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Primoris Services Corp (PRIM) SEC Filing 8-K Material Event for the period ending Tuesday, May 8, 2018

SEC Filings

Primoris Services Corp

CIK: 1361538 Ticker: PRIM

 

 

Exhibit 99.1

PSC_Primoris 300

 

 

PRIMORIS SERVICES CORPORATION ANNOUNCES 2018 FIRST QUARTER FINANCIAL RESULTS

 

Board of Directors Declares $0.06 Per Share Cash Dividend and Authorizes $5 Million Share Repurchase Plan

 

Financial Highlights

 

·

2018 Q1 revenue of $504.1 million

·

2018 Q1 net income attributable to Primoris of $0.7 million, or $0.01 per fully diluted share

·

2018 Q1 cash flow from operations of $3.7 million

·

Total Backlog of $2.6 billion at March 31, 2018

Dallas, TX – May 8, 2018–  Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its first quarter ended March 31, 2018.

 

The Company also announced that on May 4, 2018 its Board of Directors declared a $0.06 per share cash dividend to stockholders of record on June 29, 2018, payable on or about July 13, 2018. 

 

David King, President and Chief Executive Officer of Primoris, commented, “Primoris’ first quarter results are in line with our expectations, as growth in Master Service Agreement (“MSA”) revenue from our California utility customers and increased revenue from power and petrochemical projects helped offset the negative impact of the worse than normal weather conditions several markets.  In spite of the obvious headwinds from the seasonal nature of our work, we delivered profitable margins in each of our operating segments.

 

Mr. King continued, “We are seeing robust markets for services from most of our business units, and during the quarter we added sufficient new work to maintain our backlog at $2.6 billion.  We remain on pace to have another record year of revenue.   We expect our major pipeline project to kick off at the end of the second quarter; the power job in California to continue into the second half of the year; and we have started construction of a large solar installation in Texas.  Our planned acquisition of Willbros, which we anticipate closing in the second quarter, will appreciably bolster our utility MSA revenue and provide an entry into the growing transmission and distribution market.  We have successfully integrated many acquisitions during the past few years, and we expect that Willbros will provide additional opportunities for the strategic growth of Primoris.”

 

2018  FIRST QUARTER RESULTS OVERVIEW

 

Revenues for three months ended March 31, 2018 decreased by $57.4 million, or 10.2%, compared to the same period in 2017. The decrease was primarily due to the substantial completion of two large Florida pipeline projects and a petrochemical plant project in 2017. The overall decrease was partially offset by higher activity with major utility clients in California and the Midwest, progress on our Carlsbad joint venture power plant project, and a refinery project in Southern California.  Gross profit was $44.6 million for the three months ended March 31, 2018, a decrease of $10.5 million, or 19.1%, compared to the same period in 2017.  The decrease was primarily due to the substantial completion of two large Florida pipeline projects and a petrochemical plant project in 2017, partially offset by progress on our Carlsbad joint venture power plant project.  Gross profit as a percentage of revenues decreased to 8.8% in the three months ended March 31, 2018 from 9.8% 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.

·

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.

·

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.

·

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 March 31, 

 

 

 

2018

 

2017

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

 

 

Total

 

 

 

 

Total

 

Segment

    

Revenue

    

Revenue

    

Revenue

    

Revenue

 

Power

 

$

166,555

 

33.0%

 

$

131,240

 

23.4%

 

Pipeline

 

 

57,583

 

11.4%

 

 

183,445

 

32.7%

 

Utilities

 

 

166,710

 

33.1%

 

 

116,980

 

20.8%

 

Civil

 

 

113,271

 

22.5%

 

 

129,837

 

23.1%

 

Total

 

$

504,119

 

100.0%

 

$

561,502

 

100.0%

 

 

Segment Gross Profit

(in thousands, except %)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended March 31, 

 

 

 

2018

 

2017

 

 

    

 

 

    

% of

    

 

 

    

% of

 

 

 

 

 

 

Segment

 

 

 

 

Segment

 

Segment

 

Gross Profit

 

Revenue

 

Gross Profit

 

Revenue

 

Power

 

$

24,071

 

14.5%

 

$

15,524

 

11.8%

 

Pipeline

 

 

7,891

 

13.7%

 

 

28,125

 

15.3%

 

