Primoris(PRIM)2024-11-04 22:48Revenue Performance - Revenue for Q3 2024 was $1,649.1 million, an increase of $119.6 million, or 7.8%, compared to Q3 2023, driven by growth in both Energy and Utilities segments [143]. - Revenue for the nine months ended September 30, 2024, was $4,625.5 million, an increase of $425.7 million, or 10.1%, compared to the same period in 2023, primarily due to growth in the Energy segment [144]. - Revenue for the Utilities segment for the three months ended September 30, 2024, was $666.2 million, a 2.4% increase from $650.7 million in 2023, with gross profit rising by $22.4 million, or 34.6% [156][158]. - Energy segment revenue increased by $123.1 million, or 13.9%, for the three months ended September 30, 2024, compared to the same period in 2023, driven by increased renewable energy activity [159]. - Total revenue for the nine months ended September 30, 2024, was $4.63 billion, an increase from $4.20 billion in 2023, with gross profit rising to $518.6 million from $430.9 million [161]. Gross Profit - Gross profit for Q3 2024 was $198.6 million, an increase of $24.7 million, or 14.2%, compared to Q3 2023, with gross profit as a percentage of revenue increasing to 12.0% [145]. - Gross profit for the nine months ended September 30, 2024, was $518.6 million, an increase of $87.8 million, or 20.4%, compared to the same period in 2023, with gross profit as a percentage of revenue increasing to 11.2% [146]. - Gross profit for the nine months ended September 30, 2024, in the Energy segment increased by $74.3 million, or 27.9%, compared to the same period in 2023, with gross profit as a percentage of revenue rising to 11.6% [165]. Expenses - Selling, general and administrative (SG&A) expenses for Q3 2024 were $98.1 million, an increase of $13.7 million, or 16.2%, compared to Q3 2023, with SG&A as a percentage of revenue increasing to 5.9% [147]. - SG&A expenses for the nine months ended September 30, 2024, were $286.8 million, an increase of $38.8 million, or 15.7%, compared to 2023, with SG&A as a percentage of revenue rising to 6.2% from 5.9% [148]. Cost and Inflation - The company anticipates elevated levels of cost inflation could persist in 2024, impacting operations and profitability [134]. - The company has experienced increased fuel and labor costs, which may continue to affect profitability [134]. - The company has successfully renegotiated some major contracts to address increased costs on future work [134]. Debt and Interest - As of September 30, 2024, $300.0 million of the company's variable rate debt was economically hedged, with a 1.0% change in interest rates potentially affecting annual interest expense by approximately $5.4 million [137]. - Interest expense, net for the three months ended September 30, 2024, decreased by $3.2 million to $17.9 million compared to the same period in 2023, primarily due to lower average debt balances [150]. - A 1.0% increase or decrease in interest rates would change annual interest expense by approximately $5.4 million based on variable rate debt outstanding as of September 30, 2024 [196]. Taxation - The effective tax rate for the nine months ended September 30, 2024, was 29.0%, up from the U.S. federal statutory rate of 21.0%, primarily due to state income taxes and nondeductible expenses [153]. - The company recorded an income tax expense of $51.8 million for the nine months ended September 30, 2024, compared to $36.1 million in 2023, driven by a $54.1 million increase in pretax income [154]. Cash Flow and Capital Expenditures - As of September 30, 2024, cash and cash equivalents totaled $352.7 million, an increase from $217.8 million as of December 31, 2023 [175]. - Net cash provided by operating activities for the nine months ended September 30, 2024 was $210.1 million, compared to a cash usage of $7.1 million for the same period in 2023 [179]. - Capital expenditures for the nine months ended September 30, 2024 amounted to approximately $98.3 million, with an expected additional $10.0 million to $20.0 million for the remaining three months of 2024 [176]. Backlog and Contract Liabilities - Fixed backlog for the Utilities segment as of September 30, 2024, was $57.6 million, unchanged from December 31, 2023, while MSA backlog was $1.89 billion, up from $1.78 billion [169]. - Energy segment fixed backlog increased to $3.05 billion as of September 30, 2024, from $2.60 billion at the end of 2023, with MSA backlog at $199.4 million [169]. - Contract liabilities increased by $290.6 million due to higher deferred revenue from favorable billing terms on new projects for the nine months ended September 30, 2024 [181]. Financing Activities - Financing activities used cash of $74.0 million for the nine months ended September 30, 2024, primarily due to long-term debt payments of $55.9 million [186]. - The company had letters of credit outstanding totaling $53.5 million as of September 30, 2024, which reduce borrowing availability under credit agreements [192]. - The company anticipates sufficient funds from cash, investments, and future cash flows to meet operating needs and planned capital expenditures for the next twelve months [175]. Asset Sales - The company received proceeds from the sale of assets totaling $97.4 million during the nine months ended September 30, 2024, compared to $47.6 million in the prior year [185].