Primoris Services Corporation (NASDAQ GS: PRIM)
(“Primoris” or the “Company”) today announced financial results for
its third quarter ended September 30, 2022 and confirmed the
Company’s outlook.
For the third quarter 2022, Primoris reported the following
highlights(1):
- Revenue of $1,284.1 million, up $370.9 million, or 40.6
percent, year-over-year driven by strong growth in the Utilities
and Energy/Renewables segments, including $155.7 million from the
PLH acquisition
- Delivered net income of $43.0 million, or $0.80 per diluted
share, and adjusted net income of $60.4 million, or $1.12 per
diluted share
- Generated adjusted earnings before interest, income taxes,
depreciation and amortization (“Adjusted EBITDA”) of $109.0
million
- Increased backlog to a record $5.5 billion, up 99.8 percent
from the third quarter of 2021, including Master Service Agreements
(“MSA”) backlog of $2.1 billion
- Annual 2022 guidance range for earnings per share (“EPS”)
updated to $2.31 to $2.51 to reflect incremental depreciation,
amortization of intangibles, and transaction, integration and
related costs associated with the PLH acquisition
- Maintained Adjusted EPS guidance range of $2.39 to $2.59
(1)
Please refer to “Non-GAAP Measures” and
Schedule 1, 2 and 3 for the definitions and reconciliations of our
Non-GAAP financial measures, including “Adjusted Net Income,”
“Adjusted EPS” and “Adjusted EBITDA.”
“Our third quarter results demonstrate another significant step
in executing our long-term growth strategy. We saw record revenue
and backlog for the second consecutive quarter, including
significant organic revenue growth in our Utilities and
Energy/Renewables segments and a near doubling of our backlog
compared to the previous year,” said Tom McCormick, President and
Chief Executive Officer of Primoris.
“The closing of the PLH acquisition in August also contributed
meaningfully to our performance this quarter, including adding
almost $600 million of backlog while expanding our geographic
footprint and customer base. The Utilities segment saw the benefit
of our teams’ efforts to work with our customers to mitigate the
ongoing impacts of inflation, resulting in gross margins improving
4.3 percentage points compared to the second quarter. We also made
further progress in unlocking the potential of our communications
business by growing revenue and expanding margins from the prior
year with new customers and in new service areas. In the
Energy/Renewables segment, we continue to be one of the largest and
fastest growing contractors for utility scale and distributed
generation solar projects in the country and a leader in other
energy related and civil projects.”
“As we advance through the fourth quarter and into 2023, we
remain confident in the outlook for our business as we work to
further grow our backlog of projects across our segments and
provide quality service to our customers that will lead to reliable
and profitable growth.”
2022 Third Quarter
Results
Revenue was $1,284.1 million for the three months ended
September 30, 2022, an increase of $370.9 million, or 40.6 percent,
compared to the same period in 2021. The increase was primarily due
to organic growth of $197.3 million, or 21.6%, in the
Energy/Renewables and Utilities segments on higher solar
construction, power delivery, and communications services, as well
as approximately $173.6 million in revenue contribution from the
PLH and B Comm acquisitions. Gross profit was $154.9 million for
the three months ended September 30, 2022, an increase of $27.5
million, or 21.6 percent, compared to the same period in 2021. The
increase was primarily due to higher revenue and a favorable mix of
business in the Energy/Renewables and Utility segments and
approximately $16.0 million from the acquisitions of PLH and B
Comm, partially offset by gross profit declines in the Pipeline
Services segment. Gross profit as a percentage of revenue decreased
to 12.1 percent for the three months ended September 30, 2022,
compared to 14.0 percent for the same period in 2021 driven
primarily by lower Pipeline Services margins and inflation.
This press release includes Non-GAAP financial measures. The
Company believes these measures enable investors, analysts and
management to evaluate Primoris’ performance excluding the effects
of certain items that management believes impact the comparability
of operating results between reporting periods. In addition,
management believes these measures are useful in comparing the
Company’s operating results with those of its competitors. Please
refer to “Non-GAAP Measures” and Schedules 1, 2 and 3 for the
definitions and reconciliations of the Company’s Non-GAAP financial
measures, including “Adjusted Net Income,” “Adjusted EPS” and
“Adjusted EBITDA”.
