Primoris Wins Contracts of $262M - Analyst Blog

Recently, certain segments of Primoris Services Corp. PRIM have secured contracts worth $262 million. The deals involve construction work related to pipeline and gas utility. Industrial, highway infrastructure, water/wastewater and parking structures are also part of the project.

ARB Underground Group, a unit of Primoris in the West Construction Services Segment, has been awarded multiple projects worth $47 million in new contracts that are expected to be complete by the end of 2014. The scope of the contracts comprise authorizations for the hydrotesting and retrofitting of existing natural gas pipelines, gas and electric distribution work and new pipeline construction.

Another group, Q3C, in the segment secured $67 million for three or four-year contracts. The project work includes retrofitting and restoration of existing natural gas pipelines, gas and electric distribution, along with surface restoration and traffic control work.

Moreover, Rockford, in the West Construction Services Segment received contracts worth $21 million for natural gas pipelines in West Virginia and Maryland. Work on this project will be complete by the end of third-quarter 2014.

ARB Industrial Group, a unit of Primoris in the West Construction Services Segment, has been awarded new contracts in California worth $7 million that are expected to be complete by the end of second-quarter 2014.

Further, ARB Structures in the West Construction Services Segment was awarded over $13 million for a new poured-in-place parking structure. The completion date for this project is the first quarter of 2015.

James Construction Group, a unit of Primoris' East Construction Services Segment has secured contracts over $65 million. Out of the total amount, over $58 million has been awarded to the James Heavy Civil group for construction of highways in Texas and Louisiana. The majority of this work will be complete by the end of third-quarter 2016. On the other hand, around $7 million was awarded to James Infrastructure and Maintenance group for industrial and power project site work in Louisiana, Florida and Texas and this will expectedly be accomplished by the end of 2014.

Cardinal Contractors, another unit of Primoris' East Construction Services Segment, received about $5 million of new water/wastewater work in Florida. This work should be complete by the first half of 2015.

In addition, Primoris Energy Services in the East Construction Services Segment, has received contracts of about $36 million. Of the total amount, $27 million has been awarded to James Industrial Constructors for civil and mechanical construction at industrial facilities in Texas and Louisiana. Sprint Pipeline Services secured new contracts of approximately $6 million from midstream oil and gas companies for various pipeline related projects. Contracts of over $2 million were awarded to FSSI by industrial clients, primarily for maintenance work in Texas and Louisiana. Most of the work related to these deals will be complete by the end of 2014.

Finally, in the Engineering segment, another Primoris subsidiary OnQuest won contracts worth nearly $3 million. These engineering design and procurement awards for process reformers will likely be complete in the first quarter of 2015.

These new deals and work authorizations will result in revenues of approximately $7 million in the first quarter of 2014. Notably, Primoris' peers like Empresas ICA, S.A.B. de C.V. ICA and Granite Construction Inc. GVA have also won such major deals.

For full-year 2013, Primoris' earnings improved 23% year over year to $1.35 per share, surpassing the Zacks Consensus Estimate of $1.28 per share. Revenues for the year also increased 26% year over year to $1944 million, beating the Zacks Consensus Estimate of $1818 million.

For full-year 2014, Primoris expects strong contribution from the recent acquisitions as well as legacy group. A healthy balance sheet and acquisitions will likely drive growth as well.

During 2014, Primoris will realize revenues of around 53% of the East Construction Services segment backlog, about 98% of the West Construction Services segment backlog and 93% of the Engineering segment backlog. The Engineering segment will expand based on margin increase in both domestic and international markets.

Dallas, TX-based Primoris is a specialty contractor and infrastructure company that serves diverse-end markets. The company also provides a wide range of construction, fabrication, maintenance, replacement, water and wastewater as well as engineering services to major public utilities, petrochemical companies, energy companies, municipalities and other customers.

At present, Primoris has a Zacks Rank #3 (Hold). A better-ranked stock in the building and heavy construction industry is MasTec, Inc. MTZ with a Zacks Rank #1 (Strong Buy).