Primoris Services Corporation (NASDAQ GS: PRIM)
(“Primoris” or the “Company”) today announced financial results for
its fourth quarter and full year ended December 31, 2022 and
provided the Company’s initial outlook for 2023.
For the full year 2022, Primoris reported the following
highlights (1):
- Revenue of $4,420.6 million, up $923.0 million, or 26.4
percent, compared to the full year of 2021 driven by strong growth
in the Utilities and Energy/Renewables segments, including $516.8
million, or 14.8 percent, revenue growth excluding
acquisitions
- Net income of $133.0 million, or $2.47 per diluted share, up
14.9 percent from the full year of 2021
- Adjusted net income of $135.8 million, or $2.53 per diluted
share, a decrease of 5.6 percent from the full year of 2021
- Record backlog of $5.5 billion, up 37.0 percent from 2021 year
end, including Master Service Agreements (“MSA”) backlog of $1.9
billion
- Adjusted earnings before interest, income taxes, depreciation
and amortization (“Adjusted EBITDA”) of $283.4 million.
For the fourth quarter 2022, Primoris reported the following
highlights(1):
- Revenue of $1.3 billion, up $444.7 million, or up 50.3 percent,
compared to the fourth quarter of 2021 driven by strong renewables
growth, primarily design and construction of utility scale solar
facilities, and $227.8 million from acquisitions
- Net income of $41.5 million, or $0.77 per diluted share, up
40.5 percent from the fourth quarter of 2021
- Adjusted net income of $50.2 million, or 0.93 per diluted
share, up 46.0 percent from the fourth quarter of 2021
- Adjusted EBITDA of $95.6 million, or 7.2 percent of revenue, up
42.6 percent, from the fourth quarter of 2021
- Fourth quarter net cash provided by operating activities of
$185.4 million driven primarily by favorable changes in working
capital
(1)
Please refer to “Non-GAAP Measures” and Schedules 1, 2, 3 and 4
for the definitions and reconciliations of our Non-GAAP financial
measures, including “Adjusted Net Income,” “Adjusted EPS” and
“Adjusted EBITDA.”
“We exited 2022 on a great trajectory for the future of
Primoris. During the year we grew revenue to a record $4.4 billion,
including 15 percent growth excluding acquisitions, and our backlog
to a record $5.5 billion, including 21 percent growth excluding
acquired backlog, which will serve as the basis for our continued
progress in 2023,” said Tom McCormick, President and Chief
Executive Officer of Primoris.
“We navigated through the challenges of economic uncertainty,
fuel and wage inflation, supply chain constraints and a difficult
pipeline environment to deliver profitable growth for the sixth
consecutive year. We worked with our customers to respond to
rapidly changing labor and fuel costs and with suppliers to ensure
we had the necessary materials to deliver customer projects on
time. We strengthened our capabilities in power delivery with the
acquisition of PLH, further expanded our communications market
presence and significantly grew our renewables franchise. I am
proud of our employees’ efforts to achieve these results while
making it a priority to perform our jobs safely and to the
customers satisfaction.”
“Looking ahead into 2023, I believe we are well-positioned for
another successful year with a strong backlog and improving demand
outlook for our services. While there are still uncertainties and
the potential for further inflation and supply chain impacts, I am
confident that we will successfully execute on our strategic
priorities to deliver positive outcomes for our customers,
employees and shareholders.”
Fourth Quarter 2022 Results
Overview
Revenue was $1,329.1 million for the three months ended December
31, 2022, an increase of $444.7 million, compared to the same
period in 2021. Revenue increased across all segments driven by an
increase in the design and construction of utility scale solar
facilities, the commencement of a large pipeline project and $227.8
million from the PLH and B Comm acquisitions. Gross profit was
$153.4 million for the three months ended December 31, 2022, an
increase of $57.4 million compared to the same period in 2021. The
increase was primarily due to improved margins in solar and
industrial projects in the Energy/Renewables segment, higher
communications revenue mix and $28.6 million from the PLH and B
Comm acquisitions. This was partially offset by an unfavorable mix
of lower margin work in the Pipeline Services segment. Gross profit
as a percentage of revenue increased to 11.5 percent from 10.9
percent for the same period in 2021.
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 fourth quarter of 2022, net income was $41.5 million,
or $0.77 per diluted share, an increase of 40.5 percent compared to
$29.5 million, or $0.55 per diluted share, in the previous year.
