- Revenue: $1.6 billion, an increase of $150.3 million or 10.6% from the prior year.
- Energy Segment Revenue: Up $194.8 million or 25% from the prior year.
- Utility Segment Revenue: Down $28.4 million or 4.4% from the prior year.
- Gross Profit: $186.7 million, an increase of $29.4 million or 18.7% from the prior year.
- Gross Margin: 11.9%, compared to 11.1% in the prior year.
- Utility Segment Gross Profit: $64.1 million, down $2.4 million or 3.7% from the prior year.
- Utility Segment Gross Margin: 10.3%, compared to 10.2% in the prior year.
- Energy Segment Gross Profit: $122.6 million, an increase of $31.9 million or 35.1% from the prior year.
- Energy Segment Gross Margin: 12.6%, up from 11.7% in the prior year.
- SG&A Expenses: $100.1 million, an increase of $14.5 million from the prior year.
- SG&A as Percentage of Revenue: 6.4%, up slightly from the prior year.
- Net Interest Expense: $17.1 million, up slightly from the prior year.
- Effective Tax Rate: 29% for the quarter.
- Net Income: Increased almost $11 million to just under $50 million.
- Adjusted EBITDA: $117 million, up approximately $15 million or 14% from the prior year.
- Cash Flow from Operations: $16 million in Q2.
- Liquidity: $480 million, including $207 million of cash and $273 million in available borrowing capacity.
- Total Backlog: Just under $10.5 billion, down around $440 million from the end of 2023.
- Full-Year EPS Guidance: Raised to $2.70 to $2.90 per share.
- Adjusted EPS Guidance: Raised to $3.25 to $3.45 per share.
- Adjusted EBITDA Guidance: Raised to $400 million to $420 million for the full-year 2024.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Primoris Services Corp (PRIM, Financial) delivered double-digit growth in both revenue and profitability from the previous year.
- The company has been awarded or is in the process of constructing close to $400 million of work related to data centers.
- Primoris Services Corp (PRIM) booked roughly $600 million of new projects in the quarter and added another $500 million earlier in the third quarter.
- The renewables business is on track to exceed new business goals for the year, with total backlog in renewables expected to approach $3 billion by the end of the year.
- Primoris Services Corp (PRIM) raised its full-year EPS guidance to $2.70 to $2.90 per share, adjusted EPS guidance to $3.25 to $3.45 per share, and adjusted EBITDA guidance to $400 million to $420 million for the full-year 2024.
Negative Points
- Revenues in the utility segment were lower compared to last year, driven primarily by lower activity in gas operations.
- Some customers on the West Coast have had to modify their programs on lower costs, leading to a decline in revenue.
- SG&A expenses in the second quarter were $100.1 million, an increase of $14.5 million compared to the prior year.
- Net interest expense in the quarter was $17.1 million, up slightly from the prior year.
- Total backlog at the end of Q2 is just under $10.5 billion, down around $440 million from the end of 2023.
Q & A Highlights
Q: In electric utilities, what are customers' investment plans over the next two to three years to prepare for increased load growth?
A: (Kenneth Dodgen, CFO) Revenue growth is currently low, targeting single-digit growth this year. The focus is on margin improvement. (Tom McCormick, CEO) Customers' plans vary by region. In Texas, significant growth is expected with increasing budgets, while in other regions, some customers are waiting for regulatory approvals or election outcomes.
Q: What type of margin improvement is expected in utilities for 2025 versus 2024, and what is the status of renegotiating MSA utility contracts?
A: (Kenneth Dodgen, CFO) No specific margin targets for 2025 yet. Ongoing contract renewals happen yearly, with better payment terms being a focus. (Tom McCormick, CEO) Some targeted negotiations are nearing completion, but new MSAs will continue to renew annually.
Q: Is any of the year-to-date revenue growth in utilities due to intentional margin-accretive shedding, or is it mainly due to lapping of gas operations projects?
A: (Kenneth Dodgen, CFO) It's a combination of both factors.
Q: What progress has been made on winding down or divesting certain business activities, and what are the expected benefits to gross margins?
A: (Tom McCormick, CEO) Some businesses are being wound down or divested, with minimal but positive proceeds. The process will continue into 2025, with some buyers interested in the businesses.
Q: How did weather dynamics impact the segments in the quarter, and what is the outlook for the current quarter?
A: (Tom McCormick, CEO) Rain impacted solar and heavy civil businesses, with some recovery from clients due to contract language. Storm work provided some revenue, but overall impacts were not significant.
Q: Are there any trends around the expansion in the size of data center projects or relative growth in your portfolio?
A: (Tom McCormick, CEO) More opportunities are arising in power generation, fiber installs, and solar and gas projects related to data centers.
Q: What scenarios might bring EPS guidance to the low end versus the high end?
A: (Kenneth Dodgen, CFO) Low end scenarios include serious weather impacts or early winter. High end scenarios include good project closeouts and storm work from named hurricanes.
Q: How did energy segment margins compare to expectations, and what are the uncertainties for the second half of the year?
A: (Kenneth Dodgen, CFO) Margins were slightly above expectations due to project closeouts and higher revenue. The second half is expected to be solid, with most backlog being burned off.
Q: What were the ins and outs in terms of bridging backlog from Q1 to Q2 in the energy segment?
A: (Tom McCormick, CEO) Timing of contract executions affected backlog. Opportunities towards the end of the year and projects in negotiation will position the company well for 2025.
Q: How do customers in solar view the upcoming election, and is there a wait-and-see approach to new projects?
A: (Tom McCormick, CEO) Customers are not overly concerned about the election. Investment in solar continues, with a more conservative approach aligning with realistic construction timelines.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
