Primoris Services CorporationPRIM
Recorded
Primoris Services Corporation 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
PeriodQ2 2026Duration1 hr 3 min
Key takeaways
- Primoris reported Q2 2026 revenue of just under $1.7 billion, down 10.7% from the prior year, primarily due to lower energy segment revenue driven by decreased renewable activity.
- The utility segment revenue increased 2.8% year over year, driven by higher activity in gas operations and power delivery, partially offset by lower communications revenue.
- Gross profit for Q2 was $82.4 million, down $149.3 million from the prior year, with gross margin declining to 4.9% from 12.3%.
- Utility segment gross profit was $85.1 million, down $12.4 million, impacted by lower communications revenue and margins in gas operations but partially offset by power delivery improvements.
- Energy segment gross profit declined $136.9 million, with slightly negative margins due to cost overruns and lower revenues in renewables, partially offset by pipeline and Penncrest contributions.
- Primoris secured over $3.9 billion in new awards during Q2, including $1.5 billion in utilities and $2.4 billion in energy, with strong bookings in natural gas power generation and contributions from the Penncrest acquisition.
- Total backlog reached a record $13.9 billion at quarter end, up $2.2 billion sequentially, driven by energy segment bookings and power delivery activity.
- Cash used in operations was $8.7 million in Q2, an improvement from Q1 but down from $78 million provided in the prior year, reflecting lower net income.
- Liquidity remained strong at $959 million, including $218 million in cash and $741 million in revolver capacity, with net debt to EBITDA at 1.6 times.
- SG&A expenses were $106.3 million, up slightly year over year, with increased amortization from the Penncrest acquisition.
- Net interest expense rose to $10.6 million due to higher debt balances from the acquisition.
- Renewables backlog was $2 billion at the end of Q2.
- Management emphasized operational challenges in renewables projects causing margin pressure but noted progress toward mechanical and substantial completions of these projects by year end.
- Primoris delivered record bookings and backlog, highlighting strength and diversity across utility and energy segments.
- The company is maintaining disciplined risk management and project selection to position for profitable, sustainable growth.
- Management highlighted the strong demand environment in power delivery, natural gas power generation, and pipeline infrastructure.
- The Penncrest acquisition exceeded expectations in revenue and margins during its two months in the quarter and is being integrated with a light touch approach.
- Executive commentary stressed commitment to learning from renewables challenges, enhancing operational oversight, and maintaining disciplined execution.
- Management expressed confidence in long-term renewables fundamentals and the company’s ability to drive profitable growth.
- Guidance for full year 2026 remains unchanged with EPS of $1.30 to $1.85, adjusted EPS of $2.05 to $2.60, and adjusted EBITDA of $275 to $325 million.
- Adjusted EBITDA is expected to improve sequentially with $90 to $110 million in Q3 and $100 to $120 million in Q4.
- Energy segment gross margins are expected to be 6% to 8% for full year 2026, improving sequentially through the second half.
- SG&A is expected to be just over 6% of revenue for the full year due to amortization expense.
- Interest expense guidance is updated to $43 to $47 million for 2026.
- Effective tax rate is expected to be 30% to 32% for the full year.
- Free cash flow is forecasted at $150 to $200 million for 2026, down from prior expectations due to renewables impacts.
- Leverage ratio is expected to rise slightly in Q3 but trend lower in Q4 and 2027, with ample liquidity for organic growth, acquisitions, and share repurchases.
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