Primoris Services Corporation (NYSE: PRIM) (“Primoris” or
the “Company”) today announced financial results for its second
quarter ended June 30, 2023 and provided comments on the Company’s
operational performance and outlook for 2023.
For the second quarter of 2023, Primoris reported the
following highlights (1):
- Revenue of $1,413.4 million, up $390.4 million, or 38.2
percent, compared to the second quarter of 2022 driven by strong
growth in both the Utilities and Energy segments and in part by the
PLH and B Comm acquisitions;
- Net income of $39.0 million, or $0.72 per diluted share, a
decrease of $11.1 million, or $0.21 per diluted share, from the
second quarter of 2022, primarily due to a $40.1 million gain on
sale and leaseback transaction in 2022;
- Adjusted net income of $43.4 million, or $0.80 per diluted
share, an increase of $17.3 million, or $0.32 per diluted share,
from the second quarter of 2022;
- Backlog of $6.6 billion, up 44.1 percent from the second
quarter of 2022, including Master Service Agreements (“MSA”)
backlog of $2.0 billion, up 15.9 percent from the second quarter of
2022;
- Adjusted earnings before interest, income taxes, depreciation
and amortization (“Adjusted EBITDA”) of $102.4 million, up $46.2
million, or 82.3 percent, from the second quarter of 2022.
- Raised EPS and Adjusted EPS guidance ranges to $2.15 to $2.35
and $2.60 to $2.80 per diluted share, respectively.
(1)
Please refer to “Non-GAAP Measures” and
Schedules 1, 2, 3 and 4 for the definitions and reconciliations of
our Non-GAAP financial measures, including “Adjusted Net Income,”
“Adjusted EPS” and “Adjusted EBITDA.”
“Our second quarter results once again established new records
for Primoris, including total backlog and revenue generation,” said
Tom McCormick, President and Chief Executive Officer of Primoris.
“The growth we continue to see across our businesses indicates that
we are well-positioned in the right end markets and that our
customers value the quality service and execution provided by our
employees.”
“In addition to ongoing success in our strategic markets of
renewables, power delivery and communications, we are seeing
improved demand for our industrial and pipeline services, which are
moving past many of the headwinds experienced during 2022,” he
added. “We are encouraged by customer sentiment regarding their
upcoming plans, and their interest in an ongoing partnership with
Primoris as they continue investing in the years ahead to
strengthen North America’s infrastructure.”
“Looking forward to the second half of 2023, I am confident in
our teams’ abilities to successfully execute on our expanding
backlog of projects safely, efficiently and to the satisfaction of
our customers. As a result, I have increasing confidence that we
are well-positioned to exceed our goals for 2023 and set a solid
foundation for an even stronger year in 2024.”
Second Quarter 2023 Results
Overview
Revenue was $1,413.4 million for the three months ended June 30,
2023, an increase of $390.4 million, or 38.2 percent, compared to
the same period in 2022. The increase was primarily due to strong
growth across our renewables, industrial and pipeline businesses,
as well as contributions from the PLH and B Comm acquisitions.
Gross profit was $157.3 million for the three months ended June 30,
2023, an increase of $65.2 million, or 70.7 percent, compared to
the same period in 2022. The increase was primarily due to an
increase in revenue, master service agreement rate increases to
mitigate inflationary pressures, primarily in the Utilities
segment, and improved margins across several businesses in the
Energy segment. Gross profit as a percentage of revenue increased
to 11.1 percent for the three months ended June 30, 2023, compared
to 9.0 percent for the same period in 2022, primarily as a result
of improved margins in the utilities, pipeline services and
renewables businesses.
During the second quarter of 2023, net income was $39.0 million
compared to net income of $50.2 million in the prior year. Diluted
earnings per share (“EPS”) was $0.72 for the second quarter of 2023
compared to $0.93 for the same period in 2022. The decrease in net
income and diluted earnings per share from the previous year can be
largely attributed to a $40.1 million gain on sale and leaseback
transaction realized in the second quarter of 2022. Adjusted Net
Income was $43.4 million for the second quarter, compared to $26.1
million for the same period in 2022. Adjusted diluted EPS was $0.80
for the second quarter of 2023, compared to $0.48 for the second
quarter of 2022. The increase in adjusted net income and adjusted
diluted EPS was due to increased revenue, including contribution
from the PLH and B Comm acquisitions, and improved profitability
across multiple end markets in the Energy segment and the Utilities
segment. Adjusted EBITDA was $102.4 million for the second quarter
of 2023, compared to $56.1 million for the same period in 2022.
