Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 26, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Primoris Services Corp | ||
Entity Central Index Key | 1,361,538 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,020 | ||
Entity Common Stock, Shares Outstanding | 51,531,339 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents ($60,256 and $7,045 related to VIEs. See Note 12) | $ 170,385 | $ 135,823 |
Customer retention deposits | 1,000 | 481 |
Accounts receivable, net | 358,175 | 388,000 |
Costs and estimated earnings in excess of billings | 160,092 | 138,618 |
Inventory and uninstalled contract materials | 40,922 | 49,201 |
Prepaid expenses and other current assets | 12,640 | 18,985 |
Total current assets | 743,214 | 731,108 |
Property and equipment, net | 311,777 | 277,346 |
Intangible assets, net | 44,800 | 32,841 |
Goodwill | 153,374 | 127,226 |
Other long-term assets | 2,575 | 2,046 |
Total assets | 1,255,740 | 1,170,567 |
Current liabilities: | ||
Accounts payable | 140,943 | 168,110 |
Billings in excess of costs and estimated earnings | 159,034 | 112,606 |
Accrued expenses and other current liabilities | 111,387 | 108,006 |
Dividends payable | 3,087 | 2,839 |
Current portion of capital leases | 132 | 188 |
Current portion of long-term debt | 65,464 | 58,189 |
Current portion of contingent earnout liabilities | 716 | |
Total current liabilities | 480,763 | 449,938 |
Long-term capital leases, net of current portion | 196 | 15 |
Long-term debt, net of current portion | 193,351 | 203,150 |
Deferred tax liabilities | 13,571 | 9,830 |
Other long-term liabilities | 5,676 | 9,064 |
Total liabilities | 693,557 | 671,997 |
Commitments and contingencies (See Note 13) | ||
Stockholders' equity | ||
Common stock—$.0001 par value; 90,000,000 shares authorized; 51,448,753 and 51,576,442 issued and outstanding at December 31, 2017 and December 31, 2016 | 5 | 5 |
Additional paid-in capital | 160,502 | 162,128 |
Retained earnings | 395,961 | 335,218 |
Noncontrolling interest | 5,715 | 1,219 |
Total stockholders' equity | 562,183 | 498,570 |
Total liabilities and stockholders' equity | $ 1,255,740 | $ 1,170,567 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
VIEs | ||||
Cash and cash equivalents | $ 170,385 | $ 135,823 | $ 161,122 | $ 139,465 |
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 | 51,448,753 | 51,576,442 | ||
Common stock, shares outstanding | 51,448,753 | 51,576,442 | ||
VIEs | ||||
VIEs | ||||
Cash and cash equivalents | $ 60,256 | $ 7,045 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
Revenue | $ 2,379,995 | $ 1,996,948 | $ 1,929,415 |
Cost of revenue | 2,101,561 | 1,795,641 | 1,709,542 |
Gross profit | 278,434 | 201,307 | 219,873 |
Selling, general and administrative expenses | 172,146 | 140,842 | 151,703 |
Impairment of goodwill | 0 | 2,716 | 401 |
Operating income | 106,288 | 57,749 | 67,769 |
Other income (expense): | |||
Investment income | 5,817 | ||
Foreign exchange gain (loss) | 253 | 202 | (763) |
Other income (expense), net | 484 | (315) | 1,723 |
Interest income | 587 | 149 | 56 |
Interest expense | (8,146) | (8,914) | (7,688) |
Income before provision for income taxes | 105,283 | 48,871 | 61,097 |
Provision for income taxes | (28,433) | (21,146) | (23,946) |
Net income | 76,850 | 27,725 | 37,151 |
Less net income attributable to noncontrolling interests | (4,496) | (1,002) | (279) |
Net income attributable to Primoris | $ 72,354 | $ 26,723 | $ 36,872 |
Dividends per common share (in dollars per share) | $ 0.225 | $ 0.220 | $ 0.205 |
Earnings per share: | |||
Basic (in dollars per share) | 1.41 | 0.52 | 0.71 |
Diluted (in dollars per share) | $ 1.40 | $ 0.51 | $ 0.71 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 51,481 | 51,762 | 51,647 |
Diluted (in shares) | 51,741 | 51,989 | 51,798 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Non Controlling Interest | Total |
Balance at Dec. 31, 2014 | $ 5 | $ 160,186 | $ 293,628 | $ (33) | $ 453,786 |
Balance (in shares) at Dec. 31, 2014 | 51,561,396 | ||||
Increase (Decrease) in Stockholders' Equity Roll Forward | |||||
Net income | 36,872 | 279 | 37,151 | ||
Issuance of shares to employees and directors | 2,096 | 2,096 | |||
Issuance of shares to employees and directors (in shares) | 114,744 | ||||
Amortization of Restricted Stock Units | 1,050 | 1,050 | |||
Dividend equivalent Units accrued - Restricted Stock Units | 12 | (12) | |||
Distribution of non-controlling entities | (29) | (29) | |||
Dividends declared | (10,589) | (10,589) | |||
Balance at Dec. 31, 2015 | $ 5 | 163,344 | 319,899 | 217 | 483,465 |
Balance (in shares) at Dec. 31, 2015 | 51,676,140 | ||||
Increase (Decrease) in Stockholders' Equity Roll Forward | |||||
Net income | 26,723 | 1,002 | 27,725 | ||
Issuance of shares to employees and directors | 2,133 | 2,133 | |||
Issuance of shares to employees and directors (in shares) | 108,102 | ||||
Amortization of Restricted Stock Units | 1,627 | 1,627 | |||
Dividend equivalent Units accrued - Restricted Stock Units | 23 | (23) | |||
Repurchase of stock | (4,999) | (4,999) | |||
Repurchase of stock (in shares) | (207,800) | ||||
Dividends declared | (11,381) | (11,381) | |||
Balance at Dec. 31, 2016 | $ 5 | 162,128 | 335,218 | 1,219 | 498,570 |
Balance (in shares) at Dec. 31, 2016 | 51,576,442 | ||||
Increase (Decrease) in Stockholders' Equity Roll Forward | |||||
Net income | 72,354 | 4,496 | 76,850 | ||
Issuance of shares to employees and directors | 2,210 | 2,210 | |||
Issuance of shares to employees and directors (in shares) | 88,661 | ||||
Amortization of Restricted Stock Units | 1,126 | 1,126 | |||
Dividend equivalent Units accrued - Restricted Stock Units | 37 | (37) | |||
Repurchase of stock | (4,999) | (4,999) | |||
Repurchase of stock (in shares) | (216,350) | ||||
Dividends declared | (11,574) | (11,574) | |||
Balance at Dec. 31, 2017 | $ 5 | $ 160,502 | $ 395,961 | $ 5,715 | $ 562,183 |
Balance (in shares) at Dec. 31, 2017 | 51,448,753 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Cash flows from operating activities: | |||
Net income | $ 76,850 | $ 27,725 | $ 37,151 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 57,614 | 61,433 | 58,408 |
Amortization of intangible assets | 8,689 | 6,597 | 6,793 |
Goodwill and intangible asset impairment | 477 | 2,716 | 401 |
Stock-based compensation expense | 1,126 | 1,627 | 1,050 |
Gain on short-term investments | (5,817) | ||
Gain on sale of property and equipment | (4,434) | (4,677) | (2,116) |
Net deferred tax liabilities (assets) | 3,741 | 10,905 | (7,004) |
Other non-cash items | 203 | 174 | 165 |
Changes in assets and liabilities: | |||
Customer retention deposits | (519) | 2,117 | (2,117) |
Accounts receivable | 40,546 | (65,806) | 19,528 |
Costs and estimated earnings in excess of billings | (20,894) | (22,163) | (47,499) |
Other current assets | 16,976 | 17,491 | 4,784 |
Other long-term assets | 28 | (1,792) | 189 |
Accounts payable | (30,547) | 42,934 | (5,086) |
Billings in excess of costs and estimated earnings | 45,981 | (27,519) | (19,619) |
Contingent earnout liabilities | (484) | (6,722) | |
Accrued expenses and other current liabilities | (972) | 14,492 | 11,729 |
Other long-term liabilities | 378 | (3,677) | (1,658) |
Net cash provided by operating activities | 188,942 | 62,577 | 48,377 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (79,782) | (58,027) | (67,097) |
Proceeds from sale of property and equipment | 8,736 | 9,603 | 9,889 |
Purchase of short-term investments | (13,588) | ||
Sale of short-term investments | 19,405 | 30,992 | |
Cash paid for acquisitions | (66,205) | (10,997) | (22,302) |
Net cash used in investing activities | (131,434) | (59,421) | (48,518) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 55,000 | 45,000 | 75,278 |
Repayment of capital leases | (322) | (793) | (1,336) |
Repayment of long-term debt | (61,816) | (57,719) | (43,927) |
Payment of debt issuance costs for amended and restated credit agreement | (631) | ||
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,148 | 1,440 | 1,621 |
Cash distribution to non-controlling interest holder | (29) | ||
Repurchase of common stock | (4,999) | (4,999) | |
Dividends paid | (11,326) | (11,384) | (9,809) |
Net cash (used in) provided by financing activities | (22,946) | (28,455) | 21,798 |
Net change in cash and cash equivalents | 34,562 | (25,299) | 21,657 |
Cash and cash equivalents at beginning of the period | 135,823 | 161,122 | 139,465 |
Cash and cash equivalents at end of the period | 170,385 | 135,823 | 161,122 |
Cash paid: | |||
Interest | 7,965 | 8,819 | 7,688 |
Income taxes, net of refunds received | 25,984 | 8,624 | 18,696 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||
Obligations incurred for the acquisition of property | 4,163 | 25 | |
Dividends declared and not yet paid | $ 3,087 | $ 2,839 | $ 2,842 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 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. Our underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. Our 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. We are incorporated in the State of Delaware, and our corporate headquarters are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201. Reportable Segments — Through the end of the year 2016, we segregated our business into three reportable segments: the Energy segment, the East Construction Services segment and the West Construction Services segment. In the first quarter 2017, we changed our reportable segments in connection with a realignment of our internal organization and management structure. The segment changes 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 our operating and financial performance 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 has been restated to conform to the new segment presentation. See Note 14 – “ Reportable Segments ” for a brief description of the reportable segments and their operations. The classification of revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments 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 our primary business units and their reportable segment: Business Unit Reportable Segment Prior Reportable 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 AV) 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 ("PDS"); created 2017 Utilities NA Primoris Heavy Civil (formerly JCG Heavy Civil Division) Civil East Primoris I&M (formerly JCG Infrastructure & Maintenance Division) Civil East Primoris Build Own Operate Civil East We owned 50% of the Blythe Power Constructors joint venture (“Blythe”) created for the installation of a parabolic trough solar field and steam generation system in California, and its operations have been included as part of the Power segment. We determined that in accordance with FASB Topic 810, we were the primary beneficiary of a variable interest entity (“VIE”) and have consolidated the results of Blythe in our financial statements. The project has been completed, the project warranty expired in May 2015, and dissolution of the joint venture was completed in the third quarter of 2015. We own 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 Southern California. The joint venture operations are included as part of the Power segment. As a result of determining that we are the primary beneficiary of the two VIEs, the results of the Carlsbad and Wilmington joint ventures are consolidated in our financial statements. Both projects are expected to be completed in 2018. Financial information for the joint ventures is presented in Note 12— “Noncontrolling Interests” . On February 28, 2015, we acquired the net assets of Aevenia, Inc. for $22.3 million. Aevenia operations are included in the Utilities segment. On January 29, 2016, we acquired the net assets of Mueller Concrete Construction Company (“Mueller”) for $4.1 million and on November 18, 2016, we acquired the net assets of Northern Energy & Power (“Northern”) for $6.9 million. On June 24, 2016, we purchased property, plant and equipment from Pipe Jacking Unlimited, Inc. (“Pipe Jacking”), consisting of specialty directional drilling and tunneling equipment for $13.4 million. We determined this purchase did not meet the definition of a business as defined under ASC 805. Mueller operations are included in the Utilities segment, Northern operations are included in the Power segment, and Pipe Jacking operations are included in the Pipeline segment. On May 26, 2017, we acquired the net assets of Florida Gas Contractors (“FGC”) for $37.7 million; on May 30, 2017, we acquired certain engineering assets for approximately $2.3 million; and on June 16, 2017, we acquired the net assets of Coastal Field Services (“Coastal”) for $27.5 million. FGC operations are included in the Utilities segment, the engineering assets are included in the Power segment, and Coastal operations are included in the Pipeline segment. See Note 4— “ 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. Seasonality — Primoris’ results of operations are subject to quarterly variations. Most of the variation is the result of weather, particularly rain, ice and snow, which can impact our ability to perform construction services. While the majority of our work is in the southern half of the United States, these seasonal impacts affect revenues and profitability since gas and other utilities defer routine replacement and repair during their period of peak demand. Any quarter can be affected either negatively or positively by atypical weather patterns in any part of the country. In addition, demand for new projects tends to be lower during the early part of the year due to clients’ internal budget cycles. As a result, we usually experiences higher revenues and earnings in the third and fourth quarters of the year as compared to the first two quarters, with the fourth quarter revenues and earnings usually less than the third quarter revenues and earnings but higher than the second quarter revenues and earnings. Variability —In addition to seasonality, we are dependent on large construction projects, which tend not to be seasonal, but can fluctuate from year to year based on general economic conditions and client requirements. Our business may be affected by declines or delays in new projects or by client project schedules. Because of the cyclical nature of our business, the financial results for any period may fluctuate from prior periods, and our financial condition and operating results may vary from quarter-to-quarter. Results from one quarter may not be indicative of its financial condition or operating results for any other quarter or for an entire year. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of presentation — The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the financial statement rules and regulations of the Securities and Exchange Commission (“SEC”). References for Financial Accounting Standards Board (“FASB”) standards are made to the FASB Accounting Standards Codification (“ASC”). Principles of consolidation — The accompanying Consolidated Financial Statements include the accounts of Primoris, our wholly-owned subsidiaries and the noncontrolling interests of the Blythe, Carlsbad and Wilmington joint ventures, which are VIEs for which we are the primary beneficiary as determined under the provisions of ASC 810. All intercompany balances and transactions have been eliminated in consolidation. Reclassification — Certain previously reported amounts have been reclassified to conform to the current year presentation. Use of estimates — The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. As a construction contractor, we use estimates for costs to complete construction projects and the contract value of certain construction projects. These estimates have a direct effect on gross profit as reported in these consolidated financial statements. Actual results could materially differ from our estimates. Operating cycle — In the accompanying Consolidated Balance Sheets, assets and liabilities relating to long-term construction contracts (e.g. costs and estimated earnings in excess of billings, billings in excess of costs and estimated earnings) are considered current assets and current liabilities, since they are expected to be realized or liquidated in the normal course of contract completion, although completion may require more than one calendar year. Consequently, we have significant working capital invested in assets that may have a liquidation period extending beyond one year. We have claims receivable and retention due from various customers and others that are currently in dispute, the realization of which is subject to binding arbitration, final negotiation or litigation, all of which may extend beyond one calendar year. Cash and cash equivalents — We consider all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. Short-term investments — We classify as short-term investments all securities or other assets acquired which have ready marketability and can be liquidated, if necessary, within the current operating cycle and which have readily determinable fair values. Short-term investments are classified as trading and are recorded at fair value using the first-in, first-out method. Our short-term investments are generally short-term dollar-denominated bank deposits, U.S. Treasury Bills and marketable equity securities. Customer retention deposits — In some state jurisdictions, customer retention deposits consist of contract retention payments made by customers into bank escrow cash accounts as required. Investments for these amounts are limited to highly graded U.S. and municipal government debt obligations, investment grade commercial paper and CDs, which limits credit risk on these balances. Escrow cash accounts are released to us by customers as projects are completed in accordance with contract terms. 