quantic69 Investment Thesis Primoris Services Corporation (NYSE:PRIM) delivered a strong quarter for Q2 2024, fueled by the consistent incredible growth in their energy segment and investments in emerging trends in renewable energy and AI-driven utility needs that are really starting to pay off. The construction and infrastructure company reported a revenue of $1.563 billion, up 10.6% year-over-year, which surpassed Wall Street expectations by $30 million. This growth was driven by the rise in demand for so ...

Primoris president and CEO Tom McCormick emphasized the strong demand for the company's utility-scale solar and natural gas solutions. McCormick attributed this demand to the growing need for power generation and the company's solid customer relationships, underpinned by a proven track record of safe and successful project execution. Image Source: Zacks Investment Research activity. Some better-ranked stocks in the same space are: DY delivered a trailing four-quarter earnings surprise of 30.5%, on average. ...

# F F I 1 1 Based in Dallas, Texas, Primoris Services Corporation (NYSE:PRIM) is in the business of providing infrastructure services. Operating mainly in the U.S. and Canada, the company offers a broad range of construction, replacement, fabrication, and engineering services to a diversified customer base through its two primary segments, (i) utilities and (ii) energy. I am particularly interested in the energy business for several reasons: 1. It provides services to the LNG, electricity and construction m ...

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. Eve ...

What's Driving the Outperformance? The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 8, 2024, Primoris Services reported EPS of $0.47 versus consensus estimate of $0.08. Valuation Metrics On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are ...

Primoris Services Corporation (NYSE:PRIM) Q1 2024 Results Conference Call May 9, 2024 10:00 AM ET Company Participants Blake Holcomb - Vice President of Investor Relations Tom McCormick - President and Chief Executive Officer Ken Dodgen - Chief Financial Officer Conference Call Participants Lee Jagoda - CJS Securities Steven Fisher - UBS Jerry Revich - Goldman Sachs Brent Thielman - D.A. Davidson Julio Romero - Sidoti & Company Adam Thalhimer - Thompson, Davis Operator Ladies and gentlemen, thank you for st ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to . Commission file number 001-34145 Primoris Services Corporation (Exact name of registrant as specified in its charter) Delaware 20-474 ...

Financial Data and Key Metrics Changes - The company reported a revenue increase to $5.7 billion, up 29% from 2022, driven largely by the Energy segment, which was up 39% [74] - Fourth quarter revenue was $1.5 billion, an increase of $186 million or 14% compared to the prior year [57] - Gross profit for the fourth quarter improved slightly to approximately $157 million, but gross margins declined to 10.3% from the prior year [57][58] Business Line Data and Key Metrics Changes - In the Utility segment, revenue was essentially flat compared to the prior year, with gross profit down to approximately $43 million, a decrease of 39% [84] - The Energy segment revenue increased by $196 million compared to the prior year, with gross profit increasing over 36% to $114 million [58][86] - Non-MSA revenue in the Utility segment increased by more than 70% from the previous year, indicating a shift towards project work [50] Market Data and Key Metrics Changes - The company booked $7.5 billion of work during the year, resulting in a total backlog of $10.9 billion, an increase of approximately 20% from 2022 [48][91] - The renewables business closed the year with more than $2.4 billion in backlog, reflecting strong demand despite industry challenges [53] Company Strategy and Development Direction - The company aims to grow its non-MSA utilities revenue to 30% to 40% of segment revenue, specifically targeting power delivery [31] - There is a focus on improving operational performance and profitability by shifting towards higher-margin business lines and better contract terms [67][105] - The company plans to expand its project management teams from 15 to 17 by the end of the year to meet growing demand [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future potential of renewables and the overall market, citing ongoing investments in infrastructure services [55][80] - The company expects operating cash flows for 2024 to be around $150 million, indicating a focus on improving cash conversion and working capital [9][68] - Management anticipates Utility segment margins in the 9% to 11% range for the full year, with Q1 expected to be in the 5% to 7% range [92] Other Important Information - The effective tax rate for 2023 was 29%, expected to remain similar in 2024 [61] - The company invested $20.5 million in CapEx during the fourth quarter, with a total of $103 million for the full year [62] Q&A Session Summary Question: What is the revenue guidance for both segments? - The company expects around $6 billion in revenue for 2024, with approximately $2.3 billion from Utilities and $3.7 billion from Energy [114] Question: What is the expected performance of the Utilities segment? - Utilities segment margins are expected to improve, reaching high-single-digit margins as the year progresses [117] Question: What was the renewables revenue for the full year in 2023? - The renewables revenue for 2023 was a little over $1.3 billion, with expectations for about 20% growth in 2024 [118][119]

