Board of Directors Declares $0.055 Per Share Cash
Dividend
Primoris Services Corporation (NASDAQ:PRIM)
(“Primoris” or “Company”) today announced financial results for its
first quarter ended March 31, 2017.
The Company also announced that on May 5, 2017
its Board of Directors declared a $0.055 per share cash dividend to
stockholders of record on June 30, 2017, payable on or about July
15, 2017.
David King, President and Chief Executive
Officer of Primoris, commented, “We have started this year with
record revenue for the first quarter, while strong bookings during
the quarter have kept our backlog at a record high. Despite
the traditional weather-related slow start to the year for our
Utilities and Distribution segment, our revenue and earnings
improved significantly from last year’s first quarter driven by the
performance of our Pipeline and Underground segment. We
experienced an increase in earnings in our Power, Industrial, &
Engineering segment and expect that the power market will continue
to improve over the course of the year, with the continued low cost
of natural gas a key driver for the pipeline, power, and industrial
markets. In April, our Board of Directors determined to end
the process for a potential sale of our Texas Heavy Civil division,
and while the Civil segment struggled in the first quarter, we are
anticipating profit improvements in the segment by the end of this
year.”
Mr. King continued, “We have maintained a strong
balance sheet and currently have our lowest debt to equity ratio in
almost four years. We continue to be very active in looking
for the right acquisition and are beginning to see opportunities to
buy the right company at the right price. Combining
acquisitive growth with the growth opportunities for our current
business units, we feel confident in the long-term outlook and
performance for Primoris.”
2017 FIRST QUARTER RESULTS
OVERVIEW
Revenues in the first quarter 2017 increased by
$131.1 million to $561.5 million from $430.4 million for the same
period in 2016. The primary reason for the increase was two
large pipeline projects in the Pipeline & Underground
(“P&U”) segment. Gross profit for the first quarter 2017
increased by $15.8 million to $55.1 million from $39.3 million for
the same period in 2016. Gross profit as a percentage of
revenue increased to 9.8% for the first quarter 2017, compared to
9.1% for the same period in 2016, reflecting the impact of the two
large pipeline project in the P&U segment as well as improved
margins on power and industrial work in the Power, Industrial, and
Engineering (“PI&E) segment.
SEGMENT RESULTS
Through the end of the year 2016, Primoris
segregated its business into three reportable segments: the Energy
segment, the East Construction Services segment, and the West
Construction Services segment. In the first quarter 2017,
Primoris changed its reportable segments to match the changes in
the Company’s realigned internal organization and management
structure. A Form 8-K was filed on April 7th containing
historical revenue, margin, and backlog information for the new
segments.
- Power, Industrial, and Engineering - The Power division of the
PI&E segment includes ARB Industrial, Primoris Power, ARB
Structures, and Primoris Renewable Energy. The Industrial
division of this segment includes Primoris Industrial Constructors,
Primoris Fabrication, and Primoris Mechanical Contractors.
The Engineering division of this segment includes OnQuest and
PD&C.
- Pipeline and Underground – The P&U segment includes
Rockford, Vadnais Trenchless, Primoris Field Services, and Primoris
Pipeline.
- Utilities and Distribution – The U&D segment includes ARB
Underground, Q3C, and Primoris AV.
- Civil – The Civil segment includes Primoris Heavy Civil,
Primoris I&M, and BW Primoris.
