Primoris Services (PRIM) 6 Aug 242024 Q2 Earnings call transcript

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primoris Services Corporation Second Quarter 2024 Earnings Conference Call. [Operator Instructions] I would like to gain I would now like to turn the conference over to Blake Holcomb, Vice President, Investor Relations. Please go ahead.

to Second welcome Conference XXXX and Call. morning, the Quarter Primoris Earnings Good

with Tom Officer. comments Chief me prepared Joining today are and Dodgen, Executive Ken McCormick, Chief Financial Officer; and President

make and Actual Before I various are projections contained our from this These certain harbor we safe subject call results risks and materially uncertainties that of The our cautions made would to to in company begin, statement. may statements risks certain differ everyone expectations. discussed filed like are language uncertainties. our in aware and with during and forward-looking SEC. the are reports

forward-looking We outlook disclaim Our statements, as XXXX. to obligation August law. update these X, be our represent any may except of statements as today, by required

call, non-GAAP issued we to quarter our these conference reference XXXX Investors on of reconciliation and press this financial was A measures of release, make certain yesterday. are non-GAAP available second earnings section the may during addition, website measures. our In which

to like over now to would turn I McCormick. Tom call the

you, and profitability you discuss both XXXX double-digit and Good in quarter joining previous the the second our us today financial to growth Thank and results. quarter, for Primoris morning, revenue second delivered In from year. operational thank Blake.

grow ownership driving taken have and employees Our cash generation. an our profitably strategy of emphasis to with flow safety on

carbon industrial quarters, been sources. including demand investment growing reshoring, highlighting to energy solutions we've recent infrastructure electricity lower In the key increased drivers the in of and transition

by a of these demand. demand Electric its across forecast this no estimates Council or than of seeing a load Texas. are in out XXX better XX revised many there's North Texas, The gigawatts state serve from Reliability of XX% gigawatts to predicts in We increase XXXX recently for future play XXXX. perhaps we The more the increased power of in than in but the of things peak ERCOT, America, markets example

users their transitioning artificial The as growing is or industry and electricity intelligence rather than data of on such by gas oil a centers mining. gas operations as being driven as to rapidly power, increase diesel large population. cryptocurrency run The and well powering

of services We in can a critical positioned we providing and of data these provide center have work we has the the liter From generation, to development the suite data for seen well And preparation country. parts continue that are of Primoris site centers. and installation high-voltage already other impact to valuable services to power of development projects.

construction, necessary generation grants centers the as Energy The gas awarded that work modernization Texas have investments resources users. months and of So of and $XX loans to far in investment projects lines natural constructing identified in the require in more Texas slated The or than transmission million $XXX which up substations growth year, projected its related solar in is to expertise. this and incentivize deliver and we as state data process of the and align well billion XX finance maintenance the million to in with power to resources will be well our been to provide through facilities. end and next dispatchable have to significant $XXX close could believe fund of encouraging awarded to we of ultimate

how generation on the It make associated needs. delivery the gas Energy in execution relationships will customer stages long-standing positioned for power believe administered. be will has well we natural a still as in us solar Primoris Texas the as and Texas well Fund of record capitalize and that early track is to power

to of are that We Texas the ahead phases the in other be expected currently peaker and same and years experience gas are increase evaluating in cycle currently anticipate planning natural we in are electricity in more the demand. $XXX roughly simple million will parts that there of opportunities country the that facilities

let's Now to primarily revenues compared year, In segment. were performance by Utility driven segment, by our for lower quarter gas last operations. the the lower look at activity in

While Midwest Texas gas seen Coast. rollout the have programs we as the better customers West with and has or slower a in even markets, been activity on of expected

