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Exhibit 99.1

 

 

PRIMORIS SERVICES CORPORATION ANNOUNCES 2013 SECOND QUARTER FINANCIAL RESULTS

 

BOARD OF DIRECTORS AUTHORIZES QUARTERLY CASH DIVIDEND

 

Q2 2013 Financial Highlights

 

·                  Revenues increased by 31.9% to $445.0 million compared to $337.4 million in the second quarter of 2012

 

·                  Net income attributable to Primoris increased by 33.3% to $15.6 million, or $0.30 per diluted share, compared to Q2 2012 net income attributable to Primoris of $11.7 million, or $0.23 per diluted share

 

·                  At June 30, 2013:

 

·                  $117.2 million in cash, cash equivalents, and short-term investments

 

·                  Total backlog, including four quarters of estimated MSA revenue, of $1.80 billion

 

Dallas, TX — August 7, 2013— Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its second quarter ended June 30, 2013.

 

The company also announced that on August 2, 2013, its Board of Directors authorized payment of a $0.035 per share cash dividend to stockholders of record as of September 30, 2013, payable on or about October 15, 2013.

 

Brian Pratt, Chairman, President and Chief Executive Officer of Primoris commented, “Our strong second quarter results highlight the success of Primoris’s strategy to focus on specialized end markets, as our revenue growth was split almost evenly between our recent acquisitions and our legacy businesses.  As expected, our operating margins improved from the first quarter, aided by both our pipeline and our industrial work.  With a solid balance sheet and a growing backlog, we are confident that our growing momentum will provide for a strong second half.”

 

Mr. Pratt continued, “This is an exciting time for our business as there are abundant prospects for continued growth across our end markets.  The demand for improvements to the U.S. energy infrastructure provides us with multiple opportunities, and there will be a need to strengthen our U.S. domestic capabilities as the country strives for energy independence.  In addition, we believe our industrial and water end markets are poised for significant growth in the coming years.  While we are not insulated from changes in the macroeconomic environment, we are focused on end markets that we believe offer exciting prospects for enhancing shareholder value.”

 

2013 SECOND QUARTER RESULTS OVERVIEW

 

Revenues for the 2013 second quarter increased 31.9% to $445.0 million from $337.4 million for the same period last year.  Growth at legacy companies accounted for 15.4% of the increase, and the remaining 16.5% increase was from the acquisitions of Silva, Saxon, Q3C, and FSSI.  Gross profit increased by $15.5 million, or 35.2% , compared to the same period in 2012.  The gross profit increase from legacy companies’ growth was $9.9 million and the acquisitions of Silva, Saxon, Q3C, and FSSI contributed $5.6 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 June 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Total

 

 

 

Total

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

175,398

 

39.4

%

$

156,057

 

46.2

%

West Construction Services

 

258,194

 

58.0

%

167,287

 

49.6

%

Engineering

 

11,421

 

2.6

%

14,092

 

4.2

%

Total

 

$

445,013

 

100.0

%

$

337,436

 

100.0

%

 

 

 

For the six months ended June 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

 

Total

 

 

 

Total

 

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

365,609

 

42.8

%

$

277,907

 

44.2

%

West Construction Services

 

465,880

 

54.4

%

325,318

 

51.7

%

Engineering

 

23,519

 

2.8

%

25,784

 

4.1

%

Total

 

$

855,008

 

100.0

%

$

629,009

 

100.0

%

 

Segment Gross Margin

(in thousands, except %)

 

 

 

For the three months ended June 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

15,215

 

8.7

%

$

17,360

 

11.1

%

West Construction Services

 

41,926

 

16.2

%

24,294

 

14.5

%

Engineering

 

2,396

 

21.0

%

2,350

 

16.7

%

Total

 

$

59,537

 

13.4

%

$

44,004

 

13.0

%

 

 

 

For the six months ended June 30,

 

 

 

2013
Unaudited

 

2012
Unaudited

 

 

 

 

 

% of

 

 

 

% of

 

 

 

Gross

 

Segment

 

Gross

 

Segment

 

Segment

 

Profit

 

Revenue

 

Profit

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

30,210

 

8.3

%

$

28,778

 

10.4

%

West Construction Services

 

70,675

 

15.2

%

48,695

 

15.0

%

Engineering

 

4,748

 

20.2

%

4,127

 

16.0

%

Total

 

$

105,633

 

12.4

%

$

81,600

 

13.0

%

 



 