In the first quarter of 2023, we changed our reportable segments
in connection with the realignment of our internal organization and
management structure, and now we report in two segments: Utilities
and Energy. Revenue and gross profit for the segments for the three
and six months ended June 30, 2023 and 2022 were as follows:
Segment
Revenue
(in thousands,
except %)
(unaudited)
For the three months ended
June 30,
2023
2022
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
640,236
45.3%
$
476,121
46.5%
Energy
773,141
54.7%
546,827
53.5%
Total
$
1,413,377
100.0%
$
1,022,948
100.0%
For the six months ended June
30,
2023
2022
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
1,169,128
43.8%
$
834,849
46.2%
Energy
1,501,145
56.2%
972,484
53.8%
Total
$
2,670,273
100.0%
$
1,807,333
100.0%
Segment Gross
Profit
(in thousands,
except %)
(unaudited)
For the three months ended
June 30,
2023
2022
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
66,510
10.4%
$
40,356
8.5%
Energy
90,754
11.7%
51,753
9.5%
Total
$
157,264
11.1%
$
92,109
9.0%
For the six months ended June
30,
2023
2022
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
100,081
8.6%
$
62,709
7.5%
Energy
156,916
10.5%
85,885
8.8%
Total
$
256,997
9.6%
$
148,594
8.2%
Utilities Segment (“Utilities”): Revenue increased by
$164.1 million, or 34.5 percent, for the three months ended June
30, 2023, compared to the same period in 2022, primarily due to the
acquisitions of PLH and B Comm and increased activity in our legacy
power delivery and gas operations markets. Gross profit for the
three months ended June 30, 2023 increased by $26.2 million, or
64.8 percent, compared to the same period in 2022. The increase in
gross profit is primarily attributable to the higher revenue and
the impact of improved rates on power delivery services to offset
inflation pressures primarily experienced during 2022. Gross profit
as a percentage of revenue increased to 10.4 percent during the
three months ended June 30, 2023 compared to 8.5 percent for the
same period in 2022.
Energy Segment (“Energy”): Revenue increased by $226.3
million, or 41.4 percent, for the three months ended June 30, 2023,
compared to the same period in 2022. The increase year-over-year
was primarily due to increased pipeline and renewables project
work, increased industrial activity in the Gulf Coast region and
contributions from the PLH acquisition. Gross profit for the three
months ended June 30, 2023, increased by $39.0 million, or 75.4
percent, compared to the same period in 2022, primarily due to
higher revenue and margins. Gross profit as a percentage of revenue
increased to 11.7 percent during the three months ended June 30,
2023, compared to 9.5 percent in the same period in 2022. The
increase in gross margin is primarily due to strong execution on a
pipeline project in the mid-Atlantic in 2023, higher relative
carrying costs for equipment and personnel in 2022 caused by lower
than anticipated pipeline volumes.
Other Income Statement
Information
Selling, general and administrative (“SG&A”) expenses were
$85.6 million during the quarter ended June 30, 2023, an increase
of $25.8 million, or 43.3 percent, compared to 2022. The increase
year-over-year was primarily due to the acquisitions of PLH and B
Comm. Also contributing to the increase was higher incentive
compensation costs associated with improved operational performance
and an increase in headcount to support revenue growth. SG&A
expense as a percentage of revenue increased to 6.1 percent in the
second quarter of 2023, compared to 5.8 percent in the second
quarter 2022.
Interest expense, net for the quarter ended June 30, 2023 was
$16.9 million compared to $4.7 million for the quarter ended June
30, 2022. The increase of $12.2 million was due to higher average
debt balances from the borrowings incurred related to the PLH
acquisition and higher average interest rates, partially offset by
a $3.2 million unrealized gain on our interest rate swaps in 2023.
Interest expense for the full year 2023 is expected to increase to
approximately $73 to $77 million due to higher average debt
balances and higher interest rates.