Some on customers have case had market. work their and particularly approvals, to lower costs they in as modify with California programs regulators rate the

we flat decline led Although the quickly in to margins relatively to the delays our adjust to business. a hold revenue, in were structure cost able

to the a from activity year. with as On the improved the other higher in last fiber-to-the-home Profitability costs impacts did was communications of more we activity not also challenged hand, Southwest. previous the project near-term delivery communications Power with adverse the hyperscaler revenue to associated higher year to network have for but we see compared consistent was did build-outs year, center data the The previous support our increase. continues customers fairly profitability increase. opportunities outlook trend as positively of

last who amount alignment our events. to communities Hurricane and and by to want time of their in storm safely long power other hours small year. women We response need. project restore of helped who performing Driven substation to their duties work and These thank and large by efficiently. the their a traveled our different approach in productivity parts to the weather-related impacted and constructed were their to value Beryl men contributions challenging conditions country of improved to assist that I neighbors we offset from Texas work

our over delays. and our In ongoing for success Energy solution year. Renewables, performed the construction prior and and remained versus renewables segment. growth strong to the of solar EPC quarter some we Moving the The market businesses well revenue during the strong weather-related margin industrial drove despite

customers awards of million XXX million the megawatts in storage $XXX the We These multiple earlier also from booked states battery include New another in and span and of quarter. to across third $XXX approximately quarter added new projects California and roughly York.

to will and of total beyond. solid establishing now the for by $X renewables us on We and foundation making and essentially expect for for XXXX XXXX book year the in are billion that our a the and goals track business backlog new approach exceed end year, growth

within solar or small, PV renewables growing products Premier focused of offering disconnects, on we other a Premier milestone of it solutions and is through backlog, balance growing its our combiner achieved utility-scale recently addition a million products solutions. our EPC In bookings eBOS in $XX a of boxes, of PV electric to provider. business is making complete wire but harnesses that eBOS system

quality, for third Initially or to in a we started value-add are that lead as easy reliability chain a now value way our and times install solutions. option disruptions, avoid to eBOS customers to selling long parties our supply

to We that expand than a have and eBOS its renewables we can with the products well a offer PV Premier While our investments inception. capacity believe the aligns gigawatts deployed our to Premier contributor still clients the capital production to grow build on XX potential our relatively has to of small our since profitability PV of is we meaningful business, more more the the made renewables be part in years and strategy services ahead.

provider and operate. In is Solar I work our and as ranked our World also wrapping top #X in team Power nationally Magazine's dedication a hard solar in as scale of contractor service deserved evidence people. utility which congratulate solar XXXX up we several of and want renewables, of the well This acknowledgment rankings selected states the in EPC to EPC for being the were recognized

projects drove the increased particularly Gulf activity the in In Industrial U.S. improved margins in we Services, Western and on region. Coast growth double-digit and solid on execution,

made and divesting flow. down segment strides noncore will to we time expansion focus quarter, winding the During or cash businesses also on driving certain enable that margin the us in our attention and

the the half second was To and execution in good a continuing of in tailwinds and to forward consistent looking first advantage markets clients. quarter summarize, of delivering year, to take the our our we are it and safe to

on turn for I'll to Now, results. financial it over more Ken our

and morning, everyone. good Thanks, Tom,

XX% major quarter was for activity primarily in year, was second for by the profit decrease in customers due a activity transmission and renewables substation segment solar prior year. These $X.X industrial or substation driven our or was and offset improved year, revenue our and in was $XX.X was XX.X% XX.X% revenue under or is of to by Utility both construction. This the year. the segment were billion, increased completed QX a gas growth from down million increase communications. year, Gross segment. prior million increase in strong increase driven up primarily increased or and just $XXX.X from to The million partially prior Energy in $XXX.X the segment Energy from primarily million project primarily of prior an an due the operations margins compared in Our prior million, that and by $XXX.X X.X% $XX.X segments. to impacts work Energy the the

As year. for to compared a XX.X% XX.X% were quarter gross result, the in prior the margins

the down the revenue. year to revenue, due prior improved XX.X% productivity cost gross profit decrease our to management. slightly or Utility Turning the segment to X.X% margins prior to was $X.X operational Despite million, million segment in XX.X% and improved compared to compared in $XX.X gross lower to due results. year

