GlobeNewswire Inc | Aug 4, 2020 06:30AM EDT

August 04, 2020

-- Board of Directors Declares $0.06 Per Share Cash Dividend

Financial Highlights

-- 2020 Q2 revenue of $908.2 million, compared to $789.9 million in 2019 Q2 -- 2020 Q2 net income attributable to Primoris of $33.0 million, or $0.68 per fully diluted share, compared to $17.8 million, or $0.35 per fully diluted share, in 2019 Q2 -- 2020 Q2 SG&A 5.7% of revenue, compared to 6.2% of revenue in 2019 Q2 -- 2020 Q2 cash flows from operations of $66.1 million, compared to cash used in operations of $24.4 million in 2019 Q2 -- Total Backlog of $3.5 billion at June 30, 2020 Includes $0.5B related to a major pipeline project in the Mid-Atlantic

DALLAS, Aug. 04, 2020 (GLOBE NEWSWIRE) -- Primoris Services Corporation (NASDAQ GS: PRIM) (Primoris or Company) today announced financial results for its second quarter ended June 30, 2020.

The Company also announced that on July 31, 2020 its Board of Directors declared a $0.06 per share cash dividend to stockholders of record on September 30, 2020, payable on or about October 15, 2020.

Tom McCormick, President and Chief Executive Officer of Primoris, commented, We are proud of Primoris resilient second quarter results. In spite of the uncertainty created by a global pandemic, an oil crisis, and social unrest, Primoris revenue was the second highest in the Companys history. Four of our five segments improved their margins compared to the 2019 second quarter, with particularly strong results in our gas and electric utility markets. The continued improvement in the Civil segment margins are the direct result of the improvement initiatives Primoris has been implementing over the past couple of years. We signed over $1.2 billion in new business in the second quarter, much of it in the solar and renewable markets, and ended the quarter with $3.5 billion in backlog. That value includes roughly $0.5 billion related to a major pipeline project. Although our customer has publicly announced that the project has been cancelled, they have not yet provided formal notice, or given guidance to the consortium members as to their scope related to the cancellation (i.e. demobilization, reinstatement, etc.).

Mr. McCormick continued, We have learned how to successfully execute our projects while taking the necessary steps to keep our employees, customers, and communities safe during the pandemic. Our solid backlog positions us for a strong second half of the year, with the gas and electric utility markets and the solar market expected to continue to drive revenue and margins for the remainder of the year. We continue to have exceptional cash flows, supporting our stable balance sheet and continued dividend, and believe that there are exciting opportunities for growth when the markets are able to see beyond the current volatility.

2020 SECOND QUARTER RESULTS OVERVIEW

Revenue was $908.2 million for the three months ended June 30, 2020, an increase of $118.3 million, or 15.0%, compared to the same period in 2019. The increase was primarily due to growth in our Pipeline segment, partially offset by lower revenue in our Power and Transmission segments. Gross profit was $101.0 million for the three months ended June 30, 2020, an increase of $20.4 million, or 25.4%, compared to the same period in 2019. The increase was primarily due to an increase in revenue and margins. Gross profit as a percentage of revenue increased to 11.1% for the three months ended June 30, 2020, compared to 10.2% for the same period in 2019 as described in the forthcoming segment results.

Segment Revenue(in thousands, except %)(unaudited)

For the three months ended June 30, 2020 2019 %of %of Total TotalSegment Revenue Revenue Revenue RevenuePower $ 157,476 17.3 % $ 172,170 21.8 %Pipeline 289,559 31.9 % 137,243 17.4 %Utilities 230,175 25.4 % 222,312 28.1 %Transmission 109,948 12.1 % 135,354 17.1 %Civil 121,058 13.3 % 122,850 15.6 %Total $ 908,216 100.0 % $ 789,929 100.0 %

For the six months ended June 30,

2020 2019 %of %of Total TotalSegment Revenue Revenue Revenue RevenuePower $ 353,669 21.4 % $ 317,553 21.9 %Pipeline 481,082 29.1 % 272,057 18.7 %Utilities 377,345 22.9 % 368,518 25.4 %Transmission 212,732 12.9 % 253,797 17.5 %Civil 226,631 13.7 % 239,562 16.5 %Total $ 1,651,459 100.0 % $ 1,451,487 100.0 %