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 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. We are able to invoice a state agency for the materials, but in most cases title does not pass to the state agency until the materials are installed. Business combinations —Business combinations are accounted for using the acquisition method of accounting. We use the fair value of the assets acquired and liabilities assumed to account for the purchase price of businesses. The determination of fair value requires estimates and judgments of future cash flow expectations to assign fair values to the identifiable tangible and intangible assets. GAAP provides a “measurement period” of up to one year in which to finalize all fair value estimates associated with the acquisition of a business. Most estimates are preliminary until the end of the measurement period. During the measurement period, any material, newly discovered information that existed at the acquisition date would be reflected as an adjustment to the initial valuations and estimates. After the measurement date, any adjustments would be recorded as a current period income or expense. Contingent Earnout Liabilities — As part of certain acquisitions, we agreed to pay cash to certain sellers upon meeting specific operating performance targets for specified periods subsequent to the acquisition date. Each quarter, we evaluate the fair value of the estimated contingency and record a non-operating charge for the change in the fair value. Upon meeting the target, we reflect the full liability on the balance sheet and record a charge to “Selling, general and administration expense” for the change in the fair value of the liability from the prior period. See Note 3 — “Fair Value Measurements” for further discussion. Goodwill and other intangible assets — We account for goodwill in accordance with ASC 350 “ Intangibles — Goodwill and Other ”. Under ASC 350, goodwill is subject to an annual impairment test, which we perform as of the first day of the fourth quarter of each year, with more frequent testing if indicators of potential impairment exist. The impairment review is performed at the reporting unit level for those units with recorded goodwill. We can assess qualitative factors to determine if a quantitative impairment test of intangible assets is necessary. Typically, however, we use the two-step impairment test outlined in ASC 350. First, we compare the fair value of a reporting unit with its carrying amount. Fair value for the goodwill impairment test is determined utilizing a discounted cash flow analysis based on our financial plan discounted using our weighted average cost of capital and market indicators of terminal year cash flows. Other valuation methods may be used to corroborate the discounted cash flow method. If the carrying amount of a reporting unit is in excess of its fair value, goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment loss. In the second step of the goodwill impairment test, we compare the implied fair value of reporting unit goodwill with the carrying amount of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the carrying amount of goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner that the amount of goodwill recognized in a business combination was determined. We allocate the fair value of a reporting unit to all of the assets and liabilities of that unit, including intangible assets, as if the reporting unit had been acquired in a business combination. Any excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities represents the implied fair value of goodwill During the third quarter of 2016, we made a decision to divest our Texas heavy civil business unit, a division of Primoris Heavy Civil within the Civil segment. We engaged a financial advisor to assist in the marketing and sale of the business unit, and planned to continue operating the business unit until completion of a sale. In April 2017, the Board of Directors determined that based on the information available, we would attain the best long-term value by withdrawing from the sales process and continuing to operate the business unit. In accordance with ASC 350, the planned divestiture triggered an analysis of the goodwill at Primoris Heavy Civil, resulting in a pretax, non-cash goodwill impairment charge of approximately $2.7 million in the third quarter of 2016. In the fourth quarter of 2015, an impairment expense of $0.4 million was recorded relating to the goodwill attributed to Cardinal Contractors, Inc., which is part of the Power Segment. There was no impairment of goodwill for the year ended December 31, 2017. Income tax — Current income tax expense is the amount of income taxes expected to be paid for the financial results of the current year. A deferred tax liability or asset is established for the expected future tax consequences resulting from the differences in financial reporting and tax bases of assets and liabilities between GAAP and the tax codes. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards as set forth in ASC 740. The difference between a tax position taken or expected to be taken on our income tax returns and the benefit recognized on our financial statements is referred to as an unrecognized tax benefit. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. We recognize accrued interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. Staff Accounting Bulletin (“SAB”) 118 provides guidance on accounting for uncertainties of the effects of the Tax Cuts and Jobs Act (the “Tax Act”). Specifically, SAB 118 allows companies to record provisional estimates of the impact of the Tax Act during a one year “measurement period” similar to that used when accounting for business combinations. As a result of the Tax Act, we remeasured deferred tax assets and liabilities using the newly enacted tax rates and recorded a one-time net tax benefit of $9.4 million in the period ended December 31, 2017. This tax benefit is a provisional estimate that could be revised once we finalize our deductions for tax depreciation and executive compensation accruals. We may also revise our estimate based on any additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies. Comprehensive income — We account for comprehensive income in accordance with ASC 220 “ Comprehensive Income ”, which specifies the computation, presentation and disclosure requirements for comprehensive income (loss). During the reported periods, we had no other comprehensive income. Foreign operations — At December 31, 2017, we had operations in Canada with assets aggregating approximately $12.7 million, compared to $11.8 million at December 31, 2016. The Canadian operations had revenues of $8.3 million and a loss before tax of $0.3 million for the year ended December 31, 2017; revenues of $11.2 million and income before tax of $0.8 million for the year ended December 31, 2016, and revenues of $17.8 million and income before tax of $0.3 million for the year ended December 31, 2015. Functional currencies and foreign currency translation — We use the United States dollar as our functional currency for the Canadian operations of OnQuest Canada, as substantially all monetary transactions are made in U.S. dollars, and other significant economic facts and circumstances currently support that position. Since these factors may change, we periodically assess our position with respect to the functional currency of our foreign subsidiary. Non-monetary balance sheet items and gain, expense and loss accounts are valued using historical rates. All other items are remeasured using the current exchange rate in effect at the balance sheet date. Foreign exchange gains of $0.2 million and $0.2 million in 2017 and 2016, respectively, and losses of $0.8 million in 2015 are included in the “Foreign exchange gain (loss)” line of the Consolidated Statements of Income. Partnerships and joint ventures — As is normal in the construction industry, we are periodically a member of a partnership or a joint venture. These partnerships or joint ventures are used primarily for the execution of single contracts or projects. Our ownership can vary from a small noncontrolling ownership to a significant ownership interest. We evaluate each partnership or joint venture to determine whether the entity is considered a VIE as defined in ASC 810, and if a VIE, whether we are the primary beneficiary of the VIE, which would require us to consolidate the VIE with our financial statements. When consolidation occurs, we account for the interests of the other parties as a noncontrolling interest and discloses the net income attributable to noncontrolling interests. See Note 12 — “Noncontrolling Interests" for further information. Equity method of accounting — We account for our interest in an investment using the equity method of accounting per ASC 323 if we are not the primary beneficiary of a VIE or do not have a controlling interest. The investment is recorded at cost and the carrying amount is adjusted periodically to recognize our proportionate share of income or loss, additional contributions made and dividends and capital distributions received. We record the effect of any impairment or an other than temporary decrease in the value of its investment. In the event a partially owned equity affiliate were to incur a loss and our cumulative proportionate share of the loss exceeded the carrying amount of the equity method investment, application of the equity method would be suspended and our proportionate share of further losses would not be recognized unless we committed to provide further financial support to the affiliate. We would resume application of the equity method once the affiliate became profitable and our proportionate share of the affiliate’s earnings equals our cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended. Cash concentration — We place our cash in short term U.S. Treasury bonds and certificates of deposit (“CDs”). At December 31, 2017 and 2016, we had cash balances of $170.4 million and $135.8 million, respectively. At December 31, 2017, the $170.4 million cash balance consisted of $155.4 million in U.S. Treasury bill funds, backed by the federal government, and the remaining $15.0 million are held in high credit quality financial institutions in order to mitigate the risk of holding funds not backed by the federal government or in excess of federally backed limits. At December 31, 2016, the $135.8 million cash balance consisted of $100.5 million held in U.S. Treasury bill funds and $35.3 million with high credit quality financial institutions. Cash balances associated with VIEs, which totaled $60.3 million and $7.0 million as of December 31, 2017 and December 31, 2016, respectively, are not available for general corporate purposes. Collective bargaining agreements — Approximately 52% of our hourly employees, primarily consisting of field laborers, were covered by collective bargaining agreements in 2017. Upon renegotiation of such agreements, we could be exposed to increases in hourly costs and work stoppages. Of the 97 collective bargaining agreements to which we are a party to, 75 will require renegotiation during 2018. We have not had a significant work stoppage in more than 20 years. Multiemployer plans — Various subsidiaries are signatories to collective bargaining agreements. These agreements require that we participate in and contribute to a number of multiemployer benefit plans for our 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 we were to withdraw from an agreement, we would incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with GAAP, any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. In November 2011, we withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan, as discussed in Note 13 — “Commitments and Contingencies” . We have no plans to withdraw from any other agreements. Worker’s compensation insurance — We self-insure worker’s compensation claims to a certain level. We maintained a self-insurance reserve totaling $18.5 million and $18.8 million at December 31, 2017 and 2016, respectively. The amount is included in “ Accrued expenses and other current liabilities ” on the accompanying Consolidated Balance Sheets. Claims administration expenses are charged to current operations as incurred. Future payments may materially differ from the reserve amounts. Fair value of financial instruments — The consolidated financial statements include financial instruments for which the fair value may differ from amounts reflected on a historical basis. Our financial instruments consist of cash, accounts receivable, short-term investments, accounts payable and certain accrued liabilities. These financial instruments generally approximate fair market value based on their short-term nature. The carrying value of our long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities. The fair value of financial instruments is measured and disclosure is made in accordance with ASC 820, “ Fair Value Measurements and Disclosures ”. Revenue recognition— We generate revenue under a range of contracting options, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts. A substantial portion of our revenue is derived from contracts that are fixed-price or unit-price, using the percentage-of-completion method. For time and material and cost reimbursable plus fee contracts, revenue is recognized primarily based on contractual terms. Generally, time and material and cost reimbursable contract revenues are recognized on an input basis, based on labor hours incurred and on purchases made. 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. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts as changes in accounting estimates in the period in which the revisions are identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full in the period it is identified and recognized as an “accrued loss provision” which is included in the accrued expenses and other current liabilities amount on the balance sheet. For contract revenue recognized under the percentage-of-completion method, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods. The provision for estimated losses on uncompleted contracts was $10.1 million and $12.8 million at December 31, 2017 and 2016, respectively. We consider 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. We will recognize a change in contract value if we believe 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. We consider claims to be amounts we seek, 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 rain or other weather delays. 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 we have a reasonable legal basis, 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 after 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 December 31, 2017, we had unapproved change orders and claims included in the expected contract value that totaled approximately $67.8 million. These claims were in the process of being negotiated in the normal course of business. Approximately $56.7 million of unapproved change orders and claims had been recognized as revenue on a cumulative percentage-of-completion basis through December 31, 2017. In all forms of contracts, we estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as revenues, we 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, we may choose to defer recognition of a portion of the 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 reimbursable type contracts, including amounts arising from routine lags in billing; or (c) the revenue associated with unapproved change orders or claims when realization is probable and amounts can be reliably estimated. 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. Accounts receivable —Accounts receivable and contract receivables are primarily with public and private companies and governmental agencies located in the United States. Credit terms for payment of products and services are extended to customers in the normal course of business and no interest is charged. Contract receivables are generally progress billings on projects, and as a result, are short term in nature. Generally, we require no collateral from our customers, but file statutory liens or stop notices on any construction projects when collection problems are anticipated. While a project is underway, we estimate the collectability of contract amounts at the same time that we estimate project costs. As discussed in the “Revenue recognition” section above, realization of the eventual cash collection may be recognized as adjustments to the contract revenue and profitability, otherwise, we use the allowance method of accounting for losses from uncollectible accounts. Under this method an allowance is provided based upon historical experience and management’s evaluation of outstanding contract receivables at the end of each year. Receivables are written off in the period deemed uncollectible. The allowance for doubtful accounts at December 31, 2017 and 2016 was $0.5 million and $1.0 million, respectively. Significant revision 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, there can be a difference in revenues and profits that would have been recognized in the prior year, had current year estimates of costs to complete been known at the end of the prior year. The following table presents the approximate financial impact of the changes in estimates that would have been reflected in the prior years had the revised estimates been applied to the particular year (in thousands): Net impact of change in estimate for the years ended December 31, 2017 2016 2015 Revised estimates in 2017 that impact 2016 $ 6,435 $ (6,435) $ — Revised estimates in 2016 that impact 2015 — 1,685 (1,685) Revised estimates in 2015 that impact 2014 — — (1,540) Net impact to gross margin $ 6,435 $ (4,750) $ (3,225) EPS impact to year $ 0.09 $ (0.05) $ (0.04) During the third quarter 2016, we settled a dispute with a customer on collection of a receivable of $17.9 million, receiving $38.0 million in cash. Prior to settlement, we recorded revenues with zero margin. We recognized the settlement as a change in accounting estimate which resulted in recognizing revenues of approximately $27.5 million and gross profit of approximately $26.7 million in the third quarter of 2016. In October 2016, we announced that we planned to divest our Texas heavy civil business unit, which operates as a division of Primoris Heavy Civil. We engaged a financial advisor to assist in the marketing and sale of the business unit, and planned to continue operating the business unit until completion of a sale. In April 2017, the Board of Directors determined that based on the information available, we would attain the best long-term value by withdrawing from the sales process and continuing to operate the business unit. As a result of the planned divestiture, we recorded a charge of $37.3 million during the third quarter of 2016. This charge includes a reduction of the expected profitability of certain projects in the Belton, Texas area for the division and a reduction of costs and estimated earnings in excess of billings and an increase to the reserve for anticipated job losses. The settlement of the disputed project and the charge related to the planned divestiture were not included in the table above. Customer concentration — We operate in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets primarily throughout 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 comprise the top ten customers varies from year to year. See Note 15 — “ Customer Concentrations” for further discussion. Property and equipment — Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, usually ranging from three to thirty years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operating income. We assess the recoverability of property and equipment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. We perform an analysis to determine if impairment exists. The amount of property and equipment impairment, if any, is measured based on fair value and is charged to operations in the period in which property and equipment impairment is determined by management. As of December 31, 2017 and 2016, our management has not identified any material impairment of its property and equipment. Taxes collected from customers — Sales and use taxes collected from our customers are recorded on a net basis. Share-based payments and stock-based compensation — In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Detailed discussion of shares issued under the Equity Plan are included in Note 18 — “Deferred Compensation Agreements and Stock-Based Compensation” and in Note 22— “Stockholders’ Equity” . Such share issuances include grants of Restricted Stock Units to executives, issuance of stock to certain senior managers and executives and issuances of stock to non-employee members of the Board of Directors. Recently Issued 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 and 2017. 