updated 3/16/2011 9:18:27 AM ET 2011-03-16T13:18:27

Q4 2010 Financial Highlights

  • Revenues increased to $333.2 million from $117.2 million at Q4 2009
  • Net income of $12.3 million, or $0.24 per diluted share, compared to Q4 2009 net income of $3.7 million, or $0.10 per diluted share
  • $141.4 million in cash, cash equivalents, and short-term investments at December 31, 2010
  • Total backlog at December 31, 2010 of $895.8 million

DALLAS, March 16, 2011 (GLOBE NEWSWIRE) -- Primoris Services Corporation (Nasdaq:PRIM) ("Primoris" or "Company") today announced financial results for its fourth quarter and full year ended December 31, 2010. Primoris's results for the fourth quarter and full year of 2010 included the results of James Construction Group (JCG), which was acquired in the fourth quarter of 2009, and Rockford Corporation which was acquired on November 12, 2010 (see "Note Regarding Rockford Acquisition" later in this press release).

The Company also announced that on March 10, 2011, its Board of Directors declared a $0.025 per share cash dividend to stockholders of record as of March 31, 2011, payable on or about April 15, 2011.

Brian Pratt, Chairman, President and Chief Executive Officer of Primoris, commented, "2010 was a record year for Primoris, highlighted by a continuing commitment to expanding our geographic reach, broadening our services platform and maintaining a strong financial position. The acquisitions of JCG in late 2009 and Rockford in November 2010 contributed significantly to our operating results, allowing us to end the year with just under $1.0 billion in total revenue and a substantial improvement in profitability. Each of our three operating segments posted improved revenues and each contributed favorably to our results."

Mr. Pratt continued, "We ended the year in a solid financial position, including cash and short term investments of $141.4 million, a modest debt profile and operating cash flow of $81.8 million. As we look ahead to 2011, we acknowledge the competitive environment and end markets in which we operate. Still, we are pleased with the progress of Rockford's Ruby Pipeline Project contract, which contributed approximately $79.2 million in revenues in 2010. Based on current projections, we believe that the Ruby Pipeline contract will generate additional revenues to Primoris in excess of $200 million in 2011. Rockford expects to complete its portion of the Ruby Pipeline Project, passing through the states of Nevada and Oregon, by summer 2011. We are also pleased with the pace of new work at our other businesses. Thus far in 2011, we have announced new contracts valued at more than $225 million in highway infrastructure, power generation, and power production infrastructure."

2010 FOURTH QUARTER RESULTS OVERVIEW

Revenues for the 2010 fourth quarter rose 184.2% to $333.2 million from $117.2 million in the same period last year. This increase reflects an $85.3 million contribution from Rockford, approximately $79.2 million of which was generated by the Ruby Pipeline Project, as well as contributions from JCG. Excluding the impact of these acquired businesses, revenues for the fourth quarter of 2010 increased by $27.8 million, or 23.7%, from the same period a year ago.

Gross profit for the 2010 fourth quarter was $43.8 million, or 13.1% of revenues, compared to $20.2 million, or 17.2% of revenues, in the fourth quarter of 2009. Gross profit dollars increased primarily due to a $22.3 million profit contribution from the acquired businesses. The decline in gross profit as a percentage of revenues was the result of traditionally lower margin percentages on JCG's heavy civil projects, as well as a return to more traditional margin percentages on our West Construction Services segment projects.

2010 FULL YEAR RESULTS OVERVIEW

Revenues in 2010 increased 101.7% to $941.8 million from $467.0 million in 2009. This increase primarily reflects the acquisitions of JCG in December 2009 and Rockford in November 2010. The JCG acquisition contributed $429.4 million to revenues and the Rockford acquisition contributed $85.3 million of revenues during 2010. Excluding the impact of the acquired businesses, revenue declined by $39.9 million in 2010 compared to 2009, primarily in oil & gas pipeline projects and parking structure projects due to decreased project awards during the recession.

Gross profit in 2010 rose by 62.5% to $122.8 million, or 13.0% of revenues, from gross profit of $75.6 million, or 16.2% of revenues, in 2009. This increase was due primarily to the acquisitions of JCG and Rockford. JCG contributed $45.5 million in gross profit and Rockford provided $9.8 million in gross profit. The decline in gross profit as a percentage of revenues in 2010 was primarily due to the typically lower margin percentages on JCG's civil projects and the lower utilization of equipment and manpower in the West Construction Services segment.

