• Board of Directors Declares $0.06 Per Share Cash Dividend
• Authorizes $50 Million Share Repurchase Plan

Financial Highlights

• 2019 Q3 revenue of $865.1 million, compared to $908.9 million in 2018 Q3
• Record 2019 Q3 net income attributable to Primoris of $35.6 million, or $0.70 per fully diluted share
  • Compared to $32.7 million, or $0.63 per fully diluted share, in 2018 Q3, a 9.0% increase
• 2019 Q3 SG&A 5.8% of revenue, compared to 2018 Q3 5.7% of revenue
• Total Backlog of $3.2 billion at September 30, 2019, a 16.3% increase over December 31, 2018
• Successful resolution of various claims in the Civil segment
• Strong Cash Flows from Operations
• Reaffirmed 2019 EPS Guidance

DALLAS, Nov. 04, 2019 (GLOBE NEWSWIRE) -- Primoris Services Corporation (NASDAQ GS: PRIM) (“Primoris” or “Company”) today announced financial results for its third quarter ended September 30, 2019.

The Company also announced that on October 31, 2019 its Board of Directors authorized a $50 million share repurchase plan and declared a $0.06 per share cash dividend to stockholders of record on December 31, 2019, payable on or about January 15, 2020. 

David King, Executive Chairman and Chief Executive Officer of Primoris, commented, “I am pleased to say that Primoris had another great quarter, with strong project execution and continued cost control leading to a record net income.  The lack of major storm repair work and project delays created a slight headwind compared to last year, but it was more than offset by benefits from the partial resolution of outstanding claims.  Over the past year we have seen our backlog grow 19%, growing both our Fixed and MSA backlog, thanks to the combined efforts of our dedicated sales and operations teams.  As expected, we saw a significant positive swing in our operating cash flow in the third quarter, allowing us to continue reducing our debt levels while maintaining a robust capital expenditure program, actively evaluating additional acquisition opportunities, and initiating a share repurchase program.”

Mr. King continued, “Primoris’ diverse end markets remain strong.  The forces driving demand for our utility work are creating long-term opportunities to improve our country’s electric and natural gas infrastructure.  The bidding activity in our renewables, petrochemical, and LNG end markets indicate strength in those markets as we head into 2020, and the pipeline market continues to provide multiple avenues for growth, notwithstanding individual project delays.  We expect our momentum to continue in the fourth quarter and well into 2020, delivering positive results for our customers and shareholders.”

2019 THIRD QUARTER RESULTS OVERVIEW

Revenue was $865.1 million for the three months ended September 30, 2019, a decrease of $43.8 million, or 4.8%, compared to the same period in 2018. The decrease was primarily due to lower revenue in our Pipeline segment, partially offset by growth in our Power and Utilities segments.  Gross profit was $108.4 million for the three months ended September 30, 2019, an increase of $1.9 million, or 1.8%, compared to the same period in 2018.  The increase was primarily due to increases in our Civil and Utilities segments, partially offset by lower gross profit in our Power, Transmission, and Pipeline segments. Gross profit as a percentage of revenue increased to 12.5% in the three months ended September 30, 2019 from 11.7% in the same period in 2018 due primarily to a favorable impact from partial claims resolution in our Civil segment associated with the Belton area projects, partially offset by higher costs associated with two industrial projects in our Power segment.

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

		For the three months ended September 30,
		2019						2018
					% of						% of
					Total						Total
Segment		Revenue			Revenue			Revenue			Revenue
Power		$	200,657		23.2	%		$	181,822		20.0	%
Pipeline			133,590		15.4	%			213,073		23.4	%
Utilities			281,561		32.6	%			269,652		29.7	%
Transmission			128,784		14.9	%			121,526		13.4	%
Civil			120,472		13.9	%			122,829		13.5	%
Total		$	865,064		100.0	%		$	908,902		100.0	%

		For the nine months ended September 30,
		2019						2018
					% of						% of
					Total						Total
Segment		Revenue			Revenue			Revenue			Revenue
Power		$	518,210		22.4	%		$	515,378		25.0	%
Pipeline			405,647		17.5	%			361,261		17.5	%
Utilities			650,079		28.1	%			665,214		32.3	%
Transmission			382,581		16.5	%			163,980		7.9	%
Civil			360,034		15.5	%			355,975		17.3	%
Total		$	2,316,551		100.0	%		$	2,061,808		100.0	%

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

		For the three months ended September 30,
		2019						2018
					% of						% of
					Segment						Segment
Segment		Gross Profit			Revenue			Gross Profit			Revenue
Power		$	15,525		7.7	%		$	32,077		17.6	%
Pipeline			19,657		14.7	%			24,999		11.7	%
Utilities			48,892		17.4	%			35,348		13.1	%
Transmission			4,836		3.8	%			13,958		11.5	%
Civil			19,511		16.2	%			123		0.1	%
Total		$	108,421		12.5	%		$	106,505		11.7	%

