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8-K - 8-K - Primoris Services Corpa12-18013_18k.htm
EX-99.2 - EX-99.2 - Primoris Services Corpa12-18013_1ex99d2.htm

Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

PRIMORIS SERVICES CORPORATION ANNOUNCES 2012 SECOND QUARTER FINANCIAL RESULTS

 

Q2 2012 Financial Highlights

 

·                  Revenues increased by 15.7% to $337.4 million from the first quarter of 2012

 

·                  Revenues declined 4.1% compared to Q2 2011

 

·                  Net income of $11.7 million, or $0.23 per diluted share, compared to Q2 2011 net income of $14.5 million, or $0.28 per diluted share

 

·                  Net cash provided by operating activities of $0.6 million for the quarter

 

·                  At June 30, 2012:

 

·            $119.3 million in cash, cash equivalents, and short-term investments

 

·            Total backlog of $1.09 billion

 

Dallas, TX — August 8, 2012 — Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its second quarter ended June 30, 2012.

 

Brian Pratt, Chairman, President and Chief Executive Officer of Primoris, commented, “Primoris second quarter benefited from strong performances by our ARB Industrial and Underground groups in the West segment and James Construction Group in the East segment.  Our revenues increased by 15.7% from the first quarter of 2012 and by 28.6% compared to the 2011 second quarter excluding the impact of the completed Ruby project.  While most of this revenue growth was organic, the Sprint acquisition added a $12.8 million benefit in the current quarter.  Compared to the first quarter of 2012, we increased our operating margin and our net income improved by 11.9%.”

 

Mr. Pratt continued, “Based on our prospect flow and project opportunities, we believe that we will experience good backlog growth both for the remainder of this year and into next year.  Last month we announced new contract awards valued at over $370 million, much of which will be completed in 2012.  As expected for our diverse group of specialized construction and infrastructure companies, the awards were spread across our subsidiaries and end markets.  For the longer term, we remain excited about the opportunities in the large diameter pipeline, the pipeline integrity and the power generation markets.  Against a backdrop of increasing macroeconomic and political uncertainty, we are proud of the people who have helped us grow this far and encouraged by the continued growth opportunities in our markets in the coming quarters.

 

2012 SECOND QUARTER RESULTS OVERVIEW

 

Revenues for the 2012 second quarter declined 4.1% to $337.4 million from $352.0 million for the same period last year.  The 2011 second quarter included revenue of $89.5 million for the Ruby pipeline project, substantially completed in 2011.  Excluding the Ruby revenue impact, revenues for the 2012 second quarter increased by $75.0 million, or 28.6%.  The increased revenues are primarily as a result of increased project work in the West Construction Services segment for both

 



 

industrial and underground projects, as well as the impact of the March 2012 acquisition of Sprint, which contributed $12.8MM in revenue for the three months ended June 30, 2012.  Gross profit for the 2012 second quarter rose by 6.3% to $44.0 million, or 13.0% of revenues, from $41.4 million, or 11.8% of 2011 second quarter revenue.  Gross profit for the 2011 second quarter included gross profit for the Ruby project of $14.4 million.  Excluding the impact of the Ruby project, gross profit for the 2012 second quarter increased by $17.4 million compared to the same period in the previous year.  Higher gross profit was due primarily to the increased project work in the West Construction Services Segment as well as the gross profit contribution from the March 2012 acquisition of Sprint, which contributed $3.8 million to gross profit for the 2012 second quarter.

 

SEGMENT RESULTS

 

·              East Construction Services — located primarily in the southeastern United States, incorporates the construction business of James Construction Group (JCG), Cardinal Contractors, Inc.’s water and wastewater, Sprint Pipeline Services LP, acquired in March 2012 , and the operating results of Silva since May 30, 2012

 

·              West Construction Services — includes construction services performed by companies headquartered in the western United States including ARB, Inc., ARB Structures, Inc., and Rockford.

