Q2 2010 Financial Highlights
- Revenues increased 69.9% to $203.2 million from $119.6 million
in Q2 2009
- Net income of $7.1 million, or $0.16 per diluted share,
compared to Q2 2009 net income of $8.6 million, or $0.26 per
diluted share
- $120.3 million in cash and short-term investments at June 30,
2010
Primoris Services Corporation (Nasdaq:PRIM)
(Nasdaq:PRIMW) ("Primoris" or "Company") today announced financial
results for its second quarter ended June 30, 2010. Primoris'
results for the second quarter of 2010 included the results of
James Construction Group (JCG), which was acquired on December 18,
2009, and Cravens Services, Inc., which was acquired on October 3,
2009.
The Company also announced that on August 6, 2010, its Board of
Directors declared a $0.025 per share cash dividend to stockholders
of record as of September 30, 2010, payable on or about October 15,
2010.
Brian Pratt, Chairman, President and Chief Executive Officer of
Primoris, commented, "The results for the past quarter demonstrate
the benefits of being a diversified construction company, operating
in different markets with an expanded geographical reach. We
experienced a significant decline in revenues in our West
Construction Segment where our industrial group continued to feel
the effects of the cancellation of two major projects in 2009,
while the underground and parking structure businesses were
impacted by the macro-economic slowdown. However, as we head
into the second half of the year, we have begun to see our
underground business workload increase, especially in our Master
Service Agreement work. We also have announced the awards of
two large traditional power plant projects this year for our West
Construction Segment industrial group, and we expect to see revenue
contributions from these projects beginning in the fourth quarter
of this year. The new contracts have resulted in the rebound of our
West Construction Segment backlog to more satisfactory levels from
their lows in the third quarter of 2009. During the quarter, the
East Construction Segment generated a strong financial performance,
contributing to revenues, profits and backlog growth, and we expect
this trend to continue for the rest of the year.
Company-wide, we have announced so far this year over $500
million in new, large-scale contracts involving heavy civil,
underground, and power and energy-related projects. These
awards have driven our current total backlog to over $1 billion, a
more than 15% increase over total backlog at June 30, 2010. While
we believe that our end markets are showing signs of strengthening,
a more pronounced improvement is not likely until 2011. As we
look ahead, we believe that our recent investment in WesPac Energy
LLC will help broaden our exposure to a variety of pipeline,
terminal, and energy-related infrastructure opportunities across
North America. The investment may result in additional project
opportunities for us as early as the second half of 2011. We
continue to monitor our markets for growth opportunities, including
potential acquisitions. We are supported in these efforts by a
solid financial position and a proven, experienced team of industry
professionals."
2010 SECOND QUARTER RESULTS OVERVIEW
Revenues for the second quarter ended June 30, 2010 were $203.2
million, an increase of $83.6 million, or 69.9% from the same
period in 2009. The increase in revenues was due primarily to
the acquisitions in late 2009, which contributed $112.9 million in
revenues for the 2010 second quarter. Excluding the
impact of the acquisitions, revenues for the 2010 second quarter
declined by $29.3 million compared to the same period a year ago.
The decline in revenues was across all business lines, but
especially in pipeline and industrial projects in the West
Construction segment, reflecting the slowdown in project awards in
2009.
Gross profit increased by $5.9 million, or 28.5%, for the 2010
second quarter from the same period one year ago, due primarily to
a $12.8 million profit contribution from our acquisitions, as well
as the successful close out of pipeline and industrial projects in
the West Construction segment compared to the first quarter of
2009. Gross profit as a percent of revenues decreased to 13.1% from
17.3% in the 2009 second quarter, due primarily to lower
utilization of equipment and manpower in the West Construction
segment and to lower margins in the legacy companies of the East
Construction segment.
SEGMENT RESULTS
Effective January 1, 2010 our reportable operating segments
are:
- East Construction Services – incorporates JCG's construction
business, located primarily in the southeastern United States, as
well as businesses along the Gulf Coast region, including Cardinal
Contractors, Inc., Cardinal Mechanical, and Cravens.
- West Construction Services – includes construction performed in
the western United States, primarily in California and Nevada, by
ARB, ARB Structures, Inc., and Stellaris LLC.