Adjusted Net Income was $50.2 million, or $0.93 per diluted share,
for the fourth quarter, an increase of 46.0 percent compared to
$34.3 million, or $0.63 per diluted share, for the fourth quarter
of 2021. Adjusted EBITDA was $95.6 million for the fourth quarter
of 2022, an increase of $28.6 million, or 42.6 percent, compared to
$67.1 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 months ended December 31, 2022 and 2021 were as
follows:
Segment
Revenue
(in thousands,
except %)
(unaudited)
For the three months ended
December 31,
2022
2021
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
576,450
43.4%
$
442,870
50.1%
Energy/Renewables
641,646
48.2%
369,311
41.7%
Pipeline
111,042
8.4%
72,267
8.2%
Total
$
1,329,138
100.0%
$
884,448
100.0%
Segment Gross
Profit
(in thousands,
except %)
(unaudited)
For the three months ended
December 31,
2022
2021
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
69,917
12.1%
$
52,007
11.7%
Energy/Renewables
79,663
12.4%
38,461
10.4%
Pipeline
3,804
3.4%
5,549
7.7%
Total
$
153,384
11.5%
$
96,017
10.9%
Utilities Segment (“Utilities”): Revenue increased by
$133.6 million, or 30.2 percent, for the three months ended
December 31, 2022, compared to the same period in 2021, primarily
due to $144.6 million from the PLH and B Comm acquisitions and
increased activity with communications customers. Gross profit for
the three months ended December 31, 2022 increased by $17.9
million, or 34.4 percent, compared to the same period in 2021. The
increase is primarily attributable to the incremental impact of
$15.1 million from the PLH and B Comm acquisitions, partially
offset by lower margins related to higher cost inflation compared
to the previous year. Gross profit as a percentage of revenue
increased to 12.1 percent during the three months ended December
31, 2022 compared to 11.7 percent for the same period in 2021.
Energy and Renewables Segment (“Energy/Renewables”):
Revenue increased by $272.3 million, or 73.7 percent, for the three
months ended December 31, 2022, compared to the same period in
2021. The increase year-over-year was primarily due to increased
renewable energy activity of $166.0 million, $55.9 million from the
PLH acquisition and industrial activity in California and the Gulf
Coast. Gross profit for the three months ended December 31, 2022,
increased by $41.2 million, or 107.1 percent, compared to the same
period in 2021, primarily due to higher revenue and margins. Gross
profit as a percentage of revenue increased to 12.4 percent during
the three months ended December 31, 2022, compared to 10.4 percent
in the same period in 2021, primarily due to the contribution from
higher margin renewables work and improved margins in the
industrials business.
Pipeline Services Segment (“Pipeline”): Revenue increased
by $38.8 million, or 53.7 percent, for the three months ended
December 31, 2022, compared to the same period in 2021. The
increase is primarily due to $27.3 million from the PLH acquisition
and progress made on a Texas pipeline project awarded in the third
quarter of 2022. Gross profit for the three months ended December
31, 2022 decreased by $1.7 million, or 31.4 percent, compared to
the same period in 2021, primarily due to the unfavorable mix of
work and fewer project closeouts compared to the fourth quarter of
2021. Similarly, gross profit as a percentage of revenue decreased
to 3.4 percent during the three months ended December 31, 2022,
compared to 7.7 percent in the same period in 2021.
Full Year 2022 Results
Overview
Revenue for the year ended December 31, 2022 increased by $923.0
million, compared to 2021. The increase was primarily due to growth
in the Company’s Energy/Renewables and Utilities segments,
including $406.2 million from its acquisition of PLH and B Comm,
partially offset by a decrease in revenue in the Company’s Pipeline
segment.
For the year ended December 31, 2022, gross profit increased by
$40.2 million, or 9.7 percent, compared to 2021. The increase was
primarily due to $46.4 million from the Company’s acquisition of
PLH and B Comm and an increase in margins from its
Energy/Renewables segment driven by growth in solar projects and
improved margins on industrial projects. This was partially offset
by negative gross profit in the Pipeline Services segment due to
the steep decline in pipeline projects sanctioned and permitted in
2022. Gross profit as a percentage of revenue decreased to 10.3
percent from 11.9 percent in the same period in 2021. The decline
in gross profit margin was primarily due to the decline in high
margin pipeline work as well as wage and fuel inflation impacts,
particularly in the first half of the year.
