ARB Inc., a unit of the West Construction Services segment of
Primoris Services Corporation
) has secured a new underground contract from a major utility
customer worth $200 million. The deal covers pipeline safety and
replacement work in Southern California.
In 2010, California Public Utilities Commission (CPUC) launched a
pipeline safety rulemaking proceeding to provide new safety and
reliability regulations for natural gas pipelines. In response,
SoCalGas has submitted a Pipeline Safety Enhancement Plan (PSEP),
to CPUC which covers 3,640 miles of transmission pipelines.
ARB Inc. has been awarded two of the five regions of the utility's
PSEP Performance Partnership program. These two regions are the
largest of the five, with an estimated combined spend of $200
The work mainly includes class upgrades, either hydrotesting to a
higher pressure or replacing existing lines with newer, stronger
pipes. The construction work is scheduled to start in June 2014 and
will be concluded by Dec 2016.
Primoris reported earnings of 21 cents per share, increased 11%
year over year in the first-quarter of 2014. Revenues also grew 15%
year over year to $470 million driven by increased revenues at ARB
Industrial, Q3 Contracting and the James Construction Group Heavy
West Construction Services segment also recorded a sales increment
of 12.7% year over year to $234 million. The segment's gross profit
increased 10% year over year to $31.7 million. During the next four
quarters, Primoris will realize revenues of around 98% of the West
Construction Services segment backlog.
The company remains optimistic on strong balance sheet which will
provide the flexibility for continuous investment in external and
internal opportunities. In addition, various tailwinds such as the
aging pipeline system, oil and natural gas pricing differentials
and environmental regulations will drive demand in Primoris'
end-markets providing growth opportunities both in the near and
Dallas, TX-based Primoris is a specialty contractor and
infrastructure company that serves diverse-end markets. The company
also provides a wide range of construction, fabrication,
maintenance, replacement, water and wastewater as well as
engineering services to major public utilities, petrochemical
companies, energy companies, municipalities and other customers.
At present, Primoris has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the building and heavy construction industry include
EMCOR Group Inc.
Sterling Construction Co. Inc.
Tutor Perini Corp.
). All these stocks carry a Zacks Rank #2 (Buy).
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