The effective tax rate on income for the six months ended June
30, 2023 of 29.0% differs from the U.S. federal statutory rate of
21.0% primarily due to state income taxes and nondeductible
components of per diem expenses. We recorded income tax expense for
the six months ended June 30, 2023 of $16.5 million compared to
$12.5 million for the six months ended June 30, 2022. The $4.0
million increase in income tax expense is primarily driven by a
higher effective tax rate in 2023, partially offset by a $4.2
million decrease in pretax income.
Outlook
The Company is raising its estimates for the year ending
December 31, 2023. Net income is expected to be between $2.15 and
$2.35 per fully diluted share. Adjusted EPS is estimated in the
range of $2.60 to $2.80 for 2023. Adjusted EBITDA for the full year
2023 is expected to range from $360 million to $380 million.
The Company is targeting SG&A expense as a percentage of
revenue in the low six percent range for full year 2023. The
Company’s targeted gross margins by segment are as follows:
Utilities in the range of 9 to 11 percent and Energy in the range
of 10 to 12 percent. The Company expects its effective tax rate for
2023 to now be approximately 29 percent, but it may vary depending
on the mix of states in which the Company operates.
Adjusted EPS and Adjusted EBITDA are non-GAAP financial
measures. Please refer to “Non-GAAP Measures” and Schedules 1-4
below for the definitions and reconciliations. The guidance
provided above constitutes forward-looking statements, which are
based on current economic conditions and estimates, and the Company
does not include other potential impacts, such as changes in
accounting or unusual items. Supplemental information relating to
the Company’s financial outlook is posted in the Investor Relations
section of the Company’s website at www.prim.com.
Backlog
(in
millions)
Backlog at June 30,
2023
Segment
Fixed Backlog
MSA Backlog
Total Backlog
Utilities
$
150.7
$
1,829.2
$
1,979.9
Energy
4,394.3
215.0
4,609.3
Total
$
4,545.0
$
2,044.2
$
6,589.2
At June 30, 2023, Fixed Backlog was $4.5 billion, an increase of
$1.0 billion compared to our backlog at March 31, 2023 and December
31, 2022. MSA Backlog was $2.0 billion, flat compared to backlog on
March 31, 2023 and up $0.1 billion from December 31, 2022. MSA
Backlog represents estimated MSA revenue for the next four
quarters. Total Backlog as of June 30, 2023 was $6.6 billion, which
represented a new record for the Company. The Company expects that
during the next four quarters, the Company will recognize as
revenue approximately 71 percent of the total backlog at June 30,
2023, comprised of backlog of approximately: 100 percent of the
Utilities segment and 59 percent of the Energy segment.
Backlog, including estimated MSA revenue, should not be
considered a comprehensive indicator of future revenue. Revenue
from certain projects where scope, and therefore contract value, is
not adequately defined, is not included in Fixed Backlog. At any
time, any project may be cancelled at the convenience of the
Company’s customers.
Balance Sheet and Capital
Allocation
At June 30, 2023, the Company had $122.7 million of unrestricted
cash and cash equivalents. In the second quarter of 2023, capital
expenditures were $28.5 million, including $16.6 million in
construction equipment purchases. Capital expenditures for the six
months ended June 30, 2023 were $42.4 million, including $21.0
million in construction equipment purchases. The Company estimates
capital expenditures for the full year 2023 to total between $80
million and $100 million, which includes $40 million to $60 million
for equipment. For the remaining six months of 2023, capital
expenditures are expected to total between $40 million and $60
million, which includes $20 million to $40 million for
equipment.
The Company also announced that on August 2, 2023, its Board of
Directors declared a $0.06 per share cash dividend to stockholders
of record on September 29, 2023, payable on approximately October
13, 2023. During the six months ended June 30, 2023 the Company did
not purchase any shares of common stock under its share purchase
program. As of June 30, 2023, the Company had $19.0 million
remaining for purchase under the share purchase program. The share
purchase plan expires on December 31, 2023.
Conference Call and
Webcast
As previously announced, management will host a conference call
and webcast on Tuesday, August 8, 2023, at 9:00 a.m. U.S. Central
Time (10:00 a.m. U.S. Eastern Time). Tom McCormick, President and
Chief Executive Officer, and Ken Dodgen, Executive Vice President
and Chief Financial Officer, will discuss the Company’s results and
business outlook.