During the third quarter of 2022, net income was $43.0 million
compared to $44.1 million in the previous year. Adjusted Net Income
was $60.4 million for the third quarter compared to $48.5 million
for the same period in 2021. Diluted earnings per share (“EPS”) was
$0.80 compared to $0.81 in the previous year. Adjusted EPS was
$1.12 for the third quarter of 2022 compared to $0.89 for the third
quarter of 2021. Adjusted EBITDA was $109.0 million for the third
quarter of 2022, an increase of $14.2 million, or 15.1 percent,
compared to $94.7 million for the same period in 2021.
The Company’s three segments are: Utilities, Energy/Renewables
and Pipeline Services. Revenue and gross profit for the segments
for the three and nine months ended September 30, 2022 and 2021
were as follows:
Segment
Revenue
(in thousands,
except %)
(unaudited)
For the three months ended
September 30,
2022
2021
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
613,008
47.7%
$
454,654
49.8%
Energy/Renewables
600,444
46.8%
351,026
38.4%
Pipeline Services
70,676
5.5%
107,565
11.8%
Total
$
1,284,128
100.0%
$
913,245
100.0%
For the nine months ended
September 30,
2022
2021
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
1,447,857
46.8%
$
1,215,087
46.5%
Energy/Renewables
1,445,843
46.8%
1,038,900
39.8%
Pipeline Services
197,761
6.4%
359,197
13.7%
Total
$
3,091,461
100.0%
$
2,613,184
100.0%
Segment Gross
Profit
(in thousands,
except %)
(unaudited)
For the three months ended
September 30,
2022
2021
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
78,046
12.7%
$
63,715
14.0%
Energy/Renewables
80,135
13.3%
35,926
10.2%
Pipeline Services
(3,274)
(4.6%)
27,795
25.8%
Total
$
154,907
12.1%
$
127,436
14.0%
For the nine months ended
September 30,
2022
2021
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
140,755
9.7%
$
134,280
11.1%
Energy/Renewables
173,209
12.0%
111,825
10.8%
Pipeline Services
(10,463)
(5.3%)
74,538
20.8%
Total
$
303,501
9.8%
$
320,643
12.3%
Utilities Segment (“Utilities”): Revenue increased by
$158.4 million, or 34.8 percent, for the three months ended
September 30, 2022, compared to the same period in 2021, primarily
due to organic growth of 10.3 percent from increased activity
across the power delivery and communications markets and a $111.3
million revenue contribution from the acquisitions of PLH and B
Comm. Gross profit for the three months ended September 30, 2022,
increased by $14.3 million, or 22.5 percent, compared to the same
period in 2021, primarily due to a $10.0 million incremental impact
from the PLH and B Comm acquisitions and $4.3 million from organic
revenue growth in the segment. Gross profit as a percentage of
revenue decreased slightly to 12.7 percent during the three months
ended September 30, 2022, compared to 14.0 percent in the same
period in 2021, primarily due to higher costs caused by supply
chain disruptions and inflationary pressure on labor and fuel.
Gross profit as a percentage of revenue in the Utilities segment
improved from 8.5 percent for the second quarter of 2022 as a
result of actions taken by the Company to mitigate the impacts of
inflation it experienced in the second quarter. The Utilities
segment represented 46.8 percent of total Company revenue and 12.7
percent of the total Company gross profit for the three months
ended September 30, 2022.
Energy and Renewables Segment (“Energy/Renewables”):
Revenue increased by $249.4 million, or 71.1 percent, for the three
months ended September 30, 2022, compared to the same period in
2021, primarily due to organic growth of 56.7 percent driven by a
98.9 percent increase in solar construction related work, higher
electric power activity and $50.5 million contribution from the PLH
acquisition. Gross profit for the three months ended September 30,
2022, increased by $44.2 million, or 123.1 percent, compared to the
same period in 2021, primarily due to improved mix of revenue from
solar activity growth and $6.6 million in contribution from PLH.
Gross profit as a percentage of revenue increased to 13.3 percent
during the three months ended September 30, 2022, compared to 10.2
percent in the same period in 2021, primarily due to the previously
noted higher margin solar projects and lower costs from the
non-recurrence of project impacts associated with a liquified
natural gas plant project in the Northeast in 2021. The
Energy/Renewables segment represented 46.8 percent of total Company
revenue and 13.3 percent of the total Company gross profit for the
three months ended September 30, 2022.
