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Exhibit 99.1

 

GRAPHIC

 

PRIMORIS SERVICES CORPORATION ANNOUNCES RECORD 2013 THIRD QUARTER FINANCIAL RESULTS

BOARD OF DIRECTORS ANNOUNCES QUARTERLY CASH DIVIDEND

 

Q3 2013 Financial Highlights

 

·                  Revenues increased by 27.7% to a record $551.3 million compared to $431.8 million in the third quarter of 2012

 

·                  Net income attributable to Primoris increased by 24.7% to a record $21.8 million, or $0.42 per diluted share, compared to Q3 2012 net income attributable to Primoris of $17.5 million, or $0.34 per diluted share

 

·                  At September 30, 2013:

 

·            $177.2 million in cash, cash equivalents, and short-term investments

 

·            Record total backlog, including four quarters of estimated MSA revenue, of $1.92 billion

 

Dallas, TX — November 5, 2013— Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its third quarter ended September 30, 2013.

 

The company also announced that on October 30, 2013, its Board of Directors declared a $0.035 per share cash dividend to stockholders of record as of December 31, 2013, payable on or about January 15, 2014.

 

Brian Pratt, Chairman, President and Chief Executive Officer of Primoris commented, “Primoris’s third quarter results were the strongest in the company’s history.  Our top and bottom line benefitted from our emphasis on growing the company by targeting energy-focused markets. We announced nearly $600 million in new awards over the past two months, and our backlog grew to a record of $1.9 billion.  Our new awards highlight the expanded range of our offerings, a direct benefit of our strategic acquisition strategy.

 

Mr. Pratt continued, “We are in a gratifying stage of the construction cycle, as we are now seeing bids and awards for our industrial and engineering businesses in markets we have been talking about for several quarters.  Persistent low natural gas prices along with long overdue maintenance and upgrades are driving demand for our services in the Gulf Coast region, and we believe this is a multi-year opportunity.  Additionally, sustained increases in oil and gas production from U.S. shale plays are maintaining national demand for new pipelines.  While the macroeconomic environment can occasionally stifle these drivers, we have confidence that our proven ability to execute on projects will support us as we strive to deliver outstanding results to our shareholders.”

 

2013 THIRD QUARTER RESULTS OVERVIEW

 

Revenues for the 2013 third quarter increased 27.7% to $551.3 million from $431.8 million for the same period last year.  Growth at legacy companies accounted for 10.0% of the increase, and the remaining 17.7% increase was from the acquisitions of Saxon, Q3C, and FSSI.  Gross profit increased by $19.2 million, or 34.1% , compared to the same period in 2012.  The gross profit increase from legacy companies’ growth was $3.7 million and the acquisitions of Saxon, Q3C, and FSSI contributed $15.5 million to the increase in profit.

 



 

SEGMENT RESULTS

 

·              East Construction Services — The East Construction Services segment consists of businesses located primarily in the southeastern United States and along the Gulf Coast.  Included in this segment are the operations of JCG’s Heavy Civil, Industrial and Infrastructure & Maintenance divisions; Cardinal Contractor’s water and wastewater construction activities;  and the services provided by the 2012 and 2013 acquisitions (Sprint, Silva, Saxon, and FSSI).

 

·              West Construction Services — The West Construction Services segment consists of businesses located primarily in the western United States.  The segment primarily includes the underground and industrial operations of ARB, Inc., the operations of Rockford (which performs its major capital underground work throughout the United States), the operations of ARB Structures, the 2012 acquisition of Q3 Contracting, Inc.,  and Primoris Renewables, Inc.  The segment also includes the operations of the Blythe Power Constructors joint venture.

 

·              Engineering — The Engineering segment includes the results of OnQuest, Inc. and OnQuest Canada, ULC.

