Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 07, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Primoris Services Corp | |
Entity Central Index Key | 1,361,538 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,437,305 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents ($48,094 and $7,045 related to VIEs. See Note 11) | $ 111,676 | $ 135,823 |
Customer retention deposits | 906 | 481 |
Accounts receivable, net | 355,231 | 388,000 |
Costs and estimated earnings in excess of billings | 158,741 | 138,618 |
Inventory and uninstalled contract materials | 42,318 | 49,201 |
Prepaid expenses and other current assets | 16,082 | 19,258 |
Total current assets | 684,954 | 731,381 |
Property and equipment, net | 309,013 | 277,346 |
Intangible assets, net | 51,228 | 32,841 |
Goodwill | 150,672 | 127,226 |
Other long-term assets | 1,624 | 2,004 |
Total assets | 1,197,491 | 1,170,798 |
Current liabilities: | ||
Accounts payable | 134,091 | 168,110 |
Billings in excess of costs and estimated earnings | 158,698 | 112,606 |
Accrued expenses and other current liabilities | 116,244 | 108,006 |
Dividends payable | 2,829 | 2,839 |
Current portion of capital leases | 186 | 188 |
Current portion of long-term debt | 58,031 | 58,189 |
Current portion of contingent earnout liabilities | 1,213 | |
Total current liabilities | 471,292 | 449,938 |
Long-term capital leases, net of current portion | 170 | 15 |
Long-term debt, net of current portion | 183,140 | 203,381 |
Deferred tax liabilities | 9,830 | 9,830 |
Other long-term liabilities | 11,623 | 9,064 |
Total liabilities | 676,055 | 672,228 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock—$.0001 par value; 90,000,000 shares authorized; 51,437,305 and 51,576,442 issued and outstanding at June 30, 2017 and December 31, 2016 | 5 | 5 |
Additional paid-in capital | 159,761 | 162,128 |
Retained earnings | 358,779 | 335,218 |
Noncontrolling interests | 2,891 | 1,219 |
Total stockholders' equity | 521,436 | 498,570 |
Total liabilities and stockholders' equity | $ 1,197,491 | $ 1,170,798 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
VIEs | ||
Cash and cash equivalents | $ 111,676 | $ 135,823 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 51,437,305 | 51,576,442 |
Common stock, shares outstanding | 51,437,305 | 51,576,442 |
VIEs | ||
VIEs | ||
Cash and cash equivalents | $ 48,094 | $ 7,045 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Revenue | $ 631,165 | $ 456,811 | $ 1,192,667 | $ 887,257 |
Cost of revenue | 546,682 | 413,526 | 1,053,131 | 804,695 |
Gross profit | 84,483 | 43,285 | 139,536 | 82,562 |
Selling, general and administrative expenses | 45,977 | 32,498 | 85,831 | 65,156 |
Operating income | 38,506 | 10,787 | 53,705 | 17,406 |
Other income (expense): | ||||
Foreign exchange gain (loss) | 109 | 21 | 132 | 380 |
Other expense | (13) | (13) | ||
Interest income | 114 | 52 | 183 | 91 |
Interest expense | (2,145) | (2,240) | (4,407) | (4,508) |
Income before provision for income taxes | 36,571 | 8,620 | 49,600 | 13,369 |
Provision for income taxes | (14,175) | (3,333) | (18,692) | (5,166) |
Net income | 22,396 | 5,287 | 30,908 | 8,203 |
Less net income attributable to noncontrolling interests | (851) | (231) | (1,672) | (454) |
Net income attributable to Primoris | $ 21,545 | $ 5,056 | $ 29,236 | $ 7,749 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.42 | $ 0.10 | $ 0.57 | $ 0.15 |
Diluted (in dollars per share) | $ 0.42 | $ 0.10 | $ 0.56 | $ 0.15 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 51,437 | 51,772 | 51,515 | 51,749 |
Diluted (in shares) | 51,688 | 52,022 | 51,771 | 51,950 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 30,908 | $ 8,203 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 28,139 | 30,850 |
Amortization of intangible assets | 3,611 | 3,239 |
Intangible asset impairment | 477 | |
Stock-based compensation expense | 690 | 710 |
Gain on sale of property and equipment | (3,208) | (2,293) |
Changes in assets and liabilities: | ||
Customer retention deposits | (425) | (435) |
Accounts receivable | 43,792 | 2,514 |
Costs and estimated earnings in excess of billings | (19,572) | (17,151) |
Other current assets | 11,920 | 2,708 |
Other long-term assets | 380 | (747) |
Accounts payable | (37,060) | (11,065) |
Billings in excess of costs and estimated earnings | 45,791 | (17,584) |
Accrued expenses and other current liabilities | 8,154 | 7,337 |
Other long-term liabilities | 2,692 | (788) |
Net cash provided by operating activities | 116,289 | 5,498 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (44,697) | (42,140) |
Proceeds from sale of property and equipment | 4,664 | 5,723 |
Cash paid for acquisitions | (66,205) | (4,108) |
Net cash used in investing activities | (106,238) | (40,525) |
Cash flows from financing activities: | ||
Repayment of capital leases | (117) | (468) |
Repayment of long-term debt | (24,562) | (24,262) |
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,148 | 1,439 |
Repurchase of common stock | (4,999) | |
Dividends paid | (5,668) | (5,689) |
Net cash used in financing activities | (34,198) | (28,980) |
Net change in cash and cash equivalents | (24,147) | (64,007) |
Cash and cash equivalents at beginning of the period | 135,823 | 161,122 |
Cash and cash equivalents at end of the period | 111,676 | 97,115 |
Cash paid: | ||
Interest | 4,663 | 4,412 |
Income taxes, net of refunds received | 15,554 | 1,299 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Obligations incurred for the acquisition of property | 4,163 | |
Dividends declared and not yet paid | $ 2,829 | $ 2,847 |
Nature of Business
Nature of Business | 6 Months Ended |
Jun. 30, 2017 | |
Nature of Business | |
Nature of Business | Note 1—Nature of Business Organization and operations — Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware, and its corporate headquarters is located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201. Reportable Segments — Through the end of the year 2016, the Company segregated its business into three reportable segments: the Energy segment, the East Construction Services segment and the West Construction Services segment. In the first quarter 2017, the Company changed its reportable segments in connection with a realignment of the Company’s internal organization and management structure. The segment changes during the quarter reflect the focus of our chief operating decision maker (“CODM”) on the range of services we provide to our end user markets. Our CODM regularly reviews the operating and financial performance of our business units based on these segments. The current reportable segments include the Power, Industrial and Engineering (“Power”) segment, the Pipeline and Underground (“Pipeline”) segment, the Utilities and Distribution (“Utilities”) segment and the Civil segment. Segment information for prior periods have been restated to conform to the new segment presentation. See Note 18 – “Reportable Segments” for a brief description of the reportable segments and their operations. The classification of our business unit revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our business units may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses were made. The following table lists the Company’s primary business units and their reportable segment: Subsidiary Reportable Segment Prior Operating Segment ARB Industrial (a division of ARB, Inc.) Power West ARB Structures Power West Primoris Power (formerly PES Saxon division) Power Energy Primoris Renewable Energy (a division of Primoris Aevenia, Inc.) Power Energy Primoris Industrial Constructors (formerly PES Industrial Division) Power Energy Primoris Fabrication (a division of PES) Power Energy Primoris Mechanical Contractors (a combination of a division of PES and Cardinal Contractors) Power Energy OnQuest Power Energy OnQuest Canada Power Energy Primoris Design and Construction (“PD&C”); created 2017 Power NA Rockford Corporation (“Rockford”) Pipeline West Vadnais Trenchless Services (“Vadnais Trenchless”) Pipeline West Primoris Field Services (a division of PES Primoris Pipeline) Pipeline Energy Primoris Pipeline (a division of PES Primoris Pipeline) Pipeline Energy Primoris Coastal Field Services; created 2017 Pipeline NA ARB Underground (a division of ARB, Inc.) Utilities West Q3 Contracting (“Q3C”) Utilities West Primoris AV Utilities Energy Primoris Distribution Services; created 2017 Utilities NA Primoris Heavy Civil (formerly JCG Heavy Civil Division) Civil East Primoris I&M (formerly JCG Infrastructure & Maintenance Division) Civil East BW Primoris Civil East The Company owns a 50% interest in two separate joint ventures, both formed in 2015. The Carlsbad Power Constructors joint venture (“Carlsbad”) is engineering and constructing a gas-fired power generation facility, and the “ARB Inc. & B&M Engineering Co.” joint venture (“Wilmington”) is also engineering and constructing a gas-fired power generation facility. Both projects are located in the Southern California area. The joint venture operations are included as part of the Power division of the Power segment. As a result of determining that the Company is the primary beneficiary of the two variable interest entities (“VIEs”), the results of the Carlsbad and Wilmington joint ventures are consolidated in the Company’s financial statements. Both projects are expected to be completed in 2018. Financial information for the joint ventures is presented in Note 11 – “Noncontrolling Interests ”. On January 29, 2016, the Company acquired the net assets of Mueller Concrete Construction Company (“Mueller”) for $4.1 million, and on November 18, 2016, the Company acquired the net assets of Northern Energy & Power (“Northern”) for $6.8 million. On May 26, 2017, the Company acquired the net assets of Florida Gas Contractors (“FGC”) for $37.7 million, on May 30, 2017 the Company acquired certain engineering assets for approximately $2.3 million, and on June 16, 2017, the Company acquired the net assets of Coastal Field Services (“Coastal”) for $27.5 million. Both Mueller and FGC operations are included in the Utilities segment, Northern operations are included in the Power segment, and Coastal operations are included in the Pipeline segment. See Note 7— “ Business Combinations” . Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | Note 2—Basis of Presentation Interim consolidated financial statements — The interim condensed consolidated financial statements for the three and six month periods ended June 30, 2017 and 2016 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in the Company’s Annual Report on Form 10-K, filed on February 28, 2017, which contains the Company’s audited consolidated financial statements for the year ended December 31, 2016, have been omitted. This Second Quarter 2017 Report should be read in concert with the Company’s most recent Annual Report on Form 10-K. The interim financial information is unaudited. In the opinion of management, the interim information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information. Revenue recognition Fixed-price contracts — Historically, a substantial portion of the Company’s revenue has been generated under fixed-price contracts. For fixed-price contracts, the Company recognizes revenues primarily using the percentage-of-completion method, which may result in uneven and irregular results. In the percentage-of-completion method, estimated contract values, estimated cost at completion and total costs incurred to date are used to calculate revenues earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenues and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and thus the timing of revenue recognition. To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected. Other contract forms — The Company also uses unit price, time and material, and cost reimbursable plus fee contracts. For these jobs, revenue is recognized primarily based on contractual terms. Generally, time and material and cost reimbursement contract revenues are recognized on an input basis, based on labor hours incurred and on purchases made. Unit price contracts generally recognize revenue on an output based measurement such as the completion of specific units at a specified unit price. The Company considers unapproved change orders to be contract variations for which customers have not agreed to both scope and price. Costs associated with unapproved change orders are included in the estimated cost to complete and are treated as project costs as incurred. The Company will recognize revenue if it is probable that the contract price will be adjusted and can be reliably estimated. Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers. The Company considers claims to be amounts it seeks, or will seek, to collect from customers or others for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as weather delays or rain. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred. Claims are included in revenue to the extent the related costs have been incurred, realization is probable, and amounts can be reliably estimated. Revenue in excess of contract costs from claims is recognized when an agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. At any time, if an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at that time and recognized as an “accrued loss provision” which is included in the accrued expenses and other current liabilities amount on the balance sheet. For fixed price contracts, as the percentage-of-completion method is used to calculate revenues, the accrued loss provision is changed so that the gross profit for the contract remains zero in future periods. If we anticipate that there will be a loss for unit price or cost reimbursable contracts, the projected loss is recognized in full at that time. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which the revisions are identified. In all forms of contracts, the Company estimates its collectability of contract amounts at the same time that it estimates project costs. If the Company anticipates that there may be issues associated with the collectability of the full amount calculated as revenues, the Company may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection. For example, when a cost reimbursable project exceeds the client’s expected budget amount, the client frequently requests an adjustment to the final amount. Similarly, some utility clients reserve the right to audit costs for significant periods after performance of the work. In these situations, the Company may choose to defer recognition of revenue until the client pays for the services. The caption “ Costs and estimated earnings in excess of billings ” in the Consolidated Balance Sheets represents unbilled receivables which arise when revenues have been recorded but the amount will not be billed until a later date. Balances represent: (a) unbilled amounts arising from the use of the percentage-of-completion method of accounting which may not be billed under the terms of the contract until a later date or project milestone; (b) incurred costs to be billed under cost reimbursement type contracts; (c) amounts arising from routine lags in billing; or (d) the revenue associated with unapproved change orders or claims when realization is probable and amounts can be reliably determined. For those contracts in which billings exceed contract revenues recognized to date, the excess amounts are included in the caption “ Billings in excess of costs and estimated earnings ”. In accordance with applicable terms of certain construction contracts, retainage amounts may be withheld by customers until completion and acceptance of the project. Some payments of the retainage may not be received for a significant period after completion of our portion of a project. In some jurisdictions, retainage amounts are deposited into an escrow account. Significant revisions in contract estimates — Revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate revenue. Total estimated costs, and thus contract revenues and margin, are impacted by many factors, which can cause significant changes in estimates during the life cycle of a project. For projects that were in process at the end of the prior year or a prior quarter, there can be a difference in revenues and profits that would have been recognized in the prior year or prior quarter had current estimates of costs to complete been used at the end of the prior year or prior quarter. Customer concentration — The Company operates in multiple industry segments encompassing the engineering and construction of commercial, industrial and public works infrastructure assets throughout primarily the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues; however, the group that comprises the top ten customers varies from year to year. During the three and six months ended June 30, 2017, revenues generated by the top ten customers were approximately $330.2 million and $713.5 million, respectively, which represented 52.3% and 59.8%, respectively, of total revenues during the period. During the periods, two large pipeline projects represented 11.0% and 19.2% of total revenues, respectively and Texas Department of Transportation (“TXDOT”) represented 10.6% and 10.5% of total revenues, respectively. During the three and six months ended June 30, 2016, revenues generated by the top ten customers were $263.0 million and $533.0 million, respectively, which represented 57.7% and 60.1%, respectively, of total revenues during the period. During the periods, a Louisiana petrochemical project represented 11.3% and 12.4% of total revenues, respectively and TXDOT represented 10.2% and 11.8% of total revenues, respectively. At June 30, 2017, approximately 11.7% of the Company’s accounts receivable were due from one customer, and that customer provided 8.8% of the Company’s revenues for the six months ended June 30, 2017. In addition, of total accounts receivable, approximately 11.0% are from one customer with whom the Company is currently in dispute resolution. See Note 17 – “ Commitments and Contingencies ”. At June 30, 2016, approximately 15.6% of the Company’s accounts receivable were due from one customer, and that customer provided 12.4% of the Company’s revenues for the six months ended June 30, 2016. In addition, approximately 16.0% of total accounts receivable at June 30, 2016 were in dispute resolution. Multiemployer plans — Various subsidiaries are signatories to collective bargaining agreements. These agreements require that the Company participate in and contribute to a number of multiemployer benefit plans for its union employees at rates determined by the agreements. The trustees for each multiemployer plan determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits, and administer the plan. Federal law requires that if the Company were to withdraw from an agreement, it would incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with Generally Accepted Accounting Principles (“GAAP”), any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or at net realizable value. Uninstalled contract materials are certain job specific materials not yet installed, primarily for highway construction projects, which are valued using the specific identification method relating the cost incurred to a specific project. In most cases, the Company is able to invoice a state agency for the materials, but title will not pass to the state agency until the materials are installed. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 3—Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) ”, with several clarifying updates issued during 2016. The new standard is effective for reporting periods beginning after December 15, 2017. The new standard will supersede all current revenue recognition standards and guidance. Revenue recognition will occur when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled to in exchange for those goods or services. The mandatory adoption will require new qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, information about contract balances and performance obligations, and assets recognized from costs incurred to obtain or fulfill a contract. The standard permits the “modified retrospective method”, which requires prospective application of the new standard as a cumulative-effect adjustment. The Company expects to adopt this new standard using the modified retrospective method that will result in a cumulative-effect adjustment to retained earnings as of the date of adoption. The adoption will only apply to customer contracts that are not substantially complete as of January 1, 2018. The Company is currently evaluating the impact of adopting the standard on the Company’s financial position, results of operations, cash flows and related disclosures. Although it is early in our evaluation process, we do not expect Topic 606 to have a material impact on our financial statements, though internal documentation and record keeping may be significantly impacted. The impact to our results is not believed to be material because Topic 606 generally supports the recognition of revenue over time under the cost-to-cost method for the majority of our contracts, which is consistent with our current percentage of completion revenue recognition model. In most of our fixed price contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment for work performed to date to deliver services that do not have an alternative use to us. The Company does not expect the new standard to materially affect the total revenue that can be recognized over the life of a construction project; however, the revenue recognized on a quarterly basis during the construction period may change. We believe that Topic 606 is likely to be more impactful to certain of our lump sum projects as a result of the following potential changes from our current practices: § Performance obligations – Topic 606 requires a review of contracts and contract modifications to determine whether there are multiple performance obligations. Each separate performance obligation must be accounted for as a distinct project, which could impact the timing of revenue recognition. There is a potential that some of our contracts may have multiple performance obligations which may affect the timing of revenue recognition. § Variable consideration – In accordance with Topic 606, revenue recognition must account for variable consideration, including potential liquidated damages and customer discounts. Currently, we assess the impact of liquidated damages as an estimated cost of the project. The adoption of the new standard may affect the timing of the recognition of revenue for both liquidated damages and discounts. § Mobilization costs – Mobilization costs typically include costs to provide labor, equipment and facilities to a project site and they are recorded currently as project costs as incurred. Topic 606 requires these costs to be capitalized as an asset and amortized over the duration of the project. § Significant components – For some projects, we may purchase equipment from a third party, such as micro–LNG equipment, and install the equipment at the project site. Under today’s standard, the Company recognizes the associated revenue and profit for the equipment. Depending on the terms of the contract, under the new standard, revenue may be recognized without profit. We do not expect Topic 606 to have a material impact on our consolidated balance sheets, though we expect certain reclassifications among financial statement accounts to align with the new standard. We also expect significant expanded disclosures relating to revenue recognized during each period. In February 2016, the FASB issued ASU 2016-02 “ Leases (Topic 842) ”. The ASU will require recognition of operating leases with lease terms of more than twelve months on the balance sheet as both assets for the rights and liabilities for the obligations created by the leases. The ASU will require disclosures that provide qualitative and quantitative information for the lease assets and liabilities recorded in the financial statements. The guidance is effective for fiscal years beginning after December 15, 2018. The Company is reviewing the impact of the ASU and will establish procedures to adopt the ASU. In March 2016, the FASB issued ASU 2016-09 “Compensation — Stock Compensation (Topic 718) — Improvements to Employee Share-Based Payment Accounting” . The ASU modifies the accounting for excess tax benefits and tax deficiencies associated with share-based payments by requiring that excess tax benefits or deficiencies be included in the income statement rather than in equity. Additionally, the tax benefits for dividends on share-based payment awards will also be reflected in the income statement. As a result of these modifications, the ASU requires that the tax-related cash flows resulting from share-based payments will be shown on the cash flow statement as operating activities rather than as financing activities. The Company adopted the ASU as of January 1, 2017, which did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, " Business Combinations (Topic 805): Clarifying the Definition of a Business " which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the adoption of ASU 2017-01 to have an impact on its financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, " Simplifying the Test for Goodwill Impairment ". ASU 2017-04 removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019 and will be applied prospectively. The Company does not expect the adoption of ASU 2017-04 to have an impact on its financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, “ Compensation — Stock Compensation (Topic 718) — Scope of Modification Accounting ”. The ASU amends the scope of modification accounting for share-based payment arrangements. The amendments in the ASU provide guidance on types of changes to the terms or conditions of share-based payment awards would be required to apply modification accounting under ASC 718, “ Compensation — Stock Compensation” . The ASU is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company does not expect the adoption of ASU 2017-09 to have an impact on its financial position, results of operations or cash flows. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4—Fair Value Measurements ASC Topic 820, “ Fair Value Measurements and Disclosures ” defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, the Company’s financial assets and liabilities that are required to be measured at fair value at June 30, 2017 and December 31, 2016: Fair Value Measurements at Reporting Date Significant Amount Quoted Prices Other Significant Recorded in Active Markets Observable Unobservable on Balance for Identical Assets Inputs Inputs Sheet (Level 1) (Level 2) (Level 3) Assets as of June 30, 2017: Cash and cash equivalents $ 111,676 $ 111,676 — — Liabilities as of June 30, 2017: Contingent consideration $ 1,213 — — 1,213 Assets as of December 31, 2016: Cash and cash equivalents $ 135,823 $ 135,823 — — Liabilities as of December 31, 2016: None Other financial instruments of the Company not listed in the table consist of accounts receivable, accounts payable and certain accrued liabilities. These financial instruments generally approximate fair value based on their short-term nature. The carrying value of the Company’s long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities. The following table provides changes to the Company’s contingent consideration liability Level 3 fair value measurements during the six months ended June 30, 2017 and 2016: Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2017 2016 Beginning balance, January 1, $ — $ — Additions to contingent consideration liability: Florida Gas Contractors acquisition 1,200 — Change in fair value of contingent consideration liability during year 13 — Ending balance, June 30, $ 1,213 $ — On a quarterly basis, the Company assesses the estimated fair value of the contractual obligation to pay the contingent consideration and any changes in estimated fair value are recorded as a non-operating charge in the Company’s statement of income. Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management’s estimate of the probability of the acquired company meeting the contractual operating performance target and the estimated discount rate (a rate that approximates the Company’s cost of capital). Significant changes in either of those inputs in isolation would result in a different fair value measurement. Generally, a change in the assumption of the probability of meeting the performance target is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption used of the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable. | |