Financial Performance - The company achieved record revenue for the 8th consecutive year, reaching $5.7 billion[6] - Full year 2023 revenue was $5715309 thousand, compared to $4420599 thousand in 2022[8] - Adjusted EBITDA for 2023 was $379463 thousand, up from $283361 thousand in 2022[8] - Adjusted net income for 2023 was $154677 thousand, compared to $135777 thousand in 2022[8] - Adjusted EPS for 2023 was $2.85, compared to $2.53 in 2022[8] Backlog and Segment Results - Total backlog reached $10.9 billion, an increase of nearly 20 percent from the end of 2022[21] - Renewables backlog increased by 85 percent from the end of 2022, reaching $2.4 billion[21] - Utilities revenue for 2023 was $2380230 thousand, with a gross profit of $206992 thousand and a gross margin of 87%[15] - Energy revenue for 2023 was $3335079 thousand, with a gross profit of $380499 thousand and a gross margin of 114%[15] Guidance for 2024 - Full year 2024 adjusted EPS is projected to be between $3.05 and $3.25 per diluted share[38] - Full year 2024 adjusted EBITDA is projected to be between $395 million and $415 million[38] - Full year 2024 SG&A as a percentage of revenue is targeted in the low 6 percent range[38]

Part I [Business](index=5&type=section&id=Item%201.%20Business) Primoris Services Corporation is a leading provider of infrastructure services in the United States and Canada, operating through its Utilities and Energy segments - In the first quarter of 2023, the company realigned its business from three segments (Utilities, Energy/Renewables, Pipeline) into two: **Utilities and Energy**[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - The company's strategy emphasizes controlled expansion, growth in recurring revenue from Master Service Agreements (MSAs), and a conservative capital structure[27](index=27&type=chunk)[35](index=35&type=chunk) - The top ten customers accounted for **41.1% of total revenue in 2023**, a decrease from 46.1% in 2022 and 42.9% in 2021[34](index=34&type=chunk) Revenue from Master Service Agreements (MSAs) | Year | MSA Revenue as % of Total Revenue | | :--- | :--- | | 2023 | 36.7% | | 2022 | 45.8% | | 2021 | 45.9% | Employee Profile and Safety Metrics (as of Dec 31, 2023) | Metric | Value | | :--- | :--- | | Salaried Employees | 2,773 | | Hourly Employees | 11,285 | | Unionized Hourly Employees | ~30.6% | | Lost Time Injury Rate (LTIR) | 0.07 (vs. industry avg. of 1.0) | | Total Recordable Incident Rate (TRIR) | 0.46 (vs. industry avg. of 2.4) | [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from financial variability, cyclical markets, regulatory changes, fixed-price contracts, customer concentration, and cybersecurity threats - Financial and operating results are subject to significant quarterly and annual fluctuations due to factors like weather, customer spending patterns, and contract mix[78](index=78&type=chunk)[83](index=83&type=chunk) - Demand for services is cyclical and can decrease during economic downturns, while regulatory changes related to climate change could impact client projects[80](index=80&type=chunk)[89](index=89&type=chunk)[94](index=94&type=chunk) - A substantial portion of revenue is generated from fixed-price and unit-price contracts, which exposes the company to **risks of cost overruns**[112](index=112&type=chunk) - The business is dependent on a concentrated customer base, with the **top ten customers accounting for 41.1% of revenue in 2023**[103](index=103&type=chunk)[107](index=107&type=chunk) - The company faces significant cybersecurity risks that could disrupt operations, compromise confidential data, and result in financial loss or reputational damage[145](index=145&type=chunk)[146](index=146&type=chunk) - As of December 31, 2023, approximately **30.6% of the hourly workforce was covered by collective bargaining agreements**, posing risks of work stoppages[134](index=134&type=chunk)[136](index=136&type=chunk) [Unresolved Staff Comments](index=45&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[163](index=163&type=chunk) [Cybersecurity](index=45&type=section&id=Item%201C.