 

·              Engineering — incorporates the results of Onquest, Inc. and Born Heaters Canada, ULC.

 

Segment Revenues

(in thousands, except %)

 

 

 

For the three months ended June 30,

 

 

 

2012
Unaudited

 

2011
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Segment

 

 

 

Segment

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

156,057

 

46.2

%

$

144,538

 

41.0

%

West Construction Services

 

167,287

 

49.6

%

196,623

 

55.9

%

Engineering

 

14,092

 

4.2

%

10,795

 

3.1

%

Total

 

$

337,436

 

100.0

%

$

351,956

 

100.0

%

 

 

 

For the six months ended June 30,

 

 

 

2012
Unaudited

 

2011
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Segment

 

 

 

Segment

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

277,907

 

44.2

%

$

272,617

 

38.3

%

West Construction Services

 

325,318

 

51.7

%

416,737

 

58.6

%

Engineering

 

25,784

 

4.1

%

22,247

 

3.1

%

Total

 

$

629,009

 

100.0

%

$

711,601

 

100.0

%

 



 

Segment Gross Margin

(in thousands, except %)

 

 

 

For the three months ended June 30,

 

 

 

2012
Unaudited

 

2011
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

17,360

 

11.1

%

$

17,295

 

12.0

%

West Construction Services

 

24,294

 

14.5

%

21,687

 

11.0

%

Engineering

 

2,350

 

16.7

%

2,424

 

22.5

%

Total

 

$

44,004

 

13.0

%

$

41,406

 

11.8

%

 

 

 

For the six months ended June 30,

 

 

 

2012
Unaudited

 

2011
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

28,778

 

10.4

%

$

30,338

 

11.1

%

West Construction Services

 

48,695

 

15.0

%

46,450

 

11.1

%

Engineering

 

4,127

 

16.0

%

5,248

 

23.6

%

Total

 

$

81,600

 

13.0

%

$

82,036

 

11.5

%

 

East Construction Services:  Revenues increased by $11.5 million in the 2012 second quarter, primarily due to the March 2012 acquisition of Sprint, which generated $12.8 million in revenue for the quarter.  Excluding the impact of Sprint, the $1.3 million revenue decline was due to decreased petrochemical work in the Gulf Coast area and the substantial completion of a large causeway project in Louisiana in 2011.  Offsetting this were increases in infrastructure and maintenance work.  The $0.1 million increase in gross profit was driven by the Sprint acquisition, which contributed $3.8 million to gross profit, offset by lower margins on heavy civil projects, primarily due to the startup of the I-35 projects in Texas as well as the impact from the substantial completion of a large causeway project in Louisiana in 2011.

 

West Construction Services:  Revenues decreased by $29.3 million in the 2012 second quarter.  The 2011 second quarter included $89.5 million in revenues from the Ruby project.  Excluding the Ruby project revenues, revenues increased by $60.2 million in the 2012 second quarter, due primarily to a $22.8 million increase in the California underground business and a $19.2 million increase in the California industrial business. A significant contributor to the underground business was pipeline integrity work for the major gas utilities, while work on power plants provided a major increase to the industrial business.  Excluding the 2011 second quarter Ruby project gross profit of $14.4 million, gross profit for the 2012 second quarter increased by $17.4 million, driven by the significant increase in volume in both the underground and industrial projects.

 

Engineering: Revenues increased by $3.3 million, mainly due to the completion of several furnace upgrade and refurbishment projects for two major U.S. chemical companies.  Gross profit decreased by $0.1 million, primarily as the result of lower profit margins achieved on international projects at our Canadian location and higher margin projects closeouts in the prior year.

 



 

Selling, general and administrative expenses (“SG&A”) were $23.4 million, or 6.9% of revenues for the second quarter of 2012, compared to $20.5 million, or 5.8% of revenues for the second quarter of 2011, an increase of $2.9 million.  The increased SG&A included $2.0 million as a result of the Sprint acquisition, a $0.5 million increase in legal expenses, a $0.2 million increase in amortization of intangible assets and an increase of $0.8 million in other overhead expenses, offset by a reduction in compensation expenses of $0.6 million.  Excluding the impact of Sprint, SG&A as a percentage of revenues were 6.6% for the 2012 second quarter.

