Primoris Services Corporation Announces 2017 Third Quarter Financial Results
Board of Directors Increased Quarterly Cash Dividend to $0.06 Per Share
Financial Highlights
- 2017 Q3 revenues of $608.3 million, a 20% increase over 2016 Q3
- 2017 Q3 gross profit of $70.4 million, a 40% increase over 2016 Q3
- 2017 Q3 net income attributable to Primoris of $20.6 million, a $16.1 million (357%) increase over 2016 Q3. Earnings per share of $0.40 increased by $0.31 from 2016 Q3.
- At September 30, 2017, total backlog of $2.6 billion
DALLAS, Nov. 06, 2017 (GLOBE NEWSWIRE) -- Primoris Services Corporation (NASDAQ:PRIM) ("Primoris" or "Company") today announced financial results for its third quarter ended September 30, 2017.
The Company also announced that on November 2, 2017, its Board of Directors authorized a 9% increase in the quarterly cash dividend to $0.06 per share from $0.055 per share. The cash dividend will be paid to stockholders of record on December 29, 2017, payable on or about January 15, 2018.
David King, President and Chief Executive Officer of Primoris, commented, "Primoris' third quarter results are a reflection of our performance serving our diverse end markets. We experienced year over year revenue gains at the majority of our business units, with notable gains from our power projects, Gulf Coast based pipeline work and Utilities & Distribution segment. Our utility businesses grew revenue not just with current customers but also with new customers in new geographies. As we expected last quarter, the Civil segment's gross margins returned to profitability, and as we work off legacy jobs, we believe margins should continue to improve for the segment. Our acquisition strategy is paying off, as we saw positive contributions from all of our recent acquisitions.
"While hurricanes across the Gulf Coast had some impact on our third quarter results, we are extremely proud of the earnings we achieved. Our crews are not only working profitably; they are working safely, and that is every bit as important. Our backlog declined slightly to end the quarter at $2.62 billion, but our sales team continues doing an outstanding job of developing new projects. Every segment reported new business awards contributing to the backlog results."
Mr. King concluded, "As we look at the year ahead, we have provided our guidance for the next four quarters based on our expectations of the timing of major projects and project awards, but we remain mindful that start and award dates remain uncertain. Nevertheless, we see improving opportunities for growth in all of our end markets, especially for pipeline work and EPC projects and for utility work on top of our stable base business."
2017 THIRD QUARTER RESULTS OVERVIEW
Revenues in the third quarter 2017 were $608.3 million, an increase of $100.5 million compared to the same period in 2016. Gross profit for the third quarter 2017 was $70.4 million, an increase of $20.3 million compared to the same period in 2016. Gross profit as a percentage of revenue increased to 11.6% for the third quarter 2017, compared to 9.9% for the same period in 2016.
Selling, general, and administrative expenses in the 2017 third quarter were $42.6 million compared to $36.0 million in the same period of 2016. The primary reason for the increase in SG&A is from the businesses acquired subsequent to the third quarter of 2016. SG&A as a percentage of total revenue was 7.0% in the 2017 third quarter compared to 7.1% in the same period of 2016.
Included in other income in the 2017 third quarter is $6.0 million of unrealized gain from a short-term investment in marketable securities. We do not anticipate that such a gain would recur with any frequency.
SEGMENT RESULTS
Through the end of the year 2016, Primoris segregated its business into three reportable segments: the Energy segment, the East Construction Services segment, and the West Construction Services segment. In the first quarter 2017, Primoris changed its reportable segments to match the changes in the Company's realigned internal organization and management structure. A Form 8-K was filed on April 7, 2017 containing historical revenue, margin, and backlog information for the new segments.
- Power, Industrial, and Engineering ("Power") - The Power segment operates throughout the United States and specializes in a range of services that include full EPC project delivery, turnkey construction, retrofits, upgrades, repairs, outages, and maintenance for entities in the petroleum, petrochemical, water, and other industries.
- Pipeline and Underground ("Pipeline") – The Pipeline segment operates throughout the United States and specializes in a range of services, including pipeline construction, pipeline maintenance, pipeline facility work, compressor stations, pump stations, metering facilities, and other pipeline-related services for entities in the petroleum and petrochemical industries.
- Utilities and Distribution ("Utilities") – The Utilities segment operates primarily in California and the Midwest and Southeast regions of the United States and specializes in a range of services, including utility line installation and maintenance, gas and electric distribution, streetlight construction, substation work, and fiber optic cable installation.
- Civil – The Civil segment operates primarily in the Southeast and Gulf Coast regions of the United States and specializes in highway and bridge construction, airport runway and taxiway construction, demolition, heavy earthwork, soil stabilization, mass excavation, and drainage projects.
Segment Revenues
(in thousands, except %)
(Unaudited)
| For the three months ended September 30, | |||||||||||
| 2017 | 2016 | ||||||||||
| % of | % of | ||||||||||
| Total | Total | ||||||||||
| Segment | Revenue | Revenue | Revenue | Revenue | |||||||
| Power | $ | 154,178 | 25.3 | % | $ | 101,811 | 20.0 | % | |||
| Pipeline | 84,357 | 13.9 | % | 106,042 | 20.9 | % | |||||
| Utilities | 246,524 | 40.5 | % | 186,985 | 36.8 | % | |||||
| Civil | 123,252 | 20.3 | % | 112,990 | 22.3 | % | |||||
| Total | $ | 608,311 | 100.0 | % | $ | 507,828 | 100.0 | % | |||
| For the nine months ended September 30, | |||||||||||
| 2017 | 2016 | ||||||||||
| % of | % of | ||||||||||
| Total | Total | ||||||||||
| Segment | Revenue | Revenue | Revenue | Revenue | |||||||
| Power | $ | 443,191 | 24.6 | % | $ | 367,025 | 26.3 | % | |||
| Pipeline | 402,425 | 22.4 | % | 217,182 | 15.6 | % | |||||
| Utilities | 576,446 | 32.0 | % | 447,858 | 32.1 | % | |||||
| Civil | 378,916 | 21.0 | % | 363,020 | 26.0 | % | |||||
| Total | $ | 1,800,978 | 100.0 | % | $ | 1,395,085 | 100.0 | % | |||
Segment Gross Profit
(in thousands, except %)
(Unaudited)
| For the three months ended September 30, | ||||||||||||
| 2017 | 2016 | |||||||||||
| % of | % of | |||||||||||
| Gross | Segment | Gross | Segment | |||||||||
| Segment | Profit | Revenue | Profit | Revenue | ||||||||
| Power | $ | 18,842 | 12.2 | % | $ | 10,893 | 10.7 | % | ||||
| Pipeline | 12,084 | 14.3 | % | 32,402 | 30.6 | % | ||||||
| Utilities | 36,081 | 14.6 | % | 33,925 | 18.1 | % | ||||||
| Civil | 3,414 |
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