Pipeline Services (“Pipeline”): Revenue decreased by
$36.9 million, or 34.3 percent, for the three months ended
September 30, 2022, compared to the same period in 2021. The
decrease is primarily due to the substantial completion of pipeline
projects in 2021 and a decline in midstream pipeline projects
driven in part by decreased permitting for interstate pipelines,
partially offset by a $11.8 million contribution from PLH. Gross
profit for the three months ended September 30, 2022, was negative
$3.3 million, a decrease of $31.1 million compared to the same
period in 2021, primarily due to the lower revenue from the
decrease in activity and under absorption of carrying costs related
to equipment and personnel. Gross profit decreased to a negative
4.6 percent as a percentage of revenue during the three months
ended September 30, 2022, compared to a gross profit of 25.8
percent as a percentage of revenue in the same period in 2021 due
to the negative impacts to lower revenue and unabsorbed fixed costs
previously noted. The Pipeline Services segment represented 5.5
percent of total Company revenue and negative 5.3 percent of the
total Company gross profit for the three months ended September 30,
2022. The Company was awarded a pipeline project valued over $120
million in the third quarter of 2022 that is expected to drive
revenue and gross profit improvement in the Pipeline Services
segment in the fourth quarter of 2022.
Other Financial
Information
Selling, general and administrative (“SG&A”) expenses were
$75.7 million during the three months ended September 30, 2022, an
increase of $14.0 million, or 22.7 percent compared to 2021,
primarily due to $13.4 million of incremental expense from the
acquisitions of PLH and B Comm. SG&A expense as a percentage of
revenue decreased to 5.9 percent compared to 6.8 percent for the
corresponding period in 2021, primarily due to growth in revenues
outpacing incremental SG&A expenses.
Transaction and related costs were $12.7 million for the three
months ended September 30, 2022, an increase of $12.3 million
compared to 2021, primarily due to professional fees paid to
advisors associated with the PLH acquisition in 2022.
Interest expense, net for the three months ended September 30,
2022, was $13.1 million, an increase of $8.4 million compared to
the same period in 2021, primarily due to higher average debt
balances from the borrowings incurred related to the PLH
acquisition and a higher weighted average interest rate.
The Company recorded income tax expense for the three months
ended September 30, 2022, of $9.8 million compared to $16.7 million
for the three months ended September 30, 2021. The effective tax
rate was 19.6 percent for the three months ended September 30,
2022. The decrease in income tax expense year-over-year was
primarily driven by the release of a valuation allowance and a
reduction in the Company’s effective tax rate.
During the three months ended September 30, 2022, the Company
spent approximately $9.9 million for capital expenditures, which
decreased in the third quarter as the Company moves to a more
balanced leased versus owned equipment strategy.
Outlook
The Company estimates that its EPS for the year ending December
31, 2022, will range between $2.31 and $2.51, reflecting its
current expectations for the increase in depreciation, amortization
of intangibles, and transaction, integration costs from the PLH
acquisition. The Company is maintaining its Adjusted EPS estimate
for the year ending December 31, 2022, in the range of $2.39 to
$2.59 per share. The Company’s targeted gross profit as a
percentage of revenue for the fourth quarter of 2022 by segment is
as follows: Utilities in the range of 9 to 11 percent;
Energy/Renewables in the range of 10 to 12 percent; and Pipeline in
the low to mid-single digit percent range.
The Company is targeting SG&A expense as a percentage of
revenue in the low six percent range for the 2022 calendar year.
The Company expects its effective tax rate on net income for the
full year 2022 to be approximately 19.0 to 20.0 percent but may
vary depending on the mix of states in which the Company operates.
Capital expenditures for the fourth quarter are expected to total
between $20.0 million and $30.0 million, which includes $15.0
million to $25.0 million for construction equipment.
The guidance provided above constitutes forward-looking
statements, which are based on current economic conditions and
estimates, and the Company does not include other potential
impacts, such as changes in accounting, acquisitions or
dispositions or unusual items. Supplemental information relating to
the Company’s financial outlook is posted in the “Investors”
section of the Company’s website at www.prim.com.