- Engineering – incorporates the results of Onquest, Inc. and
Born Heaters Canada, ULC.
| Segment Revenues |
|
|
|
|
|
| (in thousands, except
%) |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
For the three
months ended June 30, |
| |
|
2010 |
2009 |
| Segment |
|
Revenue |
% of Segment
Revenue |
Revenue |
% of Segment
Revenue |
| |
|
(Unaudited) |
| East Construction Services |
|
$120,471 |
59.3% |
$13,459 |
11.3% |
| West Construction Services |
|
69,821 |
34.4% |
92,788 |
77.6% |
| Engineering |
|
12,895 |
6.3% |
13,363 |
11.1% |
| Total |
|
$203,187 |
100.0% |
$119,610 |
100.0% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
For the six
months ended June 30, |
| |
|
2010 |
2009 |
| Segment |
|
Revenue |
% of Segment
Revenue |
Revenue |
% of Segment
Revenue |
| |
|
(Unaudited) |
| East Construction Services |
|
$224,707 |
59.4% |
$28,198 |
11.6% |
| West Construction Services |
|
129,708 |
34.3% |
182,832 |
75.2% |
| Engineering |
|
23,754 |
6.3% |
32,130 |
13.2% |
| Total |
|
$378,169 |
100.0% |
$243,160 |
100.0% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Segment Gross
Margin |
|
|
|
|
|
| (in thousands, except
%) |
|
|
|
|
|
| |
|
For the three
months ended June 30, |
| |
|
2010 |
2009 |
| Segment |
|
Gross Profit |
% of Segment
Revenue |
Gross Profit |
% of Segment
Revenue |
| |
|
(Unaudited) |
| East Construction Services |
|
$13,593 |
11.3% |
$1,348 |
10.0% |
| West Construction Services |
|
10,181 |
14.6% |
18,128 |
19.5% |
| Engineering |
|
2,862 |
22.2% |
1,267 |
9.5% |
| Total |
|
$26,636 |
13.1% |
$20,743 |
17.3% |
| |
|
|
|
|
|
| |
|
For the six
months ended June 30, |
| |
|
2010 |
2009 |
| Segment |
|
Gross Profit |
% of Segment
Revenue |
Gross Profit |
% of Segment
Revenue |
| |
|
(Unaudited) |
| East Construction Services |
|
$23,214 |
10.3% |
$3,058 |
10.8% |
| West Construction Services |
|
22,392 |
17.3% |
29,215 |
16.0% |
| Engineering |
|
5,503 |
23.2% |
2,976 |
9.3% |
| Total |
|
$51,109 |
13.5% |
$35,249 |
14.5% |
East Construction Services: The $107.0 million
increase in revenues was attributable to the 2009 addition of JCG
and, to a lesser extent, Cravens, offset by a $5.9 million revenue
decline primarily in water and wastewater projects. The $12.2
million gross profit increase was due to the gross margin
contribution from JCG compared to the second quarter of
2009. Gross margin for the second quarter of 2010 included
$1.1 million of intangible amortization expense related to the JCG
acquisition. Higher gross profit margin in the 2010 second
quarter primarily reflected the increased margins associated with
JCG projects compared to those of the water and wastewater
projects in 2009.
West Construction Services: The $23.0 million
decline in revenues for the second quarter 2010 was primarily
attributable to lower project revenues from power plant, oil and
gas, and parking structure projects. The $7.9 million decline
in gross profit for the second quarter of 2010 was due primarily to
the impact of significantly lower business volumes and the impact
of profit of project close-outs of large power plant and pipeline
projects in the second quarter of 2009. The decline in gross
profit margin was attributable to last year's benefit from higher
project close-out margins.
Engineering: Revenues decreased by $0.5 million
from the second quarter of 2009, reflecting the benefit of the
finalization of a large international project and several large
domestic projects in 2009. Gross profit rose by $1.6 million, due
to customer acceptance of a project in 2010 and lower profit
margins in the 2009 period because of a reserve for completed
work. The customer acceptance contributed toward an improved
gross profit margin as a percent of revenues to over 20% for
the quarter.
Selling, general and administrative expenses ("SG&A")
increased by $7.7 million, or 94.3%, for the 2010 second quarter
compared to the prior year period. Approximately $6.0 million
of the increase was attributable to the acquisitions of JCG and
Cravens, with the balance of the increase attributable to higher
professional fees, a decline in profit on sale of equipment and
lower allocations of expenses to the cost of revenues reflecting
the reduced West Construction segment operations.
Operating income for the 2010 second quarter was $10.8 million,
or 5.3% of total revenues, compared to $12.6 million, or 10.5% of
total revenues, for the same period last year.
Net other income for the second quarter of 2010 was $0.5 million
compared to net other income of $1.4 million for the second quarter
of 2009, due primarily to higher interest expense of $0.7 million
on the subordinated debt associated with the JCG acquisition and to
the expense of $0.3 million related to the change in fair value of
the contingent acquisition earnout liabilities.
Income from continuing operations before provision for income
taxes for the second quarter of 2010 was $11.3 million, or 5.5% of
revenues, as compared to $14.0 million, or 11.7% of revenues, in
the second quarter of 2009.
