Primoris(US:PRIM)2021-08-04 22:23Financial Data and Key Metrics Changes - Year-to-date revenue increased by over $48 million compared to the previous year, reaching a record $1.7 billion for the first six months despite adverse weather conditions in Q2 [6][31] - Q2 revenue was $881.6 million, a decrease of $26.6 million year-over-year, primarily due to a significant decline in the Pipeline segment [31] - Gross profit for Q2 was $113 million, an increase of $12.1 million or 12% compared to the prior year, with gross margins rising to 12.8% from 11.1% [32][33] Business Line Data and Key Metrics Changes - Utility Segment: Revenue was $425.4 million, up 25% year-over-year, driven by increased activity with a major utility customer in California and contributions from Future Infrastructure [8][9] - Energy Renewable Segment: Revenue increased by 20% to $335 million, primarily due to renewable energy activities, with gross profit rising to $33.2 million [14][33] - Pipeline Services Segment: Revenue decreased to $121.2 million, reflecting a competitive market and project delays, with gross profit of $30.9 million [21][33] Market Data and Key Metrics Changes - The company reported a total backlog of $2.9 billion, down approximately $219 million from Q1, with MSA backlog at a record $1.5 billion, representing 52% of total backlog [38] - The renewable energy market is projected to be a $225 billion opportunity, with global energy investments rebounding to $1.9 trillion in 2021 [15] Company Strategy and Development Direction - The company is focusing on master service agreements (MSAs), with 52% of the current backlog being MSA-based work [7] - Strategic moves include geographic expansion and enhancing service offerings to include engineering and maintenance work [22][25] - The company aims to transition into higher growth markets, including telecom and renewables, while reducing risks associated with large lump-sum projects [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to weather-related delays and supply chain issues impacting project releases, particularly in the utility segment [12][42] - The outlook for the second half of the year remains cautious, with expectations of lower to mid-range earnings guidance of $2.30 to $2.50 per share [38][85] - Management expressed confidence in the company's business model and the ongoing transition to sustainable energy and infrastructure development [26][27] Other Important Information - The company invested $43.7 million in CapEx during Q2, primarily for construction equipment, with total debt at $654.8 million [38] - The effective tax rate for Q2 was approximately 27.3%, with expectations for the full year around 27.5% [37] Q&A Session Summary Question: How are customer-driven delays affecting project cadence? - Management noted that slow project releases were due to engineering delays and supply chain issues, particularly in telecom and electrical T&D [42][43] Question: Can you quantify revenue lost due to material delays? - Management indicated that while they do not have exact figures, it could be in the range of $10 million to $20 million [51][53] Question: What is the outlook for the Future acquisition's revenue? - Management expects Future's revenue to be down $20 million to $40 million from last year's $340 million, with growth anticipated in future years as the business expands outside Texas [64][66] Question: What are the expected margins in the utility segment for Q3 and Q4? - Management anticipates sequential improvement in Q3 margins, with a typical seasonal decline in Q4 [110] Question: What is the outlook for free cash flow in the back half of the year? - Free cash flow is expected to be similar to 2019 levels, potentially reaching $100 million to $150 million [103]