Backlog
Backlog at September 30, 2022
(in millions)
Segment
Fixed Backlog
MSA Backlog
Total Backlog
Utilities
$
76
$
1,813
$
1,889
Energy/Renewables
2,959
166
3,125
Pipeline Services
378
80
458
Total
$
3,413
$
2,059
$
5,472
As of September 30, 2022, Fixed Backlog was $3.4 billion and MSA
Backlog was $2.1 billion, a year-over-year increase of 166.1
percent and 41.4 percent, respectively. Total Backlog at the end of
the third quarter 2022 was $5.5 billion or an increase of 99.8
percent from the third quarter of 2021. MSA Backlog represents
estimated MSA revenue for the next four quarters. The Company
expects that during the next four quarters, the Company will
recognize as revenue approximately 76 percent of the total backlog
as of September 30, 2022, comprised of backlog of approximately:
100 percent of Utilities; 60 percent of Energy/Renewables; and 83
percent of Pipeline.
Backlog, including estimated MSA revenue, should not be
considered a comprehensive indicator of future revenue. Revenues
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
customers.
Liquidity and Capital
Resources
At September 30, 2022, the Company had $111.9 million of
unrestricted cash and cash equivalents. The Company had $150.0
million in outstanding borrowings under the revolving credit
facility, commercial letters of credit outstanding were $48.4
million and the available borrowing capacity was $126.6
million.
Dividend
The Company also announced that on November 3, 2022, its Board
of Directors declared a $0.06 per share cash dividend to
stockholders of record on December 30, 2022, payable on January 13,
2023.
Share Purchase Program
In November 2021, the Company’s Board of Directors authorized a
$25.0 million share purchase program. In February 2022, the
Company’s Board of Directors replenished the limit to $25.0
million. During the three months ended September 30, 2022, the
Company purchased and cancelled 129,200 shares of common stock,
which in the aggregate equaled $2.6 million at an average share
price of $20.28. As of September 30, 2022, we had $19.0 million
remaining for purchase under the share purchase program. The share
purchase plan expires on December 31, 2022.
Conference Call and
Webcast
As previously announced, management will host a conference call
and webcast on Tuesday, November 8, 2022, at 9:00 a.m. U.S. Central
Time (10:00 a.m. U.S. Eastern Time). Tom McCormick, President and
Chief Executive Officer, and Ken Dodgen, Executive Vice President
and Chief Financial Officer, will discuss the Company’s results and
business outlook.
Investors and analysts are invited to participate in the call by
phone at 1-888-330-3428, or internationally at 1-646-960-0679
(access code: 7581464) or via the Internet at www.prim.com. A
replay of the call will be available on the Company’s website or by
phone at 1-800-770-2030, or internationally at 1-647-362-9199
(access code: 7581464), for a seven-day period following the
call.
Presentation slides to accompany the conference call are
available for download under “Events & Presentations” in the
“Investors” section of the Company’s website at www.prim.com.
Non-GAAP Measures
This press release contains certain financial measures that are
not recognized under generally accepted accounting principles in
the United States (“GAAP”). Primoris uses earnings before interest,
income taxes, depreciation and amortization (“EBITDA”), Adjusted
EBITDA, Adjusted Net Income, and Adjusted EPS as important
supplemental measures of the Company’s operating performance. The
Company believes these measures enable investors, analysts, and
management to evaluate Primoris’ performance excluding the effects
of certain items that management believes impact the comparability
of operating results between reporting periods. In addition,
management believes these measures are useful in comparing the
Company’s operating results with those of its competitors. The
non-GAAP measures presented in this press release are not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with GAAP. In addition, Primoris’ method of calculating these
measures may be different from methods used by other companies,
and, accordingly, may not be comparable to similarly titled
measures as calculated by other companies that do not use the same
methodology as Primoris. Please see the accompanying tables to this
press release for reconciliations of the following non‐GAAP
financial measures for Primoris’ current and historical results:
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.
About Primoris
Primoris Services Corporation is a leading specialty contractor
providing critical infrastructure services to the utility,
energy/renewables and pipeline services markets throughout the
United States and Canada. The Company supports a diversified base
of blue-chip customers with engineering, procurement, construction
and maintenance services. A focus on multi-year master service
agreements and an expanded presence in higher-margin, higher-growth
markets such as utility-scale solar facility installations,
renewable fuels, power delivery systems and communications
infrastructure have also increased the Company’s potential for
long-term growth. Additional information on Primoris is available
at www.prim.com.