SEGMENT RESULTS

Since January 1, 2010 our reportable operating segments have been:

  • East Construction Services – located primarily in the southeastern United States, incorporates JCG's construction business, and Cardinal Contractors, Inc.'s water and wastewater, and Cardinal Mechanical, Inc.'s shored excavation for thermal utilities businesses.
     
  • West Construction Services – includes construction services performed in the western United States by ARB, Inc., and ARB Structures, Inc., and, effective November 1, 2010, Rockford.
     
  • Engineering – incorporates the results of Onquest, Inc. and Born Heaters Canada, ULC.
   
Segment Revenues  
(in thousands, except %)  
   
  For the three months ended December 31,
  2010

Unaudited
2009

Unaudited
    % of   % of
    Segment   Segment
Segment Revenue Revenue Revenue Revenue
    (Unaudited)  
East Construction Services $128,950 38.7% $26,987 23.0%
West Construction Services 185,971 55.8% 76,457 65.2%
Engineering 18,318 5.5% 13,795 11.8%
Total $333,239 100.0% $117,239 100.0%
   
  For the twelve months ended December 31,
  2010 2009
    % of   % of
    Segment   Segment
Segment Revenue Revenue Revenue Revenue
    (Unaudited)  
East Construction Services $480,533 51.0% $69,015 14.8%
West Construction Services 402,273 42.7% 340,222 72.9%
Engineering 58,959 6.3% 57,773 12.3%
Total $941,765 100.0% $467,010 100.0%
   
Segment Gross Margin  
(in thousands, except %)  
   
  For the three months ended December 31,
  2010

Unaudited
2009

Unaudited
    % of   % of
  Gross Segment Gross Segment
Segment Profit Revenue Profit Revenue
    (Unaudited)  
East Construction Services $12,667 9.8% $2,103 7.8%
West Construction Services 26,816 14.4% 16,264 21.3%
Engineering 4,317 23.6% 1,805 13.1%
Total $43,800 13.1% $20,172 17.2%
   
  For the twelve months ended December 31,
  2010 2009
    % of   % of
  Gross Segment Gross Segment
Segment Profit Revenue Profit Revenue
    (Unaudited)  
East Construction Services  $48,770 10.1% $6,544 9.5%
West Construction Services 61,897 15.4% 62,927 18.5%
Engineering 12,122 20.6% 6,104 10.6%
Total $122,789 13.0% $75,575 16.2%

East Construction Services: The $102 million increase in revenues for the quarter was attributable primarily to a full quarter of JCG revenues in 2010 compared to only 13 days of JCG revenues in 2009. Similarly, the $10.6 million gross profit increase for the quarter was due primarily to the gross margin contribution from an entire quarter of JCG operations versus the prior year's 13-day period.

West Construction Services: The $109.5 million increase in revenues for the fourth quarter of 2010 was attributable to an $85.3 million revenue contribution from Rockford, as well as increased revenue from previously announced California power plant construction projects. The $10.6 million increase in gross profit for the fourth quarter of 2010 was primarily due to Rockford's contribution of $9.8 million, the start-up of the power plant projects and the return to a more traditional mix of business in California along with more traditional gross profit margins.

Engineering: Revenues increased by $4.5 million from the fourth quarter of 2010, reflecting the start of a new U.S. refinery project and continuing international project work. Gross profit rose by $2.5 million, reflecting the completion of several lower margin projects from 2009 and the contribution from a continuing international project.

Selling, general and administrative expenses ("SG&A") increased by $9.2 million, or 76.8%, for the 2010 fourth quarter compared to the prior year period. SG&A as a percentage of revenues declined to 6.3% in the 2010 fourth quarter from 10.2% in the same period last year. Approximately $8.1 million of the increased SG&A amount was attributable to SG&A expenses of the acquired businesses, while $0.7 million of the increase was the result of accounting associated with JCG and Rockford attaining their 2010 contingent earn-out targets.

Operating income for the 2010 fourth quarter was $22.7 million, or 6.8% of total revenues, compared to $7.8 million, or 6.7% of total revenues, for the same period last year. 