 

Segment Revenues

(in thousands, except %)

 

 

 

For the three months ended September 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Total

 

 

 

Total

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

178,716

 

32.4

%

$

181,260

 

42.0

%

West Construction Services

 

362,362

 

65.7

%

242,033

 

56.0

%

Engineering

 

10,255

 

1.9

%

8,549

 

2.0

%

Total

 

$

551,333

 

100.0

%

$

431,842

 

100.0

%

 

 

 

For the nine months ended September 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Total

 

 

 

Total

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

544,325

 

38.7

%

$

459,167

 

43.3

%

West Construction Services

 

828,242

 

58.9

%

567,351

 

53.5

%

Engineering

 

33,774

 

2.4

%

34,333

 

3.2

%

Total

 

$

1,406,341

 

100.0

%

$

1,060,851

 

100.0

%

 



 

Segment Gross Margin

(in thousands, except %)

 

 

 

For the three months ended September 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

10,600

 

5.9

%

$

18,664

 

10.3

%

West Construction Services

 

62,520

 

17.3

%

35,602

 

14.7

%

Engineering

 

2,345

 

22.9

%

2,025

 

23.7

%

Total

 

$

75,465

 

13.7

%

$

56,291

 

13.0

%

 

 

 

For the nine months ended September 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

40,810

 

7.5

%

$

47,442

 

10.3

%

West Construction Services

 

133,195

 

16.1

%

84,297

 

14.9

%

Engineering

 

7,093

 

21.0

%

6,152

 

17.9

%

Total

 

$

181,098

 

12.9

%

$

137,891

 

13.0

%

 

East Construction Services:  Revenues decreased by $2.5 million in the 2013 third quarter compared to the same period in the prior year.  The acquisitions of Saxon and FSSI contributed $14.4 million.  Cardinal Contractors revenues increased by $4.5 million due to work on water treatment facilities in Florida and Texas, JCG Industrial division revenues increased $2.8 million due to additional projects in the Gulf Coast area, and JCG Infrastructure & Maintenance division revenues increased $2.4 million.  These increased revenues were offset by decreases of $15.2 million on the JCG Heavy Civil division projects as the result of a $31.9 million decrease in Louisiana Department of Transportation work offset primarily by increases in Texas Department of Transportation highway projects in Belton, Texas.  Sprint Pipeline revenues decreased by $11.5 million due to larger projects being completed in the previous quarters.  Overall gross profit decreased by $8.1 million in the 2013 third quarter compared to the same period in the prior year.  Gross profit from the JCG Heavy Civil division decreased by $6.0 million due primarily from the reduced revenues and the transition from completed projects with higher margins in Louisiana in 2012 and the startup of the Belton, Texas area projects in 2013.  Sprint Pipeline gross profit decreased $2.4 million due to its reduced revenue.  Gross profit at the JCG Industrial division increased by $0.6 million.

 

West Construction Services:  Revenues increased by $120.3 million in the 2013 third quarter compared to the same period in the prior year.  The Q3C acquisition accounted for $62.0 million of the revenue increase.  The remainder of the revenue increase came from a $67.0 million increase at Rockford, primarily from increased pipeline construction projects in the Pennsylvania and Ohio region, and a $1.2 million increase at ARB Structures.  These increases in revenues were offset by a decrease in the ARB Underground division of $8.0 million that was primarily a result of fewer MSA work authorizations from its largest customer and a decrease of $1.8 million in the ARB Industrial division due to completion of power plant projects at the end of 2012 and during the quarter ended September 30, 2013.  Gross profit increased by $26.9 million in the 2013 third quarter compared to the same period in the prior year.  This includes a gross profit contribution of $16.1 million from the acquisition of Q3C, as well as increased gross profit of $17.6 million at ARB Industrial as a result of the completion of a major power plant project.  Offsetting these was a decline at ARB Underground in gross profit of $4.2 million, mainly due to lower revenues, and a decline at Rockford in gross profit of $2.6 million because of weather and technical complications on a large Ohio project.

 



 

Engineering: Revenues increased by $1.7 million, and gross profit increased by $0.3 million in the 2013 third quarter compared to the same period in the prior year.  The revenues increase is mainly due to the increase in new sales bookings, which is expected to continue for the balance of 2013.