Accounts Receivable | Note 5—Accounts Receivable The following is a summary of the Company’s accounts receivable: June 30, December 31, 2017 2016 Contracts receivable, net of allowance for doubtful accounts of $1,654 at June 30, 2017 and $1,030 at December 31, 2016, respectively $ 294,670 $ 340,871 Retention receivable 56,251 46,394 350,921 387,265 Other accounts receivable 4,310 735 $ 355,231 $ 388,000 |
Costs and Estimated Earnings on
Costs and Estimated Earnings on Uncompleted Contracts | 6 Months Ended |
Jun. 30, 2017 | |
Costs and Estimated Earnings on Uncompleted Contracts | |
Costs and Estimated Earnings on Uncompleted Contracts | Note 6—Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated earnings on uncompleted contracts consist of the following: June 30, December 31, 2017 2016 Costs incurred on uncompleted contracts $ 4,900,812 $ 5,391,124 Gross profit recognized 390,252 456,871 5,291,064 5,847,995 Less: billings to date (5,291,021) (5,821,983) $ 43 $ 26,012 This amount is included in the accompanying consolidated balance sheets under the following captions: June 30, December 31, 2017 2016 Costs and estimated earnings in excess of billings $ 158,741 $ 138,618 Billings in excess of cost and estimated earnings (158,698) (112,606) $ 43 $ 26,012 |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations | |
Business Combinations | Note 7 — Business Combinations On January 29, 2016, the Company’s subsidiary, Primoris AV, acquired certain assets and liabilities of Mueller Concrete Construction Company for $4.1 million. The purchase was accounted for using the acquisition method of accounting. During the second quarter of 2016, the Company finalized its estimate of fair value of the acquired assets of Mueller, which included $2.0 million of fixed assets, $2.0 million of goodwill and $0.1 million of inventory. Mueller operates as a division of Primoris AV, within the Utilities segment. Goodwill largely consists of expected benefits from providing foundation expertise for Primoris AV’s construction efforts in underground line work, substations and telecom/fiber. Goodwill also includes the value of the assembled workforce that the Mueller acquisition provides to the Primoris AV business. Based on the current tax treatment, goodwill and other intangible assets will be deductible for income tax purposes over a fifteen-year period. On June 24, 2016, the Company’s subsidiary, Vadnais Trenchless, purchased property, plant and equipment from Pipe Jacking Unlimited, Inc., consisting of specialty directional drilling and tunneling equipment for $13.4 million in cash. The Company determined this purchase did not meet the definition of a business as defined under ASC 805. The estimated fair value of the equipment was equal to the purchase price. The Company believes the purchase of the equipment will aid in the Company’s pipeline construction projects and enhance the work provided to our utility clients. On November 18, 2016, the Company’s subsidiary, Primoris AV, acquired certain assets and liabilities of Northern Energy & Power for $6.8 million. The acquired business unit name was changed to Primoris Renewable Energy (“PRE”). PRE operates in the Power segment and serves the renewable energy sector with a specific focus on solar photovoltaic installations in the United States. The purchase was accounted for using the acquisition method of accounting. During the second quarter of 2017, the Company finalized its estimated fair value of the acquired assets of PRE, which resulted in a $0.1 million reduction in goodwill compared to amounts previously disclosed. The allocation of the total purchase price included fixed assets of $0.1 million; intangible assets of $3.0 million; and goodwill of $3.7 million. Goodwill largely consists of synergies expected from expanded operations as well as the value of the assembled workforce that PRE provides. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. On May 26, 2017, the Company acquired certain assets of Florida Gas Contractors, a utility contractor specializing in underground natural gas infrastructure, for approximately $33.0 million in cash. In addition, the sellers could receive a contingent earnout amount of up to $1.5 million over a one-year period ending May 26, 2018, based on the achievement of certain operating targets. The estimated fair value of the potential contingent consideration on the acquisition date was $1.2 million. FGC operates in the Utilities segment and expands the Company’s presence in the Florida and Southeast markets. The purchase was accounted for using the acquisition method of accounting. The preliminary allocation of the total purchase price consisted of $4.8 million of fixed assets; $4.2 million of working capital; $10.5 million of intangible assets; and $14.7 million of goodwill. In connection with the FGC acquisition, the Company also paid $3.5 million to acquire certain land and buildings. Goodwill associated with the FGC acquisition principally consists of expected benefits from providing expertise for the Company’s construction efforts in the underground utility business as well as the expansion of the Company’s geographic presence. Goodwill also includes the value of the assembled workforce that the FGC acquisition provides to the Company. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. On May 30, 2017, the PD&C acquired certain engineering assets for approximately $2.3 million in cash. PD&C operates in the Power segment and the acquisition futher enhances its ability to provide quality service for engineering and design projects. The purchase was accounted for using the acquisition method of accounting. The preliminary allocation of the total purchase price consisted of $0.2 million of fixed assets and $2.1 million of intangible assets. On June 16, 2017, the Company acquired certain assets and liabilities of Coastal Field Services for approximately $27.5 million in cash. Coastal provides pipeline construction and maintenance, pipe and vessel coating and insulation, and integrity support services for companies in the oil and gas industry. Coastal operates in the Pipeline segment and increases the Company’s market share in the Gulf Coast energy market. The purchase was accounted for using the acquisition method of accounting. The preliminary allocation of the total purchase price consisted of $4.0 million of fixed assets; $4.8 million of working capital; $9.9 million of intangible assets and $8.8 million of goodwill. Goodwill associated with the Coastal acquisition principally consists of expected benefits from providing expertise for the Company’s expansion of services in the pipeline construction and maintenance business. Goodwill also includes the value of the assembled workforce that the Coastal acquisition provides to the Company. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. Supplemental Unaudited Pro Forma Information for the three and six months ended June 30, 2017 and 2016 The following pro forma information for the three and six months ended June 30, 2017 and 2016 presents the results of operations of the Company as if the acquisitions had occurred at the beginning of 2016. The supplemental pro forma information has been adjusted to include: · the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment, based on the purchase price allocations; and · the pro forma tax effect of both the income before income taxes and the pro forma adjustments, calculated using a tax rate of 40.0% for the three and six months ended June 30, 2017 and the same period in 2016. The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the various acquisitions been completed on January 1, 2016. For example, the pro forma results do not reflect any operating efficiencies and associated cost savings that the Company might have achieved with respect to the acquisitions. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 641,592 $ 479,326 $ 1,218,734 $ 933,491 Income before provision for income taxes $ 37,224 $ 10,362 $ 51,372 $ 16,942 Net income attributable to Primoris $ 21,937 $ 6,101 $ 31,409 $ 9,893 Weighted average common shares outstanding: Basic 51,437 51,772 51,515 51,749 Diluted 51,688 52,022 51,771 51,950 Earnings per share: Basic $ 0.43 $ 0.12 $ 0.61 $ 0.19 Diluted $ 0.42 $ 0.12 $ 0.61 $ 0.19 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 8—Goodwill and Intangible Assets Goodwill by segment was recorded as follows: June 30, December 31, Reporting Segment 2017 2016 Power $ 24,391 $ 24,512 Pipeline 51,075 42,252 Utilities 35,056 20,312 Civil 40,150 40,150 Total Goodwill $ 150,672 $ 127,226 At June 30, 2017 and December 31, 2016, intangible assets totaled $51.2 million and $32.8 million, respectively, net of amortization. The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are on a straight-line basis: Amortization June 30, December 31, Period 2017 2016 Tradename 3 to 10 years $ 11,902 $ 11,754 Customer relationships 3 to 15 years 37,755 20,136 Non-compete agreements 2 to 5 years 1,304 951 Other 3 years 267 — $ 51,228 $ 32,841 Amortization expense of intangible assets was $1.9 million and $1.6 million for the three months ended June 30, 2017 and 2016, respectively and amortization expense for the six months ended June 30, 2017 and 2016 was $3.6 million and $3.2 million, respectively. Estimated future amortization expense for intangible assets is as follows: Estimated Intangible For the Years Ending Amortization December 31, Expense 2017 (remaining six months) $ 5,107 2018 9,741 2019 9,393 2020 6,650 2021 5,413 Thereafter 14,924 $ 51,228 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 9—Accounts Payable and Accrued Liabilities At June 30, 2017 and December 31, 2016, accounts payable were $134.1 million and $168.1 million, respectively. These balances included retention amounts for the same periods of approximately $10.7 million and $10.6 million, respectively. The retention amounts are due to subcontractors and have been retained pending contract completion and customer acceptance of jobs. The following is a summary of accrued expenses and other current liabilities: June 30, December 31, 2017 2016 Payroll and related employee benefits $ 45,474 $ 42,718 Insurance, including self-insurance reserves 44,034 42,546 Reserve for estimated losses on uncompleted contracts 13,019 12,801 Corporate income taxes and other taxes 7,623 3,368 Accrued administrative cost 3,515 3,791 Other 2,579 2,782 $ 116,244 $ 108,006 |
Credit Arrangements
Credit Arrangements | 6 Months Ended |
Jun. 30, 2017 | |
Credit Arrangements | |
Credit Arrangements | Note 10—Credit Arrangements Long-term debt and credit facilities consist of the following: Commercial Notes Payable and Mortgage Notes Payable From time to time, the Company enters into commercial equipment notes payable with various equipment finance companies and banks. Interest rates range from 1.78% to 3.51% per annum and maturity dates range from August 13, 2017 to October 14, 2021. The notes are secured by certain construction equipment of the Company. The Company also entered into two secured mortgage notes payable to a bank in December 2015, with interest rates of 4.3% per annum and maturity dates of January 1, 2031. The mortgage notes are secured by two buildings. During the six months ended June 30, 2017, the Company acquired three properties from a related party and assumed mortgage notes secured by the properties totaling $4.2 million. Revolving Credit Facility As of June 30, 2017, the Company had a revolving credit facility, as amended on March 7, 2017 (the “Credit Agreement”) with The PrivateBank and Trust Company, as administrative agent (the “Administrative Agent”) and co-lead arranger, The Bank of the West, as co-lead arranger, and IBERIABANK Corporation, Branch Banking and Trust Company and UMB Bank, N.A. (the “Lenders”). The Credit Agreement is a $125.0 million revolving credit facility whereby the Lenders agreed to make loans on a revolving basis from time to time and to issue letters of credit for up to the $125.0 million committed amount. The termination date of the Credit Agreement is December 28, 2017. The principal amount of any loans under the Credit Agreement will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Credit Agreement (based on the Company’s senior debt to EBITDA ratio as that term is defined in the Credit Agreement), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.5% or (b) the prime rate as announced by the Administrative Agent). Quarterly non-use fees, letter of credit fees and administrative agent fees are payable at rates specified in the Credit Agreement. The principal amount of any loan drawn under the Credit Agreement may be prepaid in whole or in part, with a minimum prepayment of $5.0 million, at any time, potentially subject to make-whole provisions. The Credit Agreement includes customary restrictive covenants for facilities of this type, as discussed below. Commercial letters of credit outstanding were $15.7 million at June 30, 2017 and $16.2 million at December 31, 2016. Other than commercial letters of credit, there were no borrowings under this line of credit during the six months ended June 30, 2017, and available borrowing capacity at June 30, 2017 was $109.3 million. Senior Secured Notes and Shelf Agreement On December 28, 2012, the Company entered into a $50.0 million Senior Secured Notes purchase agreement (“Senior Notes”) and a $25.0 million private shelf agreement (the “Notes Agreement”) by