We of in combination productivity and our in power through MSA prioritize project continue a business. improving this delivery higher favorable margins segment to rate increases work,

have We year toward for goal to expect to we the to this XX% see XXXX further prior the and range. year progress compared as to full XX% in perform margin improvement some our ahead the years the segment in expansion

anticipate we the the XX% range. However, of be for still X% to XXXX, lower end will at margins

increase both increase million the XX.X%, strong In and plant and revenue the higher $XXX.X the year. an natural up the XX.X% improved Gross were million were improved revenue. from in Western Energy gas driven to for segment, margins gross from margins prior execution $XX.X profit by projects XX.X% the renewables due was quarter, year a in margins. or on prior The power U.S. in

is of increase Expenses million, costs year. our Looking quarter and due million investments to $XXX.X support in increase prior the were to compared the technology second in $XX.X at to SG&A. personnel growth. SG&A The an increased primarily

full gain year the by year due slightly we percentage Net revenue, an year. of slightly X% the balances timing to rate on trend average revenue was year, the of a to quarters the in interest towards million we slightly in expense up mostly to range As debt up was year. SG&A will prior for this million, swap in down prior fourth quarter certain lower interest the expenses. the low unrealized as be X.X% the the of $X.X expect But from offset from and due third SG&A a $XX.X prior

the full our draw for be fund to million will able million year operations we now to from $XX to the been and our anticipate that is we've interest on estimate This of our the half revolver, without first between of year million. million. previous $XX that $XX Given expense down $XX need our

consistent rate tax for We for effective the XX% full will be this quarter. the rate Our believe year. was

per prior solid the EPS was share. by Second increased EPS from per year. quarter higher adjusted earnings improvement $X.XX showed and $X.XX by share

drove just to operations the adjusted higher Taking operating first the we through EBITDA $XX a a saw up million million $XX revenue is million $XX Additionally, income. million flow were cash This QX, year. approximately to a from net cash $XX.X prior drivers In X to The quarters of increase flow. prior almost income XX% cash under use $XXX related year-to-date. almost upfront million year. of look million, in increased million, or at customer which primary strong $XX $XX improvement increased compared to and the an used deferred and over cash small in payments the

on we for the our our leadership a believe we to initiatives in team, we is see flow are through improvements are implementing. key capital focus and working Cash track

which strong maintained in includes to $XXX over We capacity Moving revolver. sheet. liquidity $XXX on million, our million borrowing and of million of balance available $XXX cash the

since XX-month This Our quarter EBITDA debt our of acquisition. second of by covenants, the XXXX the represents prior our X.Xx to end debt-to-EBITDA QX. defined net to lowest ratio, at the ratio leverage as PLH trailing just dropped

on needs, While target our somewhat based trending quarter-to-quarter differ towards working ratio of ratio we are X.Xx can EBITDA. our capital

debt priority flow continues allocation free current down cash capital paying the environment. in Our interest with to rate be

energy around from lower backlog primarily at timing million billion, year-end, other of Total bookings. under $XXX of was by end and the XXXX. from just backlog was to solar due the million end segment QX $XX.X of $XXX Fixed down the

closed which pipeline us in up additional by from work tops work. $XXX MSA year. of after backlog backlog in As lower where lower $XXX quarter, by lower offset to million partially another end the driven was Canada the million year-end, Tom and MSA MSA million by mentioned, in MSA almost utilities. $XX we the right we back about started

we XXXX our the across we started We opportunity optimistic continue unforeseen we of end backlog a will work can see any in than to project end and are believe with year. build win backlog to ourselves lot year. second or Barring we we the position to a delays half markets, push-outs, the that of higher

with I'll to our Before financial updated turning overview Tom, close guidance. over the back it

to share, and guidance EPS for adjusted full $X.XX to are full to million EPS $X.XX $X.XX We our guidance adjusted $XXX share $X.XX million guidance year year $XXX EBITDA XXXX. raising to per the to per to

rest are and encouraged for first results the our interest year, with industrial construction, of by along solar We the our outlook particularly half in lower and expense.

and are the of path record and With on successful another XXXX. we earnings continued year believe safe revenue we execution, in to

With back it that, turn to I'll over Tom.

you, the Prior quarter. line recap to Ken. the questions, like of of Thank the opening for up to some key I'd points

First, the remains important state Texas. markets of and provide high is we demand increasingly in the for our services across becoming

connect required power We generation, of and and have data build critical solar to the services centers components relationships experience the gas and delivery them. power to

show ahead our management in signs we teams. accelerating backlog build our and renewables of as and to business grow thrive years Second, the continues project

services simplifies our The already solutions ancillary with and and PV for them. eBOS process the our Premier O&M expands like addition customers storage, us construction battery strong through of and relationships