 

Selling, general and administrative expenses (“SG&A”) were $36.5 million, or 6.6% of revenues for the third quarter of 2013, compared to $26.0 million, or 6.0% of revenues for the third quarter of 2012, an increase of $10.5 million.  The third quarter of 2013 SG&A expenses included a $3.3 million impairment charge of the WesPac investment basis difference, a charge of $0.5 million to recognize achievement of the 2013 Q3C earn-out target, and $5.6 million in expenses from the acquired companies of Saxon, Q3C, and FSSI.

 

Operating income for the 2013 third quarter was $39.0 million, or 7.1% of total revenues, compared to $30.3 million, or 7.0% of total revenues, for the same period last year.

 

Net other income and expenses in the 2013 third quarter was an expense of $1.7 million, a $0.3 million increase from net other expense of $1.4 million in the 2012 third quarter.  The increase was primarily due to increased interest expense from the $50 million 3.65% Senior Secured Notes, dated December 29, 2012, and the $25 million Senior Secured Notes, dated July 25, 2013.

 

The provision for income taxes for the 2013 third quarter was $14.1 million, or an effective tax rate on net income attributable to Primoris of 39.2%, compared to $11.0 million, or an effective tax rate on net income attributable to Primoris of 38.5%, in the prior year quarter.

 

Net income attributable to Primoris for the 2013 third quarter was $21.8 million, or $0.42 per diluted share, compared to net income attributable to Primoris of $17.5 million, or $0.34 per diluted share, in the same period in 2012.

 

Fully diluted shares outstanding for the 2013 third quarter increased by 0.5% to 51.7 million from 51.4 million in last year’s third quarter.

 

OTHER FINANCIAL INFORMATION

 

Primoris’s balance sheet at September 30, 2013 included cash, cash equivalents, and short-term investments of $177.2 million, working capital of $213.8 million, total debt and capital leases secured by equipment of $222.3 million, and stockholders’ equity of $377.6 million.  The balance sheet included a $14.8 million liability representing the estimated fair value for unpaid earnout amounts from acquisitions.  Primoris’ tangible net worth at September 30, 2013, was $210.9 million.

 

BACKLOG

 

 

 

Backlog at September 30, 2013 (in millions)

 

Segment

 

Historic
Calculation

 

Estimated
Annual MSA
Revenues

 

Revised Backlog

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

1,097

 

$

96

 

$

1,193

 

West Construction Services

 

315

 

379

 

694

 

Engineering

 

36

 

 

36

 

Total

 

$

1,448

 

475

 

1,923

 

 



 

At September 30, 2013, total backlog using our historical calculation was $1.45 billion compared to $1.35 billion at December 31, 2012.  For the three months ended September 30, 2013, approximately $213 million of revenue was generated by projects that were not included in the historical backlog calculation.

 

As previously discussed, we have changed our backlog calculation to better reflect the company’s increasing percentage of revenues derived from MSAs as a result of the acquisitions of Sprint and Q3C.  The new calculation includes estimated MSA revenues for the next four quarters.  With this addition to the backlog calculation, the new total backlog at September 30, 2013 was $1.9 billion.  We expect that during the next four quarters, using the revised backlog calculation, we will recognize as revenue approximately 64% of the East Construction Services segment backlog, approximately 99% of the West Construction Services segment backlog, and approximately 91% of the Engineering segment.

 

Backlog, including estimated MSA revenues, should not be considered a comprehensive indicator of future revenues, as a portion of Primoris’s revenues are still derived from projects that are not part of backlog and the estimated MSA revenues calculation, including time-and-equipment, time-and-materials, and cost-reimbursable-plus-fee contracts.  Additionally, projects that are considered a part of backlog or MSA contracts may be cancelled by our customers.

 

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, Tuesday, November 5 at 10:00 am Eastern Time / 9:00 am Central Time to discuss the results.