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. We will adopt this new standard using the modified retrospective method, which requires a cumulative-effect adjustment to retained earnings as of |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3—Fair Value Measurements ASC 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 820 addresses fair value GAAP for financial assets and financial liabilities that are remeasured and reported at fair value at each reporting period and for non-financial assets and liabilities that are remeasured 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 820, our financial assets and certain liabilities that are required to be measured at fair value at December 31, 2017 and 2016 (in thousands): 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 December 31, 2017: Cash and cash equivalents $ 170,385 $ 170,385 $ — $ — Liabilities as of December 31, 2017: Contingent consideration $ 716 $ — $ — $ 716 Assets as of December 31, 2016: Cash and cash equivalents $ 135,823 $ 135,823 $ — $ — Liabilities as of December 31, 2016: None Other financial instruments 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 our 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 our contingent consideration liability Level 3 fair value measurements during the years ended December 31, 2017 and 2016 (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2017 2016 Beginning balance, January 1, $ — $ — Florida Gas Contractors acquisition 1,200 — Change in fair value of contingent consideration liability during year (484) — Ending balance, December 31, $ 716 $ — On a quarterly basis, we assess 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 our Statement of Income. Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management’s estimate of the probability (which has ranged from 33% to 100%) of the acquired company meeting the contractual operating performance target and the estimated discount rate (a rate that approximates our 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. Upon meeting the target, we reflect the full liability on the balance sheet and record a charge to “Selling, general and administration expense” for the change in the fair value of the liability from the prior period. The May 2017 acquisition of Florida Gas Contractors included an earnout of $1.5 million payable in May 2018, contingent upon meeting certain performance targets. The estimated fair value of the contingent consideration on the acquisition date was $1.2 million. Under ASC 805, we are required to estimate the fair value of contingent consideration based on facts and circumstances that existed as of the acquisition date and remeasure to fair value at each reporting date until the contingency is resolved. As a result of that remeasurement, we reduced the fair value of the contingent consideration in the fourth quarter of 2017 related to the FGC performance target contemplated in their purchase agreement, and decreased the liability by $0.5 million with a corresponding increase in non-operating income. We paid $5.0 million to the sellers of Q3C in March 2015 based on achievement of their operating performance targets each year, as outlined in the purchase agreement. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations | |
Business Combinations | Note 4—Business Combinations 2017 Acquisitions On May 26, 2017, we 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 as of 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 our presence in the Florida and Southeast markets. The purchase was accounted for using the acquisition method of accounting. During the fourth quarter of 2017, we finalized the estimate of fair value of the acquired assets of FGC, which included $4.8 million of fixed assets; $3.3 million of working capital; $9.1 million of intangible assets; and $17.0 million of goodwill. In connection with the FGC acquisition, we also paid $3.5 million to acquire certain land and buildings. Intangible assets primarily consist of customer relationships. Goodwill associated with the FGC acquisition principally consists of expected benefits from providing expertise for our construction efforts in the underground utility business as well as the expansion of our geographic presence. Goodwill also includes the value of the assembled workforce that FGC provides to us. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. From the acquisition date through December 31, 2017, FGC contributed revenues of $15.5 million and gross margin of $3.8 million. On May 30, 2017, we acquired certain engineering assets for approximately $2.3 million in cash which further enhances our ability to provide quality service for engineering and design projects. The purchase was accounted for using the acquisition method of accounting. The allocation of the total purchase price consisted of $0.2 million of fixed assets and $2.1 million of intangible assets. Intangible assets primarily consist of customer relationships. The operations of this acquisition were fully integrated into our operations and no separate financial results were maintained. Therefore, it is impracticable for us to report the amounts of revenues and gross profit included in the Consolidated Statements of Income. On June 16, 2017, we 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 our 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; $4.6 million of working capital; $9.9 million of intangible assets; $9.3 million of goodwill; and $0.3 million of long-term capital leases. We continue to assess the final cutoff data and expect to finalize the estimate of fair value of the acquired assets of Coastal during 2018. Intangible assets primarily consist of customer relationships and tradename. Goodwill associated with the Coastal acquisition principally consists of expected benefits from providing expertise for our expansion of services in the pipeline construction and maintenance business. Goodwill also includes the value of the assembled workforce that Coastal provides to us. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period . From the acquisition date through December 31, 2017, Coastal contributed revenues of $17.9 million and gross margin of $3.2 million. 2016 Acquisitions On January 29, 2016, we 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, we finalized the 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 within the Utilities segment. Goodwill largely consists of expected benefits from providing foundation expertise for our construction efforts in underground line work, substations and telecom/fiber. Goodwill also includes the value of the assembled workforce that Mueller provides to our business. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. The operations of Mueller were fully integrated into our operations and no separate financial results were maintained. Therefore, it is impracticable for us to report the amounts of revenues and gross profit included in the Consolidated Statements of Income. On June 24, 2016, we purchased property, plant and equipment from Pipe Jacking Unlimited, Inc., consisting of specialty directional drilling and tunneling equipment for $13.4 million in cash. We 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. We believe the purchase of the equipment will aid in our pipeline construction projects and enhance the work provided to our utility clients. Pipe Jacking operations are included in the Pipeline segment. On November 18, 2016, we acquired certain assets and liabilities of Northern Energy & Power for $6.9 million. Northern 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, we finalized our estimated fair value of the acquired assets of Northern, which resulted in a $0.1 million reduction in goodwill compared to amounts previously recorded. The allocation of the total purchase price included $3.0 million of intangible assets, $3.7 million of goodwill and $0.1 million of fixed assets. Intangible assets consist of customer relationships. Goodwill is derived from the expected benefits of services in the renewable energy sector with a specific focus on Solar Photovoltaic installations in the United States. Goodwill also includes the value of the assembled workforce that Northern provides to our business. Based on the current tax treatment, goodwill will be deductible for income tax purposes over a fifteen-year period. For the year ended December 31, 2017, Northern contributed revenues of $19.1 million and gross profit of $1.1 million. From the acquisition date through December 31, 2016, Northern contributed revenues of $2.0 million and gross margin of $0.6 million. 2015 Acquisitions On February 28, 2015, we acquired the net assets of Aevenia, Inc. (“Aevenia”) for $22.3 million in cash, which operates as part of our Utilities segment. The acquisition provides electrical construction expertise and provides a greater presence and convenient access to the central plains area of the United States. The purchase was accounted for using the acquisition method of accounting. The allocation of the total purchase price consisted of $11.2 million of fixed assets; $2.1 million of working capital; $3.8 million of intangible assets; and $5.2 million of goodwill. Goodwill largely consists of expected benefits from providing electrical construction expertise for us and the greater presence and convenient access to the central plains area of the United States. Goodwill also includes the value of the assembled workforce that Aevenia provides to our business. For the year ended December 31, 2017, Aevenia contributed revenues of $24.5 million and gross profit of $1.4 million. For the year ended December 31, 2016, Aevenia contributed revenues of $26.4 million and gross profit of $1.0 million. From the acquisition date through December 31, 2015, Aevenia contributed revenues of $23.7 million and gross margin of $2.4 million. Summary of Cash Paid for Acquisitions The following table summarizes the cash paid for acquisitions under ASC 805 for the years ended December 31, 2017, 2016, and 2015 (in thousands): Year ended December 31, 2017 2016 2015 Coastal — purchased June 16, 2017 $ 27,519 $ — $ — Engineering — purchased May 30, 2017 2,315 — — Florida Gas — purchased May 26, 2017 36,492 — — Northern — purchased November 18, 2016 (121) * 6,889 — Mueller — purchased January 29, 2016 4,108 — Aevenia — purchased February 28, 2015 — — 22,302 Cash paid $ 66,205 $ 10,997 $ 22,302 * In the second quarter of 2017, we finalized the estimated fair value of the Northern acquisition, which resulted in receipt of $0.1 million in cash and a reduction in goodwill. Schedule of Assets Acquired and Liabilities Assumed The following table summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date (in thousands): Year ended December 31, 2017 2016 2015 Acquisitions Acquisitions Acquisitions Accounts receivable $ 10,721 $ 1,606 $ 2,734 Costs and estimated earnings in excess of billings 580 — — Inventory and other assets 2,352 64 1,476 Property, plant and equipment 12,402 2,133 11,173 Intangible assets 21,125 3,000 3,850 Goodwill 26,269 5,781 5,152 Accounts payable (3,380) (726) (743) Billings in excess of costs and estimated earnings (447) — — Accrued expenses (2,096) (861) (1,340) Total $ 67,526 $ 10,997 $ 22,302 Identifiable Tangible Assets. For each of the acquisitions, significant identifiable tangible assets acquired include accounts receivable, inventory and fixed assets, consisting primarily of construction equipment. We determined that the recorded value of accounts receivable and inventory reflect fair value of those assets. We estimated the fair value of fixed assets on the effective dates of the acquisitions using a market approach, based on comparable market values for similar equipment of similar condition and age. Identifiable Intangible Assets. We generally use the assistance of an independent third party valuation specialist to estimate the fair value of the intangible assets acquired for the acquisitions. Based on our assessment, the acquired intangible asset categories, average amortization periods, generally on a straight-line basis, and fair values are as follows (in thousands): Amortization 2017 2016 2015 Period Fair Value Fair Value Fair Value Tradename 1 to 3 years $ 2,150 $ — $ — Non-compete agreements 2 to 5 years 550 — 1,350 Customer relationships 5 to 10 years 18,150 3,000 2,500 Other 3 years 275 — — Total $ 21,125 $ 3,000 $ 3,850 The fair value of the tradename was determined based on the “relief from royalty” method. A royalty rate was selected based on consideration of several factors, including external research of third party trade name licensing agreements and their royalty rate levels, and management estimates. The fair value for the non-compete agreements was valued based on a discounted “income approach” model, including estimated financial results with and without the non-compete agreements in place. The agreements were analyzed based on the potential impact of competition that certain individuals could have on the financial results, assuming the agreements were not in place. An estimate of the probability of competition was applied and the results were compared to a similar model assuming the agreements were in place. The customer relationships were valued utilizing the “excess earnings method” of the income approach. The estimated discounted cash flows associated with existing customers and projects were based on historical and market participant data. Such discounted cash flows were net of fair market returns on the various tangible and intangible assets that are necessary to realize the potential cash flows. Supplemental Unaudited Pro Forma Information The following pro forma information for the twelve months ended December 31, 2017 and 2016 presents our results of operations as if the 2017 acquisitions of FGC and Coastal and the 2016 acquisitions of Mueller and Northern 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 28.2% and 44.2% for the years ended December 31, 2017 and 2016, respectively. 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 we might have achieved with respect to the acquisitions (in thousands): Year Ended December 31, 2017 2016 (unaudited) (unaudited) Revenues $ 2,406,062 $ 2,092,872 Income before provision for income taxes $ 107,055 $ 57,280 Net income attributable to Primoris $ 73,626 $ 31,415 Weighted average common shares outstanding: Basic 51,481 51,762 Diluted 51,741 51,989 Earnings per share: Basic $ 1.43 $ 0.61 Diluted $ 1.42 $ 0.60 |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable. | |
Accounts Receivable | Note 5—Accounts Receivable The following is a summary of accounts receivable at December 31 (in thousands): 2017 2016 Contracts receivable, net of allowance for doubtful accounts of $480 at December 31, 2017 and $1,030 at December 31, 2016, respectively $ 286,113 $ 340,871 Retention receivable 66,586 46,394 352,699 387,265 Other accounts receivable 5,476 735 $ 358,175 $ 388,000 |
Costs and Estimated Earnings on
Costs and Estimated Earnings on Uncompleted Contracts | 12 Months Ended |
Dec. 31, 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 at December 31 (in thousands): 2017 2016 Costs incurred on uncompleted contracts $ 6,040,678 $ 5,391,124 Gross profit recognized 519,173 456,871 6,559,851 5,847,995 Less: billings to date (6,558,793) (5,821,983) $ 1,058 $ 26,012 This amount is included under the following captions in the accompanying Consolidated Balance Sheets at December 31 (in thousands): 2017 2016 Costs and estimated earnings in excess of billings $ 160,092 $ 138,618 Billings in excess of cost and estimated earnings (159,034) (112,606) $ 1,058 $ 26,012 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Property and Equipment | Note 7—Property and Equipment The following is a summary of property and equipment at December 31 (in thousands): 2017 2016 Useful Life Land and buildings $ 82,755 $ 56,878 Buildings 30 Years Leasehold improvements 12,601 12,147 Lease Life Office equipment 8,888 8,083 3 - 5 Years Construction equipment 392,454 368,241 3 - 7 Years Transportation equipment 101,855 98,113 3 - 18 Years Construction in progress 16,336 2,321 614,889 545,783 Less: accumulated depreciation and amortization (303,112) (268,437) Property and equipment, net $ 311,777 $ 277,346 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 8—Goodwill and Intangible Assets The change in goodwill by segment for 2017 and 2016 was as follows (in thousands): Power Pipeline Utilities Civil Total Balance at January 1, 2016 $ 20,731 $ 42,252 $ 18,312 $ 42,866 $ 124,161 Goodwill acquired during the year 3,781 — 2,000 — 5,781 Goodwill impairment — — — (2,716) (2,716) Balance at December 31, 2016 $ 24,512 $ 42,252 $ 20,312 $ 40,150 $ 127,226 Goodwill acquired during the year — 9,269 17,000 — 26,269 Purchase price allocation adjustments (121) — — — (121) Balance at December 31, 2017 $ 24,391 $ 51,521 $ 37,312 $ 40,150 $ 153,374 During the third quarter of 2016, we made a decision to divest our Texas heavy civil business unit, a division of Primoris Heavy Civil within the Civil segment. We engaged a financial advisor to assist in the marketing and sale of the business unit, and planned to continue operating the business unit until completion of a sale. In April 2017, the Board of Directors determined that based on the information available, we would attain the best long-term value by withdrawing from the sales process and continuing to operate the business unit. We will aggressively pursue claims for five Texas Department of Transportation projects that resulted in significant losses recorded in 2016. However, there can be no assurance as to the final amounts collected. In accordance with ASC 350, the planned divestiture triggered an analysis of the goodwill at Primoris Heavy Civil, resulting in a pretax, non-cash goodwill impairment charge of approximately $2.7 million in the third quarter of 2016. In the fourth quarter of 2015, an impairment expense of $0.4 million was recorded relating to the goodwill attributed to Cardinal Contractors, Inc., which is part of the Power Segment. There was no impairment of goodwill for the year ended December 31, 2017. The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, at December 31 (in thousands): December 31, 2017 December 31, 2016 Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Tradename 9 years $ 32,175 $ (22,238) $ 30,485 $ (18,733) Customer relationships 10 years 49,900 (16,338) 33,579 (13,439) Non-compete agreements 5 years 1,900 (820) 2,250 (1,301) Other 3 years 275 (54) — — $ 84,250 $ (39,450) $ 66,314 $ (33,473) Amortization expense of intangible assets was $8.7 million, $6.6 million and $6.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. In the second quarter of 2017, we recorded a $0.5 million impairment charge related to our tradename intangible assets. Estimated future amortization expense for intangible assets as of December 31, 2017 is as follows (in thousands): Estimated Intangible For the Years Ending Amortization December 31, Expense 2018 $ 9,541 2019 9,193 2020 6,442 2021 5,203 2022 4,048 Thereafter 10,373 $ 44,800 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 9—Accounts Payable and Accrued Liabilities At December 31, 2017 and 2016, accounts payable included retention amounts of approximately $13.5 million and $10.6 million, respectively. These amounts due to subcontractors have been retained pending contract completion and customer acceptance of jobs. The following is a summary of accrued expenses and other current liabilities at December 31 (in thousands): 2017 2016 Payroll and related employee benefits $ 45,708 $ 43,768 Insurance, including self-insurance reserves 47,256 42,546 Reserve for estimated losses on uncompleted contracts 10,067 12,801 Corporate income taxes and other taxes 2,843 3,368 Other 5,513 5,523 $ 111,387 $ 108,006 |