%20Cybersecurity) Primoris maintains a comprehensive cybersecurity risk management program based on the NIST Framework, with oversight from the Audit Committee - The company's cybersecurity program is based on the **National Institute of Standards and Technology (NIST) Framework** and is integrated into its Enterprise Risk Management Program[164](index=164&type=chunk)[165](index=165&type=chunk) - Oversight is managed by the Audit Committee of the Board of Directors and a cross-functional management Security Steering Committee (SSC)[168](index=168&type=chunk) - Primoris engages third parties for regular assessments and maintains multiple managed Security Operations Centers (SOCs) for continuous monitoring and response[165](index=165&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company owns or leases various facilities across North America and prefers to own its construction equipment to ensure availability and control costs - As of December 31, 2023, the company **owned 54 facilities** and leased the remainder of its operational properties[171](index=171&type=chunk) - Capital expenditures in 2023 totaled approximately **$103.0 million**, including $34.0 million for construction equipment purchases[172](index=172&type=chunk) [Legal Proceedings](index=49&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 12 of the Notes to Consolidated Financial Statements - For details on legal proceedings, the company refers to **Note 12 — "Commitments and Contingencies"** in the financial statements[175](index=175&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[176](index=176&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE under "PRIM", with a history of paying quarterly dividends and a revised peer group for performance comparison - The company's common stock is listed on the New York Stock Exchange under the symbol **"PRIM"**[179](index=179&type=chunk) - Primoris has paid **consecutive quarterly cash dividends since 2008** and expects to continue doing so in the foreseeable future[180](index=180&type=chunk) - In 2023, the peer group for the stock performance graph was modified to better reflect the company's operations and market capitalization[183](index=183&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 29.3% to $5.7 billion in 2023, but net income declined due to prior-year gains and higher interest expense, while backlog grew to $10.9 billion [Results of Operations](index=68&type=section&id=Results%20of%20Operations) Consolidated revenue grew 29.3% to $5.7 billion, while net income declined to $126.1 million due to higher interest and tax expenses - SG&A expenses increased by 16.7% to $328.7 million in 2023, but **decreased as a percentage of revenue to 5.8%** from 6.4% in 2022[252](index=252&type=chunk) - Net interest expense rose to **$78.2 million** in 2023 from $39.2 million in 2022, driven by higher average debt balances and increased interest rates[257](index=257&type=chunk) - The effective tax rate for 2023 was **29.0%**, a significant increase from 16.5% in 2022, which was favorably impacted by a valuation allowance release[259](index=259&type=chunk)[260](index=260&type=chunk) Consolidated Results of Operations (in millions, except EPS) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $5,715.3 | $4,420.6 | 29.3% | | Gross Profit | $587.5 | $456.9 | 28.6% | | Gross Margin | 10.3% | 10.3% | 0 bps | | Operating Income | $253.1 | $195.3 | 29.6% | | Net Income | $126.1 | $133.0 | (5.2%) | | Diluted EPS | $2.33 | $2.47 | (5.7%) | [Segment Results](index=73&type=section&id=Segment%20Results) The Energy segment drove growth with a 39.2% revenue increase and improved margins, while the Utilities segment saw margin contraction Utilities Segment Performance | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $2,380.2 M | $2,024.3 M | | Gross Profit | $207.0 M | $210.7 M | | Gross Margin | 8.7% | 10.4% | Energy Segment Performance | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $3,335.1 M | $2,396.3 M | | Gross Profit | $380.5 M | $246.2 M | | Gross Margin | 11.4% | 10.3% | [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a solid liquidity position, improved operating cash flow to $198.6 million, and utilized a new Accounts Receivable Facility - At December 31, 2023, the company had **$217.8 million in cash** and cash equivalents and **$273.4 million in available borrowing capacity** under its Revolving Credit Facility[273](index=273&type=chunk)[276](index=276&type=chunk) - In June 2023, the company entered into a **$100.0 million Accounts Receivable Facility**, of which $75.0 million was utilized as