		For the nine months ended September 30,
		2019						2018
					% of						% of
					Segment						Segment
Segment		Gross Profit			Revenue			Gross Profit			Revenue
Power		$	58,890		11.4	%		$	76,674		14.9	%
Pipeline			46,204		11.4	%			43,568		12.1	%
Utilities			87,999		13.5	%			78,963		11.9	%
Transmission			21,664		5.7	%			19,679		12.0	%
Civil			26,655		7.4	%			3,600		1.0	%
Total		$	241,412		10.4	%		$	222,484		10.8	%

Power, Industrial, & Engineering Segment (“Power”):  Revenue increased by $18.8 million, or 10.4%, for the three months ended September 30, 2019, compared to the same period in 2018. The increase is primarily due to a West Texas solar facility project that began in 2019 and a carbon monoxide and hydrogen plant project that began in 2019. The overall increase was partially offset by the substantial completion of refinery projects in Southern California and our Carlsbad joint venture project in 2018.  Gross profit for the three months ended September 30, 2019, decreased by $16.6 million, or 51.6% compared to the same period in 2018.  The decrease is primarily due to a partial settlement in the third quarter of 2018 of a disputed receivable and higher costs associated with two industrial projects in the third quarter of 2019. Gross profit as a percentage of revenue decreased to 7.7% during the three months ended September 30, 2019, compared to 17.6% in the same period in 2018, primarily due to the reasons above and a strong performance and favorable margins realized by our Carlsbad joint venture project in 2018.

Pipeline & Underground Segment (“Pipeline”):  Revenue decreased by $79.5 million, or 37.3%, for the three months ended September 30, 2019, compared to the same period in 2018. The decrease is primarily due to the substantial completion of a major pipeline project in West Texas in the second quarter of 2019 and reduced activity on a major pipeline project in the Mid-Atlantic. These amounts were partially offset by a pipeline project in the Pacific Northwest that began in 2019.  Gross profit for the three months ended September 30, 2019 decreased by $5.3 million, or 21.4%, compared to the same period in 2018 due to lower revenue, partially offset by higher margins. Gross profit as a percentage of revenue increased to 14.7% during the three months ended September 30, 2019, compared to 11.7% in the same period in 2018, primarily due to the favorable impact from the closeout of multiple pipeline projects in 2019.
   
Utilities & Distribution Segment (“Utilities”):  Revenue increased by $11.9 million, or 4.4%, for the three months ended September 30, 2019, compared to the same period in 2018, primarily due to increased activity with two major utility customers in the Midwest and a utility customer in Texas, partially offset by decreased activity with a major utility customer in California.  Gross profit for the three months ended September 30, 2019, increased by $13.5 million, or 38.3%, compared to the same period in 2018, primarily due to higher revenue and margins. Gross profit as a percent of revenue increased to 17.4% during the three months ended September 30, 2019, compared to 13.1%, in the same period in 2018, primarily due to an increase in higher margin projects in 2019.

Transmission & Distribution Segment (“Transmission”): The Transmission segment was created in connection with the acquisition of Willbros in the second quarter of 2018. Revenue increased by $7.3 million, or 6.0%, for the three months ended September 30, 2019, compared to the same period in 2018 primarily due to increased activity with a major utility customer in the Midwest and Southeast, partially offset by the substantial completion of a major project in the Southeast in 2018.  Gross profit for the three months ended September 30, 2019, decreased by $9.1 million, or 65.4%, due primarily to lower margins, partially offset by higher revenue.  Gross profit as a percentage of revenue decreased to 3.8% during the three months ended September 30, 2019, compared to 11.5% in the same period in 2018, primarily due to a reduction in higher margin storm work, upfront costs to expand our operations, and relocation costs to move crews in 2019, along with strong performance on a major project in the Southeast in 2018.

Civil Segment (“Civil”):  Revenue decreased by $2.4 million, or 1.9%, for the three months ended September 30, 2019, compared to the same period in 2018. The decrease is primarily due to the substantial completion of an ethylene plant project in the second quarter of 2019 and lower Texas Department of Transportation volumes. These amounts are partially offset by a methanol plant project and a project with a major refining customer that both began in 2019 and higher Louisiana Department of Transportation volumes.  Gross profit increased by $19.4 million for the three months ended September 30, 2019, compared to the same period in 2018, primarily due to a favorable impact from the resolution of claims associated with three of the Belton area projects in 2019 and increased profit on Louisiana DOT projects. Gross profit as a percentage of revenue increased to 16.2% during the three months ended September 30, 2019, compared to 0.1% in the same period in 2018, due primarily to the reasons noted above.