Lastly, we basis. through increased contracts margins can timing as spending of mix, improving progress fluctuate and even a the are making new on improved productivity our quarterly utilities in customer MSA

are needed North meet to the economy. confident work in is there ahead needs the of American that our of segment be we utility will a lot Ultimately, that years the from

further opportunity We the to the and the our higher. have take of in with our allocators of cash best a along to of goal lot capital path areas drive these discipline in of achieving profitability will capital be Success us continued flow ahead industry. us down

allow the benefit customers Primoris our our reach will our this of shareholders. our to potential In view, its to employees, and

We will now questions. your open up the call for

comes the Sachs. question Jerry first Revich, Our of Goldman from Instructions] line [Operator

next level load This growth? is telling you Jerry are today. just if can utilities, to customers is at business prepare Adam speak for investment Bubes to their on the And growth X Revich. about plans to what for increased years X what wondering In you electric over the of

I'll Tom what customers kind let are talk about the of saying.

revenue In as this on of customers focused terms targeting past, about on improvement, are for then, of is margin right in growth first us, this you've terms We're it's now. year, because plan talking about more [indiscernible] growth, X-year and focused . of fairly in Adam, -- us, we we've the been the the improvement. margin And for Tom, obviously growth revenue talked low single-digit probably

depending hearing clients on a is the country we're in. from bit part what different, What we're little of

I election. are think some see to of them waiting what the happens in

here The and others our for the instance, in they're for customers year-on-year. not significant others growth increase expecting their budgets Texas, are are seeing and are planning growth,

So a We're the grow Other having whereas we're they're similar of asking and very parts different. that same. bit country, is support to [indiscernible] them. with seeing little the conversations us

election. customers waiting Some waiting are with we're happens in it what to rate the case, get the and see to

it's So a of kind bag. mixed

now in versus flowing XXXX? improvement MSA thinking of what we are type you are currently inning And shifting the What in contracts utilities. utility renegotiating margin And about utility then through? what margins, to of XXXX

targets 'XX -- ongoing right that Yes. I inning have for we're we about well, right? contracts the of specific are every year. in it, X have for renewed with in, constantly past. now. single phases margin respect But to don't Adam, there's you being talked We stuff. we're this the There's what

of the the the we're third that. other there's other and and as -- well. or 'XX, we talking over then And better the specifically next payment and course That in about terms it. of piece over inning will ongoing probably like the second there's 'XX So component, happen are 'XX where things

negotiations time year, finished targeted, eighth of inning probably have game some renewal. we're the but that But ninth those Every or up right finished soon, or expires. those in over expire coming of starts one the we've every are the ones for MSAs we

And lapping it. gas it Or Is any really shedding utilities growth of the attributable intentional revenue the project is Got you in one to operations, for business? last that margin-accretive the mainly? year-to-date referenced in that in of me.

bit It's of a little both.

Jagoda question from the comes of next Our Securities. with line Lee CJS

a the Lukas Lee. remarks. you in it, I Pete prepared covered for guys lot appreciate It's

quick questions Just you. X for

You had margins of any if a about about and Analyst a expected your spoken on What, you activities that been wind-down benefits made thinking of on the of business. portion as And how potential result front? to proceeds Day has for are progress any actions? gross

recently down a were We've actually even some that process business are just and little and we winding or come We of XXXX. minimal, in did down rest now some smaller later will were sell as The sold divesting net the in probably but into for a even go proceeds of positive. they the from will some but was that winding positive take and business, assets businesses and well divestitures year some and of the rather ourselves were that others. another while, fairly us this

So time. some some to take of these are just going

are Some to just buyers of actually the discussions those take in -- them and businesses, take we will those evolve. have time interested that

Can and me. And in impacted And into about quarter segments? that's this weather read the talk any just the last how progressing in have you the for current dynamics quarter? may how

It's and rain of had bit obviously, quarter, We Coast. the of that the Gulf some some industrial second on businesses civil our our a in here solar probably heavy little business. impacted

their impacts work will some help cover bit were recovery as all will of Some get on not of the them us those, from not of sites. not. to upsides to We significant we obviously. those back any Others quickly were have The pretty able as their and necessarily will in of get name the to the little just a language of some clients storms because costs, contract thought.

second third year, We some work the revenue gave quarter little the So early and bit that of quarter this quarter in a again, us little it's of storm been real a material. pretty not bit and had good.

