Attached files
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8-K - 8-K - Primoris Services Corp | a12-18013_18k.htm |
EX-99.2 - EX-99.2 - Primoris Services Corp | a12-18013_1ex99d2.htm |
Exhibit 99.1
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 |
|
2011 |
| ||||||
|
|
|
|
% 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 |
|
2011 |
| ||||||
|
|
|
|
% 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 |
|
2011 |
| ||||||
|
|
|
|
% 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 |
|
2011 |
| ||||||
|
|
|
|
% 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 years 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
Primoriss 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 Rockfords financial performance for 2012 and Sprints 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 Primoriss 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 Primoriss 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 Companys 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 Companys 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 |
|
Six Months Ended |
| ||||||||
|
|
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 |
|