East Construction Services:  Revenues increased by $19.3 million in the 2013 second quarter compared to the same period in the prior year.  The acquisitions of Saxon and FSSI accounted for $14.8 million of the revenue increase.  The remainder of the revenue increase came from a $20.7 million increase at Sprint from increased activity in the Eagle Ford area, a $4.0 million increase at Cardinal Contractors from increased water facility treatment work in Florida and Texas, and a $5.7 million increase at the JCG Industrial division, offset by decreases of $17.7 million at the JCG Heavy Civil division and $8.2 million at the JCG Infrastructure and Maintenance division.  The decline in revenues at the JCG Heavy Civil division is largely due to a $25.8 million decline in Louisiana DOT revenues that was only partially offset by a $12.2 million increase in Texas DOT revenues.  Overall gross profit decreased by $2.1 million in the 2013 second quarter compared to the same period in the prior year.  Gross profit contributions included $0.2 from the acquisitions of Saxon and FSSI, as well as increased gross profit of $0.8 million at Cardinal Contractors and $1.0 million at the JCG Industrial division.  The decline in gross profit is mainly attributable to a $4.3 million decrease at the JCG Heavy Civil division, due largely to the reduced revenues and the transition from completed projects with higher margins in Louisiana in 2012 to the startup of the Belton, TX area projects.

 

West Construction Services:  Revenues increased by $90.9 million in the 2013 second quarter compared to the same period in the prior year.  The Q3C acquisition accounted for $40.7 million of the revenue increase.  The remainder of the revenue increase came from a $60.6 million increase at Rockford, primarily from increased pipeline construction projects in the Pennsylvania shale area, and a $2.3 million increase at ARB Structures.  These increases in revenues were offset by a decrease in the ARB Underground division of $9.3 million that was primarily a result of fewer MSA work authorizations for its largest customer and a decrease of $3.3 million in the ARB Industrial division due to completion of power plant projects in 2012 and a current power plant project nearing completion.  Gross profit increased by $17.6 million in the 2013 second quarter compared to the same period in the prior year.  This includes a gross profit contribution of $5.4 million from the acquisition of Q3C, as well as increased gross profit of $5.6 million at Rockford as a result of its increased revenues, an increase of $9.7 million at ARB Industrial as the result of the approaching completion of a major power plant project, and an increase of $0.6 million at ARB Structures.  Offsetting these was a decline at ARB Underground in gross profit of $3.7 million, mainly due to lower revenues.

 

Engineering: Revenues decreased by $2.7 million, and gross profit remained nearly unchanged.  Gross profit as a percentage of revenues was 21.0%, compared to 16.7% for the same period in 2012.  The increase was due primarily to project closeouts in the current year.

 

Selling, general and administrative expenses (“SG&A”) were $31.6 million, or 7.1% of revenues for the second quarter of 2013, compared to $23.4 million, or 6.9% of revenues for the second quarter of 2012, an increase of $8.2 million.  The acquisitions of Silva, Saxon, Q3C, and FSSI accounted for roughly half the increase in SG&A expense, while the other half was primarily due to increased compensation and compensation-related expenses.

 

Operating income for the 2013 second quarter was $28.0 million, or 6.3% of total revenues, compared to $20.6 million, or 6.1% of total revenues, for the same period last year.

 

Net other income and expenses in the 2013 second quarter was an expense of $2.1 million, a $0.7 million increase from net other expense of $1.4 million in the 2012 second quarter.  The decline was primarily due to a loss recorded at the WesPac joint venture.

 

The provision for income taxes for the 2013 second quarter was $10.0 million, or an effective tax rate on net income attributable to Primoris of 39.1%, compared to $7.3 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 second quarter was $15.6 million, or $0.30 per diluted share, compared to net income attributable to Primoris of $11.7 million, or $0.23 per diluted share, in the same period in 2012.

 

Fully diluted shares outstanding for the 2013 second quarter increased by 0.3% to 51.6 million from 51.4 million in last year’s second quarter.

 



 

OTHER FINANCIAL INFORMATION

 

Primoris’s balance sheet at June 30, 2013 included cash and cash equivalents of $117.2 million, working capital of $146.5 million, total debt and capital leases secured by equipment of $174.4 million, and stockholders’ equity of $358.3 million.  The balance sheet included a $14.0 million liability representing the estimated fair value for unpaid earnout amounts from acquisitions.  Primoris’ tangible net worth at June 30, 2013, was $190.4 million.

