Primoris(US:PRIM)2025-11-03 22:44Revenue Growth - Revenue for Q3 2025 was $2,178.4 million, an increase of $529.3 million, or 32.1%, compared to Q3 2024, driven by growth in both Energy and Utilities segments [145]. - Revenue for the nine months ended September 30, 2025, was $5,717.3 million, an increase of $1,091.8 million, or 23.6%, compared to the same period in 2024, also due to growth in both segments [145]. - Revenue for the Utilities segment increased by $71.3 million, or 10.7%, for the three months ended September 30, 2025, compared to the same period in 2024 [158]. - Revenue for the Energy segment increased by $474.8 million, or 47.0%, for the three months ended September 30, 2025, compared to the same period in 2024 [160]. - For the nine months ended September 30, 2025, revenue for the Utilities segment increased by $218.9 million, or 12.3%, compared to the same period in 2024 [166]. - For the nine months ended September 30, 2025, revenue for the Energy segment increased by $899.0 million, or 30.7%, compared to the same period in 2024 [168]. Gross Profit and Margins - Gross profit for Q3 2025 was $235.7 million, an increase of $37.1 million, or 18.7%, compared to Q3 2024, despite lower margins [146]. - Gross profit as a percentage of revenue decreased to 10.8% for Q3 2025 from 12.0% in Q3 2024, primarily due to lower margins in both segments [146]. - Gross profit for the nine months ended September 30, 2025, was $638.1 million, an increase of $119.5 million, or 23.0%, compared to the same period in 2024 [147]. - Gross profit as a percentage of revenue remained consistent at 11.2% for the nine months ended September 30, 2025, compared to the same period in 2024, driven by improved margins in the Utilities segment [147]. Operating Costs and Expenses - The company anticipates elevated levels of cost inflation to persist in the remainder of 2025, impacting operating costs [135]. - SG&A expenses for the three months ended September 30, 2025, were $97.7 million, a decrease of $0.4 million, or 0.4%, compared to 2024, with SG&A as a percentage of revenue decreasing to 4.5% from 5.9% in 2024 [148]. - For the nine months ended September 30, 2025, SG&A expenses increased to $301.7 million, an increase of $14.9 million, or 5.2%, compared to 2024, primarily due to increased personnel costs [149]. Interest Rates and Financial Management - A 1.0% increase or decrease in interest rates would change annual interest expense by approximately $4.5 million based on variable rate debt outstanding as of September 30, 2025 [139]. - The company has established risk management policies to monitor and manage market risks related to changes in interest rates [139]. - The company utilizes derivative instruments to hedge exposure to variable interest rates, although not for trading purposes [199]. Tax and Income - The effective tax rate for the nine-month periods ended September 30, 2025, and 2024, was 28.5% and 29.0%, respectively [153]. - Income tax expense for the nine months ended September 30, 2025, was $89.0 million, compared to $51.8 million for the same period in 2024, driven by a $133.4 million increase in pretax income [154]. Backlog and Future Estimates - As of September 30, 2025, total backlog was $5,003.1 million, with Fixed Backlog at $2,914.8 million and MSA Backlog at $2,088.3 million [173]. - For the next 12 months, MSA Backlog is estimated at $1,919.1 million, contributing to a total backlog of $2,026.3 million [173]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased to $431.4 million as of September 30, 2025, down from $455.8 million as of December 31, 2024 [179]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $327.5 million, an increase of $117.5 million compared to $210.0 million in the same period of 2024 [183]. - Capital expenditures for the nine months ended September 30, 2025, totaled approximately $108.2 million, with expectations of an additional $15.0 million to $20.0 million for the remaining three months of 2025 [180]. - The company had no outstanding borrowings under the Revolving Credit Facility as of September 30, 2025, with available borrowing capacity of $315.2 million [176]. - Outstanding letters of credit totaled $10.0 million as of September 30, 2025, which are used to ensure reimbursement for insurance disbursements and performance guarantees [193]. - The company anticipates sufficient funds from cash flows, existing borrowing capacity, and cash on hand to meet operating needs and capital expenditures for the next twelve months [179]. - The company spent $78.2 million on investing activities during the nine months ended September 30, 2025, compared to $0.9 million in the same period of 2024 [181]. - The company has $125.0 million in trade accounts receivable sold and derecognized as of September 30, 2025, under its Amended Facility [177]. Internal Controls and Compliance - There were no changes to internal control over financial reporting practices during the quarter ended September 30, 2025, that materially affected internal control over financial reporting [205]. - The disclosure controls and procedures were concluded to be effective at the reasonable assurance level as of September 30, 2025, ensuring timely and accurate reporting [203]. - The evaluation of disclosure controls involved management's judgment regarding the cost-benefit relationship of possible controls [204]. Legal and Employment Matters - No legal proceedings were reported that could materially affect the company's financial position [206]. - The company has employment agreements with certain employees that may include change of control clauses, potentially leading to future payment obligations [200]. - The company has collective bargaining agreements with unions that require contributions to multi-employer pension and health plans, which could impact future contributions and operational results [200]. - No directors or officers adopted or terminated trading arrangements during the quarterly period covered by the report [207].