 

Interested parties may participate in the call by dialing:

 

·            (877) 407-8293 (Domestic)

 

·            (201) 689-8349 (International)

 

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 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 “estimated,” “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 Quarterly Report on Form 10-Q for the period ended September 30, 2013, and other filings with the Securities and Exchange Commission.  Given these uncertainties, you should not place undue reliance on forward-looking statement.  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
September 30,

 

Nine Months Ended,
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

551,333

 

$

431,842

 

$

1,406,341

 

$

1,060,851

 

Cost of revenues

 

475,868

 

375,551

 

1,225,243

 

922,960

 

Gross profit

 

75,465

 

56,291

 

181,098

 

137,891

 

Selling, general and administrative expenses

 

36,478

 

26,014

 

96,657

 

69,684

 

Operating income

 

38,987

 

30,277

 

84,441

 

68,207

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Income (loss) from non-consolidated entities

 

113

 

(159

)

169

 

895

 

Foreign exchange gain (loss)

 

91

 

18

 

3

 

(30

)

Other expense

 

(376

)

(382

)

(809

)

(961

)

Interest income

 

32

 

96

 

95

 

143

 

Interest expense

 

(1,579

)

(937

)

(4,501

)

(3,044

)

Income before provision for income taxes

 

37,268

 

28,913

 

79,398

 

65,210

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

(14,075

)

(10,965

)

(30,272

)

(24,875

)

Net income

 

23,193

 

17,948

 

49,126

 

40,335

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(1,348

)

(432

)

(1,947

)

(600

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to Primoris

 

21,845

 

17,516

 

47,179

 

39,735

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.42

 

$

0.34

 

$

0.92

 

$

0.77

 

Diluted:

 

$

0.42

 

$

0.34

 

$

0.91

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

51,568

 

51,398

 

51,529

 

51,387

 

Diluted

 

51,671

 

51,404

 

51,595

 

51,402

 

 



 

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In Thousands, Except Share Amounts)

(Unaudited)

 

 

 

September 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

174,034

 

$

157,551

 

Short term investments

 

3,179

 

3,441

 

Customer retention deposits and restricted cash

 

15,377

 

35,377

 

Accounts receivable, net

 

284,497

 

268,095

 

Costs and estimated earnings in excess of billings

 

80,434

 

41,701

 

Inventory and uninstalled contract materials

 

43,616

 

37,193

 

Deferred tax assets

 

10,477

 

10,477

 

Prepaid expenses and other current assets

 

12,830

 

10,800

 

Total current assets

 

624,444

 

564,635

 

Property and equipment, net

 

220,179

 

184,840

 

Investment in non-consolidated entities

 

6,546

 

12,813

 

Intangible assets, net

 

48,002

 

51,978

 

Goodwill

 

118,626

 

116,941

 

Other long-term assets

 

1,214

 

 

Total assets

 

$

1,019,011

 

$

931,207

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

119,882

 

$

151,546

 

Billings in excess of costs and estimated earnings

 

147,464

 

158,892

 

Accrued expenses and other current liabilities

 

101,881

 

76,152

 

Dividends payable

 

1,805

 

 

Current portion of capital leases

 

3,928

 

3,733

 

Current portion of long-term debt

 

26,910

 

19,446

 

Current portion of contingent earnout liabilities

 

8,763

 

10,900

 

Total current liabilities

 

410,633

 

420,669

 

Long-term capital leases, net of current portion

 

2,760

 

3,831

 

Long-term debt, net of current portion

 

188,713

 

128,367

 

Deferred tax liabilities

 

20,018

 

20,018

 

Long-term contingent earnout liabilities, net of current portion

 

6,083

 

12,531

 

Other long-term liabilities

 

13,243

 

13,153

 

Total liabilities

 

$

641,450

 

$

598,569

 

Stockholders’ equity

 

 

 

 

 

Common stock

 

5

 

5

 

Additional paid-in capital

 

159,058

 

155,605

 

Retained earnings

 

217,540

 

175,517

 

Noncontrolling interests

 

958

 

1,511

 

Total stockholders’ equity

 

377,561

 

332,638

 

Total liabilities and stockholders’ equity

 

$

1,019,011

 

$

931,207