For the full year 2022, net income was $133.0 million, or $2.47
per fully diluted share, compared to $115.7 million, or $2.17 per
fully diluted share, in the previous year, an increase of 14.9
percent. Adjusted Net Income was $135.8 million, or $2.53 per fully
diluted share, for the full year 2022 compared to $143.4 million,
or $2.70 per fully diluted share, for the same period in 2021.
Adjusted EBITDA was $283.4 million for 2022, a decrease of 4.8
percent, compared to $297.7 million for the full year 2021.
Revenue and gross profit for the Utilities, Energy/Renewables
and Pipeline segments for the years ended December 31, 2022 and
2021 were as follows:
Segment
Revenue
(in thousands,
except %)
(unaudited)
For the year ended December
31,
2022
2021
% of
% of
Total
Total
Segment
Revenue
Revenue
Revenue
Revenue
Utilities
$
2,024,307
45.8%
$
1,657,957
47.4%
Energy/Renewables
2,087,489
47.2%
1,408,211
40.3%
Pipeline
308,803
7.0%
431,464
12.3%
Total
$
4,420,599
100.0%
$
3,497,632
100.0%
Segment Gross
Profit
(in thousands,
except %)
(unaudited)
For the year ended December
31,
2022
2021
% of
% of
Segment
Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Utilities
$
210,672
10.4%
$
186,287
11.2%
Energy/Renewables
252,872
12.1%
150,286
10.7%
Pipeline
(6,659)
(2.2%)
80,087
18.6%
Total
$
456,885
10.3%
$
416,660
11.9%
Utilities: Revenue increased by $366.4 million, or 22.1
percent, during 2022 compared to 2021. The increase is primarily
attributable to $260.7 million from the PLH and B Comm acquisitions
and increased activity with customers across our power delivery and
communications markets. Gross profit increased $24.4 million, or
13.1 percent, during 2022 compared to 2021. The increase is
primarily attributable to $26.2 million in incremental impact of
the PLH and B Comm acquisitions and an increase in communications
activity, partially offset by lower margins from the impacts of
wage and fuel inflation. Gross profit as a percentage of revenue
decreased to 10.4 percent in 2022 compared to 11.2 percent in 2021.
This decline in gross profit as a percent of revenue was primarily
due to the rapid increase in fuel and labor costs in 2022 that in
some cases exceeded the contractual caps of some of our master
service agreements with customers. We successfully renegotiated a
number of our major MSA contracts to address fuel and labor costs
on future work and saw the improvement in Utilities gross profit as
a percentage of revenue in the second half of 2022.
Energy/Renewables: Revenue increased by $679.3 million,
or 48.2 percent, during 2022 compared to 2021, primarily due to a
$430.1 million increase in renewable energy activity, $106.4
million from the PLH acquisition and increased project work on
electric power and hydrogen plants. Gross profit increased by
$102.6 million, or 68.3 percent, during 2022 compared to 2021,
primarily due to higher revenue and margins. Gross profit as a
percentage of revenue increased to 12.1 percent in 2022 compared to
10.7 percent in 2021 primarily due to contributions from higher
margin solar projects, favorable mix of industrials projects and a
decrease in the impact of higher costs associated with a liquified
natural gas plant project in the Northeast experienced in 2021.
Pipeline: Revenue decreased by $122.7 million, or 28.4
percent, during 2022 compared to 2021. The decrease is primarily
due to the substantial completion of pipeline projects in 2021 and
a decline in the overall midstream pipeline market demand from
historically high levels, along with challenges in permitting new
pipelines. This was partially offset by $39.0 million of revenue
from the PLH acquisition. Gross profit decreased by $86.7 million,
or 108.3 percent, during 2022 compared to 2021, primarily due to
lower revenue and margins. Gross profit as a percentage of revenue
decreased to negative 2.2 percent in 2022 compared to 18.6 percent
in 2021, primarily due to higher costs on a pipeline project in the
Mid-Atlantic from unfavorable weather conditions experienced in
2022 and lower than anticipated volumes in 2022, which led to
higher relative carrying costs for equipment and personnel. In
addition, we had a favorable impact from the closeout of multiple
pipeline projects in 2021 that did not reoccur in 2022.
Other Income Statement
Information
Selling, general and administrative (“SG&A”) expenses were
$281.6 million during the year ended December 31, 2022, an increase
of $51.5 million, or 22.4 percent, compared to 2021 primarily due
to a $28.3 million increase in incremental expense from the PLH and
B Comm acquisitions as well as increased costs to support our
strong organic growth. SG&A expense as a percentage of revenue
decreased to 6.4 percent in 2022 compared to 6.6 percent in 2021
primarily due to increased revenue.