and among the Company, The Prudential Investment Management, Inc. and certain Prudential affiliates (the “Noteholders”). On June 3, 2015, the Notes Agreement was amended to provide for the issuance of additional notes of up to $75.0 million over the three year period ending June 3, 2018 ("Additional Senior Notes"). The Senior Notes amount was funded on December 28, 2012. The Senior Notes are due December 28, 2022 and bear interest at an annual rate of 3.65%, paid quarterly in arrears. Annual principal payments of $7.1 million are required from December 28, 2016 through December 28, 2021 with a final payment due on December 28, 2022. The principal amount may be prepaid, with a minimum prepayment of $5.0 million, at any time, subject to make-whole provisions. On July 25, 2013, the Company drew $25.0 million available under the Notes Agreement. The notes are due July 25, 2023 and bear interest at an annual rate of 3.85%, paid quarterly in arrears. Seven annual principal payments of $3.6 million are required from July 25, 2017 with a final payment due on July 25, 2023. On November 9, 2015, the Company drew $25.0 million available under the Additional Senior Notes Agreement. The notes are due November 9, 2025 and bear interest at an annual rate of 4.6%, paid quarterly in arrears. Seven annual principal payments of $3.6 million are required from November 9, 2019, with a final payment due on November 9, 2025. Loans made under both the Credit Agreement and the Notes Agreement are secured by our assets, including, among others, our cash, inventory, goods, equipment (excluding equipment subject to permitted liens) and accounts receivable. All of our domestic subsidiaries have issued joint and several guaranties in favor of the Lenders and Noteholders for all amounts under the Credit Agreement and Notes Agreement. Both the Credit Agreement and the Notes Agreement contain various restrictive and financial covenants including, among others, minimum tangible net worth, senior debt/EBITDA ratio, debt service coverage requirements and a minimum balance for unencumbered net book value for fixed assets. In addition, the agreements include restrictions on investments, change of control provisions and provisions in the event the Company disposes more than 20% of its total assets. The Company was in compliance with the covenants for the Credit Agreement and Notes Agreement at June 30, 2017. Canadian Credit Facility The Company has a demand credit facility for $8.0 million in Canadian dollars with a Canadian bank for purposes of issuing commercial letters of credit in Canada. The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years. The facility provides for an annual fee of 1.0% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. At December 31, 2016, there were no letters of credit outstanding. Letters of credit outstanding was $0.5 million in Canadian dollars at June 30, 2017, and the available borrowing capacity was $7.5 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for OnQuest Canada, ULC. At June 30, 2017, OnQuest Canada, ULC was in compliance with the covenant. |
Noncontrolling Interests
Noncontrolling Interests | 6 Months Ended |
Jun. 30, 2017 | |
Noncontrolling Interests | |
Noncontrolling Interests | Note 11 — Noncontrolling Interests The Company is currently involved in two joint ventures, each of which has been determined to be a variable interest entity (“VIE”) with the Company as the primary beneficiary as a result of its significant influence over the joint venture operations. Each joint venture is a partnership, and consequently, no tax effect was recognized for the income. The net assets of the joint ventures are restricted for use by the specific project and are not available for general operations of the Company. Carlsbad Joint Venture The Carlsbad joint venture operating activities began in 2015 and are included in the Company’s consolidated statements of income for the three and six months ended: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues $ 26,203 $ 3,150 $ 37,003 $ 6,668 Net income attributable to noncontrolling interests 12 131 380 286 The Carlsbad joint venture made no distributions to the partners, and the Company made no capital contributions to the Carlsbad joint venture during the six months ended June 30, 2017. The project is expected to be completed in 2018. The carrying value of the assets and liabilities associated with the operations of the Carlsbad joint venture are included in the Company's consolidated balance sheets as follows: jjjjjj June 30, December 31, 2017 2016 Cash $ 39,222 $ 4,630 Accounts receivable $ 6,703 $ — Costs and estimated earnings in excess of billings $ 124 $ 124 Billings in excess of costs and estimated earnings $ 33,452 $ 3,426 Accounts payable $ 6,288 $ 286 Due to Primoris $ 4,553 $ 46 Wilmington Joint Venture The Wilmington joint venture operating activities began in October 2015 and are included in the Company's consolidated statements of income for the three and six months ended: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues $ 12,289 $ 2,958 $ 24,599 $ 4,917 Net income attributable to noncontrolling interests 839 100 1,292 168 The Wilmington joint venture made no distributions to the partners, and the Company made no capital contributions to the Wilmington joint venture during the six months ended June 30, 2017. The project is expected to be completed in 2018. The carrying value of the assets and liabilities associated with the operations of the Wilmington joint venture are included in the Company’s consolidated balance sheets as follows: June 30, December 31, 2017 2016 Cash $ 8,872 $ 2,415 Accounts receivable $ 6,406 $ 4,242 Billings in excess of costs and estimated earnings $ 2,334 $ 2,572 Accounts payable $ 7,467 $ 602 Due to Primoris $ 1,446 $ 2,035 Summary – Joint Venture Balance Sheets The following table summarizes the total balance sheet amounts for the two joint ventures, which are included in the Company’s condensed consolidated balance sheets: Joint Venture Consolidated At June 30, 2017 Amounts Amounts Cash $ 48,094 $ 111,676 Accounts receivable $ 13,109 $ 355,231 Costs and estimated earnings in excess of billings $ 124 $ 158,741 Accounts payable $ 13,755 $ 134,091 Billings in excess of costs and estimated earnings $ 35,786 $ 158,698 At December 31, 2016 Cash $ 7,045 $ 135,823 Accounts receivable $ 4,242 $ 388,000 Costs and estimated earnings in excess of billings $ 124 $ 138,618 Accounts payable $ 888 $ 168,110 Billings in excess of costs and estimated earnings $ 5,998 $ 112,606 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions | |
Related Party Transactions | Note 12—Related Party Transactions Primoris entered into leasing transactions with Stockdale Investment Group, Inc. (“SIGI”). Our Chairman of the Board of Directors and our largest stockholder, Brian Pratt and his family, holds a majority interest of SIGI. The leases were for three properties used by the Company in California, with various expiration dates. In March 2017, the Company exercised a right of first refusal and purchased the SIGI properties. The purchase was approved by the Company’s Board of Directors for $12.8 million. The Company assumed three mortgage notes totaling $4.2 million with the remainder paid in cash. During the three months ended June 30, 2017 and 2016, the Company paid $0 and $0.2 million, respectively, in lease payments to SIGI for the use of these properties. During the six months ended June 30, 2017 and 2016, the Company paid $0.2 million and $0.4 million, respectively, in lease payments to SIGI for the use of these properties. Primoris leases properties from other individuals that are current employees. The amounts leased are not material and each arrangement was approved by the Board of Directors. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 13—Stock-Based Compensation In July 2008, the shareholders approved and the Company adopted the Primoris Services Corporation 2008 Long-term Incentive Equity Plan, which was replaced by the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”), after approval by the shareholders and adoption by the Company on May 3, 2013. The Company’s Board of Directors has granted 259,065 Restricted Stock Units (“Units”) to executives under the Equity Plan. The grants were documented in RSU Award Agreements, which provide for a vesting schedule and require continuing employment of the executive. The Units are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying RSU Award Agreement. At June 30, 2017, a total of 173,650 Units were vested. The vesting schedule for the remaining Units are as follows: Number of Units For the Years Ending December 31, to Vest 2017 (remaining six months) — 2018 28,471 2019 51,552 2020 5,392 85,415 Under guidance of ASC Topic 718 “ Compensation — Stock Compensation ”, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award). The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant. Stock compensation expense for the Units is being amortized using the straight-line method over the service period. The Company recognized $0.2 million and $0.4 million in compensation expense for the three months ended June 30, 2017 and 2016, respectively, and $0.7 million in compensation expense for each of the six months ended June 30, 2017 and 2016. At June 30, 2017, approximately $1.6 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 2.1 years. Vested Units accrue “Dividend Equivalent Units” (as defined in the Equity Plan), which will be accrued as additional Units. At June 30, 2017, a total of 2,378 Dividend Equivalent Units were accrued. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Income Taxes | Note 14—Income Taxes The Company determines its best current estimate of the annual effective tax rate using expected pre-tax earnings, statutory tax rates, and available tax planning opportunities. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense. The effective tax rate on income including noncontrolling interests for the six months ended June 30, 2017 was 37.7%. The effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 39.0%. The rates differ from the U.S. federal statutory rate of 35% primarily due to state income taxes, the Domestic Production Activity Deduction, and partially to nondeductible meals and incidental per diem expenses common to the construction industry. The Company’s federal income tax returns are generally no longer subject to examination for tax years before 2013. The statutes of limitation of state and foreign jurisdictions generally vary between 3 to 5 years. Accordingly, the tax years 2011 through 2015 remain open to examination by the other taxing jurisdictions in which the Company operates. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse. The effects of remeasurement of deferred tax assets and liabilities resulting from changes in tax rates are recognized in income in the period of enactment. |
Dividends and Earnings Per Shar
Dividends and Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Dividends and Earnings Per Share | |
Dividends and Earnings Per Share | Note 15—Dividends and Earnings Per Share The Company has paid or declared cash dividends during 2016 and 2017 as follows: Declaration Date Record Date Payable Date Amount Per Share February 22, 2016 March 31, 2016 April 15, 2016 $ May 2, 2016 June 30, 2016 July 15, 2016 $ August 3, 2016 September 30, 2016 October 14, 2016 $ November 2, 2016 December 31, 2016 January 16, 2017 $ March 21, 2017 March 31, 2017 April 15, 2017 $ May 5, 2017 June 30, 2017 July 14, 2017 $ The payment of future dividends is contingent upon our revenues and earnings, capital requirements and general financial condition of the Company, as well as contractual restrictions and other considerations deemed relevant by the Board of Directors. The table below presents the computation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016. Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator: Net income attributable to Primoris $ 21,545 $ 5,056 $ 29,236 $ 7,749 Denominator (shares in thousands): Weighted average shares for computation of basic earnings per share 51,437 51,772 51,515 51,749 Dilutive effect of shares issued to independent directors — — 3 3 Dilutive effect of restricted stock units (1) 251 250 253 198 Weighted average shares for computation of diluted earnings per share 51,688 52,022 51,771 51,950 Earnings per share attributable to Primoris: Basic $ 0.42 $ 0.10 $ 0.57 $ 0.15 Diluted $ 0.42 $ 0.10 $ 0.56 $ 0.15 (1) Represents the dilutive effect of a grant of 259,065 Units and 2,378 vested Dividend Equivalent Units. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | Note 16—Stockholders’ Equity Common stock — The Company issued 65,429 shares of common stock in February 2017 and 85,907 shares of common stock in February 2016 under the Company’s long-term retention plan (“LTR Plan”). The shares were purchased by the participants in the LTR Plan with payment made to the Company of $1.1 million in February 2017 and $1.4 million in February 2016. The Company’s LTR Plan for managers and executives allows participants to use a portion of their annual bonus amount to purchase Company common stock at a discount from the market price. The shares purchased in February 2017 were for bonus amounts earned in 2016, and the number of shares was calculated at 75% of the average closing market price of January 2017. In February 2017 and 2016, the Company issued 11,784 shares and 10,450 shares of common stock, respectively, as part of the quarterly compensation of the non-employee members of the Board of Directors. As discussed in Note 13 — “Stock–Based Compensation” , as of June 30, 2017, the Board of Directors has granted a total of 259,065 shares of Units under the Equity Plan and these Units have accrued 2,378 Dividend Equivalent Units. Share repurchase plan — In February 2017, the Company's Board of Directors authorized a $5.0 million share repurchase program under which the Company may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $5.0 million. During the period from March 23, 2017 through March 28, 2017, the Company purchased and cancelled 216,350 shares of stock for $5.0 million at an average cost of $23.10 per share. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 17—Commitments and Contingencies Leases — The Company leases certain property and equipment under non-cancellable operating leases which expire at various dates through 2023. The leases require the Company to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”. Total lease expense during the three and six months ended June 30, 2017 was $5.9 million and $12.0 million, respectively, compared to $5.5 million and $10.8 million, respectively for the same periods in 2016. The amounts for the three and six months ended June 30, 2017 included lease payments made to related parties of $0.1 million and $0.5 million, respectively compared to $0.4 million and $0.7 million, respectively, for the same periods in 2016. Letters of credit — At June 30, 2017, the Company had letters of credit outstanding of $15.7 million, and at December 31, 2016, the Company had letters of credit outstanding of $16.2 million. The outstanding amounts include the U.S. dollar equivalents for letters of credit issued in Canadian dollars. Bonding — At June 30, 2017 and December 31, 2016, the Company had bid and completion bonds issued and outstanding totaling approximately $1.46 billion and $1.53 billion, respectively. NTTA settlement — On February 7, 2012, the Company was sued in an action entitled North Texas Tollway Authority (“NTTA”), Plaintiff v. James Construction Group, LLC, and KBR, Inc., Defendants, v. Reinforced Earth Company, Third-Party Defendant (the “Lawsuit”). On February 25, 2015 the Lawsuit was settled for an expected cost to the Company of $9.0 million. One of the defendants paid the Company $8.0 million to remove all of their liability. A second defendant agreed to provide up to $5.4 million to pay for the total expected remediation cost of approximately $22.4 million. The Company will use the $17.0 million to pay for a third-party contractor approved by the NTTA. At June 30, 2017, the remaining accrual balance was $14.5 million. In the event that the total remediation costs exceed the estimated amount, the second defendant would pay 20% of the excess amount and the Company would pay for 80% of the excess amount. Legal proceedings — The Company has been engaged in dispute resolution to collect money it believes it is owed for one construction project completed in 2014. Because of uncertainties associated with the project, including uncertainty of the amounts that would be collected, the Company used a zero profit margin approach to recording revenues during the construction period for the project. For the project, a cost reimbursable contract, the Company recorded a receivable of $32.9 million with a reserve of approximately $17.8 million included in “billings in excess of costs and estimated earnings”. At this time, the Company cannot predict the amount that it will collect nor the timing of any collection. The dispute resolution for the receivable initially required international arbitration; however, in the first half of 2016, the owner sought bankruptcy protection in U.S. bankruptcy court. The Company has initiated litigation against the sureties who have provided lien and stop payment release bonds for the total amount owed. A trial date has been set for the fourth quarter of 2017. The Company is subject to other claims and legal proceedings arising out of its business. The Company provides for costs related to contingencies when a loss from such claims is probable and the amount is reasonably determinable. In determining whether it is possible to provide an estimate of loss, or range of possible loss, the Company reviews and evaluates its litigation and regulatory matters on a quarterly basis in light of potentially relevant factual and legal developments. If we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for a potential litigation loss. Management is unable to ascertain the ultimate outcome of other claims and legal proceedings; however, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles/self-insurance retention, management believes that it has meritorious defenses to the claims and believes that the reasonably possible outcome of such claims will not, individually or in the aggregate, have a materially adverse effect on the consolidated results of operations, financial condition or cash flows of the Company. SEC Inquiry — The Company has been cooperating with an inquiry by the staff of the Securities and Exchange Commission, which appears to be focused on certain percentage-of-completion contract revenue recognition practices of the Company during the time period 2013 and 2014. The Company is continuing to respond to the staff’s inquiries in connection with this matter. At this stage, the Company is unable to predict when the staff’s inquiry will conclude or the outcome. Withdrawal liability for multiemployer pension plan — In November 2011, members of the Pipe Line Contractors Association (“PLCA”), including ARB, Rockford and Q3C (prior to the Company’s acquisition in 2012), withdrew from the Central States, Southeast and Southwest Areas Pension Fund multiemployer pension plan (“Plan”) in order to mitigate additional liability in connection with the significantly underfunded Plan. During the first quarter of 2016, the Company received a final payment schedule for its withdrawal liability. Based on this schedule, the liability recorded at June 30, 2017 was $5.1 million. The Company has no plans to withdraw from any other agreements. |
Reportable Segments
Reportable Segments | 6 Months Ended |
Jun. 30, 2017 | |
Reportable Segments | |
Reportable Segments | Note 18—Reportable Segments Through the end of the year 2016, the Company segregated its business into three reportable segments: the Energy segment, the East Construction Services segment and the West Construction Services segment. In the first quarter 2017, the Company changed its reportable segments in connection with a realignment of the Company’s internal organization and management structure. The segment changes during the quarter reflect the focus of our CODM on the range of services we provide to our end user markets. Our CODM regularly reviews the operating and financial performance of our business units based on these segments. The current reportable segments include the Power segment, the Pipeline segment, the Utilities segment, and the Civil segment. Segment information for prior periods have been restated to conform to the new segment presentation. The classification of our business unit revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our business units may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses were made. The following is a brief description of the reportable segments and their business units and operations. The Power division of the Power segment includes ARB Industrial, Primoris Power, ARB Structures, and Primoris Renewable Energy. This division operates primarily in our California markets, with select projects performed nationwide. The Industrial division of this segment includes Primoris Industrial Constructors, Primoris Fabrication, and Primoris Mechanical Contractors. These groups are headquartered in and around Houston, TX and focus on the Southern region of the United States. The Engineering division of this segment includes OnQuest, with offices in California, OnQuest with offices in Calgary, and Primoris Design and Construction, located in Tyler, TX. The Pipeline segment includes Rockford, Vadnais Trenchless, Primoris Field Services, Primoris Pipeline, and Primoris Coastal Field Services. Rockford operates throughout the United States. Vadnais Trenchless provides specialized trenchless solutions in California and other select areas. Presently, Primoris Field Services, Primoris Pipeline and Primoris Coastal Field Services operate in Texas and surrounding states. The Utilities segment is comprised of ARB Underground, Q3C, Primoris AV, and Primoris Distribution Services. ARB Underground operates primarily in California, Q3C and Primoris AV are present throughout the Midwest region of the United States, and Primoris Distribution Services operates in Florida and the Southeast region of the United States. The Civil segment includes Primoris Heavy Civil, Primoris I&M, and BW Primoris. These business units are located primarily in the Southeastern and Gulf Coast regions of the United States. Each of the four segments specializes in a range of services that include engineering, designing, building/installing, replacing, repairing/rehabilitating, and providing management services for construction and construction-related projects. Our services include: · Providing installation of underground pipeline, cable, and conduits for entities in the petroleum, petrochemical, and water industries; · Providing maintenance services to utilities for installation and repair of gas distribution lines; · Providing engineering, installation, and maintenance of industrial facilities for entities in the petroleum, petrochemical, water, and other industries; · Providing installation of commercial and industrial cast-in-place structures; · Providing construction of highways and bridges; and · Providing industrial and environmental construction. All intersegment revenues and gross profit, which were immaterial, have been eliminated in the following tables. Segment Revenues Revenue by segment for the three and six months ended June 30, 2017 and 2016 were as follows: For the three months ended June 30, 2017 2016 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 157,773 $ 126,576 Pipeline 134,623 56,804 Utilities 212,942 157,119 Civil 125,827 116,312 Total $ 631,165 $ 456,811 For the six months ended June 30, 2017 2016 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 289,013 $ 265,214 Pipeline 318,068 111,140 Utilities 329,922 260,873 Civil 255,664 250,030 Total $ 1,192,667 $ 887,257 Segment Gross Profit Gross profit by segment for the three and six months ended June 30, 2017 and 2016 were as follows: For the three months ended June 30, 2017 2016 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 18,132 $ 14,092 Pipeline 39,366 6,469 Utilities 32,347 22,841 Civil (5,362) (117) Total $ 84,483 $ 43,285 For the six months ended June 30, 2017 2016 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 33,656 $ 25,677 Pipeline 67,491 11,468 Utilities 40,620 34,726 Civil (2,231) 10,691 Total $ 139,536 $ 82,562 Segment Goodwill The amount of goodwill recorded by segment at June 30, 2017 and at December 31, 2016 is presented in Note 8 – “ Goodwill and Intangible Assets” . Geographic Region — Revenues and Total Assets The Company’s revenues are derived from customers primarily in the United States, with less than 1.0% generated from sources outside of the United States. At June 30, 2017, approximately 1.0% of total assets were located outside of the United States. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events. | |
Subsequent Event | Note 19—Subsequent Events Cash Dividend – On August 2, 2017, the Board of Directors declared a cash dividend of $0.055 per common share for stockholders of record as of September 29, 2017, payable on or about October 14, 2017. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Revenue recognition | Revenue recognition Fixed-price contracts — Historically, a substantial portion of the Company’s revenue has been generated under fixed-price contracts. For fixed-price contracts, the Company recognizes revenues primarily using the percentage-of-completion method, which may result in uneven and irregular results. In the percentage-of-completion method, estimated contract values, estimated cost at completion and total costs incurred to date are used to calculate revenues earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenues and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and thus the timing of revenue recognition. To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected. Other contract forms — The Company also uses unit price, time and material, and cost reimbursable plus fee contracts. For these jobs, revenue is recognized primarily based on contractual terms. Generally, time and material and cost reimbursement contract revenues are recognized on an input basis, based on labor hours incurred and on purchases made. Unit price contracts generally recognize revenue on an output based measurement such as the completion of specific units at a specified unit price. The Company considers unapproved change orders to be contract variations for which customers have not agreed to both scope and price. Costs associated with unapproved change orders are included in the estimated cost to complete and are treated as project costs as incurred. The Company will recognize revenue if it is probable that the contract price will be adjusted and can be reliably estimated. Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers. The Company considers claims to be amounts it seeks, or will seek, to collect from customers or others for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as weather delays or rain. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred. Claims are included in revenue to the extent the related costs have been incurred, realization is probable, and amounts can be reliably estimated. Revenue in excess of contract costs from claims is recognized when an agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. At any time, if an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at that time and recognized as an “accrued loss provision” which is included in the accrued expenses and other current liabilities amount on the balance sheet. For fixed price contracts, as the percentage-of-completion method is used to calculate revenues, the accrued loss provision is changed so that the gross profit for the contract remains zero in future periods. If we anticipate that there will be a loss for unit price or cost reimbursable contracts, the projected loss is recognized in full at that time. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which the revisions are identified. In all forms of contracts, the Company estimates its collectability of contract amounts at the same time that it estimates project costs. If the Company anticipates that there may be issues associated with the collectability of the full amount calculated as revenues, the Company may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection. For example, when a cost reimbursable project exceeds the client’s expected budget amount, the client frequently requests an adjustment to the final amount. Similarly, some utility clients reserve the right to audit costs for significant periods after performance of the work. In these situations, the Company may choose to defer recognition of revenue until the client pays for the services. The caption “ Costs and estimated earnings in excess of billings ” in the Consolidated Balance Sheets represents unbilled receivables which arise when revenues have been recorded but the amount will not be billed until a later date. Balances represent: (a) unbilled amounts arising from the use of the percentage-of-completion method of accounting which may not be billed under the terms of the contract until a later date or project milestone; (b) incurred costs to be billed under cost reimbursement type contracts; (c) amounts arising from routine lags in billing; or (d) the revenue associated with unapproved change orders or claims when realization is probable and amounts can be reliably determined. For those contracts in which billings exceed contract revenues recognized to date, the excess amounts are included in the caption “ Billings in excess of costs and estimated earnings ”. In accordance with applicable terms of certain construction contracts, retainage amounts may be withheld by customers until completion and acceptance of the project. Some payments of the retainage may not be received for a significant period after completion of our portion of a project. In some jurisdictions, retainage amounts are deposited into an escrow account. |
Significant revision in contract estimate | Significant revisions in contract estimates — Revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate revenue. Total estimated costs, and thus contract revenues and margin, are impacted by many factors, which can cause significant changes in estimates during the life cycle of a project. For projects that were in process at the end of the prior year or a prior quarter, there can be a difference in revenues and profits that would have been recognized in the prior year or prior quarter had current estimates of costs to complete been used at the end of the prior year or prior quarter. |
Customer concentration | Customer concentration — The Company operates in multiple industry segments encompassing the engineering and construction of commercial, industrial and public works infrastructure assets throughout primarily the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues; however, the group that comprises the top ten customers varies from year to year. During the three and six months ended June 30, 2017, revenues generated by the top ten customers were approximately $330.2 million and $713.5 million, respectively, which represented 52.3% and 59.8%, respectively, of total revenues during the period. During the periods, two large pipeline projects represented 11.0% and 19.2% of total revenues, respectively and Texas Department of Transportation (“TXDOT”) represented 10.6% and 10.5% of total revenues, respectively. During the three and six months ended June 30, 2016, revenues generated by the top ten customers were $263.0 million and $533.0 million, respectively, which represented 57.7% and 60.1%, respectively, of total revenues during the period. During the periods, a Louisiana petrochemical project represented 11.3% and 12.4% of total revenues, respectively and TXDOT represented 10.2% and 11.8% of total revenues, respectively. At June 30, 2017, approximately 11.7% of the Company’s accounts receivable were due from one customer, and that customer provided 8.8% of the Company’s revenues for the six months ended June 30, 2017. In addition, of total accounts receivable, approximately 11.0% are from one customer with whom the Company is currently in dispute resolution. See Note 17 – “ Commitments and Contingencies ”. At June 30, 2016, approximately 15.6% of the Company’s accounts receivable were due from one customer, and that customer provided 12.4% of the Company’s revenues for the six months ended June 30, 2016. In addition, approximately 16.0% of total accounts receivable at June 30, 2016 were in dispute resolution. |
Multiemployer plans | Multiemployer plans — Various subsidiaries are signatories to collective bargaining agreements. These agreements require that the Company participate in and contribute to a number of multiemployer benefit plans for its union employees at rates determined by the agreements. The trustees for each multiemployer plan determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits, and administer the plan. Federal law requires that if the Company were to withdraw from an agreement, it would incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with Generally Accepted Accounting Principles (“GAAP”), any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. |
Inventory and uninstalled contract materials | Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or at net realizable value. Uninstalled contract materials are certain job specific materials not yet installed, primarily for highway construction projects, which are valued using the specific identification method relating the cost incurred to a specific project. In most cases, the Company is able to invoice a state agency for the materials, but title will not pass to the state agency until the materials are installed. |
Nature of Business (Tables)
Nature of Business (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Nature of Business | |
Schedule of list of primary operating subsidiaries and their reportable segment | Subsidiary Reportable Segment Prior Operating Segment ARB Industrial (a division of ARB, Inc.) Power West ARB Structures Power West Primoris Power (formerly PES Saxon division) Power Energy Primoris Renewable Energy (a division of Primoris Aevenia, Inc.) Power Energy Primoris Industrial Constructors (formerly PES Industrial Division) Power Energy Primoris Fabrication (a division of PES) Power Energy Primoris Mechanical Contractors (a combination of a division of PES and Cardinal Contractors) Power Energy OnQuest Power Energy OnQuest Canada Power Energy Primoris Design and Construction (“PD&C”); created 2017 Power NA Rockford Corporation (“Rockford”) Pipeline West Vadnais Trenchless Services (“Vadnais Trenchless”) Pipeline West Primoris Field Services (a division of PES Primoris Pipeline) Pipeline Energy Primoris Pipeline (a division of PES Primoris Pipeline) Pipeline Energy Primoris Coastal Field Services; created 2017 Pipeline NA ARB Underground (a division of ARB, Inc.) Utilities West Q3 Contracting (“Q3C”) Utilities West Primoris AV Utilities Energy Primoris Distribution Services; created 2017 Utilities NA Primoris Heavy Civil (formerly JCG Heavy Civil Division) Civil East Primoris I&M (formerly JCG Infrastructure & Maintenance Division) Civil East BW Primoris Civil East |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities which are required to be measured at fair value | Fair Value Measurements at Reporting Date Significant Amount Quoted Prices Other Significant Recorded in Active Markets Observable Unobservable on Balance for Identical Assets Inputs Inputs Sheet (Level 1) (Level 2) (Level 3) Assets as of June 30, 2017: Cash and cash equivalents $ 111,676 $ 111,676 — — Liabilities as of June 30, 2017: Contingent consideration $ 1,213 — — 1,213 Assets as of December 31, 2016: Cash and cash equivalents $ 135,823 $ 135,823 — — Liabilities as of December 31, 2016: None |
Schedule of changes to the Company's contingent consideration liability Level 3 fair value measurements | Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2017 2016 Beginning balance, January 1, $ — $ — Additions to contingent consideration liability: Florida Gas Contractors acquisition 1,200 — Change in fair value of contingent consideration liability during year 13 — Ending balance, June 30, $ 1,213 $ — |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable. | |
Summary of accounts receivable | June 30, December 31, 2017 2016 Contracts receivable, net of allowance for doubtful accounts of $1,654 at June 30, 2017 and $1,030 at December 31, 2016, respectively $ 294,670 $ 340,871 Retention receivable 56,251 46,394 350,921 387,265 Other accounts receivable 4,310 735 $ 355,231 $ 388,000 |
Costs and Estimated Earnings 29
Costs and Estimated Earnings on Uncompleted Contracts (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Costs and Estimated Earnings on Uncompleted Contracts | |
Schedule of costs and estimated earnings on uncompleted contracts | June 30, December 31, 2017 2016 Costs incurred on uncompleted contracts $ 4,900,812 $ 5,391,124 Gross profit recognized 390,252 456,871 5,291,064 5,847,995 Less: billings to date (5,291,021) (5,821,983) $ 43 $ 26,012 |
Schedule of costs and estimated earnings on uncompleted contracts included in consolidated balance sheet | June 30, December 31, 2017 2016 Costs and estimated earnings in excess of billings $ 158,741 $ 138,618 Billings in excess of cost and estimated earnings (158,698) (112,606) $ 43 $ 26,012 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations | |
Schedule of pro forma results | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (unaudited) (unaudited) (unaudited) (unaudited) Revenues $ 641,592 $ 479,326 $ 1,218,734 $ 933,491 Income before provision for income taxes $ 37,224 $ 10,362 $ 51,372 $ 16,942 Net income attributable to Primoris $ 21,937 $ 6,101 $ 31,409 $ 9,893 Weighted average common shares outstanding: Basic 51,437 51,772 51,515 51,749 Diluted 51,688 52,022 51,771 51,950 Earnings per share: Basic $ 0.43 $ 0.12 $ 0.61 $ 0.19 Diluted $ 0.42 $ 0.12 $ 0.61 $ 0.19 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by reporting unit | June 30, December 31, Reporting Segment 2017 2016 Power $ 24,391 $ 24,512 Pipeline 51,075 42,252 Utilities 35,056 20,312 Civil 40,150 40,150 Total Goodwill $ 150,672 $ 127,226 |
Summary of intangible asset categories, amounts and the average amortization periods | Amortization June 30, December 31, Period 2017 2016 Tradename 3 to 10 years $ 11,902 $ 11,754 Customer relationships 3 to 15 years 37,755 20,136 Non-compete agreements 2 to 5 years 1,304 951 Other 3 years 267 — $ 51,228 $ 32,841 |
Schedule of estimated future amortization expense for intangible assets | Estimated Intangible For the Years Ending Amortization December 31, Expense 2017 (remaining six months) $ 5,107 2018 9,741 2019 9,393 2020 6,650 2021 5,413 Thereafter 14,924 $ 51,228 |
Accounts Payable and Accrued 32
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable and Accrued Liabilities | |
Summary of accrued expenses and other current liabilities | June 30, December 31, 2017 2016 Payroll and related employee benefits $ 45,474 $ 42,718 Insurance, including self-insurance reserves 44,034 42,546 Reserve for estimated losses on uncompleted contracts 13,019 12,801 Corporate income taxes and other taxes 7,623 3,368 Accrued administrative cost 3,515 3,791 Other 2,579 2,782 $ 116,244 $ 108,006 |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Carlsbad | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues $ 26,203 $ 3,150 $ 37,003 $ 6,668 Net income attributable to noncontrolling interests 12 131 380 286 |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | jjjjjj June 30, December 31, 2017 2016 Cash $ 39,222 $ 4,630 Accounts receivable $ 6,703 $ — Costs and estimated earnings in excess of billings $ 124 $ 124 Billings in excess of costs and estimated earnings $ 33,452 $ 3,426 Accounts payable $ 6,288 $ 286 Due to Primoris $ 4,553 $ 46 |
Wilmington | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenues $ 12,289 $ 2,958 $ 24,599 $ 4,917 Net income attributable to noncontrolling interests 839 100 1,292 168 |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | June 30, December 31, 2017 2016 Cash $ 8,872 $ 2,415 Accounts receivable $ 6,406 $ 4,242 Billings in excess of costs and estimated earnings $ 2,334 $ 2,572 Accounts payable $ 7,467 $ 602 Due to Primoris $ 1,446 $ 2,035 |
Carlsbad and Wilmington | |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | Joint Venture Consolidated At June 30, 2017 Amounts Amounts Cash $ 48,094 $ 111,676 Accounts receivable $ 13,109 $ 355,231 Costs and estimated earnings in excess of billings $ 124 $ 158,741 Accounts payable $ 13,755 $ 134,091 Billings in excess of costs and estimated earnings $ 35,786 $ 158,698 At December 31, 2016 Cash $ 7,045 $ 135,823 Accounts receivable $ 4,242 $ 388,000 Costs and estimated earnings in excess of billings $ 124 $ 138,618 Accounts payable $ 888 $ 168,110 Billings in excess of costs and estimated earnings $ 5,998 $ 112,606 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Schedule of units to vest for remaining restricted stock units | Number of Units For the Years Ending December 31, to Vest 2017 (remaining six months) — 2018 28,471 2019 51,552 2020 5,392 85,415 |
Dividends and Earnings Per Sh35
Dividends and Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Dividends and Earnings Per Share | |
Schedule of cash dividends paid or declared | Declaration Date Record Date Payable Date Amount Per Share February 22, 2016 March 31, 2016 April 15, 2016 $ May 2, 2016 June 30, 2016 July 15, 2016 $ August 3, 2016 September 30, 2016 October 14, 2016 $ November 2, 2016 December 31, 2016 January 16, 2017 $ March 21, 2017 March 31, 2017 April 15, 2017 $ May 5, 2017 June 30, 2017 July 14, 2017 $ |
