Primoris Services Corporation (NYSE:PRIM) Q4 2022 Earnings Conference Call February 28, 2023 10:00 AM ET Company Participants Blake Holcomb - VP, IR Tom McCormick - President & CEO Ken Dodgen - CFO Conference Call Participants Lee Jagoda - CJS Securities Steven Fisher - UBS Alex Dwyer - KeyBanc Capital Markets Adam Thalhimer - Thompson Davis Brent Thielman - D.A. Davidson Bill Dezellem - Tieton Capital Management Clay Williams - Goldman Sachs Operator Ladies and gentlemen, thank you for standing by. My name ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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) (State or other jurisdi ...

Primoris Services Corporation (NYSE:PRIM) Q3 2022 Results Conference Call November 8, 2022 8:00 AM ET Company Participants Blake Holcomb - Vice President, Investor Relations Thomas McCormick - CEO, President & Director Kenneth Dodgen - EVP & CFO Conference Call Participants Peter Lukas - CJS Securities Adam Thalhimer - Thompson, Davis & Company Jerry Revich - Goldman Sachs Group Sean Eastman - KeyBanc Capital Markets Brent Thielman - D.A. Davidson & Co. Julio Romero - Sidoti & Company Avi Jaroslawicz - UBS ...

| --- | --- | --- | |-------|----------|-----------------------------------------------------------| | | | | | | | | | | | | | | Building | Primoris Services Corporation Momentum 3Q 2022 Earnings | | | | November 8, 2022 | Notice to Investors This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements give the current expectations of the Company's management. Words such as "anticipates", "believes", "could", "estimates", "expects", "intends", "ma ...

Commission file number 001-34145 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 September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to . Primoris Services Corporation (Exact name of registrant as specified in its charter) Delaware 20 ...

Primoris Services Corp (NYSE:PRIM) Q2 2022 Earnings Conference Call August 9, 2022 10:00 AM ET Company Participants Jeremy Apple - IR Thomas McCormick - CEO, President & Director Kenneth Dodgen - EVP & CFO Conference Call Participants Jerry Revich - Goldman Sachs Group Peter Lukas - CJS Securities Steven Fisher - UBS Sean Eastman - KeyBanc Capital Markets Brent Thielman - D.A. Davidson & Co. Julio Romero - Sidoti & Company Adam Thalhimer - Thompson, Davis & Company Operator Hello. My name is Lisa, and I wil ...