Segment Revenues(in
thousands, except %)
|
|
For the three months ended March
31, |
|
|
2017 Unaudited |
|
2016Unaudited |
|
|
|
|
% of |
|
|
|
% of |
|
|
|
|
Total |
|
|
|
Total |
Segment |
|
Revenue |
|
Revenue |
|
Revenue |
|
Revenue |
|
|
|
|
|
|
|
Power, Industrial,
& Engineering |
|
$ |
131,240 |
|
23.4 |
% |
|
$ |
138,638 |
|
32.2 |
% |
Pipeline &
Underground |
|
|
183,445 |
|
32.7 |
% |
|
|
54,336 |
|
12.6 |
% |
Utilities &
Distribution |
|
|
116,980 |
|
20.8 |
% |
|
|
103,754 |
|
24.1 |
% |
Civil |
|
|
129,837 |
|
23.1 |
% |
|
|
133,718 |
|
31.1 |
% |
Total |
|
$ |
561,502 |
|
100.0 |
% |
|
$ |
430,446 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross Profit(in
thousands, except %)
|
|
For the three months ended March
31, |
|
|
2017 Unaudited |
|
2016Unaudited |
|
|
|
|
% of |
|
|
|
% of |
|
|
Gross |
|
Segment |
|
Gross |
|
Segment |
Segment |
|
Profit |
|
Revenue |
|
Profit |
|
Revenue |
|
|
|
|
|
|
|
Power, Industrial,
& Engineering |
|
$ |
15,524 |
|
11.8 |
% |
|
$ |
11,585 |
|
8.4 |
% |
Pipeline &
Underground |
|
|
28,125 |
|
15.3 |
% |
|
|
4,999 |
|
9.2 |
% |
Utilities &
Distribution |
|
|
8,273 |
|
7.1 |
% |
|
|
11,885 |
|
11.5 |
% |
Civil |
|
|
3,131 |
|
2.4 |
% |
|
|
10,808 |
|
8.1 |
% |
Total |
|
$ |
55,053 |
|
9.8 |
% |
|
$ |
39,277 |
|
9.1 |
% |
|
|
|
|
|
|
|
|
|
Power, Industrial, & Engineering
Segment: Revenue for the Power, Industrial, &
Engineering segment decreased by $7.4 million in the first quarter
2017, compared to the same period in 2016. The primary reason
for the decline in revenue was the completion of several wastewater
treatment plants and a parking structure project in 2016, as well
as decreased volume at a large petrochemical project.
Partially offsetting the decreases was increased revenue from power
projects. Gross profit for the Power, Industrial, &
Engineering segment increased by $3.9 million in the first quarter
2017, compared to the same period in 2016. The increase in
gross profit was primarily the result of higher revenue from power
projects.
Pipeline & Underground
Segment: Revenues for the Pipeline &
Underground segment increased by $129.1 million in the first
quarter 2017, compared to the same period in 2016. The
increase in revenue was primarily from two large Rockford pipeline
projects in Florida, partially offset by reduced revenue at
Primoris Field Services after the completion of a large project in
2016. The gross profit for the Pipeline & Underground
segment increased by $23.1 million in the first quarter 2017,
compared to the same period in 2016, primarily as a result of the
higher revenue from the two Florida pipeline projects.
Utilities & Distribution
Segment: Revenue for the Utilities &
Distribution segment increased by $13.2 million in the first
quarter of 2017, compared to the same period in 2016. The
increased revenue was driven by increased volume at each of the
segment’s business units. The gross profit for the Utilities &
Distribution segment decreased by $3.6 million in the first quarter
2017, compared to the same period in 2016, primarily as a result of
the decreased revenue for a major ARB Underground utility customer
and less profitable type of work performed for a major Q3C utility
customer.
Civil Segment:
Revenue for the Civil segment decreased by
$3.9 million in the first quarter of 2017, compared to the same
period in 2016. The decreased revenue was driven by lower
revenue from departments of transportation at Primoris Heavy Civil,
partially offset by increased airport revenue, and by lower
Primoris I&M revenue at a large petrochemical project.
The gross profit for the Civil segment decreased by $7.7 million in
the first quarter 2017, compared to the same period in 2016,
primarily as a result of the decreased revenue at the large
petrochemical project and productivity issues on Arkansas
Department of Transportation projects.
Selling, general and administrative expenses (“SG&A”) were
$39.9 million, or 7.1% of revenues for the first quarter 2017,
compared to $32.7 million, or 7.6% of revenues for the first
quarter 2016. The increase in SG&A for the quarter was
primarily due to a $4.6 million increase in compensation related
expenses, a $0.9 million benefit in the prior year from an
adjustment to the pension withdrawal liability, and a $1.1 million
reserve for an account receivable and note receivable.