Net other expense in the 2010 fourth quarter of $2.1 million compared to net other income of $3.2 million in the fourth quarter of 2009. This was due primarily to lower income from non-consolidated investments of $0.5 million compared to income of $3.4 million in the fourth quarter of 2009, resulting from completion of the Otay Mesa joint venture in early 2010, and a $1.8 million increase in 2010 fourth quarter interest expense to $2.3 million from $0.5 million in the fourth quarter of 2009. Higher interest expense for the 2010 fourth quarter was associated with approximately $1.0 million interest on federal income taxes and $0.7 million in sub-debt associated with the acquisitions.

The provision for income taxes for the fourth quarter of 2010 was $8.3 million, for an effective tax rate of 40.3%, compared to $4.3 million, for an effective tax rate of 38.6%, in the prior year quarter.

Net income for the fourth quarter of 2010 was $12.3 million, or $0.24 per diluted share, compared to net income of $3.7 million, or $0.10 per diluted share, in the same period in 2009. In the fourth quarter of 2009, the Company determined to discontinue all operations in Ecuador, and, in early 2011, sold this business. As a result, the fourth quarter of 2009 included a net loss from discontinued operations of $3.0 million, or $0.08 per diluted share.

Fully diluted shares outstanding for the fourth quarter of 2010 increased by 33.6% to 50.9 million from 38.1 million in last year's fourth quarter, due to the full quarter impact of the 8.2 million shares issued as part of the JCG acquisition, the impact of the 1.6 million shares issued as part of the Rockford acquisition and the impact of the conversion of 4.3 million warrants to common shares by the start of the quarter.

OTHER FINANCIAL INFORMATION

Primoris's balance sheet at December 31, 2010 reported cash and cash equivalents of $115.4 million, short-term investments of $26.0 million, working capital of $45.8 million, total debt and capital leases secured by equipment of $59.7 million, subordinated acquisition debt of $43.2 million and stockholders' equity of $208.2 million. Additionally, the balance sheet included a $24.6 million liability representing the estimated fair value for earn-out payments relating to the 2009 and 2010 acquisitions.

BACKLOG

At December 31, 2010, total backlog was $895.8 million, an increase of $130.5 million, or 17.1%, from total backlog of $765.3 million at December 31, 2009. Total backlog declined by $71.7 million, or 7.4%, from total backlog of $967.5 million at September 30, 2010. Primoris expects that approximately $527.8 million, or 59%, of the total backlog at December 31, 2010, will be recognized as revenue in 2011, with $334.2 million expected for the East Construction segment, $162.7 million for the West Construction segment, and $30.9 million for the Engineering segment.

Revenues generated by the Ruby Pipeline Project are not included in backlog because of the nature of the contract.

Backlog should not be considered a comprehensive indicator of future revenues, as a portion of Primoris's revenues are derived from projects that are not part of a backlog calculation and projects in backlog may be cancelled by our customers.

NOTE REGARDING ROCKFORD ACQUISITION

As previously announced, Primoris acquired Rockford on November 12, 2010, at which time Rockford became a wholly owned subsidiary of Primoris. While the acquisition agreement was effective retroactive to October 1, 2010, Rockford's results of operations and estimated fair value of assets acquired and liabilities assumed were included in the Company's consolidated financial statements from November 1, 2010 through December 31, 2010. The change in results of operations between November 1, 2010 and the acquisition date of November 12, 2010 was not material. Acquisition costs of $360,000 related to the acquisition were expensed as incurred in the year ended December 31, 2010.

CONFERENCE CALL

Brian Pratt, Chairman, President and Chief Executive Officer, and Peter J. Moerbeek, Executive Vice President and Chief Financial Officer will host a conference call today, Wednesday, March 16, 2011, at 11:30 am Eastern Time / 10:30 am Central Time to discuss the results. 

Interested parties may participate in the call by dialing:

  • (877) 869-3847 (Domestic)
  • (201) 689-8261 (International)

The conference call will also be broadcasted live via the Investor Relations section of Primoris's 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

Founded in 1946, Primoris, through various subsidiaries, has grown to become 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, replacement, water and wastewater, and engineering services to major public utilities, petrochemical companies, energy companies, municipalities, and other customers. With its acquisitions of James Construction Group in December 2009 and Rockford Corporation in November 2010, Primoris has doubled its size and the Company's national footprint now extends from Florida, along the Gulf Coast, through California, into the Pacific Northwest and Canada. For additional information, 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, 2010, and other filings with the Securities and Exchange Commission. 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.