OTHER INCOME STATEMENT INFORMATION

Selling, general and administrative (“SG&A”) expenses were $49.8 million during the three months ended September 30, 2019, a decrease of $1.8 million, or 3.4%, compared to 2018 primarily due to a $2.0 million decrease in compensation related expenses. SG&A expense as a percentage of revenue was consistent with the same period in 2018.

Interest expense for the three months ended September 30, 2019, decreased compared to the same period in 2018, due primarily to $2.3 million of additional interest during the three months ended September 30, 2018, related to the early extinguishment of senior notes, partially offset by a $0.6 million unrealized loss on the change in the fair value of our interest rate swap agreement during the three months ended September 30, 2019.

The effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 29.0% for the nine months ended September 30, 2019.  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

The Company reaffirms its estimate that for the fiscal year ending December 31, 2019, net income attributable to Primoris is expected to be between $1.60 and $1.80 per fully diluted share.

BACKLOG

										Expected Next Four
										Quarters Total
	Backlog at September 30, 2019 (in millions)									Backlog Revenue
Segment	Fixed Backlog			MSA Backlog			Total Backlog			Recognition
Power	$	400		$	112		$	512			89	%
Pipeline		712			142			854			67	%
Utilities		57			708			765			100	%
Transmission		24			446			470			100	%
Civil		604			6			610			67	%
Total	$	1,797		$	1,414		$	3,211			83	%

At September 30, 2019, Fixed Backlog was $1.80 billion, compared to $1.48 billion at December 31, 2018.

At September 30, 2019, MSA Backlog was $1.41 billion, compared to $1.28 billion at December 31, 2018.  During the third quarter of 2019, approximately $367 million of revenue was recognized from MSA projects.  MSA Backlog represents estimated MSA revenue for the next four quarters.

Total Backlog at September 30, 2019 was $3.21 billion, compared to $2.76 billion at December 31, 2018. 

Backlog, including estimated MSA revenue, should not be considered a comprehensive indicator of future revenue.  Revenue from certain projects, such as cost reimbursable and time-and-materials projects, do not flow through backlog.  At any time, any project may be cancelled at the convenience of our customers.

SHARE REPURCHASE PLAN

The Company’s Board of Directors has authorized a share repurchase program under which Primoris may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $50 million.  The share repurchase program expires December 31, 2020.

CONFERENCE CALL

David King, Chairman and Chief Executive Officer; Tom McCormick, President; and Ken Dodgen, Executive Vice President and Chief Financial Officer, will host a conference call, Monday, November 4, 2019 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 13695817, 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 larger publicly traded specialty contractors and infrastructure companies in the United States. Serving diverse end markets, Primoris provides a wide range of construction, specialty services, fabrication, maintenance, replacement, and engineering services to major public utilities, petrochemical companies, refiners, energy companies, municipalities, state departments of transportation, and other customers. The Company's national footprint extends from Florida, along the Gulf Coast, through California, into the Pacific Northwest and Canada. For additional information, please visit www.prim.com.

FORWARD LOOKING STATEMENTS

This press release contains certain forward-looking statements, including with regard to the Company’s future performance. Words such as "estimated," "believes," "expects," "projects," “may,” and "future" or similar expressions are intended to identify forward-looking statements.  Forward-looking statements inherently involve known and unknown risks, uncertainties, and other factors, including without limitation, those described in this press release and those detailed in the "Risk Factors" section and other portions of our Annual Report on Form 10-K for the period ended December 31, 2018, and other filings with the Securities and Exchange Commission.  Given these 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 Contact  Ken Dodgen  Executive Vice President, Chief Financial Officer (214) 740-5608  kdodgen@prim.com

Kate Tholking Vice President, Investor Relations (214) 740-5615  ktholking@prim.com

                          