Segment Gross Profit(in thousands, except %)(unaudited)

For the three months ended June 30, 2020 2019 %of %of Segment SegmentSegment GrossProfit Revenue GrossProfit RevenuePower $ 6,703 4.3 % $ 23,167 13.5 %Pipeline 27,030 9.3 % 11,531 8.4 %Utilities 42,392 18.4 % 30,866 13.9 %Transmission 13,445 12.2 % 10,200 7.5 %Civil 11,397 9.4 % 4,767 3.9 %Total $ 100,967 11.1 % $ 80,531 10.2 %

For the six months ended June 30, 2020 2019 %of %of Segment SegmentSegment GrossProfit Revenue GrossProfit RevenuePower $ 25,385 7.2 % $ 43,365 13.7 %Pipeline 43,522 9.0 % 26,547 9.8 %Utilities 46,994 12.5 % 39,107 10.6 %Transmission 15,157 7.1 % 16,828 6.6 %Civil 17,719 7.8 % 7,144 3.0 %Total $ 148,777 9.0 % $ 132,991 9.2 %

Power, Industrial, & Engineering Segment (Power): Revenue decreased by $14.7 million, or 8.5%, for the three months ended June 30, 2020, compared to the same period in 2019. The decrease is primarily due to lower revenue at our Canadian operations and the substantial completion of a Louisiana industrial plant project in 2019, partially offset by an industrial project for a major utility customer in California that began in the third quarter of 2019. Gross profit for the three months ended June 30, 2020, decreased by $16.5 million, or 71.1%, compared to the same period in 2019 due to lower revenue and margins. Gross profit as a percentage of revenue decreased to 4.3% during the three months ended June 30, 2020, compared to 13.5% in the same period in 2019 primarily due to higher costs associated with a liquified natural gas (LNG) plant project in the northeast in 2020, partially offset by strong performance and favorable margins realized on Texas solar projects.

Pipeline & Underground Segment (Pipeline): Revenue increased by $152.3 million, or 111.0%, for the three months ended June 30, 2020, compared to the same period in 2019. The increase is primarily due to pipeline projects in Texas that began in the first quarter of 2020, partially offset by the substantial completion of a major pipeline project in West Texas in the second quarter of 2019 and reduced activity on a pipeline project in the Mid-Atlantic. Gross profit for the three months ended June 30, 2020, increased by $15.5 million, or 134.4%, compared to the same period in 2019 due to higher revenue and margins. Gross profit as a percentage of revenue increased to 9.3% during the three months ended June 30, 2020, compared to 8.4% in the same period in 2019 primarily due to unfavorable weather conditions on a West Texas pipeline project and the impact of a client delay on a project in Southern California in 2019.

Utilities & Distribution Segment (Utilities): Revenue increased by $7.9 million, or 3.5%, for the three months ended June 30, 2020, compared to the same period in 2019 primarily due to increased activity with customers in the Midwest, Southeast, California and Texas, partially offset by decreased activity with a utility customer in California. Gross profit for the three ended June 30, 2020, increased by $11.5 million, or 37.3%, compared to the same period in 2019 primarily due to higher revenue and margins. Gross profit as a percentage of revenue increased to 18.4% during the three months ended June 30, 2020, compared to 13.9% in the same period in 2019 primarily due to favorable margins on projects in the Southeast from increased productivity in 2020 and unfavorable weather conditions experienced in the Midwest in 2019.

Transmission & Distribution Segment (Transmission): Revenue decreased by $25.4 million, or 18.8%, for the three months ended June 30, 2020, compared to the same period in 2019 primarily due to decreased activity with a utility customer in Texas. Gross profit for the three months ended June 30, 2020, increased by $3.2 million, or 31.8%, compared to the same period in 2019, due primarily to higher margins, partially offset by lower revenue. Gross profit as a percentage of revenue increased to 12.2% during the three months ended June 30, 2020, compared to 7.5% in the same period in 2019 primarily due to upfront costs to expand our operations and unfavorable weather conditions experienced in certain regions in 2019.