Forward Looking
Statements
This press release contains certain forward-looking statements,
including the Company’s outlook, that reflect, when made, the
Company’s expectations or beliefs concerning future events that
involve risks and uncertainties, including with regard to the
Company’s 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 the
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
involve known and unknown risks, uncertainties, and other factors,
which may cause 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 the mix of customers, projects, contracts and business; regional
or national and/or general economic conditions and demand for the
Company’s services; macroeconomic impacts arising from the long
duration of the COVID-19 pandemic, including labor shortages and
supply chain disruptions; 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; inflation and other increases in construction costs
that the Company may be unable to pass through to 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
incurred to support growth, whether organic or through
acquisitions; the timing and volume of work under contract; losses
experienced in the Company’s operations; the results of the review
of prior period accounting on certain projects and the impact of
adjustments to accounting estimates; developments in governmental
investigations and/or inquiries; intense competition in the
industries in which the Company operates; 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 partners, suppliers or
subcontractors to perform their obligations; cyber-security
breaches; failure to maintain safe worksites; risks or
uncertainties associated with events outside of the Company’s
control, including severe weather conditions, public health crises
and pandemics (such as COVID-19), war or other armed conflict
(including Russia’s invasion of Ukraine), 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
Company’s failure, or the failure of the Company’s 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 the Company’s
Annual Report on Form 10-K for the year ended December 31, 2021,
and the Company’s other filings with the U.S. Securities and
Exchange Commission (“SEC”). Such filings are available on the
SEC’s 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.
PRIMORIS SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, Except Per
Share Amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue
$
1,284,128
$
913,245
$
3,091,461
$
2,613,184
Cost of revenue
1,129,221
785,809
2,787,960
2,292,541
Gross profit
154,907
127,436
303,501
320,643
Selling, general and administrative
expenses
75,721
61,706
190,905
172,885
Transaction and related costs
12,706
447
18,228
14,823
Gain on sale and leaseback transaction
—
—
(40,084
)
—
Operating income
66,480
65,283
134,452
132,935
Other income (expense):
Foreign exchange loss, net
(683
)
—
(239
)
(443
)
Other income, net
128
181
274
555
Interest expense, net
(13,075
)
(4,698
)
(20,656
)
(14,154
)
Income before provision for income
taxes
52,850
60,766
113,831
118,893
Provision for income taxes
(9,810
)
(16,710
)
(22,311
)
(32,694
)
Net income
43,040
44,056
91,520
86,199
Dividends per common share
$
0.06
$
0.06
$
0.18
$
0.18
Earnings per share:
Basic
$
0.81
$
0.82
$
1.72
$
1.65
Diluted
$
0.80
$
0.81
$
1.70
$
1.63
Weighted average common shares
outstanding:
Basic
53,181
53,769
53,228
52,354
Diluted
53,748
54,367
53,778
52,887
PRIMORIS SERVICES
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Thousands)
(Unaudited)
September 30,
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
111,937
$
200,512
Accounts receivable, net
687,884
471,656
Contract assets
645,725
423,659
Prepaid expenses and other current
assets
216,560
86,263
Total current assets
1,662,106
1,182,090
Property and equipment, net
508,689
433,279
Operating lease assets
162,579
158,609
Deferred tax assets
7,214
1,307
Intangible assets, net
270,349
171,320
Goodwill
820,322
581,664
Other long-term assets
23,078
15,058
Total assets
$
3,454,337
$
2,543,327
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
477,327
$
273,463
Contract liabilities
255,524
240,412
Accrued liabilities
269,494
174,821
Dividends payable
3,195
3,192
Current portion of long-term debt
80,094
67,230
Total current liabilities
1,085,634
759,118
Long-term debt, net of current portion
1,122,064