Operating income for the first quarter 2017 was
$15.2 million, or 2.7% of total revenue, compared to $6.6 million,
or 1.5% of total revenue, for the same period last year.
Net non-operating items in the first quarter
2017 resulted in expense of $2.2 million, compared to $1.9 million
in net expense in the first quarter 2016.
The provision for income taxes for the first
quarter 2017 was $4.5 million, for an effective tax rate on income
attributable to Primoris of 37.0%, compared to $1.8 million, for an
effective tax rate on income attributable to Primoris of 40.5%, in
the first quarter 2016.
Net income attributable to Primoris for the
first quarter 2017 was $7.7 million, or $0.15 per diluted share,
compared to net income attributable to Primoris of $2.7 million, or
$0.05 per diluted share, in the same period in 2016.
Fully diluted weighted average shares
outstanding for the first quarter 2017 decreased slightly to 51.85
million from 51.88 million in the first quarter 2016.
OTHER FINANCIAL INFORMATION
Primoris’ balance sheet at March 31, 2017
included cash and cash equivalents of $148.5 million, working
capital of $269.4 million, total debt and capital leases of $253.4
million and stockholders’ equity of $501.6 million. Primoris’
tangible net worth at March 31, 2017 was $341.3 million.
Based on expected start dates for current
projects in backlog, anticipated levels of customer maintenance,
MSA spending, and new project awards, and given the continued
uncertainty caused by the energy markets, the Company estimates
that for the four quarters ending March 31, 2018, net income
attributable to Primoris will remain between $1.00 and $1.20 per
fully diluted share.
BACKLOG
|
|
Backlog at March 31, 2017 (in millions) |
|
Segment |
|
Fixed Backlog |
|
MSA Backlog |
|
Total Backlog |
Expected Next Four Quarters Total Backlog Revenue
Recognition |
|
|
|
|
|
|
|
|
|
Power, Industrial,
& Engineering |
|
$ |
536 |
$ |
42 |
$ |
578 |
72 |
% |
Pipeline &
Underground |
|
|
870 |
|
47 |
|
917 |
21 |
% |
Utilities &
Distribution |
|
|
106 |
|
566 |
|
672 |
100 |
% |
Civil |
|
|
628 |
|
4 |
|
632 |
69 |
% |
Total |
|
$ |
2,140 |
$ |
659 |
$ |
2,799 |
52 |
% |
|
|
|
|
|
|
|
|
|
|
At March 31, 2017, Fixed Backlog was $2.1
billion, compared to $2.1 billion at December 31, 2016.
At March 31, 2017, MSA Backlog was $659 million,
compared to $672 million at December 31, 2016. MSA Backlog
represents estimated MSA revenues for the next four quarters.
Total Backlog at March 31, 2017 was $2.8
billion, compared to $2.8 billion at December 31, 2016.
Backlog, including estimated MSA revenues,
should not be considered a comprehensive indicator of future
revenues. There is a certain percentage of total revenues,
from projects such as cost reimbursable and time-and-materials
projects, that do not flow through backlog. Any project may
still be cancelled at the convenience of our customers.
CONFERENCE CALL
David King, President and Chief Executive
Officer, and Peter J. Moerbeek, Executive Vice President and Chief
Financial Officer will host a conference call today, Tuesday, May
9, 2017 at 11:00 am Eastern Time / 10:00 am Central Time to discuss
the results.
Interested parties may participate in the call
by dialing:
- (877) 407-8293 (Domestic)
- (201) 689-8349 (International)
If you are unable to participate in the live
call, a replay may be accessed by dialing (877) 660-6853,
conference ID 13660685, and will be available for approximately two
weeks. The conference call will also be broadcast live over the
Internet and can be accessed and replayed through the Investor
Relations section of Primoris' website at www.prim.com. Once at the
Investor Relations section, please click on "Events &
Presentations”.
ABOUT PRIMORIS
Founded in 1960, Primoris, through various
subsidiaries, has grown to become one of the largest construction
service enterprises in the United States. Serving diverse end
markets, Primoris provides a wide range of construction,
fabrication, maintenance, replacement, water and wastewater, and
engineering services to major public utilities, petrochemical
companies, energy companies, municipalities, and other customers.