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

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2019				2018				2019				2018
Revenue		$	865,064			$	908,902			$	2,316,551			$	2,061,808
Cost of revenue			756,643				802,397				2,075,139				1,839,324
Gross profit			108,421				106,505				241,412				222,484
Selling, general and administrative expenses			49,827				51,604				141,477				132,049
Merger and related costs			—				3,827				—				13,190
Operating income			58,594				51,074				99,935				77,245
Other income (expense):
Foreign exchange (loss) gain			(136	)			(69	)			(724	)			1,444
Other income (expense), net			(2,928	)			32				(3,121	)			(751	)
Interest income			42				932				610				1,544
Interest expense			(5,186	)			(6,448	)			(17,494	)			(11,637	)
Income before provision for income taxes			50,386				45,521				79,206				67,845
Provision for income taxes			(14,560	)			(10,716	)			(22,620	)			(14,633	)
Net income			35,826				34,805				56,586				53,212
Less net income attributable to noncontrolling interests			(178	)			(2,114	)			(1,204	)			(8,118	)
Net income attributable to Primoris		$	35,648			$	32,691			$	55,382			$	45,094
Dividends per common share		$	0.06			$	0.06			$	0.18			$	0.18
Earnings per share:
Basic		$	0.70			$	0.64			$	1.09			$	0.88
Diluted		$	0.70			$	0.63			$	1.08			$	0.87
Weighted average common shares outstanding:
Basic			50,976				51,403				50,887				51,471
Diluted			51,215				51,735				51,210				51,760

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)

		September 30,				December 31,
		2019				2018
ASSETS
Current assets:
Cash and cash equivalents		$	43,837			$	151,063
Accounts receivable, net			551,543				372,695
Contract assets			331,910				364,245
Prepaid expenses and other current assets			34,222				36,444
Total current assets			961,512				924,447
Property and equipment, net			379,739				375,884
Operating lease assets			228,100				—
Deferred tax assets			888				1,457
Intangible assets, net			72,581				81,198
Goodwill			215,103				206,159
Other long-term assets			11,046				5,002
Total assets		$	1,868,969			$	1,594,147
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	219,792			$	249,217
Contract liabilities			189,664				189,539
Accrued liabilities			219,472				117,527
Dividends payable			3,059				3,043
Current portion of long-term debt			60,104				62,488
Total current liabilities			692,091				621,814
Long-term debt, net of current portion			307,397				305,669
Noncurrent operating lease liabilities, net of current portion			162,418				—
Deferred tax liabilities			3,611				8,166
Other long-term liabilities			49,289				51,515
Total liabilities			1,214,806				987,164
Commitments and contingencies
Stockholders’ equity
Common stock			5				5
Additional paid-in capital			146,765				144,048
Retained earnings			507,269				461,075
Accumulated other comprehensive loss			(338	)			(908	)
Noncontrolling interest			462				2,763
Total stockholders’ equity			654,163				606,983
Total liabilities and stockholders’ equity		$	1,868,969			$	1,594,147

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

		Nine Months Ended
		September 30,
		2019				2018
Cash flows from operating activities:
Net income		$	56,586			$	53,212
Adjustments to reconcile net income to net cash used in operating activities (net of effect of acquisitions):
Depreciation			55,936				47,708
Amortization of intangible assets			8,617				8,287
Stock-based compensation expense			1,218				748
Gain on sale of property and equipment			(7,017	)			(3,212	)
Other non-cash items			240				180
Changes in assets and liabilities:
Accounts receivable			(177,942	)			(78,819	)
Contract assets			32,274				(85,817	)
Other current assets			1,219				11,061
Other long-term assets			167				(957	)
Accounts payable			(29,757	)			24,099
Contract liabilities			(3,915	)			(11,061	)
Operating lease assets and liabilities, net			(1,489	)			—
Accrued liabilities			17,662				16,400
Other long-term liabilities			6,085				5,298
Net cash used in operating activities			(40,116	)			(12,873	)
Cash flows from investing activities:
Purchase of property and equipment			(78,255	)			(80,766	)
Issuance of a note receivable			—				(15,000	)
Proceeds from a note receivable			—				15,000
Proceeds from sale of property and equipment			24,393				9,655
Cash paid for acquisitions, net of cash and restricted cash acquired			—				(111,030	)
Net cash used in investing activities			(53,862	)			(182,141	)
Cash flows from financing activities:
Borrowings under revolving line of credit			212,880				170,000
Payments on revolving line of credit			(212,880	)			(170,000	)
Proceeds from issuance of long-term debt			55,008				239,467
Repayment of long-term debt			(55,824	)			(127,291	)
Proceeds from issuance of common stock purchased under a long-term incentive plan			1,804				1,498
Payment of taxes on conversion of Restricted Stock Units			(1,519	)			—
Payment of contingent earnout liability			—				(1,200	)
Cash distribution to noncontrolling interest holders			(3,505	)			(8,750	)
Repurchase of common stock			—				(8,479	)
Dividends paid			(9,152	)			(9,271	)
Other			(328	)			(1,113	)
Net cash (used in) provided by financing activities			(13,516	)			84,861
Effect of exchange rate changes on cash and cash equivalents			268				(193	)
Net change in cash and cash equivalents			(107,226	)			(110,346	)
Cash and cash equivalents at beginning of the period			151,063				170,385
Cash and cash equivalents at end of the period		$	43,837			$	60,039