The provision for income taxes for the second quarter of 2010
was $4.2 million, for an effective tax rate of 37.1%, compared to
$5.4 million, for an effective tax rate of 38.3%, in the prior
year's quarter.
Net income for the second quarter of 2010 was $7.1 million, or
$0.16 per diluted share, compared to net income of $8.6 million, or
$0.26 per diluted share, in the same period in 2009. Fully
diluted shares outstanding for the second quarter of 2010 increased
by 38.3% to 45.4 million from 32.8 million in last year's second
quarter, due to the impact of 8.2 million shares issued for the JCG
acquisition, 2.5 million shares issued as a final earn-out portion
of the Rhapsody and Primoris merger, the conversion of 0.9 million
warrants and the dilutive impact of the remaining 3.8 million
warrants.
OTHER FINANCIAL INFORMATION
Primoris' balance sheet at June 30, 2010 reported cash and cash
equivalents of $87.3 million, short-term investments of $33.0
million, working capital of $66.1 million, total debt and capital
leases secured by equipment of $59.7 million, subordinated
acquisition debt of $46.3 million and stockholders' equity of
$159.9 million. Additionally, the balance sheet included a
$9.9 million liability representing the estimated fair value for
earn-out payments relating to the 2009 acquisitions.
BACKLOG
At June 30, 2010, total backlog was $872.8 million, an increase
of $77.4 million, or 9.7%, from total backlog of $795.4 million at
December 31, 2009. Primoris expects that approximately $338.7
million, or 38.8%, of the total backlog at June 30, 2010, will be
recognized as revenue during the remainder of 2010, with $210.5
million expected for the East Construction segment, $88.0 million
for the West Construction segment, and $40.2 million for the
Engineering segment.
Backlog should not be considered a comprehensive indicator of
future revenues, as a portion of Primoris' revenues are derived
from projects that are not part of a backlog calculation and
projects in backlog may be cancelled by our customers.
CONFERENCE CALL
Brian Pratt, Chairman, President and Chief Executive Officer,
and Peter J. Moerbeek, Executive Vice President, Chief Financial
Officer will host a conference call today, August 9, 2010 at 11:30
am Eastern Time / 8:30 am Pacific Time to discuss the
results. Interested parties may participate in the call by
dialing (866) 255-7436 (Domestic) or (706) 634-4739
(International). The conference call will also be broadcast live
via 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, the conference call will be archived
and can be accessed for approximately 90 days.
ABOUT PRIMORIS
Primoris, through various subsidiaries, is one of the largest
specialty contractors and infrastructure companies in the United
States. Serving diverse end markets, Primoris provides a wide
range of construction, fabrication, maintenance and replacement
services, as well as engineering services to major public
utilities, petrochemical companies, energy companies,
municipalities and other customers. With the recent acquisition of
James Construction Group, Primoris has a significant presence in
the Gulf States region where it provides heavy civil construction
services. Primoris is also a leading water and wastewater
contractor in the state of Florida, and a specialist in designing
and constructing complex commercial and industrial concrete
structures in California. For additional information on Primoris,
please visit www.prim.com.
The Primoris Services Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5527
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 risks and uncertainties, 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 year ended December 31, 2009 and
other filings with the Securities and Exchange Commission,
including the Company's Form 10-Q expected to be filed on August 9,
2010. 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.