Utilities

 

 

9,051

 

5.4%

 

 

8,273

 

7.1%

 

Civil

 

 

3,547

 

3.1%

 

 

3,131

 

2.4%

 

Total

 

$

44,560

 

8.8%

 

$

55,053

 

9.8%

 

 

 

 


 

 

Power, Industrial, & Engineering Segment:  Revenue increased by $35.3 million, or 26.9%, for the three months ended March 31, 2018, compared to the same period in 2017. The growth is primarily due to our Carlsbad joint venture power plant project and a monoethylene glycol plant project in Texas that started in the third quarter of 2017. In addition, a refinery project in Southern California, a LNG peak shaving plant construction project in the Northeast, and a West Texas solar electric facility increased revenue in the first quarter of 2018. The overall increase was partially offset by the substantial completions of a large petrochemical plant in Louisiana and our Wilmington joint venture power plant project in 2017.  Gross profit for the three months ended March 31, 2018, increased by $8.5 million, or 55.1%, compared to the same period in 2017.  The increase is primarily due to the revenue growth. Gross profit as a percentage of revenue increased to 14.5% during the three months ended March 31, 2018 compared to 11.8% in the same period in 2017 primarily due to a higher margin percentage realized by our Carlsbad joint venture project..

 

Pipeline & Underground Segment:  Revenue decreased by $125.9 million, or 68.6%, for the three months ended March 31, 2018, compared to the same period in 2017. The decrease is primarily due to the completion of two large pipeline jobs in Florida in 2017, partially offset by incremental revenue from the acquisition of Coastal during the second quarter of 2017.  Gross profit for the three months ended March 31, 2018 decreased by $20.2 million, or 71.9%, compared to the same period in 2017. The decrease is primarily attributable to the completion of the two pipeline jobs in Florida in 2017. Gross profit as a percent of revenues decreased to 13.7% during the three months ended March 31, 2018 compared to 15.3% in the same period in 2017. The decrease is primarily due to the impact of start up costs on a micro-tunneling project in Southern California.

 

Utilities & Distribution Segment:   Revenue increased by $49.7 million, or 42.5%, for the three months ended March 31, 2018, compared to the same period in 2017. The increase is primarily attributable to higher revenue from a collaboration MSA arrangement for a major utility customer in California, higher activity with another major utility customer in California, and increased activity with two major utility customers in the Midwest. In addition, the impact of the acquired FGC operations in the second quarter of 2017 also benefited 2018.  Gross profit for the three months ended March 31, 2018 increased by $0.8 million, or 9.4%, compared to the same period in 2017. The increase is primarily due to the growth in revenue and the impact of acquired operations, partially offset by decreases related to a client delay and unfavorable weather conditions for major utility customers in the Midwest. Gross profit as a percentage of revenues decreased to 5.4% during the three months ended March 31, 2018 compared to 7.1% in the same period in 2017 primarily as a result of lower gross margins on the collaboration MSA work, the client delay, and the unfavorable weather conditions experienced by the major utility customers in the Midwest.

 

Civil Segment:   Revenue decreased by $16.6 million, or 12.8%, for the three months ended March 31, 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 and an increase from a Louisiana power station project that began in the fourth quarter of 2017.  Gross profit increased by $0.4 million for the three months ended March 31, 2018, compared to the same period in 2017 primarily due to higher costs on Arkansas DOT projects in the three months ended March 31, 2017. The overall increase was partially offset by the substantial completions of the methanol plant and petrochemical plant projects in 2017 and unfavorable weather conditions experienced in Texas and Louisiana during the three months ended March 31, 2018.  Gross profit as a percent of revenue increased to 3.1% during the three months ended March 31, 2018, compared to 2.4% in the same periods in 2017 primarily due to the reasons noted above.

 

OTHER INCOME STATEMENT INFORMATION

 

Selling, general and administrative (“SG&A”) expenses of $38.7 million during the three months ended March 31, 2018, decreased by $1.2 million, or 3.0%, compared to the first quarter of 2017. The primary reason for the decrease was a $3.7 million reduction in compensation related expenses, including incentive compensation accruals, and a $0.9 million decrease in legal fees. The overall decrease was partially offset by $2.6 million of incremental expense from the businesses acquired in the second quarter of 2017, and $1.6 million of expenses related to the pending Willbros merger. SG&A expense as a percentage of revenue increased to 7.7% compared to 7.1% for the corresponding period in 2017 due to the decrease in revenue. Excluding the impact of acquisitions, SG&A as a percentage of revenue increased slightly to 7.4% compared to 7.1% for the corresponding period in 2017.