| --- | --- | |-------|-------| | | | | | | | | | | --- | --- | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Primoris Services Corporation as of June 30, 2022, including balance sheets, income statements, and cash flows, along with detailed notes on accounting policies and significant events [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2022, total assets increased to **$2.71 billion** from **$2.54 billion** at year-end 2021, while total liabilities grew to **$1.68 billion** from **$1.55 billion**, and stockholders' equity rose to **$1.03 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $1,317,947 | $1,182,090 | | **Total assets** | **$2,713,830** | **$2,543,327** | | **Total current liabilities** | $889,328 | $759,118 | | **Total liabilities** | **$1,681,032** | **$1,553,272** | | **Total stockholders' equity** | **$1,032,798** | **$990,055** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2022, revenue increased to **$1.02 billion** from **$881.6 million** year-over-year, with net income significantly rising to **$50.2 million**, or **$0.93 per diluted share**, aided by a **$40.1 million** gain on a sale and leaseback transaction Q2 and H1 2022 vs 2021 Income Statement (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,022,948 | $881,610 | $1,807,333 | $1,699,939 | | **Gross Profit** | $92,109 | $113,026 | $148,594 | $193,207 | | **Operating Income** | $67,264 | $54,799 | $67,972 | $67,652 | | **Gain on sale and leaseback** | $40,084 | $— | $40,084 | $— | | **Net Income** | $50,154 | $36,295 | $48,480 | $42,143 | | **Diluted EPS** | $0.93 | $0.67 | $0.90 | $0.81 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2022, net cash used in operating activities was **$91.1 million**, a significant shift from the **$6.2 million** provided in 2021, primarily due to increases in accounts receivable and contract assets Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(91,113) | $6,163 | | Net cash used in investing activities | $(44,375) | $(659,195) | | Net cash provided by financing activities | $26,200 | $504,252 | | **Net change in cash** | **$(109,333)** | **$(148,195)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and events, including a change in equipment useful lives reducing depreciation by **$11.1 million**, the completion of two acquisitions (B Comm and ASP) and announcement of a third (PLH), a **$40.1 million** gain from a sale-leaseback, and a subsequent amendment to the credit facility for the PLH acquisition - Effective January 1, 2022, the company changed its estimate for the useful lives of certain equipment, which reduced depreciation expense by **$11.1 million** and increased net income by **$8.8 million** for the six months ended June 30, 2022[26](index=26&type=chunk) - Acquisitions in 2022 include B Comm Holdco, LLC for approximately **$35.6 million** (June) and Alberta Screw Piles, Ltd. for approximately **$4.1 million** (March)[37](index=37&type=chunk)[41](index=41&type=chunk) - A definitive agreement was signed to acquire PLH Group, Inc. for approximately **$470.0 million**, which closed on August 1, 2022[42](index=42&type=chunk) - As of June 30, 2022, the company had **$3.0 billion** of remaining performance obligations, with approximately **63.3%** expected to be recognized as revenue in the next four quarters[54](index=54&type=chunk) - A sale and leaseback of property in Carson, California on June 22, 2022, resulted in a gain of **$40.1 million**[112](index=112&type=chunk)[114](index=114&type=chunk) - Subsequent to quarter-end, on August 1, 2022, the company amended its credit agreement, increasing its term loan to **$945.0 million** and its revolving credit facility to **$325.0 million** to finance the PLH acquisition[131](index=131&type=chunk)[132](index=132&type=chunk) [Management's Discussion and Analysis (MD&A)](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting a **16.0%** revenue increase in Q2 2022 to **$1.02 billion**, driven by Energy/Renewables and Utilities segments, while gross profit decreased to **9.0%** of revenue due to cost inflation and Pipeline segment performance [Results of Operations](index=51&type=section&id=MD%26A%20-%20Results%20of%20Operations) Consolidated revenue for Q2 2022 increased **16.0%** year-over-year to **$1.02 billion**, driven by Energy/Renewables and Utilities, while gross profit for Q2 2022 fell **18.5%** to **$92.1 million**, with margins contracting to **9.0%** due to negative margins in the Pipeline segment and cost pressures Q2 2022 vs Q2 2021 Revenue and Gross Profit | Metric | Q2 2022 | Q2 2021 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,022.9M | $881.6M | +$141.3M | +16.0% | | **Gross Profit** | $92.1M | $113.0M | -$20.9M | -18.5% | | **Gross Margin** | 9.0% | 12.8% | -3.8 p.p. | - | - The decrease in gross margin was primarily due to negative gross margins in the Pipeline segment, the favorable closeout of pipeline projects in 2021, and increased labor, material, and fuel costs in the Utilities segment in 2022[177](index=177&type=chunk)[178](index=178&type=chunk) - A **$40.1 million** gain on a sale and leaseback transaction was recorded in Q2 2022[185](index=185&type=chunk) - The effective tax rate for H1 2022 was **20.5%**, compared to **27.5%** in H1 2021, mainly due to the release of a valuation allowance following the capital gain from the property sale[91](index=91&type=chunk)[193](index=193&type=chunk) [Segment Results](index=55&type=section&id=MD%26A%20-%20Segment%20Results) In Q2 2022, Utilities revenue grew **11.9%** to **$476.1 million** but gross margin fell to **8.5%** due to cost inflation, while Energy/Renewables revenue surged **45.2%** to **$486.3 million** with improved gross margin at **10.9%**, and Pipeline revenue declined **50.1%** to **$60.5 million**, posting a negative gross