Primoris(US:PRIM)2025-08-04 21:48Revenue Growth - Revenue for Q2 2025 was $1,890.7 million, an increase of $327.0 million, or 20.9%, compared to Q2 2024, driven by growth in both Energy and Utilities segments [143]. - Revenue for the first half of 2025 was $3,538.9 million, an increase of $562.4 million, or 18.9%, compared to the same period in 2024, attributed to growth in both segments [143]. - Utilities segment revenue increased by $72.2 million, or 11.6%, for the three months ended June 30, 2025, primarily due to increased activity in power delivery, communications, and gas operations markets [153]. - Energy segment revenue increased by $263.3 million, or 27.0%, for the three months ended June 30, 2025, primarily due to increased renewable energy activity [155]. - For the six months ended June 30, 2025, Utilities segment revenue increased by $147.7 million, or 13.3%, while Energy segment revenue increased by $424.0 million, or 22.1% [161][163]. Profitability - Gross profit for Q2 2025 was $231.7 million, an increase of $45.0 million, or 24.1%, compared to Q2 2024, primarily due to increased revenue and improved margins in the Utilities segment [144]. - Gross profit as a percentage of revenue increased to 12.3% for Q2 2025, compared to 11.9% for Q2 2024, driven by improved margins in the Utilities segment [144]. - Gross profit for the six months ended June 30, 2025, was $402.4 million, an increase of $82.3 million, or 25.7%, compared to the same period in 2024, with gross profit as a percentage of revenue rising to 11.4% from 10.8% [145]. - Operating income for the six months ended June 30, 2025, increased by $48.8 million in the Utilities segment and by $20.1 million in the Energy segment compared to the same period in 2024 [162][164]. Expenses and Costs - SG&A expenses for the six months ended June 30, 2025, were $204.1 million, an increase of $15.3 million, or 8.1%, compared to 2024, while SG&A expenses as a percentage of revenue decreased to 5.8% from 6.3% [147]. - The company anticipates elevated levels of cost inflation to persist in the latter half of 2025, impacting operating costs [133]. - The company is exposed to inflation, tariffs, and other economic factors affecting labor, equipment, fuel, and material costs, with some cost increases exceeding contractual caps [189]. - The company has renegotiated some major contracts to address increased costs for future work [189]. Cash Flow and Financing - Net cash provided by operating activities for the six months ended June 30, 2025, was $144.6 million, a significant increase from a cash used of $12.4 million in the same period of 2024 [176]. - Cash and cash equivalents totaled $390.3 million as of June 30, 2025, down from $455.8 million as of December 31, 2024 [173]. - Financing activities used cash of $151.7 million for the six months ended June 30, 2025, compared to $39.1 million for the same period in 2024 [182]. - The company had no outstanding borrowings under the Revolving Credit Facility as of June 30, 2025, with available borrowing capacity of $304.3 million [169]. - The company anticipates sufficient funds from cash flows, existing borrowing capacity, and cash on hand to meet operating needs for the next twelve months [173]. Interest and Taxation - A 1.0% increase or decrease in interest rates would change annual interest expense by approximately $5.7 million based on variable rate debt outstanding as of June 30, 2025 [137]. - Interest expense for the three months ended June 30, 2025, decreased by $9.6 million compared to the same period in 2024, primarily due to lower average debt balances and interest rates [148]. - The effective tax rate for the six months ended June 30, 2025, was 29.0%, with income tax expense recorded at $52.5 million, up from $28.0 million in 2024, driven by an $84.6 million increase in pretax income [150]. Backlog and Project Management - As of June 30, 2025, total backlog was $5,136.9 million, with Fixed Backlog at $3,242.2 million and MSA Backlog at $1,894.7 million [167]. - The company’s project values range from several hundred dollars to several hundred million dollars, with the majority averaging less than $3.0 million [139]. Risk Management - The company is developing contingency plans, including alternative sourcing strategies, to mitigate potential impacts from increased tariffs and supply chain disruptions [134]. - The company may use financial derivative instruments to manage risks related to market conditions, including interest rates and commodity prices [190]. - The company does not engage in transactions for trading or speculative purposes, limiting exposure to any one counter-party [193]. Internal Controls and Compliance - The company has not made any changes to its internal control over financial reporting that materially affected its practices during the quarter ended June 30, 2025 [198]. - The company evaluates its disclosure controls and procedures, concluding they were effective at the reasonable assurance level as of June 30, 2025 [196]. - There were no legal proceedings affecting the company that materially impacted its financial position as of the reporting date [199]. - The company has employment agreements with certain employees that may include change of control clauses, potentially obligating the company to make payments under these agreements [194].