Investors and analysts are invited to participate in the call by
phone at 1-888-330-3428, or internationally at 1-646-960-0679
(access code: 7581464) or via the Internet at www.prim.com. A
replay of the call will be available on the Company’s website or by
phone at 1-800-770-2030, or internationally at 1-647-362-9199
(access code: 7581464), for a seven-day period following the
call.
Presentation slides to accompany the conference call are
available for download under “Events & Presentations” in the
“Investors” section of the Company’s website at www.prim.com.
Non-GAAP Measures
This press release contains certain financial measures that are
not recognized under generally accepted accounting principles in
the United States (“GAAP”). Primoris uses earnings before interest,
income taxes, depreciation and amortization (“EBITDA”), Adjusted
EBITDA, Adjusted Net Income, and Adjusted EPS as important
supplemental measures of the Company’s operating performance. The
Company believes these measures enable investors, analysts, and
management to evaluate Primoris’ performance excluding the effects
of certain items that management believes impact the comparability
of operating results between reporting periods. In addition,
management believes these measures are useful in comparing the
Company’s operating results with those of its competitors. The
non-GAAP measures presented in this press release are not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with GAAP. In addition, Primoris’ method of calculating these
measures may be different from methods used by other companies,
and, accordingly, may not be comparable to similarly titled
measures as calculated by other companies that do not use the same
methodology as Primoris. Please see the accompanying tables to this
press release for reconciliations of the following non‐GAAP
financial measures for Primoris’ current and historical results:
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.
About Primoris
Primoris Services Corporation is a premier specialty contractor
providing critical infrastructure services to the utility, energy,
and renewables markets throughout the United States and Canada.
Built on a foundation of trust, we deliver a range of engineering,
construction, and maintenance services that power, connect, and
enhance society. On projects spanning utility-scale solar,
renewables, power delivery, communications, and transportation
infrastructure, we offer unmatched value to our clients, a safe and
entrepreneurial culture to our employees, and innovation and
excellence to our communities. To learn more, visit www.prim.com
and follow us on social media at @PrimorisServicesCorporation.
Forward Looking
Statements
This press release contains certain forward-looking statements,
including the Company’s outlook, that reflect, when made, the
Company’s expectations or beliefs concerning future events that
involve risks and uncertainties, including with regard to the
Company’s future performance. Forward-looking statements include
all statements that are not historical facts and can be identified
by terms such as “anticipates”, “believes”, “could”, “estimates”,
“expects”, “intends”, “may”, “plans”, “potential”, “predicts”,
“projects”, “should”, “will”, “would” or similar expressions.
Forward-looking statements include information concerning the
possible or assumed future results of operations, business
strategies, financing plans, competitive position, industry
environment, potential growth opportunities, the effects of
regulation and the economy, generally. Forward-looking statements
involve known and unknown risks, uncertainties, and other factors,
which may cause actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Actual results may differ materially as a result of a
number of factors, including, among other things, customer timing,
project duration, weather, and general economic conditions; changes
in the mix of customers, projects, contracts and business; regional
or national and/or general economic conditions and demand for the
Company’s services; price, volatility, and expectations of future
prices of oil, natural gas, and natural gas liquids; variations and
changes in the margins of projects performed during any particular
quarter; increases in the costs to perform services caused by
changing conditions; the termination, or expiration of existing
agreements or contracts; the budgetary spending patterns of
customers; inflation and other increases in construction costs that
the Company may be unable to pass through to customers; cost or
schedule overruns on fixed-price contracts; availability of
qualified labor for specific projects; changes in bonding
requirements and bonding availability for existing and new
agreements; the need and availability of letters of credit;
increases in interest rates and slowing economic growth or
recession; the instability in the banking system as a result of
recent bank failures; costs incurred to support growth, whether
organic or through acquisitions; the timing and volume of work
under contract; losses experienced in the Company’s operations; the
results of the review of prior period accounting on certain
projects and the impact of adjustments to accounting estimates;
developments in governmental investigations and/or inquiries;
intense competition in the industries in which the Company
operates; failure to obtain favorable results in existing or future
litigation or regulatory proceedings, dispute resolution
proceedings or claims, including claims for additional costs;
failure of partners, suppliers or subcontractors to perform their
obligations; cyber-security breaches; failure to maintain safe
worksites; risks or uncertainties associated with events outside of
the Company’s control, including severe weather conditions, public
health crises and pandemics, political crises or other catastrophic
events; client delays or defaults in making payments; the
availability of credit and restrictions imposed by credit
facilities; failure to implement strategic and operational
initiatives; risks or uncertainties associated with acquisitions,
dispositions and investments; possible information technology
interruptions or inability to protect intellectual property; the
Company’s failure, or the failure of the Company’s agents or
partners, to comply with laws; the Company's ability to secure
appropriate insurance; new or changing legal requirements,
including those relating to environmental, health and safety
matters; the loss of one or a few clients that account for a
significant portion of the Company's revenues; asset impairments;
and risks arising from the inability to successfully integrate
acquired businesses. In addition to information included in this
press release, additional information about these and other risks
can be found in Part I, Item 1A “Risk Factors” of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022,
and the Company’s other filings with the U.S. Securities and
Exchange Commission (“SEC”). Such filings are available on the
SEC’s website at www.sec.gov. Given these risks and 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.