594,232
Noncurrent operating lease liabilities,
net of current portion
97,314
98,059
Deferred tax liabilities
42,314
38,510
Other long-term liabilities
39,003
63,353
Total liabilities
2,386,329
1,553,272
Commitments and contingencies
Stockholders’ equity
Common stock
6
6
Additional paid-in capital
261,816
261,918
Retained earnings
809,369
727,433
Accumulated other comprehensive income
(3,183
)
698
Total stockholders’ equity
1,068,008
990,055
Total liabilities and stockholders’
equity
$
3,454,337
$
2,543,327
PRIMORIS SERVICES
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
2022
2021
Cash flows from operating activities:
Net income
$
91,520
$
86,199
Adjustments to reconcile net income to net
cash (used in) provided by operating activities (net of effect of
acquisitions):
Depreciation and amortization
69,348
78,865
Stock-based compensation expense
5,748
9,146
Gain on sale of property and equipment
(17,987
)
(13,075
)
Gain on sale and leaseback transaction
(40,084
)
—
Unrealized gain on interest rate swap
(5,616
)
(3,183
)
Other non-cash items
1,877
823
Changes in assets and liabilities:
Accounts receivable
(122,867
)
(69,659
)
Contract assets
(148,044
)
(54,262
)
Other current assets
(98,489
)
(21,070
)
Other long-term assets
1,975
477
Accounts payable
133,731
57,698
Contract liabilities
(10,364
)
(67,821
)
Operating lease assets and liabilities,
net
(896
)
(1,388
)
Accrued liabilities
40,016
21,327
Other long-term liabilities
(1,903
)
(8,457
)
Net cash (used in) provided by operating
activities
(102,035
)
15,620
Cash flows from investing activities:
Purchase of property and equipment
(75,696
)
(102,133
)
Proceeds from sale of assets
19,237
43,488
Proceeds from sale and leaseback
transaction, net of related expenses
49,887
—
Cash paid for acquisitions, net of cash
and restricted cash acquired
(478,438
)
(606,974
)
Net cash used in investing activities
(485,010
)
(665,619
)
Cash flows from financing activities:
Borrowings under revolving line of
credit
150,000
100,000
Payments on revolving line of credit
—
(100,000
)
Borrowings under Canadian credit
facility
19,943
—
Payments under Canadian credit
facility
(19,804
)
—
Proceeds from issuance of long-term
debt
469,531
461,719
Payments on long-term debt
(77,751
)
(96,473
)
Proceeds from issuance of common stock
596
178,707
Debt issuance costs
(6,643
)
(4,876
)
Dividends paid
(9,583
)
(9,334
)
Purchase of common stock
(5,990
)
—
Other
(4,947
)
(7,038
)
Net cash provided by financing
activities
515,352
522,705
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(924
)
300
Net change in cash, cash equivalents and
restricted cash
(72,617
)
(126,994
)
Cash, cash equivalents and restricted cash
at beginning of the period
205,643
330,975
Cash, cash equivalents and restricted cash
at end of the period
$
133,026
$
203,981
Non-GAAP
Measures
Schedule 1 Primoris Services
Corporation
Reconciliation of Non-GAAP
Financial Measures
Adjusted Net Income and
Adjusted EPS
(In Thousands, Except Per
Share Amounts)
(Unaudited)
Adjusted Net Income and Adjusted
EPS
Primoris defines Adjusted Net Income as
net income (loss) adjusted for certain items including, (i)
non‐cash stock‐based compensation expense; (ii)
transaction/integration and related costs; (iii) asset impairment
charges; (iv) changes in fair value of the Company’s interest rate
swap; (v) change in fair value of contingent consideration
liabilities; (vi) amortization of intangible assets; (vii)
amortization of debt discounts and debt issuance costs; (viii)
losses on extinguishment of debt; (ix) severance and restructuring
changes; (x) selected (gains) charges that are unusual or
non-recurring; and (xi) impact of changes in statutory tax rates.
The Company defines Adjusted EPS as Adjusted Net Income divided by
the diluted weighted average shares outstanding. Management
believes these adjustments are helpful for comparing the Company’s
operating performance with prior periods. Because Adjusted Net
Income and Adjusted EPS, as defined, exclude some, but not all,
items that affect net income and diluted earnings per share, they
may not be comparable to similarly titled measures of other
companies. The most comparable GAAP financial measures, net income
and diluted earnings per share, and information reconciling the
GAAP and non‐GAAP financial measures, are included in the table
below.