Civil Segment (Civil): Revenue decreased by $1.8 million, or 1.5%, for the three months ended June 30, 2020, compared to the same period in 2019. The decrease is primarily due to the substantial completion of a project with a major refining customer, a port project, and an ethylene plant project in 2019, as well as lower Texas Department of Transportation volumes. These amounts were mostly offset by an LNG plant project in Texas that began in 2020. Gross profit for the three months ended June 30, 2020, increased by $6.6 million compared to the same period in 2019 due primarily to higher margins. Gross profit as a percentage of revenue increased to 9.4% during the three months ended June 30, 2020, compared to 3.9% in the same period in 2019 due primarily to strong performance on the LNG plant project in Texas that began in 2020 and increased profit on Louisiana Department of Transportation and Development projects.

OTHER INCOME STATEMENT INFORMATION

Selling, general and administrative (SG&A) expenses were $51.4 million during the three months ended June 30, 2020, an increase of $2.7 million, or 5.5%, compared to 2019 primarily due to a $3.5 million increase in compensation related expenses, including incentive compensation, partially offset by a $0.7 million decrease in travel expense. SG&A expense as a percentage of revenue decreased to 5.7% compared to 6.2% for the corresponding period in 2019 due to increased revenue.

Interest expense for the three months ended June 30, 2020, decreased compared to the same period in 2019 due primarily to a $0.1 million unrealized gain on the change in the fair value of our interest rate swap agreement during the three months ended June 30, 2020, compared to a $2.7 million loss in 2019.

The effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 29.0% for the three months ended June 30, 2020. The rate differs from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and nondeductible components of per diem expenses.

OUTLOOK

Balancing the ongoing uncertainty surrounding the COVID-19 pandemic with the expected continued strength in operations across the Companys Utilities, Transmission, and Civil segments for the remainder of the year, Primoris estimates that for the fiscal year ending December 31, 2020, net income attributable to Primoris will be between $1.60 and $1.80 per fully diluted share.

BACKLOG

Expected Next Four Quarters Total Backlog at June 30,2020 (in millions) Backlog RevenueSegment Fixed Backlog MSABacklog Total Backlog RecognitionPower $ 820 $ 88 $ 908 89 %Pipeline 844 74 918 45 %Utilities 33 642 675 100 %Transmission 22 413 435 100 %Civil 586 4 590 65 %Total $ 2,305 $ 1,221 $ 3,526 77 %

At June 30, 2020, Fixed Backlog was $2.31 billion, compared to $1.76 billion at December31, 2019. Fixed Backlog for the Pipeline segment as of June 30, 2020 includes $0.51 billion of backlog associated with a major pipeline project in the Mid-Atlantic. In July 2020, the customer announced the planned cancellation of the project. However, we have not received formal termination of the contract from the customer at this time.

At June 30, 2020, MSA Backlog was $1.22 billion, compared to $1.42 billion at December 31, 2019. During the second quarter of 2020, approximately $335 million of revenue was recognized from MSA projects, a 3.7% decrease over the second quarter 2019 MSA revenue. MSA Backlog represents estimated MSA revenue for the next four quarters.

Total Backlog at June 30, 2020 was $3.53 billion, compared to $3.18 billion at December 31, 2019.

Backlog, including estimated MSA revenue, should not be considered a comprehensive indicator of future revenue. Revenue from certain projects where scope, and therefore contract value, is not adequately defined, is not included in Fixed backlog. At any time, any project may be cancelled at the convenience of our customers.

CONFERENCE CALL

Tom McCormick, President and Chief Executive Officer, and Ken Dodgen, Executive Vice President and Chief Financial Officer, will host a conference call Tuesday, August 4, 2020 at 10:00 am Eastern Time / 9:00 am Central Time to discuss the results.

Interested parties may participate in the call by dialing:

-- (877) 407-8293 (Domestic) -- (201) 689-8349 (International)

Presentation slides to accompany the conference call are available for download in the Investor Relations section of Primoris 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, a replay may be accessed by dialing (877) 660-6853, conference ID 13707087, and will be available for approximately two weeks. The conference call will also be broadcast live over the Internet and can be accessed and replayed through the Investor Relations section of Primoris' website at www.prim.com.