Our comes with the next Romero line from of question Julio Sidoti.

This for Hantman on is Alex Julio.

expansion centers. growth data projects of or you in relative on question Are your the First any trends around size seeing in portfolio?

and Well, we're a part that supports work the building country the shavers and with Texas like is now this generation. here seeing peak have associated power support. and projects, construction and also centers. part demand work that some the data opportunities both power fiber studies clients in for We're doing generation I'm ability to centers. respect also doing data the comes centers of -- a with doing number We're some from in more a we in future associated of right of more with It's or component now in sure clients of to data gas. installs, we're on of solar

Great. And then might you Can I that end guidance. of high the guidance. to EPS there. bring the about talk appreciate the low bit of question versus a end little us some your scenarios the color around the the

mean the us I weather the If the normal we it's perspective in that Yes. take the -- could a of or winter if end in back year, the range. lower any opportunities, be QX that of us cost expecting, have could we're in sets than half serious right? to impact from earlier

the towards the QX named upper On the the storm side of end the Those some spectrum range. and top opposite QX. drive project during of that hurricanes the range, from us end usual of toward suspects early closeouts, work are the good

question next Avi from UBS. Our line Jaroslawicz the with comes of

On for Steve Fisher.

expectations about uncertainties you're half, into little quarter the to that? want would a as And you robust And bit are quarter biggest how what compared in going in your there? Energy of and us can as and to maybe say what then second into how mind second, I for just swing color conservative a you segment. the drove much yes, we to -- another the -- baking if in give guidance? understand the So profit just margins your think back that more

for burned modest look just little Yes. slightly a back couple most backlog the originally of thought just Look, to we burning solid were that going look, about bit again, the quarter relatively think not of we revenue during of anticipated. And to in where bit I than the year and our where we finish to of of be we of closeouts whole We the a small because back another little the going margins year, part. pie. project timing it's above lot were we're we year toward fact -- basically, it's and to have And quarter of are. for still a -- the still we the good us. they We more half solid the as uncertainties the because another be The a year have feel win, businesses. during but couple the the a total business frankly, off percentage a half of of

we the in bit $XXX maybe especially called Got bookings Energy QX terms the awards backlog, I of Okay. would in segment, press think And then little expected of million with so out it. the have release. there the when for you a July stronger

know just were So of hit another early QX? backlog the QX discuss what $XXX Like terms can to you and there's I ins we'll million But parts booked that July within from bridging in there? in backlog was outs moving the some QX. that of

The in the magic, that into easily I'm crept we're opportunities late the negotiating. were put with course the towards quarter the fourth have for the the lot if XXXX. But low just thing care to executed. year. backlog there's We've a that that's I contract. place put we've it get another contracts fact is and will could that are is into QX. We've We've about. into QX It's it sure when the you us quarter projects pushes of just that we're but really been and backlog booked that going control them. -- right? we it a this into of we'll the bidder told of The over in going And have when third expectation don't XXXX, $XXX we'll position that got year million towards in preparing of it projects on QX -- will quarter, contracts all until executed. a timing. good have We sign that sometimes some same timing take end QX, the the very got of have so it. the our over really of lot It just we have to We're of not no end any

come Thompson, Gainey And the Davis. line with from Kevin of will our next question

for It's the do Because Adam. end -- to we continue could Kevin margins pretty And guide. of Maybe if up back can were on you the the towards could if guys on might think half? in end higher quarter, you that the in they energy touch strong. shake out that the

That's the most certainly in possibility. performing a right Energy our I now, mean, of are businesses well. segment

of of Some projects. it the is timing

going If that is an early in upside. perform, starting you're we're are out, the project this there but [indiscernible] potential also your for up deal on projects a which continue to that margins, phases, that so see that not have guys are a you closing great just they we year far probably projects go margins have got to

maybe I then know the guys we was And Communications? Southwest. about And the customer you're that? that in like particular Is looking Perfect. maybe mentioned demand. one driving could half you for -- back year talk how of communications this

various country parts they Colorado, our that finishing well. performing year. extremely growing see [indiscernible] the very and No, number it's They we the a not clients group and And a communications out last They're they've expect improvement and well project -- problem in in good back half different of New growing of the but year, since Texas, performance been consistent. they in still to of with had Mexico, by at different rate, Nevada. they're rapid are performed

And Arizona.