PRIMORIS SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, Except Per
Share Amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenue
$
1,413,377
$
1,022,948
$
2,670,273
$
1,807,333
Cost of revenue
1,256,113
930,839
2,413,276
1,658,739
Gross profit
157,264
92,109
256,997
148,594
Selling, general and administrative
expenses
85,571
59,730
163,581
115,184
Transaction and related costs
898
5,199
3,593
5,522
Gain on sale and leaseback transaction
—
(40,084)
—
(40,084)
Operating income
70,795
67,264
89,823
67,972
Other income (expense):
Foreign exchange gain, net
376
560
1,302
444
Other income, net
713
155
1,044
146
Interest expense, net
(16,884)
(4,705)
(35,349)
(7,581)
Income before provision for income
taxes
55,000
63,274
56,820
60,981
Provision for income taxes
(15,968)
(13,120)
(16,478)
(12,501)
Net income
39,032
50,154
40,342
48,480
Dividends per common share
$
0.06
$
0.06
$
0.12
$
0.12
Earnings per share:
Basic
$
0.73
$
0.94
$
0.76
$
0.91
Diluted
$
0.72
$
0.93
$
0.75
$
0.90
Weighted average common shares
outstanding:
Basic
53,301
53,263
53,243
53,251
Diluted
54,324
53,852
54,083
53,815
PRIMORIS SERVICES
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(In Thousands)
(Unaudited)
June
30,
December
31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
122,692
$
248,692
Accounts receivable, net
818,284
663,119
Contract assets
786,909
616,224
Prepaid expenses and other current
assets
142,949
176,350
Total current assets
1,870,834
1,704,385
Property and equipment, net
480,598
493,859
Operating lease assets
249,609
202,801
Intangible assets, net
237,945
249,381
Goodwill
857,650
871,808
Other long-term assets
25,388
21,786
Total assets
$
3,722,024
$
3,544,020
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
513,412
$
534,956
Contract liabilities
417,995
275,947
Accrued liabilities
278,432
245,837
Dividends payable
3,199
3,187
Current portion of long-term debt
76,151
78,137
Total current liabilities
1,289,189
1,138,064
Long-term debt, net of current portion
1,036,971
1,065,315
Noncurrent operating lease liabilities,
net of current portion
171,477
130,787
Deferred tax liabilities
30,223
57,101
Other long-term liabilities
44,626
43,915
Total liabilities
2,572,486
2,435,182
Commitments and contingencies
Stockholders’ equity
Common stock
6
6
Additional paid-in capital
269,031
263,771
Retained earnings
881,628
847,681
Accumulated other comprehensive income
(1,127)
(2,620)
Total stockholders’ equity
1,149,538
1,108,838
Total liabilities and stockholders’
equity
$
3,722,024
$
3,544,020
PRIMORIS SERVICES
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
2023
2022
Cash flows from operating activities:
Net income
$
40,342
$
48,480
Adjustments to reconcile net income to net
cash used in operating activities (net of effect of
acquisitions):
Depreciation and amortization
54,754
40,778
Stock-based compensation expense
5,388
3,995
Gain on sale of property and equipment
(14,735)
(9,972)
Gain on sale and leaseback transaction
—
(40,084)
Unrealized gain on interest rate swap
(2,745)
(4,571)
Other non-cash items
982
579
Changes in assets and liabilities:
Accounts receivable
(154,016)
(105,690)
Contract assets
(170,479)
(63,640)
Other current assets
27,291
(54,142)
Other long-term assets
(1,230)
(13,118)
Accounts payable
(21,959)
62,877
Contract liabilities
136,202
9,798
Operating lease assets and liabilities,
net
2,354
(1,088)
Accrued liabilities
16,037
34,932
Other long-term liabilities
982
(247)
Net cash used in operating activities
(80,832)
(91,113)
Cash flows from investing activities:
Purchase of property and equipment
(42,392)
(65,815)
Proceeds from sale of assets
23,465
11,184
Proceeds from sale and leaseback
transaction, net of related expenses
—
49,887
Cash paid for acquisitions, net of cash
and restricted cash acquired
9,300
(39,631)
Net cash used in investing activities
(9,627)
(44,375)
Cash flows from financing activities:
Borrowings under revolving lines of
credit
390,000
77,379
Payments on revolving lines of credit
(370,000)
(12,379)
Proceeds from issuance of long-term
debt
—
30,000
Payments on long-term debt
(51,234)
(55,957)
Dividends paid
(6,383)
(6,390)
Purchase of common stock
—
(3,370)
Other