 
 
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
 
 
  Three Months Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
  Unaudited Unaudited    
         
Revenues $ 333,239 $ 117,239  $ 941,765  $ 467,010
Cost of revenues   289,439  97,067   818,976   391,435
Gross profit  43,800  20,172  122,789  75,575
         
Selling, general and administrative expenses  21,136  11,956   64,985  34,781
Merger related stock expense  --  390   --   390
Operating income  22,664  7,826  57,804  40,404
Other income (expense):        
Income from non-consolidated investments  540  3,411  4,630  8,753
Foreign exchange (loss) gain  (16)  260  250  293
Other (expense) income  (465)  --   (1,429)  --
Interest income  132  86  616  640
Interest expense  (2,324)  (516)   (6,196)   (1,979)
Income from continuing operations, before provision for income taxes  20,531  11,067  55,675    48,111 
          
Provision for income taxes  (8,277)  (4,273)   (22,059)   (18,350)
Income from continuing operations  12,254  6,794  33,616  29,761
Loss on discontinued operations, net of income taxes  

 --
 

 (3,049)
 

  --
  (3,849)
Net income $ 12,254 $ 3,745  $ 33,616  $  25,912
         
Earnings (loss) per share:        
Basic:        
Income from continuing operations $ 0.25  $ 0.21  $  0.79  $ 0.93
Loss on discontinued operations $  --  $ (0.10)  $ --  $ (0.12)
Net income $ 0.25 $ 0.11  $ 0.79  $ 0.81
 

Diluted:
       
Income from continuing operations $ 0.24 $ 0.18  $ 0.72  $ 0.86
Loss on discontinued operations $ --  $ (0.08)  $  --  $ (0.11)
Net income $ 0.24 $ 0.10  $ 0.72  $ 0.75
         
Weighted average common shares outstanding:        
Basic  49,360  32,644   42,694   31,937
Diluted  50,928  38,113   46,878   34,418
 
 
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
 
 
  December 31, December 31,
  2010 2009
ASSETS    
     
Current assets:    
Cash and cash equivalents $ 115,437 $ 90,004
Short term investments  26,000  30,058
Customer retention deposits  12,518  6,845
Accounts receivable, net  208,145  108,492
Costs and estimated earnings in excess of billings  17,275  11,378
Inventory  25,599  22,275
Deferred tax assets  9,533  5,967
Prepaid expenses and other current assets  12,925  5,501
Current assets from discontinued operations  --  5,304
Total current assets  427,432  285,824
Property and equipment, net  123,167  92,525
Investment in non-consolidated entities  18,805  5,599
Intangible assets, net  40,633  32,695
Goodwill  94,179  61,714
Total assets $ 704,216 $ 478,357
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable $ 89,484 $ 62,568
Billings in excess of costs and estimated earnings  205,268  114,035
Accrued expenses and other current liabilities  55,126  37,322
Distributions and dividends payable  1,234  2,987
Current portion of capital leases  4,286  4,220
Current portion of long-term debt  9,623  6,482
Current portion of subordinated debt  15,833  10,397
Current liabilities of discontinued operations  733  6,511
Total current liabilities  381,587  244,522
Long-term capital leases, net of current portion  7,354  7,734
Long-term debt, net of current portion  38,428  26,368
Long-term subordinated debt, net of current portion  27,378  43,853
Deferred tax liabilities  12,500  2,643
Contingent earnout liabilities  24,591  9,278
Other long-term liabilities  4,147  --
Total liabilities  495,985  334,398 
     
Commitments and contingencies    
Stockholders' equity    
Preferred stock--$.0001 par value, 1,000,000 shares authorized, none issued and outstanding at December 31, 2010 and 81,852.78 at December 31, 2009 -- --
Common stock--$.0001 par value, 90,000,000 shares authorized, 49,359,600 and 32,704,903 issued and outstanding at December 31, 2010 and December 31, 2009 5 3
Additional paid-in capital  136,245  100,644
Retained earnings  71,981  42,982
Accumulated other comprehensive income  --  330
Total stockholders' equity  208,231  143,959
Total liabilities and stockholders' equity $ 704,216 $ 478,357
CONTACT: Company Contact
         Peter J. Moerbeek
         Executive Vice President, Chief Financial Officer
         (214) 740-5602
         pmoerbeek@prim.com
         
         The Equity Group Inc.
         Devin Sullivan
         Senior Vice President
         (212) 836-9608
         dsullivan@equityny.com

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