Summary of Primoris Services (PRIM) Conference Call Company Overview - **Company**: Primoris Services Corporation (PRIM) - **Date of Conference**: June 24, 2025 - **Speakers**: David King (Interim CEO and Chairman), Ken Doshen (CFO) Key Points Industry Context - **Renewable Energy Sector**: Primoris is actively involved in the renewable energy sector, particularly in battery energy storage and project management for renewable projects [3][4][11] - **Power Delivery**: The company also operates in the power delivery sector, which includes transmission, distribution, and power generation [28][30] Financial Performance and Expectations - **Backlog**: Primoris is tracking a backlog of $20 billion to $30 billion in projects from now until 2028, indicating strong future demand [5][6] - **Bookings**: The company expects bookings in the first half of 2025 to be lighter but has seen better-than-expected performance in Q1 2025, beating expectations by $300 million [16][18] - **Battery Storage**: The battery storage segment is less than 5% of the overall business, valued at over $2 billion, and is not expected to significantly impact overall performance [26][24] Project Management and Client Relationships - **Project Resequencing**: Primoris is adapting to project resequencing due to customer requests for clarity on pricing, particularly in battery energy storage [4][7][8] - **Client Engagement**: The company emphasizes strong relationships with clients, allowing for flexibility in project management and scheduling [14][15] Growth Strategy - **Natural Gas Power Generation**: The demand for natural gas generation projects has quadrupled, with a backlog at its highest in 10-15 years, indicating a shift back to gas generation due to increased power consumption [44][46] - **Power Delivery Expansion**: Primoris aims to grow its power delivery business, focusing on larger projects while maintaining a disciplined approach to risk management [35][36] Mergers and Acquisitions - **Acquisition Strategy**: The company is looking for quality acquisition opportunities, particularly in Power Delivery and Communications, with a focus on organic growth [60][62] Leadership Transition - **CEO Search**: The search for a new CEO is ongoing, with a focus on finding a candidate with the right strategic vision for the company [56][58] Market Dynamics - **Tariffs Impact**: There has been no immediate impact from tariffs on bookings or projects, as existing projects had pre-purchased materials [22][23] - **Labor Market**: The company is focusing on training and developing labor resources to meet growing demand in the industry [39][40] Additional Insights - **Operational Efficiency**: Primoris has developed methods to execute projects efficiently, which has helped in building long-term relationships with clients [12][13] - **Market Position**: The company is positioned well to capitalize on the growing demand for power delivery and renewable energy projects, with a focus on maintaining a balanced project portfolio [30][31]

Company Overview - Primoris Services Corporation (NYSE: PRIM) provides essential infrastructure services including construction, maintenance, and engineering for utility and energy sectors in the United States and Canada [1] - The company has a current market capitalization of approximately $4 billion [1] Analyst Background - The analyst has over 10 years of experience in the investment arena, starting as an analyst and advancing to a management role [1] - The analyst holds a master's degree in Analytics from Northwestern University and a bachelor's degree in Accounting [1] Investment Interest - The analyst expresses a personal interest in dividend investing and plans to share insights with the Seeking Alpha community [1]

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Group 1 - Aecom Technology (ACM) has been outperforming its peers in the Construction sector, with a year-to-date return of approximately 0.2% compared to an average loss of 2.7% for the sector [4] - The Zacks Consensus Estimate for ACM's full-year earnings has increased by 1% over the past three months, indicating improved analyst sentiment and a stronger earnings outlook [4] - Aecom Technology is ranked 2 (Buy) in the Zacks Rank system, which highlights stocks with characteristics likely to outperform the market in the near term [3] Group 2 - Aecom Technology is part of the Engineering - R and D Services industry, which consists of 17 companies and currently holds a Zacks Industry Rank of 21, with an average loss of 1.2% this year [6] - In comparison, Primoris Services (PRIM), another outperforming stock in the Construction sector, has a year-to-date return of 0.6% and a consensus EPS estimate increase of 5.4% over the past three months [5] - The Building Products - Heavy Construction industry, which includes Primoris Services, is ranked 1 and has seen a year-to-date increase of 0.9% [7]

