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Exhibit 99.1

 

GRAPHIC

 

PRIMORIS SERVICES CORPORATION ANNOUNCES 2014 SECOND QUARTER FINANCIAL RESULTS

BOARD OF DIRECTORS INCREASES QUARTERLY CASH DIVIDEND BY 14%

 

Q2 2014 Financial Highlights

 

·                  Revenue of $515 million in the second quarter of 2014 compared to $470 million in the first quarter of 2014

 

·                  Net income attributable to Primoris of $16.0 million, or $0.31 per diluted share, in the second quarter of 2014 compared to $0.21 in the first quarter of 2014

 

·                  At June 30, 2014:

 

·            $162 million in cash, cash equivalents and short-term investments

 

·            Total backlog of $1.83 billion

 

Dallas, TX — August 7, 2014— Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its second quarter ended June 30, 2014.

 

The Company also announced that on August 5, 2014, the Board of Directors authorized a 14.3% increase in the quarterly cash dividend to $0.04 per share from $0.035 per share.  The cash dividend will be paid to stockholders of record on September 30, 2014 and is payable on or about October 15, 2014.

 

Brian Pratt, Chairman, President and Chief Executive Officer of Primoris commented, “We had a solid second quarter, with strong revenue growth in several of our end markets, especially our operations on the Gulf Coast.  Our revenue growth was accompanied by increased gross margin, operating income and net income compared to last quarter, and I am expecting our traditionally strong second half of the year.

 

Mr. Pratt continued, “Environmental constraints, such as a longer permitting process, continue to affect the energy business and have delayed a significant number of our projects.  The tailwinds driving our business remain strong, and the abundance of shale gas and its impact is driving the need for new energy and petrochemical infrastructure. Our business units continue to be preferred providers of the services our customers need to facilitate their growth.  The opportunities are there, and we will make the most of them.”

 

2014 SECOND QUARTER RESULTS OVERVIEW

 

Revenue for the 2014 second quarter increased by 15.8% to $515.3 million, compared to the same period last year.  Revenue increased by $102.7 million in the East Construction Services segment and $1.4 million in the Engineering segment and decreased by $33.8 million in the West Construction Services segment.

 

From an end-market perspective for the three months ended June 30, 2014, compared to the second quarter 2013, our industrial business increased by $63.0 million, our heavy civil work increased by $16.5 million, and our engineering business increased by $1.4 million.  Our other end-market (primarily our parking structures business) decreased by $6.2 million.

 

Gross profit increased by $1.7 million, or 2.8%, compared to the same period last year.  A reduction in gross profit as a percentage of revenues from the second quarter of 2013 to the second quarter of 2014 reduced the benefit of the increased revenue.  The primary reason for the reduction in the gross profit as a percentage of revenues was the increase in revenue in the East, which are traditionally lower-margin revenues than in the West.

 



 

SEGMENT RESULTS

 

·              East Construction Services — The East Construction Services segment includes the James Construction Group (“JCG”) and Primoris Energy Services (“PES”) construction business, located primarily in the southeastern United States and in the Gulf Coast region of the United States.  The operations of Cardinal Contractors, Inc. and BW Primoris are included in this segment.

 

·              West Construction Services — The West Construction Services segment includes the construction services performed by ARB, Inc., ARB Structures, Inc., Rockford, Q3 Contracting, Inc., and Vadnais, acquired in June 2014.  Most of the entities perform work primarily in California; however, Rockford operates throughout the Unites States and Q3C operates in the upper Midwest United States.  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 June 30,

 

 

 

2014
Unaudited

 

2013
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Segment

 

 

 

Segment

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

278,066

 

54.0

%

$

175,398

 

39.4

%

West Construction Services

 

224,391

 

43.5

%

258,194

 

58.0

%

Engineering

 

12,834

 

2.5

%

11,421

 

2.6

%

Total

 

$

515,291

 

100.0

%

$

445,013

 

100.0

%

 

 

 

For the six months ended June 30,

 

 

 

2014
Unaudited

 

2013
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Segment

 

 

 

Segment

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

501,138

 

50.9

%

$

365,609

 

42.8

%

West Construction Services

 

458,417

 

46.5

%

465,880

 

54.4

%

Engineering

 

25,810

 

2.6

%

23,519

 

2.8

%

Total

 

$

985,365

 

100.0

%

$

855,008

 

100.0

%

 



 

Segment Gross Margin

(in thousands, except %)

 

 

 

For the three months ended June 30,

 

 

 

2014
Unaudited

 

2013
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

21,309

 

7.7

%

$

15,215

 

8.7

%

West Construction Services

 

37,809

 

16.9

%

41,926

 

16.2

%

Engineering

 

2,076

 

16.2

%

2,396

 

21.0

%

Total

 

$

61,194

 

10.6

%

$

59,537

 

13.4

%

 

 

 

For the six months ended June 30,

 