of December 31, 2023[274](index=274&type=chunk) - Capital expenditures were **$103.0 million in 2023** and are expected to be between **$80.0 million and $100.0 million in 2024**[277](index=277&type=chunk) Cash Flow Summary (in millions) | Cash Flow Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $198.6 | $83.3 | $79.7 | | Net cash used in investing activities | ($30.0) | ($481.9) | ($691.3) | | Net cash (used in) from financing activities | ($205.3) | $452.0 | $485.8 | [Backlog](index=85&type=section&id=Backlog) Total backlog increased 19.8% to $10.9 billion at year-end 2023, driven by growth in the Energy segment - The Next 12 Months backlog increased to **$4.8 billion** at year-end 2023, compared to $4.0 billion at year-end 2022[312](index=312&type=chunk) Backlog by Segment (in millions) | Segment | Total Backlog Dec 31, 2023 | Total Backlog Dec 31, 2022 | | :--- | :--- | :--- | | Utilities | $5,189.9 | $5,150.4 | | Energy | $5,705.0 | $3,944.6 | | **Total** | **$10,894.9** | **$9,095.0** | [Quantitative and Qualitative Disclosures About Market Risk](index=86&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate debt, which it partially mitigates using interest rate swaps - The company's main market risk is from **interest rate changes** on its variable-rate debt[315](index=315&type=chunk)[318](index=318&type=chunk) - As of December 31, 2023, **$300.0 million** of the company's variable-rate debt was economically hedged through an interest rate swap[318](index=318&type=chunk) - A hypothetical **1.0% increase or decrease in interest rates** would change the company's annual interest expense by approximately **$5.7 million**[318](index=318&type=chunk) [Financial Statements and Supplementary Data](index=88&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's audited consolidated financial statements, supplementary data, and financial statement schedules by reference - The company's financial statements, supplementary data, and schedules are included starting on page **F-1** of the report[320](index=320&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=88&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[321](index=321&type=chunk) [Controls and Procedures](index=89&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of year-end 2023 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[324](index=324&type=chunk) - Management's assessment concluded that the company's internal control over financial reporting was **effective** as of December 31, 2023[328](index=328&type=chunk) - The independent registered public accounting firm issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[329](index=329&type=chunk) [Other Information](index=91&type=section&id=Item%209B.%20Other%20Information) The company reports no other information under this item - None[331](index=331&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=91&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[332](index=332&type=chunk) Part III Part III incorporates information by reference from the company's 2024 Proxy Statement regarding directors, compensation, and ownership [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the company's 2024 Proxy Statement [Executive Compensation](index=92&type=section&id=Item%2011.%20Executive%20Compensation) Information is incorporated by reference from the company's 2024 Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=92&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information is incorporated by reference from the company's 2024 Proxy Statement [Certain Relationships and Related Transactions, and Director Independence](index=92&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information is incorporated by reference from the company's 2024 Proxy Statement [Principal Accountant Fees and Services](index=92&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information is incorporated by reference from the company's 2024 Proxy Statement Part IV Part IV contains the list of exhibits filed with the Form 10-K, including governance documents, material contracts, and certifications [Exhibits and Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the report, including financial statements and required exhibits [Form 10-K Summary](index=97&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary under this item - None[349](index=349&type=chunk)