 

 

 


 

 

The provision for income taxes for the first quarter 2018 was $0.2 million, for an effective tax rate on income attributable to Primoris of 23.5%, compared to $4.5 million, for an effective tax rate on income attributable to Primoris of 37.0%, in the first quarter 2017.  The $4.3 million decrease in income tax expense was primarily driven by an $11.3 million decrease in pre-tax income (excluding noncontrolling interests) and the Tax Cuts and Jobs Act’s reduction of the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.

 

Net income attributable to Primoris for the first quarter 2018 was $0.7 million, or $0.01 per fully diluted share, compared to $7.7 million, or $0.15 per fully diluted share, in the same period in 2017.

 

Fully diluted weighted average shares outstanding for the 2018 first quarter decreased slightly to 51.7 million from 51.9 million in the first quarter 2017.

 

OUTLOOK

 

Based on anticipated levels of customer maintenance, MSA spending, new project awards, and an expected corporate tax rate of 23.5%, 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 a late second quarter 2018 start date for a major pipeline project in backlog.

 

BACKLOG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected Next Four

 

 

 

 

 

 

 

 

 

 

 

Quarters Total

 

 

Backlog at March 31, 2018 (in millions)

 

Backlog Revenue

 

Segment

Fixed Backlog

 

MSA Backlog

 

Total Backlog

 

Recognition

 

Power

$

342

 

$

37

 

$

379

 

 

89%

 

Pipeline

 

763

 

 

26

 

 

789

 

 

55%

 

Utilities

 

54

 

 

787

 

 

841

 

 

100%

 

Civil

 

597

 

 

 —

 

 

597

 

 

52%

 

Total

$

1,756

 

$

850

 

$

2,606

 

 

74%

 

 

At March 31, 2018, Fixed Backlog was $1.76 billion, compared to $1.82 billion at December 31, 2017.

 

At March 31, 2018, MSA Backlog was $850 million, compared to $775 million at December 31, 2017.  During the first quarter of 2018, approximately $146 million of revenue was recognized from MSA projects, a 38.8% increase over first quarter 2017 MSA revenue.  MSA Backlog represents estimated MSA revenues for the next four quarters.

 

Total Backlog at March 31, 2018 was $2.61 billion, compared to $2.60 billion at December 31, 2017. 

 

Backlog, including estimated MSA revenue, should not be considered a comprehensive indicator of future revenues.  Revenue from certain projects, such as cost reimbursable and time-and-materials projects, do not flow through backlog.  At any time, any project may 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 $5 million. The share repurchase program expires December 31, 2018.

 

 

 


 

 

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, Tuesday, May 8, 2018 at 9:30 am Eastern Time / 8:30 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 13679112, 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.

 

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

 

 

March 31, 

 

 

2018

    

2017

 

Revenue

$

504,119

 

$

561,502

 

Cost of revenue

 

459,559

 

 

506,449

 

Gross profit

 

44,560

 

 

55,053

 

Selling, general and administrative expenses

 

38,651

 

 

39,854

 

Operating income

 

5,909

 

 

15,199

 

Other income (expense):

 

 

 

 

 

 

Foreign exchange gain

 

257

 

 

23

 

Other income (expense), net

 

(12)

 

 

 —

 

Interest income

 

272

 

 

69

 

Interest expense

 

(1,998)

 

 

(2,262)

 

Income before provision for income taxes

 

4,428

 

 

13,029

 

Provision for income taxes

 

(212)

 

 

(4,517)

 

Net income

$

4,216

 

$

8,512

 

 

 

 

 

 

 

 

Less net income attributable to noncontrolling interests

$

(3,528)

 

$

(821)

 

 

 

 

 

 

 

 

Net income attributable to Primoris

$

688

 

$

7,691

 

 

 

 

 

 

 

 

Dividends per common share

$

0.060

 

$

0.055

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.01

 

$

0.15

 

Diluted

$

0.01

 

$

0.15

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

51,479

 