Schedule of computation of basic and diluted earnings per share | Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Numerator: Net income attributable to Primoris $ 21,545 $ 5,056 $ 29,236 $ 7,749 Denominator (shares in thousands): Weighted average shares for computation of basic earnings per share 51,437 51,772 51,515 51,749 Dilutive effect of shares issued to independent directors — — 3 3 Dilutive effect of restricted stock units (1) 251 250 253 198 Weighted average shares for computation of diluted earnings per share 51,688 52,022 51,771 51,950 Earnings per share attributable to Primoris: Basic $ 0.42 $ 0.10 $ 0.57 $ 0.15 Diluted $ 0.42 $ 0.10 $ 0.56 $ 0.15 (1) Represents the dilutive effect of a grant of 259,065 Units and 2,378 vested Dividend Equivalent Units. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Reportable Segments | |
Schedule of revenue by segment | For the three months ended June 30, 2017 2016 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 157,773 $ 126,576 Pipeline 134,623 56,804 Utilities 212,942 157,119 Civil 125,827 116,312 Total $ 631,165 $ 456,811 For the six months ended June 30, 2017 2016 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 289,013 $ 265,214 Pipeline 318,068 111,140 Utilities 329,922 260,873 Civil 255,664 250,030 Total $ 1,192,667 $ 887,257 |
Schedule of gross profit by segment | For the three months ended June 30, 2017 2016 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 18,132 $ 14,092 Pipeline 39,366 6,469 Utilities 32,347 22,841 Civil (5,362) (117) Total $ 84,483 $ 43,285 For the six months ended June 30, 2017 2016 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 33,656 $ 25,677 Pipeline 67,491 11,468 Utilities 40,620 34,726 Civil (2,231) 10,691 Total $ 139,536 $ 82,562 |
Nature of Business (Details)
Nature of Business (Details) $ in Millions | Jun. 16, 2017USD ($) | May 30, 2017USD ($) | May 26, 2017USD ($) | Nov. 18, 2016USD ($) | Jan. 29, 2016USD ($) | Jun. 30, 2017segmentitem | Dec. 31, 2016segment |
Nature of Business | |||||||
Number of reportable segments | segment | 4 | 3 | |||||
Number of joint ventures | item | 2 | ||||||
Number of variable interest entities | item | 2 | ||||||
Amount of purchase of assets and liabilities | $ 2.3 | ||||||
Pipeline | Northern | |||||||
Nature of Business | |||||||
Amount of purchase of assets and liabilities | $ 6.8 | ||||||
Pipeline | Coastal | |||||||
Nature of Business | |||||||
Amount of purchase of assets and liabilities | $ 27.5 | ||||||
Utilities | Mueller | |||||||
Nature of Business | |||||||
Amount of purchase of assets and liabilities | $ 4.1 | ||||||
Utilities | FGC | |||||||
Nature of Business | |||||||
Amount of purchase of assets and liabilities | $ 37.7 | ||||||
Carlsbad | |||||||
Nature of Business | |||||||
Ownership percentage | 50.00% | ||||||
Wilmington | |||||||
Nature of Business | |||||||
Ownership percentage | 50.00% |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)customeritem | Jun. 30, 2016USD ($)customer | |
Customer concentration | ||||
Revenue | $ | $ 631,165 | $ 456,811 | $ 1,192,667 | $ 887,257 |
Revenues. | Customer concentration | Top ten customers | ||||
Customer concentration | ||||
Number of top customers | 10 | 10 | ||
Number of calendar years in which top customers typically generate minimum specified percentage of revenue | item | 1 | |||
Minimum percentage of revenues generated by top ten customers | 50.00% | |||
Revenue | $ | $ 330,200 | $ 263,000 | $ 713,500 | $ 533,000 |
Percentage of concentration risk | 52.30% | 57.70% | 59.80% | 60.10% |
Revenues. | Customer concentration | Two large pipeline projects | ||||
Customer concentration | ||||
Percentage of concentration risk | 11.00% | 19.20% | ||
Revenues. | Customer concentration | TXDOT | ||||
Customer concentration | ||||
Percentage of concentration risk | 10.60% | 10.20% | 10.50% | 11.80% |
Revenues. | Customer concentration | Louisiana petrochemical project | ||||
Customer concentration | ||||
Percentage of concentration risk | 11.30% | 12.40% | ||
Revenues. | Customer concentration | One customer | ||||
Customer concentration | ||||
Percentage of concentration risk | 8.80% | 12.40% | ||
Accounts receivable | Customer concentration | One customer | ||||
Customer concentration | ||||
Percentage of concentration risk | 11.70% | 15.60% | ||
Number of customers | 1 | 1 | ||
Accounts receivable | Customer concentration | Disputed Receivables | ||||
Customer concentration | ||||
Percentage of concentration risk | 11.00% | 16.00% | ||
Number of customers | 1 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | $ 111,676 | $ 135,823 |
Significant Unobservable Inputs (Level 3) | ||
Liabilities | ||
Contingent consideration | 1,213 | |
Amount Recorded on Balance Sheet | ||
Assets | ||
Cash and cash equivalents | 111,676 | $ 135,823 |
Liabilities | ||
Contingent consideration | $ 1,213 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration Liability (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)item | |
Additional information | |
Number of unobservable inputs | item | 2 |
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | |
Rollforward of contingent consideration liability level three fair value measurements | |
Change in fair value of contingent consideration liability during year | $ 13 |
Balance at the end of the period | 1,213 |
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | FGC | |
Rollforward of contingent consideration liability level three fair value measurements | |
Florida Gas Contractors acquisition | $ 1,200 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Receivable. | ||
Contracts receivable, net of allowance for doubtful accounts of $1,654 at June 30, 2017 and $1,030 at December 31, 2016, respectively | $ 294,670 | $ 340,871 |
Retention receivable | 56,251 | 46,394 |
Contracts receivable and retention | 350,921 | 387,265 |
Other accounts receivable | 4,310 | 735 |
Accounts receivable, net | 355,231 | 388,000 |
Allowance for doubtful accounts | $ 1,654 | $ 1,030 |
Costs and Estimated Earnings 42
Costs and Estimated Earnings on Uncompleted Contracts (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Costs and Estimated Earnings on Uncompleted Contracts | ||
Costs incurred on uncompleted contracts | $ 4,900,812 | $ 5,391,124 |
Gross profit recognized | 390,252 | 456,871 |
Costs and Estimated Earnings on Uncompleted Contracts | 5,291,064 | 5,847,995 |
Less: billings to date | (5,291,021) | (5,821,983) |
Net cost and estimated earnings in excess of billings | 43 | 26,012 |
Amount included in consolidated balance sheet | ||
Costs and estimated earnings in excess of billings | 158,741 | 138,618 |
Billings in excess of costs and estimated earnings | (158,698) | (112,606) |
Net cost and estimated earnings in excess of billings | $ 43 | $ 26,012 |
Business Combinations - 2016 Co
Business Combinations - 2016 Combinations (Details) - USD ($) $ in Thousands | May 30, 2017 | Nov. 18, 2016 | Jun. 24, 2016 | Jan. 29, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Business combinations | |||||||||
Fair value of consideration | $ 2,300 | ||||||||
Cash payment made | 2,300 | ||||||||
Operating income | $ 38,506 | $ 10,787 | $ 53,705 | $ 17,406 | |||||
Fixed assets | 200 | ||||||||
Intangibles assets | $ 2,100 | ||||||||
Goodwill | 150,672 | 150,672 | $ 127,226 | ||||||
Pipe Jacking Unlimited Inc | Vadnais | |||||||||
Business combinations | |||||||||
Purchase of property, plant and equipment | $ 13,400 | ||||||||
Mueller | Aevenia | |||||||||
Business combinations | |||||||||
Fair value of consideration | $ 4,100 | ||||||||
Fixed assets | 2,000 | 2,000 | |||||||
Goodwill | 2,000 | 2,000 | |||||||
Fair value of inventory acquired | $ 100 | $ 100 | |||||||
The period of time goodwill and/or other intangible assets are deductible for income tax purposes | 15 years | ||||||||
Northern | Aevenia | |||||||||
Business combinations | |||||||||
Fair value of consideration | $ 6,800 | ||||||||
Decrease to goodwill | (100) | ||||||||
Fixed assets | 100 | 100 | |||||||
Intangibles assets | 3,000 | 3,000 | |||||||
Goodwill | $ 3,700 | $ 3,700 | |||||||
The period of time goodwill and/or other intangible assets are deductible for income tax purposes | 15 years |
Business Combinations - 2017 Co
Business Combinations - 2017 Combinations (Details) - USD ($) $ in Thousands | Jun. 16, 2017 | May 30, 2017 | May 26, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Business combinations | |||||
Cash payment made | $ 2,300 | ||||
Fixed assets | 200 | ||||
Intangibles assets | $ 2,100 | ||||
Goodwill | $ 150,672 | $ 127,226 | |||
FGC | |||||
Business combinations | |||||
Cash payment made | $ 33,000 | ||||
Potential contingent consideration | $ 1,500 | ||||
Contingent earnout period (in years) | 1 year | ||||
Fair value of the contingent consideration | $ 1,200 | ||||
Fixed assets | 4,800 | ||||
Working capital | 4,200 | ||||
Intangibles assets | 10,500 | ||||
Goodwill | 14,700 | ||||
Land and buildings | $ 3,500 | ||||
The period of time goodwill and/or other intangible assets are deductible for income tax purposes | 15 years | ||||
Coastal | |||||
Business combinations | |||||
Cash payment made | $ 27,500 | ||||
Fixed assets | 4,000 | ||||
Working capital | 4,800 | ||||
Intangibles assets | 9,900 | ||||
Goodwill | $ 8,800 | ||||
The period of time goodwill and/or other intangible assets are deductible for income tax purposes | 15 years |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pro forma results | ||||
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent) | 40.00% | 40.00% | 40.00% | 40.00% |
Revenues | $ 641,592 | $ 479,326 | $ 1,218,734 | $ 933,491 |
Income before provision for income taxes | 37,224 | 10,362 | 51,372 | 16,942 |
Net income attributable to Primoris | $ 21,937 | $ 6,101 | $ 31,409 | $ 9,893 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 51,437 | 51,772 | 51,515 | 51,749 |
Diluted (in shares) | 51,688 | 52,022 | 51,771 | 51,950 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.43 | $ 0.12 | $ 0.61 | $ 0.19 |
Diluted (in dollars per share) | $ 0.42 | $ 0.12 | $ 0.61 | $ 0.19 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Goodwill | ||
Goodwill | $ 150,672 | $ 127,226 |
Power | ||
Goodwill | ||
Goodwill | 24,391 | 24,512 |
Pipeline | ||
Goodwill | ||
Goodwill | 51,075 | 42,252 |
Utilities | ||
Goodwill | ||
Goodwill | 35,056 | 20,312 |
Civil | ||
Goodwill | ||
Goodwill | $ 40,150 | $ 40,150 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Intangible assets | |||||
Total | $ 51,228 | $ 51,228 | $ 32,841 | ||
Amortization expense of intangible assets | 1,900 | $ 1,600 | 3,611 | $ 3,239 | |
Estimated future amortization expense for intangible assets | |||||
2017 (remaining six months) | 5,107 | 5,107 | |||
2,018 | 9,741 | 9,741 | |||
2,019 | 9,393 | 9,393 | |||
2,020 | 6,650 | 6,650 | |||
2,021 | 5,413 | 5,413 | |||
Thereafter | 14,924 | 14,924 | |||
Tradename | |||||
Intangible assets | |||||
Total | 11,902 | $ 11,902 | 11,754 | ||
Tradename | Minimum | |||||
Intangible assets | |||||
Amortization Period | 3 years | 3 years | |||
Tradename | Maximum | |||||
Intangible assets | |||||
Amortization Period | 10 years | 10 years | |||
Customer relationships | |||||
Intangible assets | |||||
Total | 37,755 | $ 37,755 | 20,136 | ||
Customer relationships | Minimum | |||||
Intangible assets | |||||
Amortization Period | 3 years | 3 years | |||
Customer relationships | Maximum | |||||
Intangible assets | |||||
Amortization Period | 15 years | 15 years | |||
Non-compete agreements | |||||
Intangible assets | |||||
Total | 1,304 | $ 1,304 | $ 951 | ||
Non-compete agreements | Minimum | |||||
Intangible assets | |||||
Amortization Period | 2 years | 2 years | |||
Non-compete agreements | Maximum | |||||
Intangible assets | |||||
Amortization Period | 5 years | 5 years | |||
Other | |||||
Intangible assets | |||||
Amortization Period | 3 years | ||||
Total | $ 267 | $ 267 |
Accounts Payable and Accrued 48
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities | ||
Accounts Payable, Current | $ 134,091 | $ 168,110 |
Retention amounts included in accounts payable | 10,700 | 10,600 |
Accrued expenses and other current liabilities | ||
Payroll and related employee benefits | 45,474 | 42,718 |
Insurance, including self-insurance reserves | 44,034 | 42,546 |
Reserve for estimated losses on uncompleted contracts | 13,019 | 12,801 |
Corporate income taxes and other taxes | 7,623 | 3,368 |
Accrued administrative cost | 3,515 | 3,791 |
Other | 2,579 | 2,782 |
Total accrued expenses and other current liabilities | $ 116,244 | $ 108,006 |
Credit Arrangements (Details)
Credit Arrangements (Details) $ in Thousands, CAD in Millions | Nov. 09, 2015USD ($)payment | Jun. 05, 2015 | Jul. 25, 2013USD ($)payment | Dec. 31, 2015loanbuilding | Jun. 30, 2017USD ($)building | Jun. 30, 2017CAD | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 03, 2015USD ($) | Dec. 28, 2012USD ($) |
Senior Notes | ||||||||||
Credit arrangements | ||||||||||
Interest rate (as a percent) | 4.60% | 3.65% | 3.65% | |||||||
Required principal payment | $ 3,600 | $ 7,100 | ||||||||
Initial principal amount | $ 25,000 | $ 50,000 | ||||||||
Number of annual principal payments | payment | 7 | |||||||||
Senior Notes | Minimum | ||||||||||
Credit arrangements | ||||||||||
Prepayment to be paid on debt | $ 5,000 | |||||||||
Notes Agreement | ||||||||||
Credit arrangements | ||||||||||
Interest rate (as a percent) | 3.85% | |||||||||
Required principal payment | $ 3,600 | |||||||||
Initial principal amount | $ 25,000 | $ 25,000 | ||||||||
Number of annual principal payments | payment | 7 | |||||||||
Notes Agreement | Minimum | ||||||||||
Credit arrangements | ||||||||||
Restrictions on investments, change of control provisions and provisions as a percentage of total assets to be disposed off | 20.00% | |||||||||
Notes Agreement | Maximum | ||||||||||
Credit arrangements | ||||||||||
Initial principal amount | $ 75,000 | |||||||||
Mortgages | ||||||||||
Credit arrangements | ||||||||||
Number of assets secured | building | 3 | |||||||||
Assumed notes | $ 4,200 | |||||||||
Commercial equipment notes payable, maturing range from November 30, 2016 To September 24, 2021 | Minimum | ||||||||||