Capital Leases
Capital Leases | 12 Months Ended |
Dec. 31, 2017 | |
Capital Leases | |
Capital Leases | Note 10—Capital Leases We lease vehicles and certain equipment under capital leases. The economic substance of the leases is as a financing transaction for acquisition of the vehicles and equipment, and accordingly, the leases are recorded as assets and liabilities. Included in depreciation expense is depreciation of vehicles and equipment held under capital leases, amortized over their useful lives on a straight-line basis. At December 31, 2017, total assets under capital leases were $3.1 million, accumulated depreciation was $1.9 million, and the net book value was $1.2 million. For 2016, total assets under capital leases were $2.5 million, accumulated depreciation was $2.3 million, and the net book value of assets was $0.2 million. The following is a schedule by year of the future minimum lease payments required under capital leases together with their present value as of December 31 (in thousands): 2018 $ 134 2019 98 2020 90 2021 11 2022 — Total minimum lease payments $ 333 Amounts representing interest (5) Net present value of minimum lease payments 328 Less: current portion of capital lease obligations (132) Long-term capital lease obligations $ 196 |
Credit Arrangements
Credit Arrangements | 12 Months Ended |
Dec. 31, 2017 | |
Credit Arrangements | |
Credit Arrangements | Note 11—Credit Arrangements Long-term debt and credit facilities consist of the following at December 31 (in thousands): Commercial Notes Payable and Mortgage Notes Payable 2017 2016 Commercial equipment notes $ 165,532 $ 161,148 Mortgage notes 11,242 7,564 Revolving credit facility — — Senior secured notes 82,143 92,858 Total debt 258,917 261,570 Unamortized debt issuance costs (102) (231) Total debt, net $ 258,815 $ 261,339 Less: current portion (65,464) (58,189) Long-term debt, net of current portion $ 193,351 $ 203,150 Scheduled maturities of long-term debt are as follows (in thousands): Year Ending December 31, 2018 $ 65,464 2019 62,014 2020 50,755 2021 33,939 2022 24,144 Thereafter 22,601 $ 258,917 Commercial Notes Payable and Mortgage Notes Payable From time to time, we enter into commercial equipment notes payable with various equipment finance companies and banks. At December 31, 2017, interest rates ranged from 1.78% to 3.51% per annum and maturity dates range from June 15, 2018 to December 15, 2022. The notes are secured by certain construction equipment. We also entered into two secured mortgage notes payable to a bank in December 2015 totaling $8.0 million, with interest rates of 4.3% per annum and maturity dates of January 1, 2031. The mortgage notes are secured by two buildings. During 2017, we acquired three properties from a related party and assumed mortgage notes secured by the properties totaling $4.2 million, with interest rates of 5.0% per annum and maturity dates of October 1, 2038. Revolving Credit Facility On September 29, 2017, we entered into an amended and restated credit agreement (the “Credit Agreement”) with CIBC Bank USA, as administrative agent (the “Administrative Agent”) and co-lead arranger, The Bank of the West, as co-lead arranger, and Branch Banking and Trust Company, IBERIABANK, Bank of America, and Simmons Bank (the “Lenders”), which increased our borrowing capacity from $125.0 million to $200.0 million. The Credit Agreement consists of a $200.0 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 $200.0 million committed amount. The termination date of the Credit Agreement is September 29, 2022. We capitalized $0.6 million of debt issuance costs during the third quarter of 2017 that is being amortized as interest expense over the life of the Credit Agreement. 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 our senior debt to EBITDA ratio as defined in the Credit Agreement), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.50% or (b) the prime rate as announced by the Administrative Agent). 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 at any time, with a minimum prepayment of $5.0 million. The Credit Agreement includes customary restrictive covenants for facilities of this type, as discussed below. Commercial letters of credit outstanding were $19.5 million at December 31, 2017. Other than commercial letters of credit, there were no borrowings under the Credit Agreement or the previous credit agreement during the twelve months ended December 31, 2017, and available borrowing capacity at December 31, 2017 was $180.5 million. Senior Secured Notes and Shelf Agreement On December 28, 2012, we entered into a $50.0 million Senior Secured Notes purchase (“Senior Notes”) and a $25.0 million private shelf agreement (the “Notes Agreement”) by and among us, 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 next 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, we 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, we 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, 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, senior debt/EBITDA ratio and debt service coverage requirements. In addition, the agreements include restrictions on investments, change of control provisions and provisions in the event we dispose more than 20% of our total assets. We were in compliance with the covenants for the Credit Agreement and Notes Agreement at December 31, 2017. Canadian Credit Facility We have 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, 2017, letters of credit outstanding totaled $0.5 million in Canadian dollars. At December 31, 2017, the available borrowing capacity was $7.5 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, OnQuest Canada, ULC. At December 31, 2017, OnQuest Canada, ULC was in compliance with the covenant. |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 31, 2017 | |
Noncontrolling Interests | |
Noncontrolling Interests | Note 12 — Noncontrolling Interests We are currently participating in two joint ventures, each of which operates in the Power segment. Both joint ventures have been determined to be a VIE and we were determined to be the primary beneficiary as a result of our 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 our general operations. The Carlsbad joint venture operating activities began in 2015 and are included in our Consolidated Statements of Income as follows for the years ended December 31 (in thousands): 2017 2016 2015 Revenues $ 110,669 $ 7,254 $ 2,887 Net income attributable to noncontrolling interests 1,780 325 172 The Carlsbad joint venture made no distributions to the partners and we made no capital contributions to the Carlsbad joint venture during the years ending December 31, 2017 and 2016. 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 our Consolidated Balance Sheets at December 31 as follows (in thousands): 2017 2016 Cash $ 44,308 $ 4,630 Accounts receivable $ 15,343 $ — Costs and estimated earnings in excess of billings $ — $ 124 Billings in excess of costs and estimated earnings $ 42,743 $ 3,426 Accounts payable $ 12,352 $ 286 Due to Primoris $ — $ 46 The Wilmington joint venture operating activities began in 2015 and are included in our Consolidated Statements of Income as follows for the years ended December 31 (in thousands): 2017 2016 2015 Revenues $ 31,638 $ 19,781 $ 1,364 Net income attributable to noncontrolling interests 2,716 677 48 The Wilmington joint venture made no distributions to the partners and we made no capital contributions to the Wilmington joint venture during the years ending December 31, 2017 and 2016. 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 our Consolidated Balance Sheets at December 31 as follows (in thousands): 2017 2016 Cash $ 15,948 $ 2,415 Accounts receivable $ 598 $ 4,242 Billings in excess of costs and estimated earnings $ 1,480 $ 2,572 Accounts payable $ 759 $ 602 Due to Primoris $ 7,428 $ 2,035 We participated in the Blythe joint venture created for the installation of a parabolic trough solar field and steam generation system in California, which was also determined to be a VIE and we were determined to be the primary beneficiary as a result of our significant influence over the joint venture operations. The Blythe joint venture project was completed; the project warranty expired in May 2015 and dissolution of the joint venture was completed in the third quarter 2015. Revenues and net income attributable to the joint venture were immaterial in 2015. The following table summarizes the total balance sheet amounts for the two joint ventures, which are included in our Consolidated Balance Sheets( in thousands): Joint Venture Consolidated At December 31, 2017 Amounts Amounts Cash $ 60,256 $ 170,385 Accounts receivable $ 15,941 $ 358,175 Accounts payable $ 13,111 $ 140,943 Billings in excess of costs and estimated earnings $ 44,223 $ 159,034 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 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 13—Commitments and Contingencies Leases — We lease certain property and equipment under non-cancelable operating leases, which expire at various dates through 2024. The leases require us to pay all taxes, insurance, maintenance, and utilities and are classified as operating leases in accordance with ASC 840 “Leases”. The future minimum lease payments required under non-cancelable operating leases are as follows (in thousands): For the Years Ending Real Total December 31, Property Equipment Commitments 2018 $ 5,027 $ 13,581 $ 18,608 2019 3,900 9,314 13,214 2020 2,464 5,563 8,027 2021 1,428 2,667 4,095 2022 331 11 342 Thereafter — — — $ 13,150 $ 31,136 $ 44,286 Total lease expense during the years ended December 31, 2017, 2016 and 2015 was $25.5 million, $22.5 and $21.8 million, respectively. Withdrawal liability for multiemployer pension plan — In November 2011, members of the Pipe Line Contractors Association “PLCA” including ARB, Rockford and Q3C (prior to our acquisition in 2012), withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan (“Plan”). These withdrawals were made in order to mitigate additional liability in connection with the significantly underfunded Plan. We recorded a withdrawal liability of $7.5 million, which was increased to $7.6 million after the acquisition of Q3C. During the first quarter of 2016, we received a final payment schedule. As a result of payments made and based on this schedule, the liability recorded at December 31, 2017 and 2016 was $4.7 million and $5.7 million, respectively. We expect to pay the remaining liability balance during 2018, and have no plans to withdraw from any other labor agreements. NTTA settlement — On February 7, 2012, we were 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, and we recorded a liability for $17.0 million. A second defendant agreed to provide up to $5.4 million to pay for the total expected remediation cost of approximately $22.4 million. We will use our settlement obligation to pay for a third-party contractor approved by the NTTA. In the event that the total remediation costs exceed the $22.4 million, the second defendant would pay 20% of the excess amount and we would pay for 80% of the excess amount. During 2017, we increased our liability by $1.9 million. As of December 31, 2017, we have spent $3.7 million for remediation. At December 31, 2017, our remaining accrual balance was $15.2 million. Litigation — We have been engaged in dispute resolution to collect money we believe we are owed for one construction project completed in 2014. Because of uncertainties associated with the project, including uncertainty of the amounts that would be collected, we used a zero profit margin approach to recording revenues during the construction period for the project. For the project, a cost reimbursable contract, we have recorded a receivable of $32.9 million with a reserve of approximately $17.9 million included in “B illings in excess of costs and estimated earnings .” At this time, we cannot predict the amount that we 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. We have initiated litigation against the sureties who have provided lien and stop payment release bonds for the total amount owed. A trial date has been tentatively set for the second quarter of 2018. We had been engaged in dispute resolution to collect money we believed was owed to us for another construction project completed in 2014. During the third quarter 2016, we settled the dispute with an exchange of general releases and receipt of $38.0 million in cash. We changed our zero estimate of profit and accounted for the settlement as a change in accounting estimate which resulted in recognizing revenues of approximately $27.5 million and gross profit of approximately $26.7 million in the third quarter of 2016. We are subject to other claims and legal proceedings arising out of our business. We provide for costs related to contingencies when a loss from such claims is probable and the amount is reasonably estimable. In determining whether it is possible to provide an estimate of loss, or range of possible loss, we review and evaluate our 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 defense 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 our consolidated results of operations, financial condition or cash flow. SEC Inquiry — We have 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. We are continuing to respond to the staff’s inquiries in connection with this matter. At this stage, we are unable to predict when the staff’s inquiry will conclude or the outcome. Bonding — As of December 31, 2017 and 2016, we had bid and completion bonds issued and outstanding totaling approximately $705.7 million and $680.0 million, respectively. |
Reportable Segments
Reportable Segments | 12 Months Ended |
Dec. 31, 2017 | |
Reportable Segments | |
Reportable Segments | Note 14—Reportable Segments Through the end of the year 2016, we segregated our business into three reportable segments: the Energy segment, the East Construction Services segment and the West Construction Services segment. In the first quarter 2017, we changed our reportable segments in connection with a realignment of our internal organization and management structure. The segment changes reflect the focus of our CODM on the range of services we provide to our end user markets. Our CODM regularly reviews our operating and financial performance 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 has been restated to conform to the new segment presentation. Each of our reportable segments is comprised of similar business units that specialize in services unique to the segment. Driving the new end-user focused segments are differences in the economic characteristics of each segment, the nature of the services provided by each segment; the production processes of each segment; the type or class of customer using the segment’s services; the methods used by the segment to provide the services; and the regulatory environment of each segment’s customers. The classification of revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments 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: The Power segment operates throughout the United States and specializes in a range of services that include full EPC project delivery, turnkey construction, retrofits, upgrades, repairs, outages, and maintenance for entities in the petroleum, petrochemical, water, and other industries. The Pipeline segment operates throughout the United States and specializes in a range of services, including pipeline construction, pipeline maintenance, pipeline facility work, compressor stations, pump stations, metering facilities, and other pipeline related services for entities in the petroleum and petrochemical industries. The Utilities segment operates primarily in California, the Midwest, and the Southeast regions of the United States and specializes in a range of services, including utility line installation and maintenance, gas and electric distribution, streetlight construction, substation work, and fiber optic cable installation. The Civil segment operates primarily in the Southeastern and Gulf Coast regions of the United States and specializes in highway and bridge construction, airport runway and taxiway construction, demolition, heavy earthwork, soil stabilization, mass excavation, and drainage projects. All intersegment revenues and gross profit, which were immaterial, have been eliminated in the following tables. Segment Revenues Revenue by segment for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands): 2017 2016 2015 % of % of % of Total Total Total Segment Revenue Revenue Revenue Revenue Revenue Revenue Power $ 606,125 $ 478,653 $ 466,292 Pipeline 465,570 401,931 299,365 Utilities 806,523 637,212 587,047 Civil 501,777 479,152 576,711 Total $ 2,379,995 $ 1,996,948 $ 1,929,415 Segment Gross Profit Gross profit by segment for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands): 2017 2016 2015 % of % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Gross Profit Revenue Power $ 65,675 $ 49,807 $ 53,620 Pipeline 92,087 68,100 24,685 Utilities 113,037 100,071 96,450 Civil 7,635 (16,671) 45,118 Total $ 278,434 $ 201,307 $ 219,873 Geographic Region — Revenues and Total Assets The majority of our revenues are derived from customers in the United States with approximately 1% generated from sources outside of the United States. At December 31, 2017 and 2016, approximately 1% of total assets were located outside of the United States. |
Customer Concentrations
Customer Concentrations | 12 Months Ended |
Dec. 31, 2017 | |
Customer Concentrations | |
Customer Concentrations | Note 15—Customer Concentrations We operate in multiple industry segments encompassing the construction of commercial, industrial, and public works infrastructure assets primarily throughout the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year. During the years ended December 31, 2017, 2016 and 2015, we generated 38.4%, 45.6% and 48.9%, of our revenues, respectively, from the following customers (in thousands): 2017 2016 2015 Description of Customer's Business Segment Amount Percentage Amount Percentage Amount Percentage State DOT Civil $ 222,142 $ 193,049 $ 183,847 Public gas and electric utility Utilities 210,747 184,002 120,507 Private gas and electric utility Utilities 190,659 201,443 173,232 Chemical/Energy producer Power/Civil 160,995 208,458 173,931 Pipeline operator Pipeline 128,182 * * * * Pipeline operator Pipeline * * 123,055 * * Pipeline operator Pipeline * * * * 165,578 Gas utility Utilities * * * * 127,128 $ 912,725 $ 910,007 $ 944,223 (*) Indicates a customer with less than 5% of revenues during such period. For the years ended December 31, 2017, 2016 and 2015, approximately 56.4%, 60.4% and 59.4%, respectively, of total revenues were generated from our top ten customers in that year. In each of the years, a different group of customers comprised the top ten customers by revenue. At December 31, 2017, approximately 4.3% of our accounts receivable were due from one customer, and that customer provided 8.9% of our revenues for the year ended December 31, 2017. At December 31, 2016, approximately 20.8% of our accounts receivable were due from one customer, and that customer provided 6.2% of our revenues for the year ended December 31, 2016. |
