Primoris Services Corporation
) reported first-quarter 2013 earnings of 19 cents per share,
declining 5% from 20 cents per share delivered in the year-ago
quarter. The results, however, outperformed the Zacks Consensus
Estimate by a penny.
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Revenues in the reported quarter augmented 40.6% year over year
to $410 million. The results were way ahead of the Zacks
Consensus Estimate of $351 million. The year- over-year rise was
attributable to an 18.6% increase in organic growth and the
remaining 22% increase was from the acquisitions of Sprint,
Saxon, Q3C, and FSSI.
Cost of sales went up 43% to $363.9 million in the first quarter
from $253.9 million in the year-ago quarter. Gross profit
improved 22.6% year over year to $46.1 million. Gross margin,
however, contracted 170 basis points (bps) to 11.2% in the
Selling, general and administrative expenses increased 41% year
over year to $28.6 million. Operating profit was $17.5 million in
the quarter, flat compared to the prior-year quarter. Operating
margin reduced 160 bps to 4.3% in the quarter.
East Construction Services:
Net sales at the segment spiked 56% to $190 million in the
quarter, primarily due to the acquisition of Sprint and increased
gas and crude-oil pipeline activity, partly offset by a decline
in the JCG Heavy Civil and Infrastructure & Maintenance
divisions. Gross profit for the segment increased 31.3% to $15
million from $11 million in the year-ago quarter.
West Construction Services:
West Construction Services reported sales of $207.7 million, up
31% from the year-ago quarter, led by increased revenues at
Rockford, partly offset by a revenue decline in the ARB
Industrial division. The segment's gross profit grew 17.8% year
over year to $28.7 million.
Net sales in the reported quarter went up 3.4% year over year to
$12.1 million. Consequently, gross profit rose 32% to $2.3
million in the quarter compared to $1.7 million in the year-ago
Primoris' Board has approved a 16.7% increase in its regular
quarterly dividend. The company will now pay 3.5 cents per share
to its shareholders, up from the prior quarter's dividend of 3
cents per share. The increased dividend will be paid on Jul 15,
2013, to shareholders of record as of Jun 28, 2013.
Cash and cash equivalents were $141.5 million as of Mar 31, 2013
compared with $157.5 million as of Dec 31, 2012. Long-term debt
amounted to $157.7 million as of Mar 31, 2013, compared with
$147.8 million as of Dec 31, 2012. The debt-to-capitalization
ratio expanded to 31.4% as of Mar 31, 2013 from 30.7% as of Dec
31, 2012. Total backlog was $1.22 billion as of Mar 31, 2013
compared to $1.35 billion as of Dec 31, 2012.
Primoris remains optimistic about its all business lines for the
near term as well as the long term. For the full year 2013, the
company expects strong contributions from the recent
acquisitions, as well as legacy group, driven by favorable
Strength is witnessed in the upstream market and the midstream
market (with long haul projects returning) while the downstream
market holds promise, with contractor capacity constraints
The increased investment in construction fleet will be helpful in
profitability growth. Water and wastewater markets have also
recovered in 2013, which will drive revenue growth.
Over the next four quarters, Primoris will recognize as revenues
around 49% of the East Construction Services segment backlog,
about 96% of the West Construction Services segment backlog and
roughly 98% of the Engineering segment backlog.
Dallas, TX-based Primoris is a specialty contractor and
infrastructure company which serves diverse end markets. The
company also 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.
Primoris currently retains a short-term Zacks Rank #1 (Strong
Buy). Other companies in the building and heavy construction
industry with favorable Zacks Ranks are
China Communications Construction Company
Chicago Bridge & Iron Company N.V.
Orion Marine Group, Inc
). While China Communications Construction holds a Zacks Rank #1
(Strong Buy), Chicago Bridge & Iron and Orion Marine carry a
Zacks Rank #2 (Buy).