Credit arrangements | ||||||||||
Interest rate (as a percent) | 1.78% | 1.78% | ||||||||
Commercial equipment notes payable, maturing range from November 30, 2016 To September 24, 2021 | Maximum | ||||||||||
Credit arrangements | ||||||||||
Interest rate (as a percent) | 3.51% | 3.51% | ||||||||
Secured mortgage notes, maturing on January 1, 2031 | ||||||||||
Credit arrangements | ||||||||||
Number of secured mortgage notes payable to a bank | loan | 2 | |||||||||
Number of assets secured | building | 2 | |||||||||
Interest rate (as a percent) | 4.30% | |||||||||
Credit Agreement | ||||||||||
Credit arrangements | ||||||||||
Available borrowing capacity | $ 109,300 | |||||||||
Additional Period to Issue Notes | 3 years | |||||||||
Credit Agreement | Federal funds rate | ||||||||||
Credit arrangements | ||||||||||
Basis spread on variable rate (as a percent) | 0.50% | |||||||||
Credit Agreement | Minimum | ||||||||||
Credit arrangements | ||||||||||
Prepayment to be paid on debt | $ 5,000 | |||||||||
Restrictions on investments, change of control provisions and provisions as a percentage of total assets to be disposed off | 20.00% | |||||||||
Credit Agreement | Revolving line of credit | ||||||||||
Credit arrangements | ||||||||||
Maximum borrowing capacity | 125,000 | |||||||||
Borrowings outstanding | 0 | |||||||||
Credit Agreement | Commercial letters of credit | ||||||||||
Credit arrangements | ||||||||||
Total commercial letters of credit outstanding | 15,700 | $ 16,200 | ||||||||
Canadian Credit Facility | ||||||||||
Credit arrangements | ||||||||||
Available borrowing capacity | CAD | CAD 7.5 | |||||||||
Canadian Credit Facility | Commercial letters of credit | ||||||||||
Credit arrangements | ||||||||||
Maximum borrowing capacity | CAD | CAD 8 | |||||||||
Total commercial letters of credit outstanding | $ 500 | $ 0 | ||||||||
Annual fee (as a percent) | 1.00% | |||||||||
Canadian Credit Facility | Commercial letters of credit | Maximum | ||||||||||
Credit arrangements | ||||||||||
Term of credit facility | 5 years |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($)item | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)item | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Noncontrolling Interests | |||||
Number of joint ventures | item | 2 | 2 | |||
Revenue | $ 631,165 | $ 456,811 | $ 1,192,667 | $ 887,257 | |
Net income attributable to noncontrolling interests | 851 | 231 | 1,672 | 454 | |
Tax effect on income recognized | 14,175 | 3,333 | 18,692 | 5,166 | |
Cash | 111,676 | 111,676 | $ 135,823 | ||
Accounts receivable | 355,231 | 355,231 | 388,000 | ||
Costs and estimated earnings in excess of billings | 158,741 | 158,741 | 138,618 | ||
Billings in excess of costs and estimated earnings | 158,698 | 158,698 | 112,606 | ||
Accounts payable | $ 134,091 | $ 134,091 | 168,110 | ||
Carlsbad | |||||
Noncontrolling Interests | |||||
Ownership percentage | 50.00% | 50.00% | |||
Carlsbad | Primary beneficiary | |||||
Noncontrolling Interests | |||||
Revenue | $ 26,203 | 3,150 | $ 37,003 | 6,668 | |
Net income attributable to noncontrolling interests | 12 | 131 | 380 | 286 | |
Tax effect on income recognized | 0 | ||||
Distributions to partners | 0 | ||||
Capital contributions | 0 | ||||
Cash | 39,222 | 39,222 | 4,630 | ||
Accounts receivable | 6,703 | 6,703 | |||
Costs and estimated earnings in excess of billings | 124 | 124 | 124 | ||
Billings in excess of costs and estimated earnings | 33,452 | 33,452 | 3,426 | ||
Accounts payable | 6,288 | 6,288 | 286 | ||
Due to Primoris | $ 4,553 | $ 4,553 | 46 | ||
Wilmington | |||||
Noncontrolling Interests | |||||
Ownership percentage | 50.00% | 50.00% | |||
Wilmington | Primary beneficiary | |||||
Noncontrolling Interests | |||||
Revenue | $ 12,289 | 2,958 | $ 24,599 | 4,917 | |
Net income attributable to noncontrolling interests | 839 | $ 100 | 1,292 | $ 168 | |
Tax effect on income recognized | 0 | ||||
Distributions to partners | 0 | ||||
Capital contributions | 0 | ||||
Cash | 8,872 | 8,872 | 2,415 | ||
Accounts receivable | 6,406 | 6,406 | 4,242 | ||
Billings in excess of costs and estimated earnings | 2,334 | 2,334 | 2,572 | ||
Accounts payable | 7,467 | 7,467 | 602 | ||
Due to Primoris | 1,446 | 1,446 | 2,035 | ||
Carlsbad and Wilmington | Primary beneficiary | |||||
Noncontrolling Interests | |||||
Cash | 48,094 | 48,094 | 7,045 | ||
Accounts receivable | 13,109 | 13,109 | 4,242 | ||
Costs and estimated earnings in excess of billings | 124 | 124 | 124 | ||
Billings in excess of costs and estimated earnings | 35,786 | 35,786 | 5,998 | ||
Accounts payable | $ 13,755 | $ 13,755 | $ 888 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2017USD ($)loanproperty | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | |
Related party transactions | |||||
Number of leased properties | property | 3 | ||||
Lease payments to related party | $ 100 | $ 400 | $ 500 | $ 700 | |
Mortgages | |||||
Related party transactions | |||||
Assumed notes | 4,200 | 4,200 | |||
SIGI | |||||
Related party transactions | |||||
Lease payments to related party | $ 0 | $ 200 | $ 200 | $ 400 | |
Purchase of properties | $ 12,800 | ||||
SIGI | Mortgages | |||||
Related party transactions | |||||
Number of mortgages assumed | loan | 3 | ||||
Assumed notes | $ 4,200 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Equity Plan - Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 38 Months Ended | 50 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | |
Stock-based compensation | ||||||
Units granted | 259,065 | 259,065 | 259,065 | |||
Number of vested units | 173,650 | 173,650 | 173,650 | |||
Number of unvested units | 85,415 | 85,415 | 85,415 | |||
Compensation expense recognized | $ 200 | $ 400 | $ 700 | $ 700 | ||
Unrecognized compensation expense | $ 1,600 | $ 1,600 | $ 1,600 | |||
Period to recognize unrecognized compensation expense | 2 years 1 month 6 days | |||||
Accrued dividend equivalent units | 2,378 | 2,378 | 2,378 | |||
2,018 | ||||||
Stock-based compensation | ||||||
Number of Units to Vest | 28,471 | 28,471 | 28,471 | |||
2,019 | ||||||
Stock-based compensation | ||||||
Number of Units to Vest | 51,552 | 51,552 | 51,552 | |||
2,020 | ||||||
Stock-based compensation | ||||||
Number of Units to Vest | 5,392 | 5,392 | 5,392 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Effective tax rate on income before provision for income taxes excluding income attributable to noncontrolling interests (as a percent) | 37.70% |
Effective tax rate on income before provision for income taxes and noncontrolling interests (as a percent) | 39.00% |
U.S. federal statutory income tax rate (as a percent) | 35.00% |
Minimum period of statute of limitations of state and foreign jurisdictions | 3 years |
Maximum period of statute of limitations of state and foreign jurisdictions | 5 years |
Dividends and Earnings Per Sh54
Dividends and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | May 05, 2017 | Mar. 21, 2017 | Nov. 02, 2016 | Aug. 03, 2016 | May 02, 2016 | Feb. 22, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Dividends and Earnings Per Share | ||||||||||
Cash dividend declared (in dollars per share) | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | ||||
Numerator: | ||||||||||
Net income attributable to Primoris | $ 21,545 | $ 5,056 | $ 29,236 | $ 7,749 | ||||||
Denominator (shares in thousands): | ||||||||||
Weighted average shares for computation of basic earnings per share | 51,437 | 51,772 | 51,515 | 51,749 | ||||||
Dilutive effect of shares issued to independent directors | 3 | 3 | ||||||||
Dilutive effect of restricted stock units | 251 | 250 | 253 | 198 | ||||||
Weighted average shares for computation of diluted earnings per share | 51,688 | 52,022 | 51,771 | 51,950 | ||||||
Earnings per share attributable to Primoris: | ||||||||||
Basic earnings per share (in dollars per share) | $ 0.42 | $ 0.10 | $ 0.57 | $ 0.15 | ||||||
Diluted earnings per share (in dollars per share) | $ 0.42 | $ 0.10 | $ 0.56 | $ 0.15 |
Dividends and Earnings Per Sh55
Dividends and Earnings Per Share - Dilutive Effect (Details) - Equity Plan - Restricted Stock Units - shares | 6 Months Ended | 38 Months Ended | 50 Months Ended |
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | |
Earnings per share | |||
Units granted | 259,065 | 259,065 | 259,065 |
Accrued Dividend Equivalent Units | 2,378 | 2,378 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 28, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Feb. 29, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 |
Share repurchase plan | |||||||
Aggregate purchase price up to which shares can be acquired under share repurchase program | $ 5 | ||||||
Number of shares purchased and cancelled under the share repurchase program | 216,350 | ||||||
Amount paid for shares purchased and cancelled under share repurchase program | $ 5 | ||||||
Amount paid for shares purchased and cancelled under share repurchase program (per share) | $ 23.10 | ||||||
LTR Plan | |||||||
Common Stock | |||||||
Amount received in exchange for shares of common stock under a long term incentive plan | $ 1.1 | $ 1.4 | |||||
Shares of common stock issued under the long-term incentive plan | 65,429 | 85,907 | |||||
Percentage of average market closing prices used in determining number of common stock that could be purchased by participants | 75.00% | ||||||
Equity Plan | |||||||
Common Stock | |||||||
Shares of common stock issued as a part of quarterly compensation of non-employee members of the Board of Directors | 11,784 | 10,450 | |||||
Equity Plan | Restricted Stock Units | |||||||
Common Stock | |||||||
Units granted | 259,065 | 259,065 | 259,065 | ||||
Accrued dividend equivalent units | 2,378 | 2,378 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Commitments and Contingencies. | ||||
Total lease expense | $ 5.9 | $ 5.5 | $ 12 | $ 10.8 |
Lease payments to related party | $ 0.1 | $ 0.4 | $ 0.5 | $ 0.7 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Feb. 25, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2014 |
Commitments and contingencies | |||||||
Billings in excess of costs and estimated earnings | $ 158,698 | $ 158,698 | $ 112,606 | ||||
Revenue | 631,165 | $ 456,811 | 1,192,667 | $ 887,257 | |||
Gross Profit | 84,483 | $ 43,285 | 139,536 | $ 82,562 | |||
Withdrawal liability recorded | 5,100 | 5,100 | |||||
Construction Project One | |||||||
Commitments and contingencies | |||||||
Receivable recorded relating to the project | $ 32,900 | ||||||
Billings in excess of costs and estimated earnings | 17,800 | 17,800 | |||||
JCG | North Texas Tollway Authority v. James Construction Group, LLC | |||||||
Commitments and contingencies | |||||||
Settlement | $ (9,000) | ||||||
Defendants paid to remove the liability | 8,000 | ||||||
Expected remediation cost | 22,400 | ||||||
Estimated cost of remediating issues for lawsuit | 17,000 | 17,000 | |||||
Remaining accrual balance | $ 14,500 | $ 14,500 | |||||
Percentage of expected costs second defendant would pay | 20.00% | 20.00% | |||||
Percentage of expected costs Company would pay | 80.00% | 80.00% | |||||
JCG | North Texas Tollway Authority v. James Construction Group, LLC | Maximum | |||||||
Commitments and contingencies | |||||||
Agreed payments by second defendant in expected remediation costs toward settlement | $ 5,400 | ||||||
Letters of credit | |||||||
Commitments and contingencies | |||||||
Total commercial letters of credit outstanding | $ 15,700 | $ 15,700 | 16,200 | ||||
Bonding | |||||||
Commitments and contingencies | |||||||
Bid and completion bonds issued and outstanding | $ 1,460,000 | $ 1,460,000 | $ 1,530,000 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)segment | Jun. 30, 2016USD ($) | Dec. 31, 2016segment | |
Segment reporting information | |||||
Number of reportable segments | segment | 4 | 3 | |||
Revenue | $ 631,165 | $ 456,811 | $ 1,192,667 | $ 887,257 | |
% of Total Revenue | 100.00% | 100.00% | 100.00% | 100.00% | |
Gross Profit | $ 84,483 | $ 43,285 | $ 139,536 | $ 82,562 | |
% of Revenue | 13.40% | 9.50% | 11.70% | 9.30% | |
Power | |||||
Segment reporting information | |||||
Revenue | $ 157,773 | $ 126,576 | $ 289,013 | $ 265,214 | |
% of Total Revenue | 25.00% | 27.70% | 24.20% | 29.90% | |
Gross Profit | $ 18,132 | $ 14,092 | $ 33,656 | $ 25,677 | |
% of Revenue | 11.50% | 11.10% | 11.60% | 9.70% | |
Pipeline | |||||
Segment reporting information | |||||
Revenue | $ 134,623 | $ 56,804 | $ 318,068 | $ 111,140 | |
% of Total Revenue | 21.30% | 12.40% | 26.70% | 12.50% | |
Gross Profit | $ 39,366 | $ 6,469 | $ 67,491 | $ 11,468 | |
% of Revenue | 29.20% | 11.40% | 21.20% | 10.30% | |
Utilities | |||||
Segment reporting information | |||||
Revenue | $ 212,942 | $ 157,119 | $ 329,922 | $ 260,873 | |
% of Total Revenue | 33.80% | 34.40% | 27.70% | 29.40% | |
Gross Profit | $ 32,347 | $ 22,841 | $ 40,620 | $ 34,726 | |
% of Revenue | 15.20% | 14.50% | 12.30% | 13.30% | |
Civil | |||||
Segment reporting information | |||||
Revenue | $ 125,827 | $ 116,312 | $ 255,664 | $ 250,030 | |
% of Total Revenue | 19.90% | 25.50% | 21.40% | 28.20% | |
Gross Profit | $ (5,362) | $ (117) | $ (2,231) | $ 10,691 | |
% of Revenue | (4.30%) | (0.10%) | (0.90%) | 4.30% |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Total Assets by Geographic Area (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues and total assets by geographic area | ||||
% of Revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Non-United States | Maximum | ||||
Revenues and total assets by geographic area | ||||
% of Revenue | 1.00% | |||
Canada | ||||
Revenues and total assets by geographic area | ||||
% of total assets | 1.00% |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Aug. 02, 2017 | May 05, 2017 | Mar. 21, 2017 | Nov. 02, 2016 | Aug. 03, 2016 | May 02, 2016 | Feb. 22, 2016 |
Cash Dividend | |||||||
Cash dividend declared (in dollars per share) | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | |
Subsequent Events | |||||||
Cash Dividend | |||||||
Cash dividend declared (in dollars per share) | $ 0.055 |