Interest expense, net for the year ended December 31, 2022 was
$39.2 million compared to $18.5 million for the year ended December
31, 2021. The increase of $20.7 million was due to an increase in
term loan debt of $439.5 million related to the PLH acquisition and
higher weighted average interest rates, partially offset by a $5.6
million unrealized gain on the Company’s interest rate swap.
Interest expense for the year 2023 is expected to increase to
approximately $73 to $77 million due to higher debt balances and
higher interest rates.
The effective tax rate was 16.5 percent for the year ended
December 31, 2022. The decrease from 23.8 percent for the year
ended December 31, 2021 was primarily due to the release of capital
loss valuation allowances during 2022 and tax credits.
Outlook
The Company is providing its estimates for the year ending
December 31, 2023. Net income is expected to be between $2.10 and
$2.30 per fully diluted share. Adjusted EPS is estimated in the
range of $2.50 to $2.70 for 2023. Adjusted EBITDA for the full year
2023 is expected to range from $350 million to $370 million.
The Company is targeting SG&A expense as a percentage of
revenue in the low six percent range for full year 2023. The
Company estimates capital expenditures for 2022 in the range of $80
to $100 million, which includes $40 to $60 million for construction
equipment. The Company’s targeted gross margins by segment are as
follows: Utilities in the range of 9 to 11 percent; Energy in the
range of 10 to 12 percent. The Company expects its effective tax
rate for 2022 to be approximately 28 percent but may vary depending
on the mix of states in which the Company operates.
Adjusted EPS and Adjusted EBITDA are non-GAAP financial
measures. Please refer to “Non-GAAP Measures” and Schedules below
for the definitions and reconciliations. 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 or
unusual items. Supplemental information relating to the Company’s
financial outlook is posted in the Investor Relations section of
the Company’s website at www.prim.com.
Backlog
(in
millions)
Backlog at December 31,
2022
Segment
Fixed Backlog
MSA Backlog
Total Backlog
Utilities
$
183
$
1,650
$
1,833
Energy/Renewables
3,003
162
3,165
Pipeline
389
97
486
Total
$
3,575
$
1,909
$
5,484
At December 31, 2022, Fixed Backlog was $3.6 billion, an
increase of $1.1 billion, or 44 percent compared to $2.5 billion at
December 31, 2021. MSA Backlog represents estimated MSA revenue for
the next four quarters. MSA Backlog was $1.9 billion, an increase
of 0.4 billion, or 25 percent, compared to $1.5 billion at December
31, 2021. Total Backlog as of December 31, 2022 was $5.5 billion.
The Company expects that during the next four quarters, the Company
will recognize as revenue approximately 73 percent of the total
backlog at December 31, 2022, comprised of backlog of
approximately: 100 percent of Utilities; 56 percent of
Energy/Renewables; and 85 percent of Pipeline.
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 the
Company’s customers.
Liquidity and Capital
Resources
At December 31, 2022, the Company had $248.7 million of
unrestricted cash and cash equivalents. The Company had $100.0
million in outstanding borrowings under the revolving credit
facility, commercial letters of credit outstanding were $47.3
million and the available borrowing capacity was $177.7 million. In
2022, capital expenditures were $94.7 million, including $48.5
million in equipment purchases.
Dividend
The Company also announced that on February 22, 2023, its Board
of Directors declared a $0.06 per share cash dividend to
stockholders of record on March 31, 2023, payable on approximately
April 14, 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 year ended December 31, 2022, the Company
purchased and cancelled 277,200 shares of common stock, which in
the aggregate equaled $6.0 million at an average share price of
$21.61. As of December 31, 2022, we had $19.0 million remaining for
purchase under the share purchase program and the plan expires on
December 31, 2023.
Other Business Updates
Beginning with the first quarter of 2023, the Company will
consolidate and reorganize its operating segments. The two
reorganized segments will be Utilities and Energy.
