Credit: Shutterstock photoTwo units of Primoris Services Corporation ( PRIM ), James Industrial Contractors (JIC) and Infrastructure & Maintenance (I&M), have jointly secured an industrial and heavy civil contract worth $290 million from a major petrochemical company. Per the contract, Primoris will work at their multi-billion dollar expansion site in Louisiana.
Shares of Primoris gained over 6% and closed at $26.44 on Nov 18, after this announcement.
The project will require over 2 million craft man-hours for doing 1.5 million cubic yards of excavation, 3 million cubic yards of backfill and 120,000 linear feet of underground piping. Scope of the work also involves 100,000 cubic yards of concrete foundation and pavement.
JIC will be responsible for deep foundations, underground piping and installation of electrical duct banks and foundations. It is expected that JIC will receive approximately 60% of the total award value for these tasks.
Conversely, I&M will do mass excavation and backfill along with clearing and site work, which is expected to fetch it around 40% of the total award value.
Work on the project will begin immediately and extend into 2016. Primoris believes that the completion of the full scope of the project would result in a significant increase in the work authorization amount as this is the highest valued contract received by the company after the release of its third-quarter 2014 results on Nov 6.
Primoris Energy Services' JIC is a part of the Energy segment. The segment's revenue increased 163.7% year over year to $116.9 million in the third quarter, primarily driven by increase in revenues in James Industrial Contractors division that resulted from its work at petrochemical projects in Louisiana.
Further, I&M is a division of Primoris' James Construction Group, which is a part of the East Construction Services segment. East segment reported a 15% year-over-year increase in revenues in the reported quarter.
However, total backlog as of Sep 30, 2014, declined to $1.80 billion, compared with $1.94 billion as of Dec 31, 2013. Primoris is expected to realize revenues of around 95% from the West Construction Services segment backlog, approximately 43% from the East Construction Services segment backlog and about 72% from the Energy segment backlog during the next four quarters.
Primoris remains optimistic about its business lines as it sees ample prospects for continued growth across end markets. Improvement in the U.S. energy infrastructure will drive growth. I&M group, which is focused on private civil work, will also perform well on its existing backlog. In addition, the company believes that industrial and water end markets are poised for significant growth in the coming years.
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 sector include AECOM Technology Corporation ( ACM ), Boise Cascade Company ( BCC ) and CaesarStone Sdot-Yam Ltd. ( CSTE ). All these stocks sport a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