Multiemployer Plans
Multiemployer Plans | 12 Months Ended |
Dec. 31, 2017 | |
Multiemployer Plans | |
Multiemployer Plans | Note 16 — Multiemployer Plans Union Plans — Various subsidiaries are signatories to collective bargaining agreements. These agreements require that we participate in and contribute to a number of multiemployer benefit plans for our 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. We contributed $46.9 million, $34.2 million, and $34.3 million, to multiemployer pension plans for the years ended December 31, 2017, 2016 and 2015, respectively. These costs were charged to the related construction contracts in process. Contributions during 2017 increased from the prior years as a result of an increase in the number of man-hours worked by our union labor. The financial risks of participating in multiemployer plans are different from single-employer plans in the following respects: · Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. · If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. · If a participating employer chooses to stop participating in the plan, a withdrawal liability may be created based on the unfunded vested benefits for all employees in the plan. Under U.S. legislation regarding multiemployer pension plans, an employer is required to pay an amount that represents its proportionate share of a plan’s unfunded vested benefits in the event of withdrawal from a plan or upon plan termination. We participate in a number of multiemployer pension plans, and our potential withdrawal obligation may be significant. Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. As discussed in Note 13—“ Commitments and Contingencies ,” in 2011 we withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan. We have no plans to withdraw from any other labor agreements. During the last three years, we made annual contributions to 78 pension plans. None of the pension plans that we contributed to in 2017 and 2016 listed us in the plan’s Form 5500 as providing more than 5% of the plan’s total contributions. Two of the pension plans that we contributed to in 2015 listed us in the plan’s Form 5500 as providing more than 5% of the plan’s total contributions. The contribution to one plan was $2.2 million and $0.5 million for the second plan. Our participation in significant plans for the years ended December 31, 2017, 2016 and 2015 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three digit plan number. The “Zone Status” is based on the latest information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The “Surcharge Imposed” column includes plans in a red zone status that require a payment of a surcharge in excess of regular contributions. The next column lists the expiration date of our collective bargaining agreement related to the plan. The table follows: Collective FIP/RP Bargaining EIN / Pension Protection Act Status Agreement Pension Plan Zone Status Pending / Surcharge Expiration Contributions of the Company Pension Fund Name Number 2017 2016 Implemented Imposed Date 2017 2016 2015 Central Pension Fund of the International Union of Operating Engineers and Participating Employers 36-6052390/001 Green as of February 1, 2016 Green as of February 1, 2015 No No 5/31/2020 $ 7,562 $ 5,373 $ 5,659 Pipeline Industry Benefit Fund 73-6146433/001 Green as of January 1, 2016 Green as of January 1, 2015 No No 5/31/2020 6,050 2,740 3,783 Laborers International Union of North America National (Industrial) Pension Fund 52-6074345/001 Red as of January 1, 2016 Red as of January 1, 2015 No No 5/31/2020 4,658 2,415 3,287 Southern California Pipetrades Trust Funds 51-6108443/001 Green as of January 1, 2016 Green as of January 1, 2015 No No 9/30/2022 3,219 2,614 2,180 Laborers Pension Trust Fund for Northern California 94-6277608/001 Yellow as of June 1, 2016 Yellow as of June 1, 2015 No No 6/30/2019 2,945 3,598 3,150 National Pension Fund 52-6152779 Yellow as of July 1 2017 Yellow as of July 1 2016 No No 9/30/2022 2,548 2,161 2,106 Operating Engineer Trust Funds 95-6032478/001 Yellow as of July 1, 2016 Yellow as of July 1, 2016 No No 6/30/2019 2,448 1,643 1,401 Contributions to significant plans 29,430 20,544 21,566 Contributions to other multiemployer plans 17,505 13,639 12,730 Total contributions made $ 46,935 $ 34,183 $ 34,296 |
Company Retirement Plans
Company Retirement Plans | 12 Months Ended |
Dec. 31, 2017 | |
Company Retirement Plans | |
Company Retirement Plans | Note 17—Company Retirement Plans 401(k) Plan — We provide a 401(k) plan for our employees not covered by collective bargaining agreements. Under the plan, employees are allowed to contribute up to 100% of their compensation, within the Internal Revenue Service (“IRS”) prescribed annual limit. We make employer match contributions of 100% of the first 3% and 50% of the next 2% of employee contributions, which vest immediately. We may, at the discretion of our Board of Directors, make an additional profit share contribution to the 401(k) plan. No such contributions were made during 2015 through 2017. Our contributions to the plan for the years ended December 31, 2017, 2016 and 2015 were $4.1 million, $3.9 million, and $3.7 million, respectively. OnQuest Canada, ULC RRSP-DPSP Plan — We provide a RRSP-DPSP plan (Registered Retirement Saving Plan—Deferred Profit Sharing Plan) for our employees of OnQuest Canada, ULC. There are two components to the plan. The RRSP portion is contributed by the employee, while our portion is paid to the DPSP. Under this plan, we make employer match contributions of 100% of the first 3% and 50% of the next 2% of employee contributions. Employees vest in the DPSP portion after one year of employment. Our contribution to the DPSP during each of the years ended December 31, 2017, 2016 and 2015 was $0.1 million. We have no other post-retirement benefits. |
Deferred Compensation Agreement
Deferred Compensation Agreements and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Compensation Agreements and Stock-Based Compensation | |
Deferred Compensation Agreements and Stock-Based Compensation | Note 18—Deferred Compensation Agreements and Stock-Based Compensation Primoris Long-Term Retention Plan (“LTR Plan”) — We adopted a long-term retention plan for certain senior managers and executives. The voluntary plan provides for the deferral of one half of the participant’s annual earned bonus for one year. Generally, except in the case of death, disability or involuntary separation from service, the deferred compensation is vested to the participant only if actively employed by us on the payment date of bonus amounts the following year. The amount of compensation deferred under this plan is calculated each year. Total deferred compensation liability under this plan as of December 31, 2017 and 2016 was $5.7 million and $4.5 million, respectively. Participants in the long term retention plan may elect to purchase our common stock at a discounted price. For bonuses earned in 2017 and 2016, the participants could use up to one sixth of their bonus amount to purchase shares of stock. The purchase price was calculated as 75% of the average market closing price for the month of December 2017 and January 2017, respectively. The discount is treated as compensation to the participant. Stock-based compensation — In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Our 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. The table below presents the Units activity for 2017: Nonvested RSUs Units Weighted Average Grant Date Fair Value per Unit Balance at December 31, 2016 149,809 $ 24.70 Granted 10,000 22.90 Vested 25.53 Balance at December 31, 2017 23.76 During 2016, 100,553 Units were granted with a weighted-average grant-date fair value per unit of $23.87. There were no Units granted during 2015. The total fair value of Units that vested during 2017, 2016 and 2015 was $1.7 million, $0.6 million and $0.9 million, respectively At December 31, 2017, a total of 173,650 Units were vested. The vesting schedule for the remaining Units follows: Number of Units For the Years Ending December 31, to Vest 2018 28,471 2019 51,552 2020 5,392 85,415 Under guidance of ASC 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. For the twelve months ended December 31, 2017, 2016, and 2015, we recognized $1.1 million, $1.6 million, and $1.1 million respectively, in compensation expense. At December 31, 2017, approximately $1.2 million of unrecognized compensation expense remains for the Units, which will be recognized over a weighted average period of 1.6 years. Vested Units accrue “Dividend Equivalents” (as defined in the Equity Plan) which will be accrued as additional Units. At December 31, 2017, a total of 3,097 Dividend Equivalent Units were accrued. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | Note 19—Related Party Transactions Prior to March 2017, we leased three properties in California from Stockdale Investment Group, Inc. (“SIGI”). Our Chairman of the Board of Directors, who is our largest stockholder, and his family hold a majority interest of SIGI. In March 2017, we exercised a right of first refusal and purchased the SIGI properties. The purchase was approved by our Board of Directors for $12.8 million. We assumed three mortgage notes totaling $4.2 million with the remainder paid in cash. During the years ended December 31, 2017, 2016 and 2015, we paid $0.2 million, $0.8 million, and $0.8 million, respectively, in lease payments to SIGI for the use of these properties. We lease properties from other individuals that are current employees. The amounts leased are not material and each arrangement was approved by the Board of Directors. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | Note 20—Income Taxes The components of the provision for income taxes are as follows (in thousands): 2017 2016 2015 Current provision (benefit) Federal $ 21,509 $ 4,726 $ 26,948 State 3,371 5,423 3,640 Foreign (188) 92 362 24,692 10,241 30,950 Deferred provision (benefit) Federal 1,958 11,560 (7,099) State 1,219 (727) 155 Foreign (36) 72 (60) 3,141 10,905 (7,004) Change in valuation allowance 600 — — Total $ 28,433 $ 21,146 $ 23,946 A reconciliation of the U.S. statutory federal income tax rate related to pretax income to the effective tax rate for the periods indicated is as follows: 2017 2016 2015 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal income tax impact 2.9 % 6.4 % 4.2 % Foreign tax credit 0.0 % (0.4)% (0.5)% Canadian income tax (benefit) provision (0.2)% 0.4 % 0.5 % Domestic production activities deduction (2.3)% (1.1)% (3.9)% Nondeductible meals & entertainment 2.8 % 5.4 % 5.1 % Other items (0.7)% (1.5)% (1.0)% Effective tax rate excluding the impact of the Tax Act and income attributable to noncontrolling interests 37.5 % 44.2 % 39.4 % Deferred tax liability remeasurement benefit from the Tax Act (9.3)% 0.0 % 0.0 % Effective tax rate excluding income attributable to noncontrolling interests 28.2 % 44.2 % 39.4 % Impact of income from noncontrolling interests on effective tax rate (1.2)% (0.9)% (0.2)% Effective tax rate 27.0 % 43.3 % 39.2 % Deferred taxes are recognized for temporary differences between the financial reporting bases and tax bases of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based upon consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income, the length of the tax asset carryforward periods, and tax planning strategies. SAB 118 provides guidance on accounting for uncertainties of the effects of the Tax Act. Specifically, SAB 118 allows companies to record provisional estimates of the impact of the Tax Act during a one year “measurement period” similar to that used when accounting for business combinations. As a result of the Tax Act, we remeasured deferred tax assets and liabilities using the newly enacted tax rates and recorded a one-time net tax benefit of $9.4 million in the period ended December 31, 2017. This tax benefit is a provisional estimate that could be revised once we finalize our deductions for tax depreciation and executive compensation accruals. We may also revise our estimate based on any additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies. The tax effect of temporary differences that give rise to deferred income taxes for the years ended December 31, 2017 and 2016 are as follows (in thousands): 2017 2016 Deferred tax assets: Accrued compensation $ 3,323 $ 5,804 Accrued workers compensation 6,197 9,855 Capital loss carryforward — 1,077 Foreign tax credit 1,456 1,349 Insurance reserves 2,544 3,248 Loss reserves 2,215 4,841 Pension liability — 1,979 State income taxes 2,233 2,011 Other 202 288 Total deferred tax assets 18,170 30,452 Deferred tax liabilities Depreciation and amortization (30,555) (38,327) Prepaid expenses and other (586) (1,955) Total deferred tax liabilities (31,141) (40,282) Valuation allowance (600) — Net deferred tax liabilities $ (13,571) $ (9,830) As of December 31, 2017, the tax effects of state net operating loss carryforwards were $0.8 million, state tax credit carryforwards were $1.1 million, and foreign tax credit carryforwards were $1.5 million. These carryforwards will begin to expire in 2021, 2025, and 2019, respectively. We determined it is more likely than not that a portion of our deferred tax asset related to foreign tax credits will be not be realized; a valuation allowance of $0.6 million was recorded. A reconciliation of the beginning and ending and aggregate changes in the gross balances of unrecognized tax benefits for each period is as follows (in thousands): 2017 2016 2015 Beginning balance $ — $ — $ 456 Increases in balances for tax positions taken during the current year 592 — — Increases in balances for tax positions taken during prior years — — — Settlements and effective settlements with tax authorities — — (456) Lapse of statute of limitations — — — Total $ 592 $ — $ — We recognize accrued interest and penalties related to uncertain tax positions in income tax expense, which were not material for the three years presented. We believe it is reasonably possible that decreases between $0 and $0.1 million of unrecognized tax benefits could occur in the next twelve months due to the expiration of statutes of limitation. Our federal income tax returns are generally no longer subject to examination for tax years before 2014. The statutes of limitation of state and foreign jurisdictions generally vary between 3 to 5 years. Accordingly, the tax years 2012 through 2016 remain open to examination by the other taxing jurisdictions in which we operate. |
Dividends and Earnings Per Shar
Dividends and Earnings Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Dividends and Earnings Per Share | |
Dividends and Earnings Per Share | Note 21—Dividends and Earnings Per Share We have 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 $ February 21, 2017 March 31, 2017 April 15, 2017 $ May 5, 2017 June 30, 2017 July 14, 2017 $ August 2, 2017 September 29, 2017 October 14, 2017 $ November 2, 2017 December 29, 2017 January 15, 2018 $ The payment of future dividends is contingent upon our revenues and earnings, capital requirements and our general financial condition, 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 years ended December 31, 2017, 2016 and 2015 follows (in thousands, except per share amounts): 2017 2016 2015 Numerator: Net income attributable to Primoris $ 72,354 $ 26,723 $ 36,872 Denominator: Weighted average shares for computation of basic earnings per share 51,481 51,762 51,647 Dilutive effect of shares issued to independent directors 3 3 2 Dilutive effect of restricted stock units (1) 257 224 149 Weighted average shares for computation of diluted earnings per share 51,741 51,989 51,798 Earnings per share attributable to Primoris: Basic $ 1.41 $ 0.52 $ 0.71 Diluted $ 1.40 $ 0.51 $ 0.71 (1) Represents the effect of the grant of 259,065 shares of Restricted Stock Units and 3,097 vested Dividend Equivalent Units. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | Note 22—Stockholders’ Equity Common Stock We are authorized to issue 90,000,000 shares of $0.0001 par value common stock, of which 51,448,753 and 51,576,442 shares were issued and outstanding as of December 31, 2017 and 2016, respectively. As of December 31, 2017, there were 365 holders of record of our common stock. We issued 65,429 shares of common stock in 2017, 85,907 shares of common stock in 2016, and 96,828 shares of common stock in 2015 under our LTR Plan. The shares were purchased by the participants in the LTR Plan with payments made to us of $1.1 million in 2017, $1.4 million in 2016, and $1.6 million in 2015. Our LTR Plan for managers and executives allows participants to use a portion of their annual bonus amount to purchase our 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 price of January 2017. The shares purchased in March 2016 were for bonus amounts earned in 2015, and the number of shares was calculated at 75% of the average closing price of December 2015. The shares purchased in March 2015 were for bonus amounts earned in 2014, and the number of shares was calculated at 75% of the average market price of December 2014. The shares purchased have a six month trading restriction. We issued shares of common stock under the Equity Plan to the non-employee members of the Board of Directors as part of our quarterly compensation provided to the Directors. Shares issued were as follows: · 11,448 shares in August 2017, · 11,784 shares in February 2017, · 11,745 shares in August 2016, · 10,450 shares in February 2016, · 9,748 shares in August 2015, and · 8,168 shares in March 2015, The shares were fully vested upon issuance and have a one-year trading restriction. As discussed in Note 18—“ Deferred Compensation Agreements and Stock-Based Compensation ”, the Board of Directors has granted a total of 259,065 shares of Units under the Equity Plan. At December 31, 2017, there were 1,853,494 shares of common stock reserved to provide for the grant and exercise of all future stock option grants, SARS, Units and grants of restricted shares under the Equity Plan. Other than the Units discussed above, there were no stock options, SARS or restricted shares of stock issued or outstanding at December 31, 2017. Share Repurchase Plan In February 2017, our Board of Directors authorized a $5.0 million share repurchase program under which we could, depending on market conditions, share price and other factors, acquire shares of our common stock on the open market or in privately negotiated transactions. During the month of March 2017, we purchased and cancelled 216,350 shares of stock for $5.0 million at an average cost of $23.10 per share. In August 2016, our Board of Directors authorized a share repurchase program under which we, from time to time and depending on market conditions, share price and other factors, could acquire shares of our common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $5.0 million. During the month of December 2016, we purchased and cancelled 207,800 shares of stock for $5.0 million at an average cost of $24.02 per share. There were no share repurchases authorized in 2015. Preferred Stock We are authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. No shares of Preferred Stock were outstanding at December 31, 2017, 2016, and 2015. Warrants At December 31, 2017, 2016, and 2015 there were no warrants outstanding. |