 

BACKLOG

 

 

 

Backlog at June 30, 2013 (in millions)

 

Segment

 

Historic
Calculation

 

Estimated
Annual MSA
Revenues

 

Revised Backlog

 

 

 

 

 

 

 

 

 

East Construction Services

 

$

999

 

$

92

 

$

1,091

 

West Construction Services

 

361

 

329

 

690

 

Engineering

 

22

 

 

22

 

Total

 

$

1,382

 

421

 

1,803

 

 

At June 30, 2013, total backlog using our historical calculation was $1.38 billion compared to $1.35 billion at December 31, 2012.  For the three months ended June 30, 2013, approximately $82.0 million of revenue was generated by projects that were not included in the historical backlog calculation.

 

As previously discussed, we are changing 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  June 30, 2013 was $1.8 billion.  We expect that during the next four quarters, using the revised backlog calculation, we will recognize as revenue approximately 50% of the East Construction Services segment backlog, approximately 98% of the West Construction Services segment backlog, and approximately 100% 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, Wednesday, August 7 at 11:00 am Eastern Time / 10:00 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 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 tripled its revenue 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 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 June 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
June 30,

 

Six Months Ended,
June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

445,013

 

$

337,436

 

$

855,008

 

$

629,009

 

Cost of revenues

 

385,476

 

293,432

 

749,375

 

547,409

 

Gross profit

 

59,537

 

44,004

 

105,633

 

81,600

 

Selling, general and administrative expenses

 

31,560

 

23,396

 

60,179

 

43,670

 

Operating income

 

27,977

 

20,608

 

45,454

 

37,930

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Income (loss) from non-consolidated entities

 

(213

)

(47

)

56

 

1,054

 

Foreign exchange loss

 

(29

)

(6

)

(88

)

(48

)

Other expense

 

(377

)

(371

)

(433

)

(579

)

Interest income

 

23

 

25

 

63

 

47

 

Interest expense

 

(1,498

)

(1,006

)

(2,922

)

(2,107

)

Income before provision for income taxes

 

25,883

 

19,203

 

42,130

 

36,297

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

(9,990

)

(7,346

)

(16,197

)

(13,910

)

Net income

 

15,893

 

11,857

 

25,933

 

22,387

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(329

)

(124

)

(599

)

(168

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to Primoris

 

15,564

 

11,733

 

25,334

 

22,219

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.30

 

$

0.23

 

$

0.49

 

$

0.43

 

Diluted:

 

$

0.30

 

$

0.23

 

$

0.49

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

51,562

 

51,435

 

51,510

 

51,386

 

Diluted

 

51,626

 

51,435

 

51,547

 

51,386

 

 



 

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In Thousands, Except Share Amounts)

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

113,777

 

$

157,551

 

Short term investments

 

3,428

 

3,441

 

Customer retention deposits and restricted cash

 

27,503

 

35,377

 

Accounts receivable, net

 

251,092

 

268,095

 

Costs and estimated earnings in excess of billings

 

70,288

 

41,701

 

Inventory and uninstalled contract materials

 

38,339

 

37,193

 

Deferred tax assets

 

10,477

 

10,477

 

Prepaid expenses and other current assets

 

12,719

 

10,800

 

Total current assets

 

527,623

 

564,635

 

Property and equipment, net

 

215,659

 

184,840

 

Investment in non-consolidated entities

 

12,724

 

12,813

 

Intangible assets, net

 

49,893

 

51,978

 

Goodwill

 

118,028

 

116,941

 

Other long-term assets

 

1,158

 

 

Total assets

 

$

925,085

 

$

931,207

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

102,026

 

$

151,546

 

Billings in excess of costs and estimated earnings

 

162,570

 

158,892

 

Accrued expenses and other current liabilities

 

80,349

 

76,152

 

Dividends payable

 

1,805

 

 

Current portion of capital leases

 

4,335

 

3,733

 

Current portion of long-term debt

 

21,967

 

19,446

 

Current portion of contingent earnout liabilities

 

8,048

 

10,900

 

Total current liabilities

 

381,100

 

420,669

 

Long-term capital leases, net of current portion

 

3,584

 

3,831

 

Long-term debt, net of current portion

 

144,546

 

128,367

 

Deferred tax liabilities

 

20,018

 

20,018

 

Long-term contingent earnout liabilities, net of current portion

 

5,924

 

12,531

 

Other long-term liabilities

 

11,568

 

13,153

 

Total liabilities

 

$

566,740

 

$

598,569

 

Stockholders’ equity

 

 

 

 

 

Common stock

 

5

 

5

 

Additional paid-in capital

 

158,730

 

155,605

 

Retained earnings

 

197,500

 

175,517

 

Noncontrolling interests

 

2,110

 

1,511

 

Total stockholders’ equity

 

358,345

 

332,638

 

Total liabilities and stockholders’ equity

 

$

925,085

 

$

931,207