On November 7, 2023, Primoris Services Corp (PRIM, Financial) released its earnings report for the third quarter ended September 30, 2023, showcasing a period of significant financial growth and operational achievements. The company's revenue reached a new quarterly record, climbing to $1.53 billion, representing a 19.1% increase from the same period in the previous year. This growth was primarily driven by robust performance across the renewables, industrial, and pipeline businesses, as well as contributions from the PLH acquisition in power delivery.
Income Statement Highlights
The company's gross profit for the quarter was $173.9 million, a 12.3% increase year-over-year, attributed to higher revenue and improved margins, particularly in the Energy segment. However, the gross profit margin slightly decreased to 11.4% from 12.1% in the previous year, mainly due to lower margins in the Utilities segment, which were partially offset by the Energy segment's margin improvements.
Net income for the quarter was reported at $48.1 million, with diluted earnings per share (EPS) of $0.89, up from $43.0 million and $0.80 EPS in the same quarter of the previous year. The increase in net income and EPS was largely due to the rise in gross profit, despite higher selling, general, and administrative (SG&A) expenses, interest expenses, and taxes. Adjusted Net Income was $55.2 million, with adjusted diluted EPS of $1.02, reflecting adjustments related to a higher tax rate and increased interest expense, partially offset by increased operating income.
Segment Performance and Backlog
Primoris Services Corp (PRIM, Financial) now reports in two segments: Utilities and Energy. The Utilities segment saw a revenue increase of 5.2% to $644.6 million, while the Energy segment's revenue surged by 31.8% to $884.8 million. The Energy segment's gross profit increased by 42.1%, with a gross profit margin of 12.3%, due to improved pipeline project margins and growth in high-margin renewable energy work.
The company's total backlog as of September 30, 2023, reached a record $6.7 billion, with expectations to recognize approximately 69% of this backlog as revenue over the next four quarters. This backlog is a strong indicator of Primoris's potential future revenue and continued growth.
Balance Sheet and Capital Allocation
As of September 30, 2023, Primoris had $160.7 million in unrestricted cash and cash equivalents. Capital expenditures for the third quarter amounted to $40.1 million, including $10.4 million for construction equipment purchases. The company also announced a $0.06 per share cash dividend and did not purchase any shares under its share purchase program during the nine months ended September 30, 2023.
Outlook and Management Commentary
Tom McCormick, President and CEO of Primoris, expressed confidence in achieving the company's annual financial and operational goals and positioning Primoris for further growth in 2024. The company reaffirmed its full-year 2023 guidance, with net income expected to be between $2.15 and $2.35 per fully diluted share and adjusted EPS estimated in the range of $2.60 to $2.80. Adjusted EBITDA is forecasted to be between $360 million and $380 million.
Primoris's strong quarter reflects its strategic focus on high-growth areas such as renewables and industrial services, as well as disciplined cost management. With a record backlog and a positive outlook, Primoris is well-positioned to navigate economic uncertainties and capitalize on the demand for energy and infrastructure modernization.
For more detailed financial information and the full earnings release, please visit Primoris's website.
Explore the complete 8-K earnings release (here) from Primoris Services Corp for further details.