Selected Quarterly Financial In
Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information (Unaudited) | |
Selected Quarterly Financial Information (Unaudited) | Note 23—Selected Quarterly Financial Information (Unaudited) Selected unaudited quarterly consolidated financial information is presented in the following tables (in thousands, except per share amounts): Year Ended December 31, 2017 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Revenues $ 561,502 $ 631,165 $ 608,311 $ 579,017 Gross profit 55,053 84,483 70,421 68,477 Net income 8,512 22,396 22,134 23,808 Net income attributable to Primoris 7,691 21,545 20,597 22,521 Earnings per share: Basic earnings per share $ 0.15 $ 0.42 $ 0.40 $ 0.44 Diluted earnings per share $ 0.15 $ 0.42 $ 0.40 $ 0.44 Weighted average shares outstanding Basic 51,594 51,437 51,441 51,449 Diluted 51,851 51,688 51,707 51,711 Year Ended December 31, 2016 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Revenues $ 430,446 $ 456,811 $ 507,828 $ 601,863 Gross profit 39,277 43,285 50,129 68,616 Impairment of goodwill — — 2,716 — Net income 2,916 5,287 4,756 14,766 Net income attributable to Primoris 2,693 5,056 4,504 14,470 Earnings per share: Basic earnings per share $ 0.05 $ 0.10 $ 0.09 $ 0.28 Diluted earnings per share $ 0.05 $ 0.10 $ 0.09 $ 0.28 Weighted average shares outstanding Basic 51,725 51,772 51,780 51,771 Diluted 51,881 52,022 52,034 52,021 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events. | |
Subsequent Event | Note 24—Subsequent Event On February 21, 2018, the Board of Directors declared a cash dividend of $0.06 per common share for stockholders of record as of March 30, 2018, payable on or about April 13, 2018. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Basis of presentation | Basis of presentation — The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the financial statement rules and regulations of the Securities and Exchange Commission (“SEC”). References for Financial Accounting Standards Board (“FASB”) standards are made to the FASB Accounting Standards Codification (“ASC”). |
Principles of consolidation | Principles of consolidation — The accompanying Consolidated Financial Statements include the accounts of Primoris, our wholly-owned subsidiaries and the noncontrolling interests of the Blythe, Carlsbad and Wilmington joint ventures, which are VIEs for which we are the primary beneficiary as determined under the provisions of ASC 810. All intercompany balances and transactions have been eliminated in consolidation. |
Reclassification | Reclassification — Certain previously reported amounts have been reclassified to conform to the current year presentation. |
Use of estimates | Use of estimates — The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. As a construction contractor, we use estimates for costs to complete construction projects and the contract value of certain construction projects. These estimates have a direct effect on gross profit as reported in these consolidated financial statements. Actual results could materially differ from our estimates. |
Operating cycle | Operating cycle — In the accompanying Consolidated Balance Sheets, assets and liabilities relating to long-term construction contracts (e.g. costs and estimated earnings in excess of billings, billings in excess of costs and estimated earnings) are considered current assets and current liabilities, since they are expected to be realized or liquidated in the normal course of contract completion, although completion may require more than one calendar year. Consequently, we have significant working capital invested in assets that may have a liquidation period extending beyond one year. We have claims receivable and retention due from various customers and others that are currently in dispute, the realization of which is subject to binding arbitration, final negotiation or litigation, all of which may extend beyond one calendar year. |
Cash and cash equivalents | Cash and cash equivalents — We consider all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. |
Short-term investments | Short-term investments — We classify as short-term investments all securities or other assets acquired which have ready marketability and can be liquidated, if necessary, within the current operating cycle and which have readily determinable fair values. Short-term investments are classified as trading and are recorded at fair value using the first-in, first-out method. Our short-term investments are generally short-term dollar-denominated bank deposits, U.S. Treasury Bills and marketable equity securities. |
Customer retention deposits | Customer retention deposits — In some state jurisdictions, customer retention deposits consist of contract retention payments made by customers into bank escrow cash accounts as required. Investments for these amounts are limited to highly graded U.S. and municipal government debt obligations, investment grade commercial paper and CDs, which limits credit risk on these balances. Escrow cash accounts are released to us by customers as projects are completed in accordance with contract terms. |
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 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. We are able to invoice a state agency for the materials, but in most cases title does not pass to the state agency until the materials are installed. |
Business combinations | Business combinations —Business combinations are accounted for using the acquisition method of accounting. We use the fair value of the assets acquired and liabilities assumed to account for the purchase price of businesses. The determination of fair value requires estimates and judgments of future cash flow expectations to assign fair values to the identifiable tangible and intangible assets. GAAP provides a “measurement period” of up to one year in which to finalize all fair value estimates associated with the acquisition of a business. Most estimates are preliminary until the end of the measurement period. During the measurement period, any material, newly discovered information that existed at the acquisition date would be reflected as an adjustment to the initial valuations and estimates. After the measurement date, any adjustments would be recorded as a current period income or expense. |
Contingent Earnout Liabilities | Contingent Earnout Liabilities — As part of certain acquisitions, we agreed to pay cash to certain sellers upon meeting specific operating performance targets for specified periods subsequent to the acquisition date. Each quarter, we evaluate the fair value of the estimated contingency and record a non-operating charge for the change in the fair value. Upon meeting the target, we reflect the full liability on the balance sheet and record a charge to “Selling, general and administration expense” for the change in the fair value of the liability from the prior period. See Note 3 — “Fair Value Measurements” for further discussion. |
Goodwill and other intangible assets | Goodwill and other intangible assets — We account for goodwill in accordance with ASC 350 “ Intangibles — Goodwill and Other ”. Under ASC 350, goodwill is subject to an annual impairment test, which we perform as of the first day of the fourth quarter of each year, with more frequent testing if indicators of potential impairment exist. The impairment review is performed at the reporting unit level for those units with recorded goodwill. We can assess qualitative factors to determine if a quantitative impairment test of intangible assets is necessary. Typically, however, we use the two-step impairment test outlined in ASC 350. First, we compare the fair value of a reporting unit with its carrying amount. Fair value for the goodwill impairment test is determined utilizing a discounted cash flow analysis based on our financial plan discounted using our weighted average cost of capital and market indicators of terminal year cash flows. Other valuation methods may be used to corroborate the discounted cash flow method. If the carrying amount of a reporting unit is in excess of its fair value, goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment loss. In the second step of the goodwill impairment test, we compare the implied fair value of reporting unit goodwill with the carrying amount of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the carrying amount of goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner that the amount of goodwill recognized in a business combination was determined. We allocate the fair value of a reporting unit to all of the assets and liabilities of that unit, including intangible assets, as if the reporting unit had been acquired in a business combination. Any excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities represents the implied fair value of goodwill During the third quarter of 2016, we made a decision to divest our Texas heavy civil business unit, a division of Primoris Heavy Civil within the Civil segment. We engaged a financial advisor to assist in the marketing and sale of the business unit, and planned to continue operating the business unit until completion of a sale. In April 2017, the Board of Directors determined that based on the information available, we would attain the best long-term value by withdrawing from the sales process and continuing to operate the business unit. In accordance with ASC 350, the planned divestiture triggered an analysis of the goodwill at Primoris Heavy Civil, resulting in a pretax, non-cash goodwill impairment charge of approximately $2.7 million in the third quarter of 2016. In the fourth quarter of 2015, an impairment expense of $0.4 million was recorded relating to the goodwill attributed to Cardinal Contractors, Inc., which is part of the Power Segment. There was no impairment of goodwill for the year ended December 31, 2017. |
Income tax | Income tax — Current income tax expense is the amount of income taxes expected to be paid for the financial results of the current year. A deferred tax liability or asset is established for the expected future tax consequences resulting from the differences in financial reporting and tax bases of assets and liabilities between GAAP and the tax codes. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards as set forth in ASC 740. The difference between a tax position taken or expected to be taken on our income tax returns and the benefit recognized on our financial statements is referred to as an unrecognized tax benefit. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. We recognize accrued interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. Staff Accounting Bulletin (“SAB”) 118 provides guidance on accounting for uncertainties of the effects of the Tax Cuts and Jobs Act (the “Tax Act”). Specifically, SAB 118 allows companies to record provisional estimates of the impact of the Tax Act during a one year “measurement period” similar to that used when accounting for business combinations. As a result of the Tax Act, we remeasured deferred tax assets and liabilities using the newly enacted tax rates and recorded a one-time net tax benefit of $9.4 million in the period ended December 31, 2017. This tax benefit is a provisional estimate that could be revised once we finalize our deductions for tax depreciation and executive compensation accruals. We may also revise our estimate based on any additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies. |
Comprehensive income | Comprehensive income — We account for comprehensive income in accordance with ASC 220 “ Comprehensive Income ”, which specifies the computation, presentation and disclosure requirements for comprehensive income (loss). During the reported periods, we had no other comprehensive income. |
Foreign operations | Foreign operations — At December 31, 2017, we had operations in Canada with assets aggregating approximately $12.7 million, compared to $11.8 million at December 31, 2016. The Canadian operations had revenues of $8.3 million and a loss before tax of $0.3 million for the year ended December 31, 2017; revenues of $11.2 million and income before tax of $0.8 million for the year ended December 31, 2016, and revenues of $17.8 million and income before tax of $0.3 million for the year ended December 31, 2015. |
Functional currencies and foreign currency translation | Functional currencies and foreign currency translation — We use the United States dollar as our functional currency for the Canadian operations of OnQuest Canada, as substantially all monetary transactions are made in U.S. dollars, and other significant economic facts and circumstances currently support that position. Since these factors may change, we periodically assess our position with respect to the functional currency of our foreign subsidiary. Non-monetary balance sheet items and gain, expense and loss accounts are valued using historical rates. All other items are remeasured using the current exchange rate in effect at the balance sheet date. Foreign exchange gains of $0.2 million and $0.2 million in 2017 and 2016, respectively, and losses of $0.8 million in 2015 are included in the “Foreign exchange gain (loss)” line of the Consolidated Statements of Income. |
Partnerships and joint ventures | Partnerships and joint ventures — As is normal in the construction industry, we are periodically a member of a partnership or a joint venture. These partnerships or joint ventures are used primarily for the execution of single contracts or projects. Our ownership can vary from a small noncontrolling ownership to a significant ownership interest. We evaluate each partnership or joint venture to determine whether the entity is considered a VIE as defined in ASC 810, and if a VIE, whether we are the primary beneficiary of the VIE, which would require us to consolidate the VIE with our financial statements. When consolidation occurs, we account for the interests of the other parties as a noncontrolling interest and discloses the net income attributable to noncontrolling interests. See Note 12 — “Noncontrolling Interests" for further information. |
Equity method of accounting | Equity method of accounting — We account for our interest in an investment using the equity method of accounting per ASC 323 if we are not the primary beneficiary of a VIE or do not have a controlling interest. The investment is recorded at cost and the carrying amount is adjusted periodically to recognize our proportionate share of income or loss, additional contributions made and dividends and capital distributions received. We record the effect of any impairment or an other than temporary decrease in the value of its investment. In the event a partially owned equity affiliate were to incur a loss and our cumulative proportionate share of the loss exceeded the carrying amount of the equity method investment, application of the equity method would be suspended and our proportionate share of further losses would not be recognized unless we committed to provide further financial support to the affiliate. We would resume application of the equity method once the affiliate became profitable and our proportionate share of the affiliate’s earnings equals our cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended. |
Cash concentration | Cash concentration — We place our cash in short term U.S. Treasury bonds and certificates of deposit (“CDs”). At December 31, 2017 and 2016, we had cash balances of $170.4 million and $135.8 million, respectively. At December 31, 2017, the $170.4 million cash balance consisted of $155.4 million in U.S. Treasury bill funds, backed by the federal government, and the remaining $15.0 million are held in high credit quality financial institutions in order to mitigate the risk of holding funds not backed by the federal government or in excess of federally backed limits. At December 31, 2016, the $135.8 million cash balance consisted of $100.5 million held in U.S. Treasury bill funds and $35.3 million with high credit quality financial institutions. |
Collective bargaining agreements | Collective bargaining agreements — Approximately 52% of our hourly employees, primarily consisting of field laborers, were covered by collective bargaining agreements in 2017. Upon renegotiation of such agreements, we could be exposed to increases in hourly costs and work stoppages. Of the 97 collective bargaining agreements to which we are a party to, 75 will require renegotiation during 2018. We have not had a significant work stoppage in more than 20 years. |
Multiemployer plans | Multiemployer plans — Various subsidiaries are signatories to collective bargaining agreements. These agreements require that we participate in and contribute to a number of multiemployer benefit plans for our 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 we were to withdraw from an agreement, we would incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with GAAP, any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. In November 2011, we withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan, as discussed in Note 13 — “Commitments and Contingencies” . We have no plans to withdraw from any other agreements. |
Worker's compensation insurance | Worker’s compensation insurance — We self-insure worker’s compensation claims to a certain level. We maintained a self-insurance reserve totaling $18.5 million and $18.8 million at December 31, 2017 and 2016, respectively. The amount is included in “ Accrued expenses and other current liabilities ” on the accompanying Consolidated Balance Sheets. Claims administration expenses are charged to current operations as incurred. Future payments may materially differ from the reserve amounts. |
Fair value of financial instruments | Fair value of financial instruments — The consolidated financial statements include financial instruments for which the fair value may differ from amounts reflected on a historical basis. Our financial instruments consist of cash, accounts receivable, short-term investments, accounts payable and certain accrued liabilities. These financial instruments generally approximate fair market value based on their short-term nature. The carrying value of our long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities. The fair value of financial instruments is measured and disclosure is made in accordance with ASC 820, “ Fair Value Measurements and Disclosures ”. |