 

Operating income for the 2012 second quarter $20.6 million, or 6.1% of total revenues, compared to $20.9 million, or 6.0% of total revenues, for the same period last year.

 

Net other income and expenses in the 2012 second quarter was an expense of $1.5 million, a $4.3 million decline from net other income of $2.8 million in the 2011 second quarter.  The decline was primarily due to the near completion of the St. Bernard Levee Partners joint venture.

 

The provision for income taxes for the 2012 second quarter was $7.4 million, for an effective tax rate of 38.5%, compared to $9.2 million, for an effective tax rate of 39.0%, in the prior year quarter.

 

Net income for the 2012 second quarter was $11.7 million, or $0.23 per diluted share, compared to net income of $14.5 million, or $0.28 per diluted share, in the same period in 2011.

 

Fully diluted shares outstanding for the 2012 second quarter increased by 0.5% to 51.4 million from 51.2 million in last year’s second quarter.  The increase was mainly due to shares issued as a result of Rockford meeting a defined performance target in 2011.  During the 2012 second quarter, the Company purchased 89,600 shares of stock under the previously announced share repurchase program, for a total of $1.0 million.

 

OTHER FINANCIAL INFORMATION

 

Primoris’s balance sheet at June 30, 2012 included cash and cash equivalents of $119.3 million, working capital of $97.2 million, total debt and capital leases secured by equipment of $81.8 million, subordinated acquisition debt of $5.0 million and stockholders’ equity of $299.5 million.  The balance sheet included a $12.6 million liability representing the estimated fair value for potential earn-out payments for Rockford’s financial performance for 2012 and Sprint’s performance for 2012 and 2013.

 

BACKLOG

 

At June 30, 2012, total backlog was $1.09 billion compared to $1.17 billion at December 31, 2011.  Primoris expects that approximately 61% of total backlog at June 30, 2012 will be recognized as revenue during the remainder of 2012, with $420 million expected for the East Construction Services segment, $228 million for the West Construction Services segment and $14 million for the Engineering segment.

 

Backlog should not be considered a comprehensive indicator of future revenues, as a significant portion of Primoris’s revenues are derived from projects that are not part of a backlog calculation and projects that are considered a part of backlog may be cancelled by our customers.  For the six months ended June 30, 2012, approximately $124.7 million of revenue was generated by projects that were not included in backlog.

 

CONFERENCE CALL

 

Brian Pratt, Chairman, President and Chief Executive Officer, and Peter J. Moerbeek, Executive Vice President and Chief Financial Officer will host a conference call today, Wednesday, August 8, 2012 at 11:30 am Eastern Time / 10:30 am Central Time to discuss the results.

 

Interested parties may participate in the call by dialing:

·            (877) 407-8029 (Domestic)

 

·            (201) 689-8029 (International)

 



 

The conference call will also be broadcasted live via the Investor Relations section of Primoris’s website at www.prim.com.  Once at the Investor Relations section, please click on “Events & Presentations”.  If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 90 days.

 

ABOUT PRIMORIS

 

Founded in 1946, Primoris, through various subsidiaries, has grown to become one of the largest specialty contractors and infrastructure companies 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. Since December 2009, Primoris has doubled its size and the Company’s national footprint now 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 “estimated,” “believes,” “expects,” “projects,” “may,” and “future” or similar expressions are intended to identify forward-looking statements.  Forward-looking statements inherently involve risks and uncertainties, including without limitation, those described in this press release and those detailed in the “Risk Factors” section and other portions of our Quarterly Report on Form 10-Q for the period ended June 30, 2012, and other filings with the Securities and Exchange Commission.  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.