Conference Call and
Webcast
As previously announced, management will host a conference call
and webcast on Tuesday, February 28, 2023, 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 a 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, 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, 2022,
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
CONSOLIDATED STATEMENTS OF
INCOME
(In Thousands, Except Per
Share Amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Revenue
$
1,329,138
$
884,448
$
4,420,599
$
3,497,632
Cost of revenue
1,175,754
788,431
3,963,714
3,080,972
Gross profit
153,384
96,017
456,885
416,660
Selling, general and administrative
expenses
90,672
57,225
281,577
230,110
Transaction and related costs
1,826
1,576
20,054
16,399
Gain on sale and leaseback transaction
—
—
(40,084
)
—
Operating income
60,886
37,216
195,338
170,151
Other income (expense):
Foreign exchange gain (loss), net
1,327
348
1,088
(95
)
Other income (expense), net
1,798
(256
)
2,072
299
Interest expense, net
(18,556
)
(4,344
)
(39,212
)
(18,498
)
Income before provision for income
taxes
45,455
32,964
159,286
151,857
Provision for income taxes
(3,954
)
(3,424
)
(26,265
)
(36,118
)
Net income
41,501
29,540
133,021
115,739
Dividends per common share
$
0.06
$
0.06
$
0.24
$
0.24
Earnings per share:
Basic
$
0.78
$
0.55
$
2.50
$
2.19
Diluted
$
0.77
$
0.55
$
2.47
$
2.17
Weighted average common shares
outstanding:
Basic
53,120
53,625
53,200
52,674
Diluted
53,711
54,172
53,759
53,161
PRIMORIS SERVICES
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(In Thousands)
December
31,
December
31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
248,692
$
200,512
Accounts receivable, net
663,119
471,656
Contract assets
616,224
423,659
Prepaid expenses and other current
assets
176,350
86,263
Total current assets
1,704,385
1,182,090
Property and equipment, net
493,859
433,279
Operating lease assets
202,801
158,609
Deferred tax assets
—
1,307
Intangible assets, net
249,381
171,320
Goodwill
871,808
581,664
Other long-term assets
21,786
15,058
Total assets
$
3,544,020
$
2,543,327
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
534,956
$
273,463
Contract liabilities
275,947
240,412
Accrued liabilities
245,837
174,821
Dividends payable
3,187
3,192
Current portion of long-term debt
78,137
67,230
Total current liabilities
1,138,064
759,118
Long-term debt, net of current portion
1,065,315
594,232
Noncurrent operating lease liabilities,
net of current portion
130,787
98,059
Deferred tax liabilities
57,101
38,510
Other long-term liabilities
43,915
63,353
Total liabilities
2,435,182
1,553,272
Commitments and contingencies
Stockholders’ equity
Common stock
6
6
Additional paid-in capital
263,771
261,918
Retained earnings
847,681
727,433
Accumulated other comprehensive income
(2,620)
698
Total stockholders’ equity
1,108,838
990,055
Total liabilities and stockholders’
equity
$
3,544,020
$
2,543,327
PRIMORIS SERVICES
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In Thousands)
Year Ended
December 31,
2022
2021
Cash flows from operating activities:
Net income
$
133,021
$
115,739
Adjustments to reconcile net income to net
cash provided by operating activities (net of effect of
acquisitions):
Depreciation and amortization
99,157
105,559
Stock-based compensation expense
7,441
10,462
Gain on sale of property and equipment
(31,890
)
(15,921
)
Gain on sale and leaseback transaction
(40,084
)
—
Unrealized gain on interest rate swap
(5,581
)
(4,859
)
Other non-cash items
277
1,381
Changes in assets and liabilities:
Accounts receivable
(98,724
)
10,540
Contract assets
(118,806
)
(66,999
)
Other current assets
(70,275
)
(54,725
)
Net deferred tax liabilities
14,695
25,564
Other long-term assets
932
(1,683
)
Accounts payable
191,532
15,701
Contract liabilities
(7,869
)
(29,111
)
Operating lease assets and liabilities,
net
(505
)
(2,605
)
Accrued liabilities
5,707
(24,700
)
Other long-term liabilities
4,318
(4,596
)
Net cash provided by operating
activities
83,346
79,747
Cash flows from investing activities:
Purchase of property and equipment
(94,690
)
(133,842
)
Proceeds from sale of assets
41,302
49,548
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
(481,939
)
(691,268
)
Cash flows from financing activities:
Borrowings under revolving lines of
credit
188,560
100,000
Payments on revolving lines of credit
(88,560
)
(100,000
)
Proceeds from issuance of long-term
debt
469,531
461,719
Payments on long-term debt
(86,769
)
(113,851
)
Proceeds from issuance of common stock
585
178,707
Debt issuance costs
(6,643
)
(4,876
)
Dividends paid
(12,778
)
(12,565
)
Purchase of common stock
(5,990
)
(14,720
)
Other
(5,893
)
(8,681
)