Revenue recognition | Revenue recognition— We generate revenue under a range of contracting options, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts. A substantial portion of our revenue is derived from contracts that are fixed-price or unit-price, using the percentage-of-completion method. For time and material and cost reimbursable plus fee contracts, revenue is recognized primarily based on contractual terms. Generally, time and material and cost reimbursable contract revenues are recognized on an input basis, based on labor hours incurred and on purchases made. 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. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts as changes in accounting estimates in the period in which the revisions are identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full in the period it is identified and recognized as an “accrued loss provision” which is included in the accrued expenses and other current liabilities amount on the balance sheet. For contract revenue recognized under the percentage-of-completion method, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods. The provision for estimated losses on uncompleted contracts was $10.1 million and $12.8 million at December 31, 2017 and 2016, respectively. We consider 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. We will recognize a change in contract value if we believe 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. We consider claims to be amounts we seek, 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 rain or other weather delays. 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 we have a reasonable legal basis, 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 after 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 December 31, 2017, we had unapproved change orders and claims included in the expected contract value that totaled approximately $67.8 million. These claims were in the process of being negotiated in the normal course of business. Approximately $56.7 million of unapproved change orders and claims had been recognized as revenue on a cumulative percentage-of-completion basis through December 31, 2017. In all forms of contracts, we estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as revenues, we 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, we may choose to defer recognition of a portion of the 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 reimbursable type contracts, including amounts arising from routine lags in billing; or (c) the revenue associated with unapproved change orders or claims when realization is probable and amounts can be reliably estimated. 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. |
Accounts receivable | Accounts receivable —Accounts receivable and contract receivables are primarily with public and private companies and governmental agencies located in the United States. Credit terms for payment of products and services are extended to customers in the normal course of business and no interest is charged. Contract receivables are generally progress billings on projects, and as a result, are short term in nature. Generally, we require no collateral from our customers, but file statutory liens or stop notices on any construction projects when collection problems are anticipated. While a project is underway, we estimate the collectability of contract amounts at the same time that we estimate project costs. As discussed in the “Revenue recognition” section above, realization of the eventual cash collection may be recognized as adjustments to the contract revenue and profitability, otherwise, we use the allowance method of accounting for losses from uncollectible accounts. Under this method an allowance is provided based upon historical experience and management’s evaluation of outstanding contract receivables at the end of each year. Receivables are written off in the period deemed uncollectible. The allowance for doubtful accounts at December 31, 2017 and 2016 was $0.5 million and $1.0 million, respectively. |
Significant revision in contract estimates | Significant revision 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, there can be a difference in revenues and profits that would have been recognized in the prior year, had current year estimates of costs to complete been known at the end of the prior year. The following table presents the approximate financial impact of the changes in estimates that would have been reflected in the prior years had the revised estimates been applied to the particular year (in thousands): Net impact of change in estimate for the years ended December 31, 2017 2016 2015 Revised estimates in 2017 that impact 2016 $ 6,435 $ (6,435) $ — Revised estimates in 2016 that impact 2015 — 1,685 (1,685) Revised estimates in 2015 that impact 2014 — — (1,540) Net impact to gross margin $ 6,435 $ (4,750) $ (3,225) EPS impact to year $ 0.09 $ (0.05) $ (0.04) During the third quarter 2016, we settled a dispute with a customer on collection of a receivable of $17.9 million, receiving $38.0 million in cash. Prior to settlement, we recorded revenues with zero margin. We recognized the settlement as a change in accounting estimate which resulted in recognizing revenues of approximately $27.5 million and gross profit of approximately $26.7 million in the third quarter of 2016. In October 2016, we announced that we planned to divest our Texas heavy civil business unit, which operates as a division of Primoris Heavy Civil. We engaged a financial advisor to assist in the marketing and sale of the business unit, and planned to continue operating the business unit until completion of a sale. In April 2017, the Board of Directors determined that based on the information available, we would attain the best long-term value by withdrawing from the sales process and continuing to operate the business unit. As a result of the planned divestiture, we recorded a charge of $37.3 million during the third quarter of 2016. This charge includes a reduction of the expected profitability of certain projects in the Belton, Texas area for the division and a reduction of costs and estimated earnings in excess of billings and an increase to the reserve for anticipated job losses. The settlement of the disputed project and the charge related to the planned divestiture were not included in the table above. |
Customer concentration | Customer concentration — We operate in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets primarily throughout 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 comprise the top ten customers varies from year to year. See Note 15 — “ Customer Concentrations” for further discussion. |
Property and equipment | Property and equipment — Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, usually ranging from three to thirty years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operating income. We assess the recoverability of property and equipment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. We perform an analysis to determine if impairment exists. The amount of property and equipment impairment, if any, is measured based on fair value and is charged to operations in the period in which property and equipment impairment is determined by management. As of December 31, 2017 and 2016, our management has not identified any material impairment of its property and equipment. |
Taxes collected from customers | Taxes collected from customers — Sales and use taxes collected from our customers are recorded on a net basis. |
Share-based payments and stock-based compensation | Share-based payments and stock-based compensation — In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Detailed discussion of shares issued under the Equity Plan are included in Note 18 — “Deferred Compensation Agreements and Stock-Based Compensation” and in Note 22— “Stockholders’ Equity” . Such share issuances include grants of Restricted Stock Units to executives, issuance of stock to certain senior managers and executives and issuances of stock to non-employee members of the Board of Directors. |
Recently Issued Accounting Pronouncements | Recently Issued 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 and 2017. 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. We will adopt this new standard using the modified retrospective method, which requires a cumulative-effect adjustment to retained earnings as of the date of adoption, if material. The adoption will only apply to customer contracts that are not substantially complete as of January 1, 2018. We have substantially completed our evaluation of the impact of adopting the standard on our financial position, results of operations, cash flows and related disclosures. Based on our evaluation, the cumulative impact of adopting Topic 606 is expected to be immaterial and will not require an adjustment to retained earnings. The impact to our results is not 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. We do not expect the new standard to materially affect the timing and amount of 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 required 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. In connection with our evaluation, we discovered limited cases of multiple performance obligations which had minimal impact on revenue recognized to date. · Variable consideration – In accordance with Topic 606, revenue recognition must account for variable consideration, including potential liquidated damages and customer discounts. We generally 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. 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 standard is effective for fiscal years beginning after December 15, 2018. We have already revised our credit agreements to address the impact of ASU 2016-02 and are currently evaluating other impacts of adopting the standard on our financial position, results of operations, cash flows, and related disclosures. See Note 13 — “ Commitments and Contingencies” for more information about the timing and amount of future operating lease payments, which we believe is indicative of the materiality of adoption of the ASU to our financial statements. 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. We adopted the ASU as of January 1, 2017, and it did not have a material impact on our 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. We do not expect the adoption of ASU 2017-01 to have any impact on our financial position, results of operations or cash flows. In January 2017, the Financial Accounting Standards Board ("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. We do not expect the adoption of ASU 2017-04 to have an impact on our 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 that 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. We do not expect the adoption of ASU 2017-09 to have an impact on our financial position, results of operations or cash flows Other new pronouncements issued but not effective until after December 31, 2017 are not expected to have a material impact on our consolidated results of operations, financial position or cash flows. |
Nature of Business (Tables)
Nature of Business (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Nature of Business | |
Schedule of list of primary operating subsidiaries and their reportable segment | Business Unit Reportable Segment Prior Reportable 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 AV) 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 ("PDS"); created 2017 Utilities NA Primoris Heavy Civil (formerly JCG Heavy Civil Division) Civil East Primoris I&M (formerly JCG Infrastructure & Maintenance Division) Civil East Primoris Build Own Operate Civil East |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Schedule of the financial impact of the changes in estimates that would have been reflected in the prior years had the revised estimates been applied to the particular year | The following table presents the approximate financial impact of the changes in estimates that would have been reflected in the prior years had the revised estimates been applied to the particular year (in thousands): Net impact of change in estimate for the years ended December 31, 2017 2016 2015 Revised estimates in 2017 that impact 2016 $ 6,435 $ (6,435) $ — Revised estimates in 2016 that impact 2015 — 1,685 (1,685) Revised estimates in 2015 that impact 2014 — — (1,540) Net impact to gross margin $ 6,435 $ (4,750) $ (3,225) EPS impact to year $ 0.09 $ (0.05) $ (0.04) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities which are required to be measured at fair value | The following table presents, for each of the fair value hierarchy levels identified under ASC 820, our financial assets and certain liabilities that are required to be measured at fair value at December 31, 2017 and 2016 (in thousands): 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 December 31, 2017: Cash and cash equivalents $ 170,385 $ 170,385 $ — $ — Liabilities as of December 31, 2017: Contingent consideration $ 716 $ — $ — $ 716 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 | The following table provides changes to our contingent consideration liability Level 3 fair value measurements during the years ended December 31, 2017 and 2016 (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2017 2016 Beginning balance, January 1, $ — $ — Florida Gas Contractors acquisition 1,200 — Change in fair value of contingent consideration liability during year (484) — Ending balance, December 31, $ 716 $ — |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations | |
Summary of the cash paid for acquisitions | The following table summarizes the cash paid for acquisitions under ASC 805 for the years ended December 31, 2017, 2016, and 2015 (in thousands): Year ended December 31, 2017 2016 2015 Coastal — purchased June 16, 2017 $ 27,519 $ — $ — Engineering — purchased May 30, 2017 2,315 — — Florida Gas — purchased May 26, 2017 36,492 — — Northern — purchased November 18, 2016 (121) * 6,889 — Mueller — purchased January 29, 2016 4,108 — Aevenia — purchased February 28, 2015 — — 22,302 Cash paid $ 66,205 $ 10,997 $ 22,302 |
Summary of the fair value of assets acquired and the liabilities assumed | The following table summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date (in thousands): Year ended December 31, 2017 2016 2015 Acquisitions Acquisitions Acquisitions Accounts receivable $ 10,721 $ 1,606 $ 2,734 Costs and estimated earnings in excess of billings 580 — — Inventory and other assets 2,352 64 1,476 Property, plant and equipment 12,402 2,133 11,173 Intangible assets 21,125 3,000 3,850 Goodwill 26,269 5,781 5,152 Accounts payable (3,380) (726) (743) Billings in excess of costs and estimated earnings (447) — — Accrued expenses (2,096) (861) (1,340) Total $ 67,526 $ 10,997 $ 22,302 |
Schedule of the acquired intangible assets categories, fair value and average amortization periods | Based on our assessment, the acquired intangible asset categories, average amortization periods, generally on a straight-line basis, and fair values are as follows (in thousands): Amortization 2017 2016 2015 Period Fair Value Fair Value Fair Value Tradename 1 to 3 years $ 2,150 $ — $ — Non-compete agreements 2 to 5 years 550 — 1,350 Customer relationships 5 to 10 years 18,150 3,000 2,500 Other 3 years 275 — — Total $ 21,125 $ 3,000 $ 3,850 |
Schedule of pro forma results | For example, the pro forma results do not reflect any operating efficiencies and associated cost savings that we might have achieved with respect to the acquisitions (in thousands): Year Ended December 31, 2017 2016 (unaudited) (unaudited) Revenues $ 2,406,062 $ 2,092,872 Income before provision for income taxes $ 107,055 $ 57,280 Net income attributable to Primoris $ 73,626 $ 31,415 Weighted average common shares outstanding: Basic 51,481 51,762 Diluted 51,741 51,989 Earnings per share: Basic $ 1.43 $ 0.61 Diluted $ 1.42 $ 0.60 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable. | |
Summary of accounts receivable | The following is a summary of accounts receivable at December 31 (in thousands): 2017 2016 Contracts receivable, net of allowance for doubtful accounts of $480 at December 31, 2017 and $1,030 at December 31, 2016, respectively $ 286,113 $ 340,871 Retention receivable 66,586 46,394 352,699 387,265 Other accounts receivable 5,476 735 $ 358,175 $ 388,000 |
Costs and Estimated Earnings 37
Costs and Estimated Earnings on Uncompleted Contracts (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Costs and Estimated Earnings on Uncompleted Contracts | |
Schedule of costs and estimated earnings on uncompleted contracts | Costs and estimated earnings on uncompleted contracts consist of the following at December 31 (in thousands): 2017 2016 Costs incurred on uncompleted contracts $ 6,040,678 $ 5,391,124 Gross profit recognized 519,173 456,871 6,559,851 5,847,995 Less: billings to date (6,558,793) (5,821,983) $ 1,058 $ 26,012 |
Schedule of costs and estimated earnings on uncompleted contracts included in consolidated balance sheet | This amount is included under the following captions in the accompanying Consolidated Balance Sheets at December 31 (in thousands): 2017 2016 Costs and estimated earnings in excess of billings $ 160,092 $ 138,618 Billings in excess of cost and estimated earnings (159,034) (112,606) $ 1,058 $ 26,012 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Summary of property and equipment | The following is a summary of property and equipment at December 31 (in thousands): 2017 2016 Useful Life Land and buildings $ 82,755 $ 56,878 Buildings 30 Years Leasehold improvements 12,601 12,147 Lease Life Office equipment 8,888 8,083 3 - 5 Years Construction equipment 392,454 368,241 3 - 7 Years Transportation equipment 101,855 98,113 3 - 18 Years Construction in progress 16,336 2,321 614,889 545,783 Less: accumulated depreciation and amortization (303,112) (268,437) Property and equipment, net $ 311,777 $ 277,346 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by reporting unit | The change in goodwill by segment for 2017 and 2016 was as follows (in thousands): Power Pipeline Utilities Civil Total Balance at January 1, 2016 $ 20,731 $ 42,252 $ 18,312 $ 42,866 $ 124,161 Goodwill acquired during the year 3,781 — 2,000 — 5,781 Goodwill impairment — — — (2,716) (2,716) Balance at December 31, 2016 $ 24,512 $ 42,252 $ 20,312 $ 40,150 $ 127,226 Goodwill acquired during the year — 9,269 17,000 — 26,269 Purchase price allocation adjustments (121) — — — (121) Balance at December 31, 2017 $ 24,391 $ 51,521 $ 37,312 $ 40,150 $ 153,374 |
Summary of intangible asset categories, amounts and the average amortization periods | The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, at December 31 (in thousands): December 31, 2017 December 31, 2016 Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Tradename 9 years $ 32,175 $ (22,238) $ 30,485 $ (18,733) Customer relationships 10 years 49,900 (16,338) 33,579 (13,439) Non-compete agreements 5 years 1,900 (820) 2,250 (1,301) Other 3 years 275 (54) — — $ 84,250 $ (39,450) $ 66,314 $ (33,473) |