| CONDENSED CONSOLIDATED
STATEMENTS OF INCOME |
|
(Unaudited) |
| (In Thousands, Except
Per Share Amounts) |
| |
|
|
|
|
| |
|
|
| |
Three Months
Ended |
Six Months
Ended |
| |
June 30, |
June 30, |
| |
2010 |
2009 |
2010 |
2009 |
| |
|
|
|
|
| Revenues |
$203,187 |
$119,610 |
$378,169 |
$243,160 |
| Cost of revenues |
176,551 |
98,867 |
327,060 |
207,911 |
| Gross profit |
26,636 |
20,743 |
51,109 |
35,249 |
| Selling, general and administrative
expenses |
15,823 |
8,143 |
29,269 |
15,559 |
| Operating income |
10,813 |
12,600 |
21,840 |
19,690 |
| Other income (expense): |
|
|
|
|
| Income from non-consolidated
entities |
1,756 |
1,736 |
2,724 |
3,903 |
| Foreign exchange gain (loss) |
94 |
(26) |
186 |
203 |
| Other expense |
(322) |
-- |
(631) |
-- |
| Interest income |
153 |
205 |
333 |
464 |
| Interest expense |
(1,220) |
(539) |
(2,527) |
(1,065) |
| |
461 |
1,376 |
85 |
3,505 |
| |
|
|
|
|
| Income from continuing operations, before
provision for income taxes |
11,274 |
13,976 |
21,925 |
23,195 |
| Provision for taxes |
(4,187) |
(5,355) |
(8,140) |
(8,954) |
| Income from continuing operations |
7,087 |
8,621 |
13,785 |
14,241 |
| Loss on discontinued operations, net of
income taxes |
-- |
(41) |
-- |
(21) |
| Net income |
$7,087 |
$8,580 |
$13,785 |
$14,220 |
| |
|
|
|
|
| Earnings per share: |
|
|
|
|
| Basic: |
|
|
|
|
| Income from continuing operations |
$0.16 |
$0.26 |
$0.36 |
$0.45 |
| Income on discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
| Net income |
$0.16 |
$0.26 |
$0.36 |
$0.45 |
| |
|
|
|
|
| Diluted: |
| Income from continuing operations |
$0.16 |
$0.26 |
$0.30 |
$0.44 |
| Income on discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
| Net income |
$0.16 |
$0.26 |
$0.30 |
$0.44 |
| Weighted average common shares
outstanding |
|
|
|
|
| Basic |
43,163 |
32,477 |
38,210 |
31,303 |
| Diluted |
45,407 |
32,835 |
45,451 |
32,477 |
| CONDENSED CONSOLIDATED
BALANCE SHEETS |
|
(Unaudited) |
| (In Thousands, Except
Share Amounts) |
| |
|
| |
|
|
| |
June 30, 2010 |
December 31,
2009 |
| ASSETS |
|
|
| |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$87,283 |
$90,004 |
| Short-term investments |
33,000 |
30,058 |
| Restricted cash |
9,310 |
6,845 |
| Accounts receivable, net |
121,928 |
108,492 |
| Costs and estimated earnings in
excess of billings |
22,091 |
11,378 |
| Inventory |
19,922 |
22,275 |
| Deferred tax assets |
5,630 |
5,630 |
| Prepaid expenses and other
current assets |
12,375 |
5,501 |
| Current assets from
discontinued operations |
-- |
5,304 |
| Total current assets |
311,539 |
285,487 |
| Property and equipment,
net |
97,269 |
92,568 |
| Investment in non-consolidated
entities |
3,133 |
5,599 |
| Intangible assets,
net |
29,818 |
32,695 |
| Goodwill |
59,678 |
59,678 |
| Total assets |
$501,437 |
$476,027 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$64,392 |
$62,568 |
| Billings in excess of costs and
estimated earnings |
117,572 |
114,035 |
| Accrued expenses and other
current liabilities |
37,819 |
34,992 |
| Distributions and dividends
payable |
1,107 |
2,987 |
| Current portion of long-term
debt |
9,694 |
6,482 |
| Current portion of capital
leases |
3,537 |
4,220 |
| Current portion of subordinated
debt |
10,575 |
10,397 |
| Current liabilities of
discontinued operations |
733 |
6,511 |
| Total current liabilities |
245,429 |
242,192 |
| Long-term debt, net of current
portion |
39,922 |
26,368 |
| Long-term capital leases, net
of current portion |
6,512 |
7,734 |
| Long-term subordinated debt,
net of current portion |
35,758 |
43,853 |
| Deferred tax liabilities |
2,643 |
2,643 |
| Contingent earnout
liabilities |
9,910 |
9,278 |
| Other long-term
liabilities |
1,354 |
-- |
| Total liabilities |
341,528 |
332,068 |
| |
|
|
| Commitments and contingencies |
|
|
| Stockholders' equity |
|
|
| Preferred stock--$.0001 par value,
1,000,000 shares authorized, 0 issued and outstanding at June 30,
2010 and 81,852.78 at December 31, 2009 |
-- |
-- |
| Common stock--$.0001 par value,
90,000,000 shares authorized, 44,238,611 and 32,704,903 issued and
outstanding at June 30,2010 and December 31,2009 |
4 |
3 |
| Additional paid-in capital |
105,348 |
100,644 |
| Retained earnings |
54,557 |
42,982 |
| Accumulated other comprehensive
income |
-- |
330 |
| Total stockholders' equity |
159,909 |
143,959 |
| Total liabilities and stockholders'
equity |
$501,437 |
$476,027 |
CONTACT: Primoris Services Corporation
Peter J. Moerbeek, Executive Vice President,
Chief Financial Officer
(949) 454-7121
pmoerbeek@prim.com
The Equity Group Inc.
Devin Sullivan, Senior Vice President
(212) 836-9608
dsullivan@equityny.com
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