The Company's national footprint extends from Florida, along the
Gulf Coast, through California, into the Pacific Northwest and
Canada. For additional information, please visit www.prim.com.
FORWARD LOOKING STATEMENTS
This press release contains certain
forward-looking statements, including with regard to the Company’s
future performance. Words such as "estimates," "believes,"
"expects," "projects," “may,” and "future" or similar expressions
are intended to identify forward-looking statements.
Forward-looking statements inherently involve known and unknown
risks, uncertainties, and other factors, including without
limitation, those described in this press release and those
detailed in the "Risk Factors" section and other portions of our
Annual Report on Form 10-K for the period ended December 31, 2016,
and other filings with the Securities and Exchange
Commission. Given these uncertainties, you should not place
undue reliance on forward-looking statements. Primoris does
not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
|
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
(In Thousands, Except Per Share
Amounts) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Revenue |
$ |
561,502 |
|
|
$ |
430,446 |
|
Cost of revenue |
|
506,449 |
|
|
|
391,169 |
|
Gross profit |
|
55,053 |
|
|
|
39,277 |
|
Selling, general and
administrative expenses |
|
39,854 |
|
|
|
32,658 |
|
Operating
income |
|
15,199 |
|
|
|
6,619 |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Foreign exchange gain
(loss) |
|
23 |
|
|
|
359 |
|
Interest income |
|
69 |
|
|
|
39 |
|
Interest expense |
|
(2,262 |
) |
|
|
(2,268 |
) |
|
|
|
|
|
|
Income before provision
for income taxes |
|
13,029 |
|
|
|
4,749 |
|
|
|
|
|
|
|
Provision for income
taxes |
|
(4,517 |
) |
|
|
(1,833 |
) |
Net income |
$ |
8,512 |
|
|
$ |
2,916 |
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests |
|
(821 |
) |
|
|
(223 |
) |
|
|
|
|
|
|
Net income attributable
to Primoris |
$ |
7,691 |
|
|
$ |
2,693 |
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
Basic: |
$ |
0.15 |
|
|
$ |
0.05 |
|
Diluted: |
$ |
0.15 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
Basic |
|
51,594 |
|
|
|
51,725 |
|
Diluted |
|
51,851 |
|
|
|
51,881 |
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In Thousands, Except Share
Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
2017 |
|
|
2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
148,485 |
|
$ |
135,823 |
Customer
retention deposits |
|
377 |
|
|
481 |
Accounts
receivable, net |
|
369,775 |
|
|
388,000 |
Costs and
estimated earnings in excess of billings |
|
129,614 |
|
|
138,618 |
Inventory
and uninstalled contract materials |
|
45,130 |
|
|
49,201 |
Prepaid
expenses and other current assets |
|
17,804 |
|
|
19,258 |
Total
current assets |
|
711,185 |
|
|
731,381 |
Property
and equipment, net |
|
285,921 |
|
|
277,346 |
Intangible assets, net |
|
31,114 |
|
|
32,841 |
Goodwill |
|
127,226 |
|
|
127,226 |
Other
long-term assets |
|
2,151 |
|
|
2,004 |
Total
assets |
$ |
1,157,597 |
|
$ |
1,170,798 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
124,113 |
|
$ |
168,110 |
Billings
in excess of costs and estimated earnings |
|
150,771 |
|
|
112,606 |
Accrued
expenses and other current liabilities |
|
105,839 |
|
|
108,006 |
Dividends
payable |
|
2,829 |
|
|
2,839 |
Current
portion of capital leases |
|
107 |
|
|
188 |
Current
portion of long-term debt |
