Primoris Services ((PRIM)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Primoris Services Corporation highlighted a robust start to 2025, showcasing significant revenue growth and record cash flow, primarily driven by the Energy and Utilities segments. The company reported improvements in gross margins and maintained a strong liquidity position. Despite some challenges, such as declining industrial and pipeline revenues and increased SG&A expenses, the overall sentiment was positive, indicating a strong beginning to the year.
Strong Revenue Growth
Primoris Services reported first-quarter revenue of $1.6 billion, marking a 16.7% increase from the previous year. This growth was fueled by the Energy and Utilities segments, showcasing the company’s ability to expand its market presence and capitalize on industry opportunities.
Record Cash Flow
The company achieved a first-quarter record with cash from operations reaching $66.2 million. This milestone was driven by improved collection of receivables and higher operating income, underscoring Primoris’s effective financial management strategies.
Utilities Segment Performance
The Utilities segment demonstrated impressive performance with a gross profit of $51.6 million, up $22.1 million from the previous year. Gross margins in this segment increased from 6% to 9.2%, reflecting enhanced operational efficiency.
Energy Segment Growth
The Energy segment saw a revenue increase of $161 million, or 17%, largely due to record revenue in renewables, particularly in utility-scale solar projects. This growth highlights Primoris’s strategic focus on expanding its renewable energy portfolio.
Margin Improvements
Overall gross margins improved to 10.4% for the quarter, up from 9.4% in the prior year. Significant improvements were noted in power delivery profitability, contributing to the company’s enhanced financial performance.
Strong Liquidity Position
Primoris maintained a strong liquidity position of $652 million, including approximately $352 million in cash and $300 million in available borrowing capacity. This financial stability provides the company with the flexibility to pursue growth opportunities.
Industrial and Pipeline Revenue Decline
The company experienced a decline in industrial and pipeline revenue compared to the previous year, attributed to the completion of certain projects and the winddown of noncore businesses in 2024. This decline highlights the challenges faced in these segments.
Slightly Lower Energy Segment Gross Margins
The Energy segment’s gross margins slightly decreased to 10.7% from 11% in the prior year. This was due to fewer project closeouts and the ramping up of new projects, indicating transitional challenges in the segment.
SG&A Expenses Increase
SG&A expenses rose to $99.5 million, an increase of $10.9 million from the previous year. This rise was due to increased personnel costs and $3.2 million in severance costs, reflecting the company’s investment in human resources.
Forward-Looking Guidance
Primoris Services Corporation provided optimistic guidance for the fiscal year, maintaining its full-year EPS guidance of $3.70 to $3.90 per share, with adjusted EPS expected to range between $4.20 and $4.40. Adjusted EBITDA guidance was reaffirmed at $440 million to $460 million. The company remains optimistic about achieving or exceeding its financial and operational goals for 2025, despite macroeconomic uncertainties.
In conclusion, Primoris Services Corporation’s earnings call reflected a strong start to 2025, with significant revenue growth and record cash flow. While challenges such as declining industrial and pipeline revenues and increased SG&A expenses were noted, the overall sentiment was positive. The company’s strong liquidity position and strategic focus on growth in the Energy and Utilities segments position it well for future success.