 

51,594

 

Diluted

 

51,747

 

 

51,851

 

 

 

 

 

 

 

 

 


 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

March 31, 

 

 

December 31, 

 

 

    

2018

    

2017

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

134,172

 

$

170,385

 

Accounts receivable, net

 

 

260,920

 

 

291,589

 

Contract assets

 

 

262,932

 

 

265,902

 

Note receivable

 

 

10,000

 

 

 —

 

Prepaid expenses and other current assets

 

 

21,694

 

 

15,338

 

Total current assets

 

 

689,718

 

 

743,214

 

Property and equipment, net

 

 

313,937

 

 

311,777

 

Intangible assets, net

 

 

42,376

 

 

44,800

 

Goodwill

 

 

153,374

 

 

153,374

 

Other long-term assets

 

 

3,042

 

 

2,575

 

Total assets

 

$

1,202,447

 

$

1,255,740

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

130,956

 

$

140,943

 

Contract liabilities

 

 

137,380

 

 

169,101

 

Accrued liabilities

 

 

99,909

 

 

102,168

 

Dividends payable

 

 

3,092

 

 

3,087

 

Current portion of long-term debt

 

 

63,975

 

 

65,464

 

Total current liabilities

 

 

435,312

 

 

480,763

 

Long-term debt, net of current portion

 

 

181,972

 

 

193,351

 

Deferred tax liabilities

 

 

13,577

 

 

13,571

 

Other long-term liabilities

 

 

6,090

 

 

5,872

 

Total liabilities

 

 

636,951

 

 

693,557

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common stock

 

 

 5

 

 

 5

 

Additional paid-in capital

 

 

162,701

 

 

160,502

 

Retained earnings

 

 

393,547

 

 

395,961

 

Non-controlling interest

 

 

9,243

 

 

5,715

 

Total stockholders’ equity

 

 

565,496

 

 

562,183

 

Total liabilities and stockholders’ equity

 

$

1,202,447

 

$

1,255,740

 

 

 

 


 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2018

    

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

4,216

 

$

8,512

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

14,368

 

 

14,134

 

Amortization of intangible assets

 

 

2,424

 

 

1,727

 

Stock-based compensation expense

 

 

215

 

 

459

 

Gain on sale of property and equipment

 

 

(1,104)

 

 

(1,308)

 

Other non-cash items

 

 

40

 

 

44

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

30,669

 

 

36,383

 

Contract assets

 

 

2,970

 

 

(4,671)

 

Other current assets

 

 

(6,356)

 

 

1,102

 

Other long-term assets

 

 

(499)

 

 

(147)

 

Accounts payable

 

 

(9,987)

 

 

(43,997)

 

Contract liabilities

 

 

(31,721)

 

 

38,525

 

Accrued expenses and other current liabilities

 

 

(1,806)

 

 

(1,752)

 

Other long-term liabilities

 

 

231

 

 

77

 

Net cash provided by operating activities

 

 

3,660

 

 

49,088

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(19,125)

 

 

(19,222)

 

Issuance of a note receivable

 

 

(10,000)

 

 

 —

 

Proceeds from sale of property and equipment

 

 

3,734

 

 

1,984

 

Net cash used in investing activities

 

 

(25,391)

 

 

(17,238)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayment of long-term debt and capital leases

 

 

(12,893)

 

 

(12,498)

 

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

 

 

(3,087)

 

 

(2,839)

 

Net cash used in financing activities

 

 

(14,482)

 

 

(19,188)

 

Net change in cash and cash equivalents

 

 

(36,213)

 

 

12,662

 

Cash and cash equivalents at beginning of the period

 

 

170,385

 

 

135,823

 

Cash and cash equivalents at end of the period

 

$

134,172

 

$

148,485

 

 

 

 

 


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Primoris Services Corp provided additional information to their SEC Filing as exhibits

Ticker: PRIM
CIK: 1361538
Form Type: 8-K Corporate News
Accession Number: 0001361538-18-000008
Submitted to the SEC: Tue May 08 2018 7:42:49 AM EST
Accepted by the SEC: Tue May 08 2018
Period: Tuesday, May 8, 2018
Industry: Water Sewer Pipeline Comm And Power Line Construction
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Other Events
  4. Vote of Security Holders

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