|
58,087 |
|
|
58,189 |
Total
current liabilities |
|
441,746 |
|
|
449,938 |
Long-term
capital leases, net of current portion |
|
14 |
|
|
15 |
Long-term
debt, net of current portion |
|
195,230 |
|
|
203,381 |
Deferred
tax liabilities |
|
9,830 |
|
|
9,830 |
Other
long-term liabilities |
|
9,141 |
|
|
9,064 |
Total
liabilities |
|
655,961 |
|
|
672,228 |
Commitments and
contingencies |
|
|
|
|
|
Stockholders’
equity |
|
|
|
|
|
Common
stock |
|
5 |
|
|
5 |
Additional paid-in capital |
|
159,518 |
|
|
162,128 |
Retained
earnings |
|
340,073 |
|
|
335,218 |
Non-controlling interest |
|
2,040 |
|
|
1,219 |
Total
stockholders’ equity |
$ |
501,636 |
|
$ |
498,570 |
Total
liabilities and stockholders’ equity |
|
1,157,597 |
|
|
1,170,798 |
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In Thousands) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2017 |
|
|
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
|
|
Net
income |
$ |
8,512 |
|
|
$ |
2,916 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
|
|
Depreciation |
|
14,134 |
|
|
|
15,281 |
|
Amortization of intangible assets |
|
1,727 |
|
|
|
1,624 |
|
Stock—based compensation expense |
|
459 |
|
|
|
262 |
|
Loss
(gain) on sale of property and equipment |
|
(1,308 |
) |
|
|
(736 |
) |
Changes
in assets and liabilities: |
|
|
|
|
|
Customer
retention deposits and restricted cash |
|
104 |
|
|
|
(241 |
) |
Accounts
receivable |
|
18,225 |
|
|
|
(20,513 |
) |
Costs and
estimated earnings in excess of billings |
|
9,004 |
|
|
|
(24,155 |
) |
Other
current assets |
|
5,525 |
|
|
|
(3,265 |
) |
Other
long-term assets |
|
(147 |
) |
|
|
(395 |
) |
Accounts
payable |
|
(43,997 |
) |
|
|
11,978 |
|
Billings
in excess of costs and estimated earnings |
|
38,165 |
|
|
|
(14,217 |
) |
Accrued
expenses and other current liabilities |
|
(1,392 |
) |
|
|
(3,469 |
) |
Other
long-term liabilities |
|
77 |
|
|
|
(678 |
) |
Net cash
provided by (used in) operating activities |
$ |
49,088 |
|
|
$ |
(35,608 |
) |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Purchase
of property and equipment |
|
(19,222 |
) |
|
|
(12,255 |
) |
Proceeds
from sale of property and equipment |
|
1,984 |
|
|
|
3,306 |
|
Cash paid
for acquisitions |
|
- |
|
|
|
(4,108 |
) |
Net cash
used in investing activities |
$ |
(17,238 |
) |
|
$ |
(13,057 |
) |
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Repayment
of capital leases |
|
(82 |
) |
|
|
(268 |
) |
Repayment
of long-term debt |
|
(12,416 |
) |
|
|
(11,977 |
) |
Proceeds
from issuance of common stock purchased under a long-term incentive
plan |
|
1,148 |
|
|
|
1,439 |
|
Repurchase of common stock |
|
(4,999 |
) |
|
|
- |
|
Dividends
paid |
|
(2,839 |
) |
|
|
(2,842 |
) |
Net cash
used in financing activities |
$ |
(19,188 |
) |
|
$ |
(13,648 |
) |
|
|
|
|
|
|
Net change in cash and
cash equivalents |
|
12,662 |
|
|
|
(62,313 |
) |
Cash and cash
equivalents at beginning of the period |
|
135,823 |
|
|
|
161,122 |
|
Cash and cash
equivalents at end of the period |
$ |
148,485 |
|
|
$ |
98,809 |
|
|
|
|
|
|
|
|
|
Company Contact
Peter J. Moerbeek
Executive Vice President, Chief Financial Officer
(214) 740-5602
pmoerbeek@prim.com
Kate Tholking
Director of Investor Relations
(214) 740-5615
ktholking@prim.com
Primoris Services (NASDAQ:PRIM)
Historical Stock Chart
From Feb 2024 to Mar 2024
Primoris Services (NASDAQ:PRIM)
Historical Stock Chart
From Mar 2023 to Mar 2024