(3,497)
(3,083)
Net cash (used in) provided by financing
activities
(41,114)
26,200
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
946
(45)
Net change in cash, cash equivalents and
restricted cash
(130,627)
(109,333)
Cash, cash equivalents and restricted cash
at beginning of the period
258,991
205,643
Cash, cash equivalents and restricted cash
at end of the period
$
128,364
$
96,310
Non-GAAP Measures
Schedule 1 Primoris Services
Corporation Reconciliation of Non-GAAP Financial
Measures Adjusted Net Income and Adjusted EPS (In
Thousands, Except Per Share Amounts) (Unaudited)
Adjusted Net Income and Adjusted EPS
Primoris defines Adjusted Net Income as net income (loss)
adjusted for certain items including, (i) non‐cash stock‐based
compensation expense; (ii) transaction/integration and related
costs; (iii) asset impairment charges; (iv) changes in fair value
of the Company’s interest rate swap; (v) change in fair value of
contingent consideration liabilities; (vi) amortization of
intangible assets; (vii) amortization of debt discounts and debt
issuance costs; (viii) losses on extinguishment of debt; (ix)
severance and restructuring changes; (x) selected (gains) charges
that are unusual or non-recurring; and (xi) impact of changes in
statutory tax rates. The Company defines Adjusted EPS as Adjusted
Net Income divided by the diluted weighted average shares
outstanding. Management believes these adjustments are helpful for
comparing the Company’s operating performance with prior periods.
Because Adjusted Net Income and Adjusted EPS, as defined, exclude
some, but not all, items that affect net income and diluted
earnings per share, they may not be comparable to similarly titled
measures of other companies. The most comparable GAAP financial
measures, net income and diluted earnings per share, and
information reconciling the GAAP and non‐GAAP financial measures,
are included in the table below.
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income as reported (GAAP)
$
39,032
$
50,154
$
40,342
$
48,480
Non-cash stock based compensation
3,009
2,442
5,388
3,995
Transaction/integration and related
costs
898
5,199
3,593
5,522
Amortization of intangible assets
5,363
3,463
11,437
7,073
Amortization of debt issuance costs
491
283
982
566
Unrealized gain on interest rate swap
(3,213)
(1,675)
(2,745)
(4,571)
Change in fair value of contingent
consideration
(449)
—
(694)
—
Gain on sale and leaseback transaction
—
(40,084)
—
(40,084)
Income tax impact of adjustments
(1,769)
6,302
(5,209)
5,637
Adjusted net income
$
43,362
$
26,084
$
53,094
$
26,618
Weighted average shares (diluted)
54,324
53,852
54,083
53,815
Diluted earnings per share
$
0.72
$
0.93
$
0.75
$
0.90
Adjusted diluted earnings per share
$
0.80
$
0.48
$
0.98
$
0.49
Schedule 2 Primoris Services
Corporation Reconciliation of Non-GAAP Financial
Measures EBITDA and Adjusted EBITDA (In
Thousands) (Unaudited)
EBITDA and Adjusted EBITDA
Primoris defines EBITDA as net income (loss) before interest,
income taxes, depreciation and amortization. Adjusted EBITDA is
defined as EBITDA adjusted for certain items including, (i)
non‐cash stock‐based compensation expense; (ii)
transaction/integration and related costs; (iii) asset impairment
charges; (iv) severance and restructuring changes; (v) change in
fair value of contingent consideration liabilities; and (vi)
selected (gains) charges that are unusual or non-recurring. The
Company believes the EBITDA and Adjusted EBITDA financial measures
assist in providing a more complete understanding of the Company’s
underlying operational measures to manage its business, to evaluate
its performance compared to prior periods and the marketplace, and
to establish operational goals. EBITDA and Adjusted EBITDA are
non‐GAAP financial measures and should not be considered in
isolation or as a substitute for financial information provided in
accordance with GAAP. These non‐GAAP financial measures may not be
computed in the same manner as similarly titled measures used by
other companies. The most comparable GAAP financial measure, net
income, and information reconciling the GAAP and non‐GAAP financial
measures are included in the table below.
