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Primoris Services Corporation Announces 2012 Third Quarter Financial Results

2012 THIRD QUARTER RESULTS OVERVIEW

Revenues for the 2012 third quarter increased 15.0% to $431.8 million from $375.5 million for the same period last year. The 2011 third quarter included revenue of $48.3 million for the Ruby pipeline project, substantially completed in 2011. Excluding the Ruby revenue impact, revenues for the 2012 third quarter increased by $104.6 million, or 32.0%. The increased revenues are primarily as a result of increased project work in the West Construction Services segment for both industrial and underground projects, as well as the impact of the March 2012 acquisition of Sprint, which contributed $33.5 million in revenue for the three months ended September 30, 2012. Gross profit for the 2012 third quarter rose by 8.0% to $56.3 million, or 13.0% of revenues, from $52.1 million, or 13.9% of 2011 third quarter revenue. Gross profit for the 2011 third quarter included gross profit for the Ruby project of $12.7 million. Excluding the impact of the Ruby project, gross profit for the 2012 third quarter increased by $16.4 million compared to the same period in the previous year. Higher gross profit was due primarily to the increased project work in the West Construction Services segment as well as the gross profit contribution from the March 2012 acquisition of Sprint, which contributed $6.3 million to gross profit for the 2012 third quarter.

SEGMENT RESULTS
  • East Construction Services – located primarily in the southeastern United States, incorporates the construction business of James Construction Group (JCG), Cardinal Contractors, Inc.’s water and wastewater, and Sprint Pipeline Services LP, acquired in March 2012.
  • West Construction Services – includes construction services performed by companies headquartered in the western United States including ARB, Inc., ARB Structures, Inc. and Rockford. The Blythe Power Constructors joint venture is also included as part of West Construction Services.
  • Engineering – incorporates the results of Onquest, Inc. and Born Heaters Canada, ULC.
   

Segment Revenues

(in thousands, except %)

 
 
For the three months ended September 30,
2012

Unaudited
    2011

Unaudited
    % of     % of
Segment Segment

Segment
Revenue Revenue Revenue Revenue
 
East Construction Services $ 181,260 42.0 % $ 130,682 34.8 %
West Construction Services 242,033 56.0 % 230,904 61.5 %
Engineering   8,549 2.0 %   13,897 3.7 %
Total $ 431,842 100.0 % $ 375,483 100.0 %
 
 
For the nine months ended June 30,
2012

Unaudited
2011

Unaudited
% of % of
Segment Segment

Segment
Revenue Revenue Revenue Revenue
 
East Construction Services $ 459,167 43.3 % $ 403,299 37.1 %
West Construction Services 567,351 53.5 % 647,640 59.6 %
Engineering   34,333 3.2 %   36,145 3.3 %
Total $ 1,060,851 100.0 % $ 1,087,084 100.0 %
   
 

Segment Gross Profit

(in thousands, except %)

 
 
For the three months ended September 30,
2012

Unaudited
    2011

Unaudited
    % of     % of
Gross Segment Gross Segment

Segment
Profit Revenue Profit Revenue
 
East Construction Services $ 18,664 10.3 % $ 15,320 11.7 %
West Construction Services 35,602 14.7 % 34,377 14.9 %
Engineering   2,025 23.7 %   2,424 17.4 %
Total $ 56,291 13.0 % $ 52,121 13.9 %
 
 
 
For the nine months ended September 30,
2012

Unaudited
2011

Unaudited
% of % of
Gross Segment Gross Segment

Segment
Profit Revenue Profit Revenue
 
East Construction Services

$

47,442
10.3 % $ 45,658 11.3 %
West Construction Services 84,297 14.9 % 80,828 12.5 %
Engineering   6,152 17.9 %   7,671 21.2 %
Total $ 137,891 13.0 % $ 134,157 12.3 %
 

East Construction Services: Revenues increased by $50.6 million in the 2012 third quarter, primarily due to the March 2012 acquisition of Sprint, which generated $33.5 million in revenue for the quarter. Excluding the impact of Sprint, revenues increased by $17.1 million due primarily to increased industrial work in petrochemical and fertilizer facilities as a result of lower natural gas prices in the Gulf Coast area as well as increases in infrastructure and maintenance work related to the number and size of projects in petrochemical and power facilities. Gross profit increased by $3.3 million in the 2012 third quarter, including $6.3 million of gross profit contribution from the Sprint acquisition. Excluding the impact of the Sprint acquisition, decreased gross profit of $3.0 million was a result of lower margins of heavy civil projects, primarily due to larger highway projects in Louisiana in the prior year quarter.

West Construction Services: Revenues increased by $11.1 million in the 2012 third quarter. The 2011 third quarter included $48.3 million in revenues from the Ruby project. Excluding the Ruby project revenues, revenues increased by $59.4 million in the 2012 third quarter, due primarily to a $17.7 million increase in the California underground business, a $10.3 million increase in the California industrial business, and $33.5 million for work in the Marcellus gas shale region. A significant contributor to the underground business was pipeline integrity work for the major California gas utilities, while work on power plants provided a major increase to the industrial business. Excluding the 2011 third quarter Ruby project gross profit of $12.7 million, gross profit for the 2012 third quarter increased by $13.4 million, driven by the significant increase in volume in both the underground and industrial projects.

Engineering: Revenues decreased by $5.3 million, mainly due to the completion early in the quarter of several furnace upgrade and refurbishment projects for two major U.S. chemical companies. Gross profit decreased by $0.4 million, primarily as the result of lower profit margins achieved on international projects at our Canadian location and higher margin project closeouts in the prior year.

Selling, general and administrative expenses (“SG&A”) were $26.0 million, or 6.0% of revenues for the 2012 third quarter, compared to $23.4 million, or 6.9% of revenues for the 2012 second quarter, an increase of $2.6 million. The increased SG&A included a $0.7 million increase as a result of the Sprint acquisition and an increase of $1.9 million in compensation and compensation-related expenses, largely due to the costs of increased personnel associated with the higher volume of work. Excluding the impact of Sprint, SG&A as a percentage of revenues was 5.8% for the 2012 third quarter.

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