 

 

2014
Unaudited

 

2013
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

37,325

 

7.5

%

$

30,210

 

8.3

%

West Construction Services

 

69,483

 

15.2

%

70,675

 

15.2

%

Engineering

 

4,143

 

16.1

%

4,748

 

20.2

%

Total

 

$

110,951

 

11.3

%

$

105,633

 

12.4

%

 

East Construction Services:  Revenue increased by $102.7 million in the 2014 second quarter compared to the same period last year.  Revenue at the PES Sprint Pipeline division increased by $30.4 million from pipeline projects in south Texas, and at the PES James Industrial Contractors division revenue increased by $50.0 million from petrochemical projects in Louisiana and Texas.  Revenue for the PES Saxon Construction division increased by $3.1 million as a result of a petrochemical project in Texas.  JCG’s Heavy Civil division revenue increased by $17.2 million as increases of $23.0 million from TXDOT projects and $7.5 million from Mississippi projects were offset by a decrease of $13.3 million from LADOT projects.  Revenue at the JCG Infrastructure & Maintenance division increased by $2.0 million.  Gross profit increased by $6.1 million in the 2014 second quarter compared to the same period last year.  The gross profit increase was primarily at the PES James Industrial Contractors division, which increased $5.0 million due to increased volume.

 

West Construction Services:  Revenue decreased by $33.8 million in the 2014 second quarter compared to the same period last year.  Decreases in revenue of $22.4 million at the ARB Underground division, primarily from gas utility projects, and of $34.4 million at Rockford were partially offset by increases at Q3C of $21.5 million.  Gross profit decreased by $4.1 million in the 2014 second quarter compared to the same period last year.  The decreases in gross profit at the ARB Underground division of $4.0 million and of $8.5 million at the ARB Industrial division were partially offset by a gross profit increase of $7.3 million at Q3C and at Rockford of $1.2 million.  Profit at Rockford increased, despite a decrease in revenue, due to project close-outs.

 

Engineering: Revenue increased by $1.4 million in the 2014 second quarter compared to the same quarter last year.  The increase is mainly due to the increase in revenue from two new LNG plant projects.  Gross profit declined by $0.3 million.  The decline results from the lower margins on the LNG plant projects associated with their beginning stages.

 

Selling, general and administrative expenses (“SG&A”) were $33.2 million, or 6.5% of revenue for the second quarter of 2014, compared to $31.6 million, or 7.1% of revenue for the second quarter of 2013, an increase of $1.7 million.  The increase in SG&A was primarily as a result of increased compensation and compensation-related expenses of $1.3 million and increased expenses of $0.4 million for legal, consulting and other SG&A expenses.

 



 

Operating income for the 2014 second quarter was $28.0 million, or 5.4% of total revenue, compared to $28.0 million, or 6.3% of total revenue, for the same period last year.

 

Net other income and expenses in the 2014 second quarter was an expense of $1.4 million, a $0.7 million decrease from net other expense of $2.1 million in the 2013 second quarter.

 

The provision for income taxes for the 2014 second quarter was $10.6 million, or an effective tax rate on net income attributable to Primoris of 39.9%, compared to $10.0 million, or an effective tax rate on net income attributable to Primoris of 39.1%, in the prior year quarter.

 

Net income attributable to Primoris for the 2014 second quarter was $16.0 million, or $0.31 per diluted share, compared to net income attributable to Primoris of $15.6 million, or $0.30 per diluted share, in the same period in 2013.

 

Fully diluted weighted average shares outstanding for the 2014 second quarter increased by 0.3% to 51.8 million from 51.6 million in last year’s second quarter.

 

OTHER FINANCIAL INFORMATION

 

Primoris’ balance sheet at June 30, 2014 included cash, cash equivalents, and short-term investments of $162.5 million, working capital of $226.3 million, total debt and capital leases secured by equipment of $219.9 million, and stockholders’ equity of $423.7 million.  The balance sheet included a $5.4 million liability representing the estimated fair value for unpaid earnout amounts from acquisitions.

 

BACKLOG

 

 

 

Backlog at June 30, 2014 (in millions)

 

Segment

 

Fixed Backlog

 

MSA Backlog

 

Total Backlog

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

1,079

 

$

91

 

$

1,170

 

West Construction Services

 

194

 

389

 

583

 

Engineering

 

81

 

 

81

 

Total

 

$

1,354

 

$

480

 

$

1,834

 

 

At June 30, 2014, Fixed Backlog was $1.35 billion, compared to $1.48 billion at December 31, 2013.  In the first six months of 2014, approximately $199.2 million of revenue was recognized by non-Fixed Backlog projects.

 

At June 30, 2014, MSA Backlog was $480.1 million, compared to $460.3 million at December 31, 2013.  As previously discussed, MSA Backlog includes estimated MSA revenue for the next four quarters.