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income as reported (GAAP)
$
43,040
$
44,056
$
91,520
$
86,199
Non-cash stock based compensation
1,753
1,661
5,748
4,046
Transaction/integration and related costs
(1)
12,706
447
18,228
14,823
Amortization of intangible assets
6,711
4,645
13,784
13,474
Amortization of debt issuance costs
422
283
988
850
Loss on extinguishment of debt
759
-
759
-
Unrealized gain on interest rate swap
(1,045
)
(929
)
(5,616
)
(3,183
)
Gain on sale and leaseback transaction
-
-
(40,084
)
-
Income tax impact of adjustments
(3,954
)
(1,679
)
1,214
(8,253
)
Adjusted net income
$
60,392
$
48,484
$
86,541
$
107,956
Weighted average shares (diluted)
53,748
54,367
53,778
52,887
Diluted earnings per share
$
0.80
$
0.81
$
1.70
$
1.63
Adjusted diluted earnings per share
$
1.12
$
0.89
$
1.61
$
2.04
(1)
The nine month period ended September 30,
2021, includes $5.1 million in stock compensation expense related
to the acquisition of Future Infrastructure Holdings, LLC
(“FIH”).
Schedule 2
Primoris Services
Corporation
Reconciliation of Non-GAAP
Financial Measures
EBITDA and Adjusted
EBITDA
(In Thousands)
(Unaudited)
EBITDA and Adjusted EBITDA
Primoris defines EBITDA as net income
(loss) before interest, income taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA adjusted for
certain items including, (i) non‐cash stock‐based compensation
expense; (ii) transaction/integration and related costs; (iii)
asset impairment charges; (iv) severance and restructuring changes;
(v) change in fair value of contingent consideration liabilities;
and (vi) selected (gains) charges that are unusual or
non-recurring. The Company believes the EBITDA and Adjusted EBITDA
financial measures assist in providing a more complete
understanding of the Company’s underlying operational measures to
manage its business, to evaluate its performance compared to prior
periods and the marketplace, and to establish operational goals.
EBITDA and Adjusted EBITDA are non‐GAAP financial measures and
should not be considered in isolation or as a substitute for
financial information provided in accordance with GAAP. These
non‐GAAP financial measures may not be computed in the same manner
as similarly titled measures used by other companies. The most
comparable GAAP financial measure, net income, and information
reconciling the GAAP and non‐GAAP financial measures are included
in the table below.
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income as reported (GAAP)
$
43,040
$
44,056
$
91,520
$
86,199
Interest expense, net
13,075
4,698
20,656
14,154
Provision for income taxes
9,810
16,710
22,311
32,694
Depreciation and amortization
28,570
27,163
69,348
78,865
EBITDA
94,495
92,627
203,835
211,912
Non-cash stock based compensation
1,753
1,661
5,748
4,046
Transaction/integration and related costs
(1)
12,706
447
18,228
14,823
Gain on sale and leaseback transaction
-
-
(40,084
)
-
Adjusted EBITDA
$
108,954
$
94,735
$
187,727
$
230,781
(1)
The nine month period ended September 30,
2021, includes $5.1 million in stock compensation expense related
to the acquisition of FIH.
Schedule 3
Primoris Services
Corporation
Reconciliation of Non-GAAP
Financial Measures
Forecasted Guidance for
2022
(In Thousands, Except Per
Share Amounts)
(Unaudited)
The following table sets forth a
reconciliation of the forecasted GAAP net income to Adjusted Net
Income and EPS to Adjusted EPS for the year ending December 31,
2022.
Estimated Range
Full Year Ending
December 31, 2022
Net income as defined (GAAP)
$
124,100
$
134,900
Non-cash stock based compensation
7,400
7,400
Amortization of intangible assets
21,800
21,800
Amortization of debt issuance costs
2,300
2,300
Loss on extinguishment of debt
800
800
Unrealized gain on interest rate swap
(5,600
)
(5,600
)
Transaction/integration and related
costs
19,200
19,200
Gain on sale and leaseback transaction
(40,100
)
(40,100
)
Income tax impact of adjustments
(1,100
)
(1,100
)
Adjusted net income
$
128,800
$
139,600
Weighted average shares (diluted)
53,800
53,800
Diluted earnings per share
$
2.31
$
2.51
Adjusted diluted earnings per share
$
2.39
$
2.59
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107005866/en/
Ken Dodgen Executive Vice President, Chief Financial Officer
(214) 740-5608 kdodgen@prim.com Blake
Holcomb Vice President, Investor Relations (214) 545-6773
bholcomb@prim.com
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