 

Company Contact

 

Peter J. Moerbeek

Kate Tholking

Executive Vice President, Chief Financial Officer

Director of Investor Relations

(214) 740-5602

(214) 740-5615

pmoerbeek@prim.com

ktholking@prim.com

 

### #### ###

 



 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Revenues

 

$

337,436

 

$

351,956

 

$

629,009

 

$

711,601

 

Cost of revenues

 

293,432

 

310,550

 

547,409

 

629,565

 

Gross profit

 

44,004

 

41,406

 

81,600

 

82,036

 

Selling, general and administrative expenses

 

23,396

 

20,477

 

43,670

 

40,322

 

Operating income

 

20,608

 

20,929

 

37,930

 

41,714

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Income (loss) from non-consolidated entities

 

(171

)

4,400

 

886

 

5,226

 

Foreign exchange loss

 

(6

)

(72

)

(48

)

(36

)

Other expense

 

(371

)

(306

)

(579

)

(603

)

Interest income

 

25

 

100

 

47

 

258

 

Interest expense

 

(1,006

)

(1,353

)

(2,107

)

(2,724

)

Income before provision for income taxes

 

19,079

 

23,698

 

36,129

 

43,835

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

(7,346

)

(9,236

)

(13,910

)

(17,095

)

Net income

 

11,733

 

14,462

 

22,219

 

26,740

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.23

 

$

0.28

 

$

0.43

 

$

0.53

 

Diluted:

 

$

0.23

 

$

0.28

 

$

0.43

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

51,435

 

51,044

 

51,386

 

50,363

 

Diluted

 

51,435

 

51,154

 

51,386

 

51,111

 

 



 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2012

 

2011

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

119,286

 

$

120,306

 

Short term investments

 

 

23,000

 

Customer retention deposits and restricted cash

 

40,168

 

31,490

 

Accounts receivable, net

 

175,082

 

187,378

 

Costs and estimated earnings in excess of billings

 

45,473

 

41,866

 

Inventory and uninstalled contract materials

 

34,881

 

31,926

 

Deferred tax assets

 

10,659

 

10,659

 

Prepaid expenses and other current assets

 

10,715

 

13,252

 

Total current assets

 

436,264

 

459,877

 

Property and equipment, net

 

151,345

 

129,649

 

Investment in non-consolidated entities

 

12,481

 

12,687

 

Intangible assets, net

 

32,428

 

32,021

 

Goodwill

 

103,569

 

94,179

 

Total assets

 

$

736,087

 

$

728,413

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

107,752

 

$

106,725

 

Billings in excess of costs and estimated earnings

 

131,688

 

137,729

 

Accrued expenses and other current liabilities

 

66,292

 

59,923

 

Dividends payable

 

1,542

 

1,532

 

Current portion of capital leases

 

3,535

 

6,623

 

Current portion of long-term debt

 

15,244

 

13,870

 

Current portion of subordinated debt

 

3,223

 

15,167

 

Current portion of contingent earnout liabilities

 

9,755

 

3,450

 

Total current liabilities

 

339,031

 

345,019

 

Long-term capital leases, net of current portion

 

4,089

 

4,047

 

Long-term debt, net of current portion

 

58,970

 

55,852

 

Long-term subordinated debt, net of current portion

 

1,777

 

7,334

 

Long-term contingent earnout liabilities, net of current portion

 

2,842

 

9,268

 

Deferred tax liabilities

 

21,079

 

21,079

 

Other long-term liabilities

 

8,813

 

10,882

 

Total liabilities

 

436,601

 

453,481

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock-$.0001 par value; 90,000,000 shares authorized, 51,388,406 and 51,059,132 issued and outstanding at June 30, 2012 and December 31, 2011

 

5

 

5

 

Additional paid-in capital

 

155,417

 

150,003

 

Retained earnings

 

144,064

 

124,924

 

Total stockholders’ equity

 

299,486

 

274,932

 

Total liabilities and stockholders’ equity

 

$

736,087

 

$

728,413