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Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.6 billion, an increase of $235 million or 16.7% from the prior year, driven by growth in both Energy and Utility segments [19][20] - Gross profit for Q1 was approximately $171 million, an increase of $37 million or 28% from the prior year, with gross margins at 10.4% compared to 9.4% in the prior year [19][20] - Cash from operations for Q1 was $66.2 million, an increase of nearly $95 million from the prior year, marking a first-quarter record for the company [24] Business Segment Performance - Utilities segment revenue increased by over $75 million or 15.5% compared to the prior year, with significant contributions from power delivery, gas operations, and communications [19][20] - Energy segment revenue rose by $161 million or 17% from the prior year, primarily due to strong growth in solar projects [19][20] - The power delivery business saw improved performance driven by early project releases and increased client engagement regarding grid resiliency plans [13][14] Market Data and Key Metrics Changes - The total backlog at the end of Q1 was $11.4 billion, down from $11.9 billion at the end of 2024, with a decrease in the Energy segment backlog primarily due to timing of new solar awards [26][27] - Utilities backlog increased by $88 million from year-end, driven by MSA and fixed backlog [27] Company Strategy and Industry Competition - The company is focused on capitalizing on ongoing investments in North American power, industrial, and energy infrastructure, with a favorable outlook for multi-year endeavors [8][11] - Management emphasized the importance of maintaining strong relationships with customers and adapting to changing market conditions while pursuing higher-margin projects [30][71] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued bookings throughout the year, despite potential economic and regulatory uncertainties [11][30] - The company is closely monitoring risks related to tariffs and regulatory changes but does not expect significant impacts on operations in 2025 [9][30] Other Important Information - The company authorized a new share purchase program allowing for the purchase of up to $150 million in shares through April 2028 [25] - SG&A expenses for Q1 were $99.5 million, an increase of $10.9 million compared to the prior year, but as a percentage of revenue, it decreased to 6% from 6.3% [22] Q&A Session Summary Question: Concerns about prolonged economic uncertainty and project signings - Management clarified that there is no significant freeze in project signings, and they continue to have regular conversations with customers about their project queues [33][35] Question: Interest expense outlook - Management indicated that they do not expect a significant uptick in interest expense and will monitor trends closely [38] Question: Confidence in financial targets for 2024-2026 - Management confirmed they are on track or ahead of schedule in all metrics outlined during the Analyst Day [46] Question: Renewable revenue targets for 2025 - Management expects to return to a normal growth cadence of $300 million to $400 million post-2025, with a significant portion of 2026 already booked [47][48] Question: Update on CEO search - The Board is prioritizing finding the right candidate rather than setting a strict timeline, with a focus on public company experience and M&A capabilities [49][50] Question: Utility segment margin performance - Management expects modest growth in utilities, with potential for margin improvement driven by project work and supply chain improvements [52][68] Question: Natural gas generation opportunities - Management is currently vetting approximately $1 billion in natural gas projects tied to data centers across the U.S. [55] Question: Impact of tariffs on solar projects - Management stated that tariffs have not significantly impacted their business, and they are prepared for various outcomes regarding battery storage materials [83][85]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.6 billion, an increase of $235 million or 16.7% from the prior year, driven by growth in both Energy and Utility segments [17][18] - Gross profit for Q1 was approximately $171 million, an increase of $37 million or 28% from the prior year, with gross margins at 10.4% compared to 9.4% in the prior year [18][19] - Cash from operations for Q1 was $66.2 million, an increase of nearly $95 million from the prior year, marking a record for the company [23] Business Line Data and Key Metrics Changes - In the Utilities segment, gross profit was $51.6 million, up $22.1 million compared to the prior year, driven by higher revenue in gas operations and significant improvement in power delivery profitability [19][20] - The Energy segment achieved significant top-line growth, with gross profit just over $119 million for the quarter, a $15.2 million increase from the prior year, primarily due to higher revenue in Renewables [20][21] - The Utilities backlog increased by $88 million from year-end, driven by MSA and fixed backlog, while the Energy segment backlog decreased by $567 million due to timing of new solar awards [25] Market Data and Key Metrics Changes - The company noted strong demand in North American power, industrial, and energy infrastructure, positioning itself to capitalize on ongoing investments [7][9] - The company is optimistic about continued bookings throughout the year, despite potential economic and regulatory uncertainties [9][10] Company Strategy and Development Direction - The company is focused on driving higher margins and improved cash flow while maintaining safety and operational efficiency [6][16] - The management emphasized the importance of being selective in project bidding and maintaining strong communication with customers to ensure project execution [16][68] - The company is actively monitoring market conditions and is prepared to adapt to changes, with a strong balance sheet allowing for continued investment in growth opportunities [29][76] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for critical infrastructure services and the ability to achieve or exceed financial goals for 2025 [16][26] - The company is closely monitoring risks related to tariffs and regulatory changes but does not expect significant impacts on operations in 2025 [8][79] - Management indicated that while there may be some delays in project signings, they have not seen major pauses from customers [33][87] Other Important Information - The company authorized a new share purchase program allowing for the purchase of up to $150 million in shares through April 2028 [24] - The effective tax rate for the quarter was 29%, expected to remain consistent for the full year [22] Q&A Session Summary Question: Concerns about prolonged economic uncertainty and project signings - Management clarified that there is no significant freeze in project signings and that customer conversations indicate a normal cadence of uncertainty [33][34] Question: Interest expense outlook - Management indicated that they do not expect a significant uptick in interest expense and will monitor trends closely [37] Question: Confidence in financial targets for 2024-2026 - Management confirmed they are on track or ahead of schedule in all metrics laid out during Analyst Day [44][45] Question: Renewable revenue targets for 2025 - Management expects to return to a normal growth cadence post-2025, with a significant portion of 2026 already booked [47] Question: Update on CEO search - The board is prioritizing finding the right candidate without a specific timeline, focusing on public company experience and acquisition integration [48] Question: Utility segment margin performance - Management expects modest growth in utilities, with potential for margin improvement if supply chain conditions improve [51] Question: Natural gas generation opportunities - Management is vetting approximately $1 billion in natural gas projects tied to data centers [53] Question: Impact of tariffs on solar projects - Management stated that tariffs have not significantly impacted their business, and they are prepared for various scenarios [79][81] Question: Timing and impact of reconciliation bill on solar projects - Management is in regular communication with customers and feels prepared for any outcome regarding the reconciliation bill [91]