Arizona. And

a gain There is industrial in quickly, flow. on stuff cash mentioning. sale you sizable that were definitely the that particular a Southwest the there just a [indiscernible]. divestment was rather guys then And Was on

of businesses was winding other the was spread there. those. it through business It couple down. one and across of this of sold a we one, Yes. divestments. And equipment we [indiscernible] underutilized kind we're When sell X of all look, It's a our

with of D.A. the question come from Davidson. Thielman line next will Our Brent

competitive opportunities had sort be Tom, manage that those be just exposure you market, couple here. in of of like the questions what to environment typical will be the a around you? a seems guys an power could risks past It sorts in for developing I think made looks curious gas-fired Primoris. project like, interesting your do of I and you opportunity the sized some for mention that in what release how

our we're some And out now this out in Well, California group they of West. an in in union work doing have expertise and that.

their extremely they're So other our well. won negotiated. of really with, they recent but are basically they manage and And the the work. there of we performing just Yes, number share contractors awarded one risk competitors, of we've a compete well, most jobs were

extremely perhaps. was well. cycle but Nonunion, we competition. that And we simple there know So more and shavers, no to with inclined an expertise, work or which go down smaller, peak have primarily are much again, maybe $XXX million

We in the the areas Texas not as Actually competition some in we have here in some seen in this of much we've company. the as in other region is of [indiscernible] expertise will on rely probably parts country. the

upcoming Okay. real I any curious doesn't it the moving your of election? guess, sort wait-and-see new wouldn't Tom, any projects customers are I solar Is viewing how like sense to in thoughts that appreciate there look -- approach it, that. there. but And

than customers The possibly going see They have conservative not build more is you there they'll honestly, so facilities being more can fast and that more for is in we investment They that in. solar approach to for aggressive. apparent specifically, to next about do. what need work the worried not. how see a slowdown we probably what's these be anyway really see to in it energy. realistic the being But They're demand administration line with may with

our are we the developers. all So work of execute our I customers customers, XX% very that think negotiated of all well-funded we of and about

seen we So haven't anything. really

grow see growing. we couple not may But yes, growing been still quite the It add in quickly as just as it's that, to it to just past of years.

which reality with Yes, being conservative, but which I little in said with is more respect to -- more what is. of what kind line a is

Yes.

of margin story. of much in can to headwind of the other term? How softness Just words, last sort still utilities is the guess, face near I Utility gas of segment. the gross that one the some spending spending In in from expand margins expansion on some of the you pressure

I honestly Yes, I can. we can. think think we

it performance related. of Some just is

and we we can. our on optimize to if perform efficiencies continue better, job we our better productivity and sites, So perform

need in they receptive Some and have services of MSAs. are negotiate our negotiations adjustments and rights our partners been clients inclined, U.S. and to our to they our it's want really services,

pulled not more much. have as back them to of the are done. spending of same They're Some get they really the amount and saying that spending clients are work probably

So dropping. they It's but the planning spending up rates that they similar $X a of that rates in done. interest spend year, on their it's getting probably experienced right? impact work maybe amount just in they're going not but their the billion -- -- So or have, we the same is same is interest

-- reduce no reduce we in to our not So their costs -- there's clients any seen anyway. pressure from have and costs

margin [indiscernible] So pressure.

I for to Tom turn call our conclude closing McCormick over question-and-answer will back session. will now remarks. That the

put positive forward the through half in look thank with trajectory XXXX And for a quarter. Primoris. XXXX. pleased you second We're of and questions the interest the and Thank you. first you of updating we expect you, your year to Thank for us half on and next our to results

today's conclude will for all joining. you That call. Thank

disconnect. You now may