margin of **-2.3%** Q2 2022 Segment Performance (in thousands) | Segment | Revenue | % Change YoY | Gross Profit | Gross Margin % | | :--- | :--- | :--- | :--- | :--- | | **Utilities** | $476,121 | +11.9% | $40,356 | 8.5% | | **Energy/Renewables** | $486,349 | +45.2% | $53,143 | 10.9% | | **Pipeline** | $60,478 | -50.1% | $(1,390) | -2.3% | - **Utilities:** Gross margin declined from **11.5%** in Q2 2021 due to increased fuel and labor costs from inflation, as cost increases exceeded contractual caps on MSA billing rate adjustments[197](index=197&type=chunk) - **Energy/Renewables:** Revenue growth was driven by a **$98.6 million** increase in renewable energy activity, and gross margin improved from **9.9%** in Q2 2021[199](index=199&type=chunk)[201](index=201&type=chunk) - **Pipeline:** Revenue decline was due to the substantial completion of four major projects in 2021, and the negative gross margin was caused by lower volumes leading to high carrying costs for equipment and personnel[204](index=204&type=chunk)[206](index=206&type=chunk) [Backlog](index=60&type=section&id=MD%26A%20-%20Backlog) Total backlog reached a record **$4.57 billion** at June 30, 2022, up from **$4.00 billion** at year-end 2021, consisting of **$2.81 billion** in Fixed Backlog and **$1.76 billion** in estimated 12-month MSA Backlog, with the Energy/Renewables segment accounting for the largest portion Total Backlog by Segment (in millions) | Reportable Segment | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Utilities | $1,558.4 | $1,383.6 | | Energy/Renewables | $2,878.6 | $2,455.3 | | Pipeline | $134.6 | $163.9 | | **Total** | **$4,571.6** | **$4,002.8** | - Fixed Backlog increased by **13.3%** to **$2.81 billion** at June 30, 2022, from **$2.48 billion** at December 31, 2021[211](index=211&type=chunk)[212](index=212&type=chunk) - Estimated 12-month MSA Backlog was **$1.76 billion**, with the Utilities segment contributing **$1.55 billion**[214](index=214&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) The company ended Q2 2022 with **$91.3 million** in cash, with net cash used in operations at **$91.1 million** for H1 2022, and subsequently amended its credit agreement to increase its term loan to **$945.0 million** and revolving credit facility to **$325.0 million** to finance the PLH acquisition - Cash and cash equivalents decreased to **$91.3 million** at June 30, 2022, from **$200.5 million** at December 31, 2021[220](index=220&type=chunk) - Net cash used by operating activities was **$91.1 million** for H1 2022, primarily due to a **$105.7 million** increase in accounts receivable and a **$63.6 million** increase in contract assets[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - On August 1, 2022, the company amended its credit agreement, increasing the Term Loan to **$945.0 million** and the Revolving Credit Facility to **$325.0 million**, with available borrowing capacity of **$170.7 million** as of that date[218](index=218&type=chunk) - Capital expenditures for the remaining six months of 2022 are projected to be between **$60.0 million** and **$70.0 million**[221](index=221&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to market risks from fluctuations in interest rates on its variable-rate debt, with a hypothetical **1.0%** change impacting annual interest expense by approximately **$4.4 million** on the unhedged portion - The company's primary market risk is interest rate fluctuations on its variable-rate credit facility and term loan[239](index=239&type=chunk) - A **1.0%** increase or decrease in interest rates would change annual interest expense by approximately **$4.4 million**, based on variable rate debt outstanding at June 30, 2022[239](index=239&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[242](index=242&type=chunk) - No material changes were made to internal control over financial reporting during the quarter ended June 30, 2022[244](index=244&type=chunk) [Part II. Other Information](index=43&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims and legal proceedings in the ordinary course of business, which management believes will not have a material adverse effect on its financial condition or results of operations - The company is subject to claims and legal proceedings arising from its business but does not expect them to have a material adverse effect; see Note 14 for details[115](index=115&type=chunk)[116](index=116&type=chunk)[245](index=245&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased **148,000** shares of its common stock for **$3.4 million** under its authorized share purchase program, with **$21.6 million** remaining available for purchase as of June 30, 2022 Share Repurchase Activity (Q2 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2022 | — | — | | May 2022 | 148,000 | $22.77 | | June 2022 | — | — | | **Total** | **148,000** | **$22.77** | - As of June 30, 2022, **$21.6 million** remained available for repurchase under the company's share purchase program[246](index=246&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the merger agreement for the PLH acquisition, various employment agreements, and CEO/CFO certifications - Exhibits filed with the report include the PLH Group, Inc. merger agreement, employment agreements, and required certifications[249](index=249&type=chunk)

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

| --- | --- | --- | |-------|-------|-------| | | | | | | | | | | | | Notice to Investors This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements give the current expectations of the Company's management. Words such as "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "potential", "predicts", "projects", "should", "will", "would" and similar expressions are used to identify forward-looking statements. With ...