ABOUT PRIMORIS

Founded in 1960, Primoris, through various subsidiaries, has grown to become one of the leading providers of specialty contracting services operating mainly in the United States and Canada. Primoris provides a wide range of specialty construction services, fabrication, maintenance, replacement, and engineering services to a diversified base of customers. The Companys national footprint extends from Florida, along the Gulf Coast, through California, into the Pacific Northwest and into Canada. For additional information, please visit www.prim.com.

FORWARD LOOKING STATEMENTS

This press release contains certain forward-looking statements that reflect, when made, the Companys expectations or beliefs concerning future events that involve risks and uncertainties, including with regard to the Companys future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as anticipates, believes, could, estimates, expects, intends, may, plans, potential, predicts, projects, should, will, would or similar expressions. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of regulation and the economy, generally. Forward-looking statements inherently involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results may differ materially as a result of a number of factors, including, among other things, customer timing, project duration, weather, and general economic conditions; changes in our mix of customers, projects, contracts and business; regional or national and/or general economic conditions and demand for our services; price, volatility, and expectations of future prices of oil, natural gas, and natural gas liquids; variations and changes in the margins of projects performed during any particular quarter; increases in the costs to perform services caused by changing conditions; the termination, or expiration of existing agreements or contracts; the budgetary spending patterns of customers; increases in construction costs that we may be unable to pass through to our customers; cost or schedule overruns on fixed-price contracts; availability of qualified labor for specific projects; changes in bonding requirements and bonding availability for existing and new agreements; the need and availability of letters of credit; costs we incur to support growth, whether organic or through acquisitions; the timing and volume of work under contract; losses experienced in our operations; the results of the review of prior period accounting on certain projects; developments in governmental investigations and/or inquiries; intense competition in the industries in which we operate; failure to obtain favorable results in existing or future litigation or regulatory proceedings, dispute resolution proceedings or claims, including claims for additional costs; failure of our partners, suppliers or subcontractors to perform their obligations; cyber-security breaches; failure to maintain safe worksites; risks or uncertainties associated with events outside of our control, including severe weather conditions, public health crises and pandemics (such as COVID-19), political crises or other catastrophic events; client delays or defaults in making payments; the availability of credit and restrictions imposed by credit facilities; failure to implement strategic and operational initiatives; risks or uncertainties associated with acquisitions, dispositions and investments; possible information technology interruptions or inability to protect intellectual property; the Companys failure, or the failure of our agents or partners, to comply with laws; the Company's ability to secure appropriate insurance; new or changing legal requirements, including those relating to environmental, health and safety matters; the loss of one or a few clients that account for a significant portion of the Company's revenues; asset impairments; and risks arising from the inability to successfully integrate acquired businesses. In addition to information included in this press release, additional information about these and other risks can be found in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2019, and our other filings with the Securities and Exchange Commission (SEC). Such filings are available on the SECs website at www.sec.gov. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements. 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 ContactKen Dodgen Kate TholkingExecutive Vice President, Chief Financial Vice President, InvestorOfficer Relations(214) 740-5608 (214) 740-5615kdodgen@prim.com ktholking@prim.com

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands, Except Per Share Amounts)(Unaudited)

Three Months Ended Six Months Ended June 30 June 30 2020 2019 2020 2019 Revenue $ 908,216 $ 789,929 $ 1,651,459 $ 1,451,487 Cost of 807,249 709,398 1,502,682 1,318,496 revenueGross profit 100,967 80,531 148,777 132,991 Selling,general and 51,422 48,719 95,810 91,650 administrativeexpensesOperating 49,545 31,812 52,967 41,341 incomeOther income (expense):Foreignexchange gain (200 ) (403 ) (64 ) (588 ) (loss), netOther income 706 177 718 (193 ) (expense), netInterest 64 219 345 568 incomeInterest (3,690 ) (6,716 ) (12,802 ) (12,308 ) expenseIncome beforeprovision for 46,425 25,089 41,164 28,820 incometaxesProvision for (13,463 ) (7,265 ) (11,936 ) (8,060 ) income taxesNet income 32,962 17,824 29,228 20,760 Less netincomeattributable (3 ) (37 ) (6 ) (1,026 ) tononcontrollinginterests Net incomeattributable $ 32,959 $ 17,787 $ 29,222 $ 19,734 to Primoris Dividends per $ 0.06 $ 0.06 $ 0.12 $ 0.12 common share Earnings per share:Basic $ 0.68 $ 0.35 $ 0.60 $ 0.39 Diluted $ 0.68 $ 0.35 $ 0.60 $ 0.39 Weightedaverage common sharesoutstanding:Basic 48,270 50,912 48,429 50,841 Diluted 48,668 51,228 48,782 51,208

CONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)(Unaudited)

June 30 December31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 155,670 $ 120,286 Accounts receivable, net 468,949 404,911 Contract assets 376,733 344,806 Prepaid expenses and other current assets 45,943 42,704 Total current assets 1,047,295 912,707 Property and equipment, net 368,086 375,888 Operating lease assets 240,072 242,385 Deferred tax assets 1,116 1,100 Intangible assets, net 65,146 69,829 Goodwill 215,103 215,103 Other long-term assets 16,736 13,453 Total assets $ 1,953,554 $ 1,830,465 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 256,980 $ 235,972 Contract liabilities 223,077 192,397 Accrued liabilities 222,472 183,501 Dividends payable 2,893 2,919 Current portion of long-term debt 51,913 55,659 Total current liabilities 757,335 670,448 Long-term debt, net of current portion 300,899 295,642 Noncurrent operating lease liabilities, net 163,947 171,225 of current portionDeferred tax liabilities 17,820 17,819 Other long-term liabilities 68,649 45,801 Total liabilities 1,308,650 1,200,935 Commitments and contingencies Stockholders? equity Common stock 5 5 Additional paid-in capital 91,257 97,130 Retained earnings 554,717 531,291 Accumulated other comprehensive (loss) income (1,109 ) 76 Noncontrolling interest 34 1,028 Total stockholders? equity 644,904 629,530 Total liabilities and stockholders? equity $ 1,953,554 $ 1,830,465

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)(Unaudited)

Six Months Ended June 30, 2020 2019Cash flows from operating activities: Net income $ 29,228 $ 20,760 Adjustments to reconcile net income to net cash provided by (used in) operatingactivities:Depreciation and amortization 39,231 43,392 Stock-based compensation expense 1,202 858 Gain on sale of property and equipment (7,332 ) (4,713 )Unrealized loss on interest rate swap 4,907 4,194 Other non-cash items 2,823 160 Changes in assets and liabilities: Accounts receivable (65,860 ) (97,964 )Contract assets (32,765 ) (51,048 )Other current assets (3,268 ) 5,309 Other long-term assets 223 (137 )Accounts payable 21,897 (31,405 )Contract liabilities 30,784 4,205 Operating lease assets and liabilities, net (551 ) (918 )Accrued liabilities 22,125 13,481 Other long-term liabilities 18,007 (2,698 )Net cash provided by (used in) operating activities 60,651 (96,524 )Cash flows from investing activities: Purchase of property and equipment (21,703 ) (56,907 )Proceeds from sale of property and equipment 12,086 21,196 Net cash used in investing activities (9,617 ) (35,711 )Cash flows from financing activities: Borrowings under revolving line of credit ? 140,000 Payments on revolving line of credit ? (85,000 )Proceeds from issuance of long-term debt 33,873 23,105 Repayment of long-term debt (32,469 ) (34,320 )Proceeds from issuance of common stock purchased 578 1,804 under a long-term incentive planPayment of taxes on conversion of Restricted Stock (77 ) (1,519 )UnitsCash distribution to noncontrolling interest (1,000 ) (3,505 )holdersRepurchase of common stock (8,343 ) ? Dividends paid (5,814 ) (6,094 )Other (2,014 ) (39 )Net cash (used in) provided by financing activities (15,266 ) 34,432 Effect of exchange rate changes on cash and cash (384 ) 854 equivalentsNet change in cash and cash equivalents 35,384 (96,949 )Cash and cash equivalents at beginning of the 120,286 151,063 periodCash and cash equivalents at end of the period $ 155,670 $ 54,114