

$

106,434

 

$

186,985

 

$

112,473

 

$

508,570

 

Eliminations

 

(867

)

(392

)

 

517

 

(742

)

Net Revenue

 

$

101,811

 

$

106,042

 

$

186,985

 

$

112,990

 

$

507,828

 

Gross Profit

 

$

10,893

 

$

32,402

 

$

33,925

 

$

(27,091

)

$

50,129

 

% of Net Revenues

 

10.7

%

30.6

%

18.1

%

-24.0

%

9.9

%

 

 

 

PI&E

 

P&U

 

U&D

 

Civil

 

4th Quarter

 

4th Quarter 2016

 

Segment

 

Segment

 

Segment

 

Segment

 

2016

 

Gross Revenue

 

$

111,842

 

$

184,755

 

$

189,354

 

$

116,136

 

$

602,087

 

Eliminations

 

(214

)

(6

)

 

(4

)

(224

)

Net Revenue

 

$

111,628

 

$

184,749

 

$

189,354

 

$

116,132

 

$

601,863

 

Gross Profit

 

$

13,237

 

$

24,230

 

$

31,420

 

$

(271

)

$

68,616

 

% of Net Revenues

 

11.9

%

13.1

%

16.6

%

-0.2

%

11.4

%

 

3



 

Fixed Backlog — Activity — 2016

 

Fixed Backlog by reporting segment and the changes in Fixed Backlog for the period ending December 31, 2016 was as follows (unaudited and in thousands):

 

 

 

Beginning Fixed

 

 

 

 

 

Ending Fixed

 

Revenue

 

Total Revenue

 

 

 

Backlog at

 

Contract

 

Revenue

 

Backlog

 

Recognized from

 

for 12 Months

 

Reportable

 

December 31,

 

Additions to

 

Recognized from

 

at December 31,

 

Non-Fixed Backlog

 

Ended December 31,

 

Segment

 

2015

 

Fixed Backlog

 

Fixed Backlog

 

2016

 

Projects

 

2016

 

PI&E

 

$

549,320

 

$

345,104

 

$

424,843

 

$

469,581

 

$

53,839

 

$

478,682

 

P&U

 

225,637

 

1,161,823

 

368,068

 

1,019,392

 

33,833

 

401,901

 

U&D

 

42,795

 

140,731

 

151,990

 

31,536

 

485,221

 

637,211

 

Civil

 

699,475

 

370,930

 

464,511

 

605,894

 

14,643

 

479,154

 

Total

 

$

1,517,227

 

$

2,018,588

 

$

1,409,412

 

$

2,126,403

 

$

587,536

 

$

1,996,948

 

 

Total Backlog — 2016

 

The following table shows total backlog (Fixed Backlog plus MSA Backlog), by reportable segment at December 31, 2016 (unaudited and in thousands):

 

 

 

Ending

 

MSA Backlog

 

Total Backlog

 

 

 

Fixed Backlog

 

at December 31,

 

at December 31,

 

Reportable Segment:

 

at December 31, 2016

 

2016

 

2016

 

PI&E

 

$

469,581

 

$

42,346

 

$

511,927

 

P&U

 

1,019,392

 

33,221

 

1,052,613

 

U&D

 

31,536

 

574,958

 

606,494

 

Civil

 

605,894

 

21,000

 

626,894

 

Total

 

$

2,126,403

 

$

671,525

 

$

2,797,928

 

 

Segment Goodwill — 2016

 

The amount of goodwill recorded by segment at December 31, 2016 was as follows (unaudited and in thousands):

 

 

 

Goodwill

 

Reportable Segment:

 

at December 31, 2016

 

PI&E

 

$

24,512

 

P&U

 

42,252

 

U&D

 

20,312

 

Civil

 

40,150

 

Total

 

$

127,226

 

 

4