Financial Performance - Q1 2025 - Revenue increased to $1,648.112 million in 1Q 2025, compared to $1,412.707 million in 1Q 2024[7] - Net income rose to $44.240 million in 1Q 2025, significantly higher than the $18.943 million in 1Q 2024[7] - Diluted EPS increased to $0.81 in 1Q 2025, compared to $0.35 in 1Q 2024[7] - Adjusted EBITDA increased to $99.412 million in 1Q 2025, from $73.758 million in 1Q 2024[7] - Adjusted EPS increased to $0.98 in 1Q 2025, from $0.47 in 1Q 2024[7] Segment Performance - Q1 2025 - Utilities revenue was $563.407 million with a gross profit of $51.578 million (9.2% of segment revenue) and operating income of $18.060 million (3.2% of segment revenue)[11] - Energy revenue was $1,108.341 million with a gross profit of $119.079 million (10.7% of segment revenue) and operating income of $78.861 million (7.1% of segment revenue)[11] Backlog - Total backlog decreased in Q1 2025, driven primarily by higher renewables revenue in the Energy segment[10] - Total backlog as of March 31, 2025, was $11,386 million, with 51% in Energy and 49% in Utilities[9] Full Year 2025 Guidance - The company projects full year 2025 EPS to be in the range of $3.70 to $3.90 per diluted share[16] - The company projects full year 2025 Adjusted EPS to be in the range of $4.20 to $4.40 per diluted share[17] - The company projects full year 2025 Adjusted EBITDA to be in the range of $440 million to $460 million[18]

Core Insights - Primoris Services (PRIM) reported $1.65 billion in revenue for Q1 2025, a year-over-year increase of 16.7% [1] - The company's EPS for the same period was $0.98, compared to $0.47 a year ago, indicating significant growth [1] - Revenue exceeded the Zacks Consensus Estimate of $1.5 billion by 9.89%, and EPS surpassed the consensus estimate of $0.72 by 36.11% [1] Financial Performance - Total Backlog for Energy was reported at $5.78 billion, below the average estimate of $6.39 billion from two analysts [4] - Total Backlog overall was $11.39 billion, slightly lower than the average estimate of $11.93 billion [4] - Total Backlog for Utilities was $5.61 billion, which was above the average estimate of $5.54 billion [4] Revenue and Profit Metrics - Revenue from Energy was $1.11 billion, exceeding the average estimate of $940.29 million [4] - Revenue from Utilities was $563.41 million, also surpassing the average estimate of $540.31 million [4] - Gross Profit from Energy was $119.08 million, compared to the average estimate of $103.02 million [4] - Gross Profit from Utilities was $51.58 million, exceeding the average estimate of $47.12 million [4] Stock Performance - Primoris Services shares have returned +25.7% over the past month, significantly outperforming the Zacks S&P 500 composite's +0.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Primoris Services (PRIM) came out with quarterly earnings of $0.98 per share, beating the Zacks Consensus Estimate of $0.72 per share. This compares to earnings of $0.47 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 36.11%. A quarter ago, it was expected that this construction contractor would post earnings of $0.73 per share when it actually produced earnings of $1.13, delivering a surprise of 54.79%.Over the last four quar ...