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income as reported (GAAP)
$
39,032
$
50,154
$
40,342
$
48,480
Interest expense, net
16,884
4,705
35,349
7,581
Provision for income taxes
15,968
13,120
16,478
12,501
Depreciation and amortization
27,021
20,606
54,754
40,778
EBITDA
98,905
88,585
146,923
109,340
Non-cash stock based compensation
3,009
2,442
5,388
3,995
Transaction/integration and related
costs
898
5,199
3,593
5,522
Change in fair value of contingent
consideration
(449)
—
(694)
—
Gain on sale and leaseback transaction
—
(40,084)
—
(40,084)
Adjusted EBITDA
$
102,363
$
56,142
$
155,210
$
78,773
Schedule 3 Primoris Services
Corporation Reconciliation of Non-GAAP Financial
Measures Forecasted Adjusted Net Income and Adjusted Diluted
Earnings Per Share for Full Year 2023 (In Thousands, Except
Per Share Amounts) (Unaudited)
The following table sets forth a reconciliation of the
forecasted GAAP net income to Adjusted Net Income and EPS to
Adjusted EPS for the year ending December 31, 2023.
Estimated Range
Full Year Ending
December 31, 2023
Net income as defined (GAAP)
$
116,500
$
127,500
Non-cash stock based compensation
11,000
11,000
Amortization of intangible assets
21,500
21,500
Amortization of debt issuance costs
1,900
1,900
Unrealized gain on interest rate swap
(2,700)
(2,700)
Transaction/integration and related
costs
3,500
3,500
Change in fair value of contingent
consideration
(700)
(700)
Income tax impact of adjustments (1)
(10,000)
(10,000)
Adjusted net income
$
141,000
$
152,000
Weighted average shares (diluted)
54,200
54,200
Diluted earnings per share
$
2.15
$
2.35
Adjusted diluted earnings per share
$
2.60
$
2.80
(1)
Adjustments above are reported on a
pre-tax basis before the income tax impact of adjustments. The
income tax impact for each adjustment is determined by calculating
the tax impact of the adjustment on the Company's quarterly and
annual effective tax rate, as applicable, unless the nature of the
item and/or the tax jurisdiction in which the item has been
recorded requires application of a specific tax rate or tax
treatment, in which case the tax effect of such item is estimated
by applying such specific tax rate or tax treatment.
Schedule 4 Primoris Services
Corporation Reconciliation of Non-GAAP Financial
Measures Forecasted EBITDA and Adjusted EBITDA for Full Year
2023 (In Thousands) (Unaudited)
The following table sets forth a reconciliation of the
forecasted GAAP net income to Adjusted EBITDA for the year ending
December 31, 2023.
Estimated Range
Full Year Ending
December 31, 2023
Net income as defined (GAAP)
$
116,500
$
127,500
Interest expense, net
73,000
77,000
Provision for income taxes
47,700
52,700
Depreciation and amortization
109,000
109,000
EBITDA
$
346,200
$
366,200
Non-cash stock based compensation
11,000
11,000
Transaction/integration and related
costs
3,500
3,500
Change in fair value of contingent
consideration
(700)
(700)
Adjusted EBITDA
$
360,000
$
380,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807518527/en/
Ken Dodgen Executive Vice President, Chief Financial Officer
(214) 740-5608 kdodgen@prim.com
Blake Holcomb Vice President, Investor Relations (214) 545-6773
bholcomb@prim.com
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