Net cash provided by financing
activities
452,043
485,733
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(102
)
456
Net change in cash, cash equivalents and
restricted cash
53,348
(125,332
)
Cash, cash equivalents and restricted cash
at beginning of the year
205,643
330,975
Cash, cash equivalents and restricted cash
at end of the year
$
258,991
$
205,643
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 December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net income as reported (GAAP)
$
41,501
$
29,540
$
133,021
$
115,739
Non-cash stock based compensation
1,693
1,316
7,441
5,366
Transaction/integration and related costs
(1)
1,826
1,576
20,054
16,399
Amortization of intangible assets
7,154
4,845
20,938
18,319
Amortization of debt issuance costs
491
283
1,479
1,133
Loss on extinguishment of debt
—
—
759
—
Unrealized (gain) loss on interest rate
swap
35
(1,676
)
(5,581
)
(4,859
)
Gain on sale and leaseback transaction
—
—
(40,084
)
—
Change in fair value of contingent
consideration
(1,705
)
—
(1,705
)
—
Income tax impact of adjustments (2)
(797
)
(1,510
)
(545
)
(8,653
)
Adjusted net income
$
50,198
$
34,374
$
135,777
$
143,444
Weighted average shares (diluted)
53,711
54,172
53,759
53,161
Diluted earnings per share
$
0.77
$
0.55
$
2.47
$
2.17
Adjusted diluted earnings per share
$
0.93
$
0.63
$
2.53
$
2.70
(1)
The twelve months ended December 31, 2021, includes $5.1 million
in stock compensation expense related to the acquisition of
FIH.
(2)
Adjustments above are reported on a pre-tax basis before the
income tax impact of adjustments. The income tax impact for each
adjustment is determined by calculating the tax impact of the
adjustment on the Company's quarterly and annual effective tax
rate, as applicable, unless the nature of the item and/or the tax
jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment, in which case
the tax effect of such item is estimated by applying such specific
tax rate or tax treatment.
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 December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net income as reported (GAAP)
$
41,501
$
29,540
$
133,021
$
115,739
Interest expense, net
18,556
4,344
39,212
18,498
Provision for income taxes
3,954
3,424
26,265
36,118
Depreciation and amortization
29,809
26,854
99,157
105,559
EBITDA
93,820
64,162
297,655
275,914
Non-cash stock based compensation
1,693
1,316
7,441
5,366
Transaction/integration and related costs
(1)
1,826
1,576
20,054
16,399
Change in fair value of contingent
consideration
(1,705
)
—
(1,705
)
—
Gain on sale and leaseback transaction
—
—
(40,084
)
—
Adjusted EBITDA
$
95,634
$
67,054
$
283,361
$
297,679
(1)
The twelve months ended December 31, 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 Adjusted Net Income and Adjusted Diluted
Earnings Per Share for Full Year 2023 (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, 2023.
Estimated Range
Full Year Ending
December 31, 2023
Net income as defined (GAAP)
$
113,550
$
124,400
Non-cash stock based compensation
7,500
7,500
Amortization of intangible assets
21,500
21,500
Amortization of debt issuance costs
1,900
1,900
Income tax impact of adjustments (1)
(8,700
)
(8,700
)
Adjusted net income
$
135,750
$
146,600
Weighted average shares (diluted)
54,200
54,200
Diluted earnings per share
$
2.10
$
2.30
Adjusted diluted earnings per share
$
2.50
$
2.70
(1)
Adjustments above are reported on a pre-tax basis before the
income tax impact of adjustments. The income tax impact for each
adjustment is determined by calculating the tax impact of the
adjustment on the Company's quarterly and annual effective tax
rate, as applicable, unless the nature of the item and/or the tax
jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment, in which case
the tax effect of such item is estimated by applying such specific
tax rate or tax treatment.
Schedule 4 Primoris Services
Corporation Reconciliation of Non-GAAP Financial
Measures Forecasted EBITDA and Adjusted EBITDA for Full Year
2023 (In Thousands, Except Per Share Amounts)
(Unaudited)
The following table sets forth a reconciliation of the
forecasted GAAP net income to Adjusted EBITDA for the year ending
December 31, 2023.
Estimated Range
Full Year Ending
December 31, 2023
Net income as defined (GAAP)
$
113,550
$
124,400
Interest expense, net
73,000
77,000
Provision for income taxes
43,650
48,800
Depreciation and amortization
112,300
112,300
EBITDA
$
342,500
$
362,500
Non-cash stock based compensation
7,500
7,500
Adjusted EBITDA
$
350,000
$
370,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230227005754/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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