 

Total Backlog at June 30, 2014 was $1.83 billion, compared to $1.94 billion at December 31, 2013.  We expect that during the next four quarters, we will recognize as revenue approximately 50% of the East Construction Services segment Total Backlog, approximately 93% of the West Construction Services segment Total Backlog, and approximately 40% of the Engineering segment Total Backlog.

 

Backlog, including estimated MSA revenues, should not be considered a comprehensive indicator of future revenue, as a portion of Primoris’ revenue is still derived from projects that are not part of backlog, including time-and-equipment, time-and-materials, and cost-reimbursable-plus-fee contracts.  Projects that are considered a part of Total Backlog may be still 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, Thursday, August 7 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) 407-8293 (Domestic)

 

·                  (201) 689-8349 (International)

 

If you are unable to participate in the live call, a replay may be accessed by dialing (877) 660-6853, passcode 13587472, and will be available for approximately two weeks. The conference call will also be broadcast live over the Internet and can be accessed and replayed through the Investor Relations section of Primoris’s website at www.prim.com. Once at the Investor Relations section, please click on “Events & Presentations”.

 

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 Annual Report on Form 10-K for the period ended December 31, 2013, and other filings with the Securities and Exchange Commission.  Given these uncertainties, you should not place undue reliance on forward-looking statements.  Primoris does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

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,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

515,291

 

$

445,013

 

$

985,365

 

$

855,008

 

Cost of revenue

 

454,097

 

385,476

 

874,414

 

749,375

 

Gross profit

 

61,194

 

59,537

 

110,951

 

105,633

 

Selling, general and administrative expenses

 

33,213

 

31,560

 

62,925

 

60,179

 

Operating income

 

27,981

 

27,977

 

48,026

 

45,454

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Income (loss) from non-consolidated entities

 

 

(213

)

14

 

56

 

Foreign exchange gain (loss)

 

149

 

(29

)

175

 

(88

)

Other expense

 

(327

)

(377

)

(441

)

(433

)

Interest income

 

14

 

23

 

66

 

63

 

Interest expense

 

(1,196

)

(1,498

)

(2,864

)

(2,922

)

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

26,621

 

25,883

 

44,976

 

42,130

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

(10,618

)

(9,990

)

(17,708

)

(16,197

)

Net income

 

16,003

 

15,893

 

27,268

 

25,933

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

(329

)

(432

)

(599

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to Primoris

 

$

16,003

 

$

15,564

 

$

26,836

 

$

25,334

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.31

 

$

0.30

 

$

0.52

 

$

0.49

 

Diluted:

 

$

0.31

 

$

0.30

 

$

0.52

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

51,655

 

51,562

 

51,631

 

51,510

 

Diluted

 

51,804

 

51,626

 

51,759

 

51,547

 

 



 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2014

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

160,177

 

$

196,077

 

Short-term investments

 

2,280

 

18,686

 

Customer retention deposits and restricted cash

 

56

 

5,304

 

Accounts receivable, net

 

311,321

 

304,955

 

Costs and estimated earnings in excess of billings

 

88,111

 

57,146

 

Inventory and uninstalled contract materials

 

61,230

 

51,829

 

Deferred tax assets

 

13,133

 

13,133

 

Prepaid expenses and other current assets

 

12,003

 

12,654

 

Total current assets

 

648,311

 

659,784

 

Property and equipment, net

 

245,342

 

226,512

 

Intangible assets, net

 

42,345

 

45,303

 

Goodwill

 

118,626

 

118,626

 

Other long-term assets

 

382

 

468

 

Total assets

 

$

1,055,006

 

$

1,050,693

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

130,575

 

$

127,302

 

Billings in excess of costs and estimated earnings

 

158,097

 

173,365

 

Accrued expenses and other current liabilities

 

93,258

 

91,079

 

Dividends payable

 

1,808

 

1,805

 

Current portion of capital leases

 

2,230

 

3,288

 

Current portion of long-term debt

 

30,683

 

28,475

 

Current portion of contingent earnout liabilities

 

5,403

 

5,000

 

Total current liabilities

 

422,054

 

430,314

 

Long-term capital leases, net of current portion

 

1,386

 

2,295

 

Long-term debt, net of current portion

 

185,570

 

191,051

 

Deferred tax liabilities

 

10,092

 

10,092

 

Long-term contingent earnout liabilities, net of current portion

 

 

4,233

 

Other long-term liabilities

 

12,192

 

14,260

 

Total liabilities

 

631,294

 

652,245

 

Stockholders’ equity

 

 

 

 

 

Common stock

 

5

 

5

 

Additional paid-in capital

 

162,322

 

159,196

 

Retained earnings

 

261,437

 

238,216

 

Noncontrolling interests

 

(52

)

1,031

 

Total stockholders’ equity

 

423,712

 

398,448

 

Total liabilities and stockholders’ equity

 

$

1,055,006

 

$

1,050,693