Primoris(US:PRIM)2023-11-07 22:44Acquisitions - The company acquired PLH Group, Inc. for approximately $429.0 million, enhancing its capabilities in utility markets [143]. - The acquisition of B Comm Holdco, LLC was completed for about $36.0 million, aimed at expanding communication services within utility markets [144]. Financial Performance - Revenue for the three months ended September 30, 2023, was $1,529.5 million, an increase of $245.4 million, or 19.1%, compared to the same period in 2022 [156]. - Revenue for the nine months ended September 30, 2023, was $4,199.8 million, an increase of $1,108.3 million, or 35.9%, compared to the same period in 2022 [157]. - Gross profit for the three months ended September 30, 2023, was $173.9 million, an increase of $19.0 million, or 12.3%, compared to the same period in 2022 [158]. - Gross profit for the nine months ended September 30, 2023, was $430.9 million, an increase of $127.4 million, or 42.0%, compared to the same period in 2022 [159]. - SG&A expenses for the three months ended September 30, 2023, were $84.4 million, an increase of $8.7 million, or 11.5%, compared to 2022 [160]. - SG&A expenses for the nine months ended September 30, 2023, were $248.0 million, an increase of $57.1 million, or 29.9%, compared to 2022 [161]. Backlog and Future Revenue - As of September 30, 2023, total Fixed Backlog was $4.63 billion, an increase of $1.05 billion, or 29.4% from $3.58 billion at December 31, 2022 [183]. - MSA Backlog at September 30, 2023 totaled $2.06 billion, with Utilities segment contributing $1.82 billion and Energy segment $241 million [185]. - Total backlog (Fixed Backlog plus MSA Backlog) reached $6.69 billion as of September 30, 2023, with expectations to recognize approximately 69% as revenue over the next four quarters [186]. Cash Flow and Liquidity - Cash and cash equivalents were $160.7 million at September 30, 2023, down from $248.7 million at December 31, 2022 [191]. - Net cash used in operating activities for the nine months ended September 30, 2023 was $7.1 million, a significant improvement from $102.0 million used in the same period in 2022 [195]. - The company anticipates sufficient funds from cash, investments, and future cash flows to meet operating needs and capital expenditures for the next twelve months [192]. Debt and Financing - As of September 30, 2023, $300.0 million of the company's variable rate debt was economically hedged, with a 1.0% interest rate change affecting annual interest expense by approximately $7.2 million [151]. - Outstanding borrowings under the Revolving Credit Facility were $120 million as of September 30, 2023, with available borrowing capacity of $167.2 million [188]. - The company had bid and completion bonds issued and outstanding amounting to approximately $6.0 billion, with remaining performance obligations on those projects totaling about $2.7 billion [209]. Market Conditions and Risks - The company anticipates elevated levels of cost inflation to persist into 2024, impacting operations and pricing strategies [147]. - The regulatory environment has led to delays and cancellations of projects, but also increased demand for pipeline maintenance and integrity services [150]. - The company is exposed to market risks including fluctuations in foreign currency exchange rates, interest rates, and commodity prices, which may be managed through financial derivative instruments [211]. Operational Challenges - Seasonal impacts, particularly weather-related, can significantly affect revenue and profitability across all business segments [152]. - The company has experienced increased fuel and labor costs, which have been addressed through price escalation provisions in major contracts [147]. - The company operates in a cyclical industry, with financial results subject to quarterly variations due to client project schedules and economic conditions [153]. - The company may renegotiate major contracts to address increased costs on future work [210]. Taxation - The effective tax rate for the nine-month period ended September 30, 2023, was 29.0%, compared to 19.6% for the same period in 2022 [167]. - The company recorded income tax expense of $36.1 million for the nine months ended September 30, 2023, compared to $22.3 million for the same period in 2022 [168]. Customer Dependency - The company has not been dependent on any single customer, although a small number of customers can constitute a substantial portion of total revenue in any given year [139]. Internal Controls - The company has effective disclosure controls and procedures as of September 30, 2023, ensuring timely and accurate reporting of required information [215]. - There were no changes to the internal control over financial reporting that materially affected the company during the quarter ended September 30, 2023 [217].