Schedule of estimated future amortization expense for intangible assets | In the second quarter of 2017, we recorded a $0.5 million impairment charge related to our tradename intangible assets. Estimated future amortization expense for intangible assets as of December 31, 2017 is as follows (in thousands): Estimated Intangible For the Years Ending Amortization December 31, Expense 2018 $ 9,541 2019 9,193 2020 6,442 2021 5,203 2022 4,048 Thereafter 10,373 $ 44,800 |
Accounts Payable and Accrued 40
Accounts Payable and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Liabilities | |
Summary of accrued expenses and other current liabilities | The following is a summary of accrued expenses and other current liabilities at December 31 (in thousands): 2017 2016 Payroll and related employee benefits $ 45,708 $ 43,768 Insurance, including self-insurance reserves 47,256 42,546 Reserve for estimated losses on uncompleted contracts 10,067 12,801 Corporate income taxes and other taxes 2,843 3,368 Other 5,513 5,523 $ 111,387 $ 108,006 |
Capital Leases (Tables)
Capital Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Capital Leases | |
Schedule of future minimum lease payments required under capital leases together with their present value | The following is a schedule by year of the future minimum lease payments required under capital leases together with their present value as of December 31 (in thousands): 2018 $ 134 2019 98 2020 90 2021 11 2022 — Total minimum lease payments $ 333 Amounts representing interest (5) Net present value of minimum lease payments 328 Less: current portion of capital lease obligations (132) Long-term capital lease obligations $ 196 |
Credit Arrangements (Tables)
Credit Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Credit Arrangements | |
Schedule of long-term debt and credit facilities | Long-term debt and credit facilities consist of the following at December 31 (in thousands): Commercial Notes Payable and Mortgage Notes Payable |
Schedule of maturities of long-term debt | 2017 2016 Commercial equipment notes $ 165,532 $ 161,148 Mortgage notes 11,242 7,564 Revolving credit facility — — Senior secured notes 82,143 92,858 Total debt 258,917 261,570 Unamortized debt issuance costs (102) (231) Total debt, net $ 258,815 $ 261,339 Less: current portion (65,464) (58,189) Long-term debt, net of current portion $ 193,351 $ 203,150 Scheduled maturities of long-term debt are as follows (in thousands): Year Ending December 31, 2018 $ 65,464 2019 62,014 2020 50,755 2021 33,939 2022 24,144 Thereafter 22,601 $ 258,917 |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance sheet amounts for the two joint ventures | The following table summarizes the total balance sheet amounts for the two joint ventures, which are included in our Consolidated Balance Sheets( in thousands): Joint Venture Consolidated At December 31, 2017 Amounts Amounts Cash $ 60,256 $ 170,385 Accounts receivable $ 15,941 $ 358,175 Accounts payable $ 13,111 $ 140,943 Billings in excess of costs and estimated earnings $ 44,223 $ 159,034 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 |
Carlsbad | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | The Carlsbad joint venture operating activities began in 2015 and are included in our Consolidated Statements of Income as follows for the years ended December 31 (in thousands): 2017 2016 2015 Revenues $ 110,669 $ 7,254 $ 2,887 Net income attributable to noncontrolling interests 1,780 325 172 |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | The carrying value of the assets and liabilities associated with the operations of the Carlsbad joint venture are included in our Consolidated Balance Sheets at December 31 as follows (in thousands): 2017 2016 Cash $ 44,308 $ 4,630 Accounts receivable $ 15,343 $ — Costs and estimated earnings in excess of billings $ — $ 124 Billings in excess of costs and estimated earnings $ 42,743 $ 3,426 Accounts payable $ 12,352 $ 286 Due to Primoris $ — $ 46 |
Wilmington | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | The Wilmington joint venture operating activities began in 2015 and are included in our Consolidated Statements of Income as follows for the years ended December 31 (in thousands): 2017 2016 2015 Revenues $ 31,638 $ 19,781 $ 1,364 Net income attributable to noncontrolling interests 2,716 677 48 |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | The carrying value of the assets and liabilities associated with the operations of the Wilmington joint venture are included in our Consolidated Balance Sheets at December 31 as follows (in thousands): 2017 2016 Cash $ 15,948 $ 2,415 Accounts receivable $ 598 $ 4,242 Billings in excess of costs and estimated earnings $ 1,480 $ 2,572 Accounts payable $ 759 $ 602 Due to Primoris $ 7,428 $ 2,035 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies. | |
Schedule of future minimum lease payments required under non-cancelable operating leases | The future minimum lease payments required under non-cancelable operating leases are as follows (in thousands): For the Years Ending Real Total December 31, Property Equipment Commitments 2018 $ 5,027 $ 13,581 $ 18,608 2019 3,900 9,314 13,214 2020 2,464 5,563 8,027 2021 1,428 2,667 4,095 2022 331 11 342 Thereafter — — — $ 13,150 $ 31,136 $ 44,286 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reportable Segments | |
Schedule of revenue by segment | Revenue by segment for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands): 2017 2016 2015 % of % of % of Total Total Total Segment Revenue Revenue Revenue Revenue Revenue Revenue Power $ 606,125 $ 478,653 $ 466,292 Pipeline 465,570 401,931 299,365 Utilities 806,523 637,212 587,047 Civil 501,777 479,152 576,711 Total $ 2,379,995 $ 1,996,948 $ 1,929,415 |
Schedule of gross profit by segment | Gross profit by segment for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands): 2017 2016 2015 % of % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Gross Profit Revenue Power $ 65,675 $ 49,807 $ 53,620 Pipeline 92,087 68,100 24,685 Utilities 113,037 100,071 96,450 Civil 7,635 (16,671) 45,118 Total $ 278,434 $ 201,307 $ 219,873 |
Customer Concentrations (Tables
Customer Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Customer Concentrations | |
Schedule of revenue from customers | During the years ended December 31, 2017, 2016 and 2015, we generated 38.4%, 45.6% and 48.9%, of our revenues, respectively, from the following customers (in thousands): 2017 2016 2015 Description of Customer's Business Segment Amount Percentage Amount Percentage Amount Percentage State DOT Civil $ 222,142 $ 193,049 $ 183,847 Public gas and electric utility Utilities 210,747 184,002 120,507 Private gas and electric utility Utilities 190,659 201,443 173,232 Chemical/Energy producer Power/Civil 160,995 208,458 173,931 Pipeline operator Pipeline 128,182 * * * * Pipeline operator Pipeline * * 123,055 * * Pipeline operator Pipeline * * * * 165,578 Gas utility Utilities * * * * 127,128 $ 912,725 $ 910,007 $ 944,223 (*) Indicates a customer with less than 5% of revenues during such period. |
Multiemployer Plans (Tables)
Multiemployer Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Multiemployer Plans | |
Schedule of the entity's contributions to different pension funds | Collective FIP/RP Bargaining EIN / Pension Protection Act Status Agreement Pension Plan Zone Status Pending / Surcharge Expiration Contributions of the Company Pension Fund Name Number 2017 2016 Implemented Imposed Date 2017 2016 2015 Central Pension Fund of the International Union of Operating Engineers and Participating Employers 36-6052390/001 Green as of February 1, 2016 Green as of February 1, 2015 No No 5/31/2020 $ 7,562 $ 5,373 $ 5,659 Pipeline Industry Benefit Fund 73-6146433/001 Green as of January 1, 2016 Green as of January 1, 2015 No No 5/31/2020 6,050 2,740 3,783 Laborers International Union of North America National (Industrial) Pension Fund 52-6074345/001 Red as of January 1, 2016 Red as of January 1, 2015 No No 5/31/2020 4,658 2,415 3,287 Southern California Pipetrades Trust Funds 51-6108443/001 Green as of January 1, 2016 Green as of January 1, 2015 No No 9/30/2022 3,219 2,614 2,180 Laborers Pension Trust Fund for Northern California 94-6277608/001 Yellow as of June 1, 2016 Yellow as of June 1, 2015 No No 6/30/2019 2,945 3,598 3,150 National Pension Fund 52-6152779 Yellow as of July 1 2017 Yellow as of July 1 2016 No No 9/30/2022 2,548 2,161 2,106 Operating Engineer Trust Funds 95-6032478/001 Yellow as of July 1, 2016 Yellow as of July 1, 2016 No No 6/30/2019 2,448 1,643 1,401 Contributions to significant plans 29,430 20,544 21,566 Contributions to other multiemployer plans 17,505 13,639 12,730 Total contributions made $ 46,935 $ 34,183 $ 34,296 |
Deferred Compensation Agreeme48
Deferred Compensation Agreements and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Compensation Agreements and Stock-Based Compensation | |
Schedule of units activity | Nonvested RSUs Units Weighted Average Grant Date Fair Value per Unit Balance at December 31, 2016 149,809 $ 24.70 Granted 10,000 22.90 Vested 25.53 Balance at December 31, 2017 23.76 |
Schedule of units to vest for remaining restricted stock units | Number of Units For the Years Ending December 31, to Vest 2018 28,471 2019 51,552 2020 5,392 85,415 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of components of the provision for income taxes | The components of the provision for income taxes are as follows (in thousands): 2017 2016 2015 Current provision (benefit) Federal $ 21,509 $ 4,726 $ 26,948 State 3,371 5,423 3,640 Foreign (188) 92 362 24,692 10,241 30,950 Deferred provision (benefit) Federal 1,958 11,560 (7,099) State 1,219 (727) 155 Foreign (36) 72 (60) 3,141 10,905 (7,004) Change in valuation allowance 600 — — Total $ 28,433 $ 21,146 $ 23,946 |
Schedule of reconciliation of income tax expense compared to the amount of income tax expense that would result by applying U.S. federal statutory income tax rate to pre-tax income | 2017 2016 2015 U.S. federal statutory income tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal income tax impact 2.9 % 6.4 % 4.2 % Foreign tax credit 0.0 % (0.4)% (0.5)% Canadian income tax (benefit) provision (0.2)% 0.4 % 0.5 % Domestic production activities deduction (2.3)% (1.1)% (3.9)% Nondeductible meals & entertainment 2.8 % 5.4 % 5.1 % Other items (0.7)% (1.5)% (1.0)% Effective tax rate excluding the impact of the Tax Act and income attributable to noncontrolling interests 37.5 % 44.2 % 39.4 % Deferred tax liability remeasurement benefit from the Tax Act (9.3)% 0.0 % 0.0 % Effective tax rate excluding income attributable to noncontrolling interests 28.2 % 44.2 % 39.4 % Impact of income from noncontrolling interests on effective tax rate (1.2)% (0.9)% (0.2)% Effective tax rate 27.0 % 43.3 % 39.2 % |
Schedule of tax effect of temporary differences that give rise to deferred income taxes | The tax effect of temporary differences that give rise to deferred income taxes for the years ended December 31, 2017 and 2016 are as follows (in thousands): 2017 2016 Deferred tax assets: Accrued compensation $ 3,323 $ 5,804 Accrued workers compensation 6,197 9,855 Capital loss carryforward — 1,077 Foreign tax credit 1,456 1,349 Insurance reserves 2,544 3,248 Loss reserves 2,215 4,841 Pension liability — 1,979 State income taxes 2,233 2,011 Other 202 288 Total deferred tax assets 18,170 30,452 Deferred tax liabilities Depreciation and amortization (30,555) (38,327) Prepaid expenses and other (586) (1,955) Total deferred tax liabilities (31,141) (40,282) Valuation allowance (600) — Net deferred tax liabilities $ (13,571) $ (9,830) |
Schedule of reconciliation of the beginning and ending amounts and aggregate changes in the balance of unrecognized tax benefits | A reconciliation of the beginning and ending and aggregate changes in the gross balances of unrecognized tax benefits for each period is as follows (in thousands): 2017 2016 2015 Beginning balance $ — $ — $ 456 Increases in balances for tax positions taken during the current year 592 — — Increases in balances for tax positions taken during prior years — — — Settlements and effective settlements with tax authorities — — (456) Lapse of statute of limitations — — — Total $ 592 $ — $ — |
Dividends and Earnings Per Sh50
Dividends and Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 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 $ February 21, 2017 March 31, 2017 April 15, 2017 $ May 5, 2017 June 30, 2017 July 14, 2017 $ August 2, 2017 September 29, 2017 October 14, 2017 $ November 2, 2017 December 29, 2017 January 15, 2018 $ |
Schedule of computation of basic and diluted earnings per share | The table below presents the computation of basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015 follows (in thousands, except per share amounts): 2017 2016 2015 Numerator: Net income attributable to Primoris $ 72,354 $ 26,723 $ 36,872 Denominator: Weighted average shares for computation of basic earnings per share 51,481 51,762 51,647 Dilutive effect of shares issued to independent directors 3 3 2 Dilutive effect of restricted stock units (1) 257 224 149 Weighted average shares for computation of diluted earnings per share 51,741 51,989 51,798 Earnings per share attributable to Primoris: Basic $ 1.41 $ 0.52 $ 0.71 Diluted $ 1.40 $ 0.51 $ 0.71 Represents the effect of the grant of 259,065 shares of Restricted Stock Units and 3,097 vested Dividend Equivalent Units. |
Selected Quarterly Financial 51
Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information (Unaudited) | |
Schedule of selected unaudited quarterly consolidated financial information | Selected unaudited quarterly consolidated financial information is presented in the following tables (in thousands, except per share amounts): Year Ended December 31, 2017 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Revenues $ 561,502 $ 631,165 $ 608,311 $ 579,017 Gross profit 55,053 84,483 70,421 68,477 Net income 8,512 22,396 22,134 23,808 Net income attributable to Primoris 7,691 21,545 20,597 22,521 Earnings per share: Basic earnings per share $ 0.15 $ 0.42 $ 0.40 $ 0.44 Diluted earnings per share $ 0.15 $ 0.42 $ 0.40 $ 0.44 Weighted average shares outstanding Basic 51,594 51,437 51,441 51,449 Diluted 51,851 51,688 51,707 51,711 Year Ended December 31, 2016 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Revenues $ 430,446 $ 456,811 $ 507,828 $ 601,863 Gross profit 39,277 43,285 50,129 68,616 Impairment of goodwill — — 2,716 — Net income 2,916 5,287 4,756 14,766 Net income attributable to Primoris 2,693 5,056 4,504 14,470 Earnings per share: Basic earnings per share $ 0.05 $ 0.10 $ 0.09 $ 0.28 Diluted earnings per share $ 0.05 $ 0.10 $ 0.09 $ 0.28 Weighted average shares outstanding Basic 51,725 51,772 51,780 51,771 Diluted 51,881 52,022 52,034 52,021 |
Nature of Business (Details)
Nature of Business (Details) $ in Thousands | Jun. 16, 2017USD ($) | May 30, 2017USD ($) | May 26, 2017USD ($) | Nov. 18, 2016USD ($) | Jun. 24, 2016USD ($) | Jan. 29, 2016USD ($) | Feb. 28, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2017USD ($)item | Sep. 30, 2015 |
Nature of Business | ||||||||||
Number of reportable segments | segment | 3 | |||||||||
Number of joint ventures | item | 2 | |||||||||
Number of variable interest entities | item | 2 | |||||||||
Capitalized property, plant and equipment | $ 545,783 | $ 614,889 | ||||||||
Pipe Jacking | ||||||||||
Nature of Business | ||||||||||
Purchase of property, plant and equipment | $ 13,400 | |||||||||
Aevenia | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 22,300 | |||||||||
Mueller | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 4,100 | |||||||||
Northern | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 6,900 | |||||||||
Power | ||||||||||
Nature of Business | ||||||||||
Number of joint ventures | item | 2 | |||||||||
Power | Northern | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 6,900 | |||||||||
Power | Engineering Assets | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 2,300 | |||||||||
Pipeline | Pipe Jacking | ||||||||||
Nature of Business | ||||||||||
Purchase of property, plant and equipment | $ 13,400 | |||||||||
Pipeline | Coastal | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 27,500 | |||||||||
Utilities | Aevenia | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 22,300 | |||||||||
Utilities | Mueller | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 4,100 | |||||||||
Utilities | FGC | ||||||||||
Nature of Business | ||||||||||
Amount of purchase of assets and liabilities | $ 37,700 | |||||||||
Blythe | ||||||||||
Nature of Business | ||||||||||
Ownership percentage | 50.00% | |||||||||
Carlsbad | ||||||||||
Nature of Business | ||||||||||
Ownership percentage | 50.00% | |||||||||
Wilmington | ||||||||||
Nature of Business | ||||||||||
Ownership percentage | 50.00% |
Summary of Significant Accoun53
Summary of Significant Accounting Policies - Short-term investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating cycle | |||||
Minimum liquidation period of assets in which significant working capital has been invested | 1 year | ||||
Goodwill impairment | $ 2,716 | $ 0 | $ 2,716 | $ 401 | |
Income tax | |||||
Estimated net tax benefit of Tax Act | 9,400 | ||||
Comprehensive income | |||||
Other comprehensive income | $ 0 | $ 0 | $ 0 | ||
Cardinal Contractors | |||||
Operating cycle | |||||
Goodwill impairment | $ 400 |
Summary of Significant Accoun54
Summary of Significant Accounting Policies - Foreign Operations (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017USD ($)$ / shares | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / shares | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)item$ / shares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($) | |
Foreign operations | ||||||||||||
Assets | $ 1,255,740 | $ 1,170,567 | $ 1,255,740 | $ 1,170,567 | ||||||||
Revenue | 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | 2,379,995 | 1,996,948 | $ 1,929,415 | |
Functional currencies and foreign currency translation | ||||||||||||
Foreign exchange gain (loss) | 253 | 202 | (763) | |||||||||
Cash concentration | ||||||||||||
Cash and cash equivalents | 170,385 | 135,823 | 170,385 | 135,823 | 161,122 | $ 139,465 | ||||||
Treasury bill funds | 155,400 | 100,500 | 155,400 | 100,500 | ||||||||
Cash balances with various high credit quality financial institutions | 15,000 | 35,300 | $ 15,000 | 35,300 | ||||||||
Collective bargaining agreements | ||||||||||||
Percentage of labor force subject to collective bargaining agreements | 52.00% | |||||||||||
Number of collective bargaining agreements | item | 97 | |||||||||||
Number of collective bargaining agreements requiring renegotiation during the year | item | 75 | |||||||||||
Number of years without work stoppages | 20 years | |||||||||||
Revenue recognition | ||||||||||||
Future gross profit on contracts due to change from accrued loss provision | $ 0 | |||||||||||
Reserve for estimated losses on uncompleted contracts | 10,067 | 12,801 | 10,067 | 12,801 | ||||||||
Unapproved change orders and claims | 67,800 | 67,800 | ||||||||||
Revenue recognized | 56,700 | |||||||||||
Accounts receivable | ||||||||||||
Allowance for doubtful accounts | 480 | 1,030 | 480 | 1,030 | ||||||||
Estimated net impact of change in estimate | ||||||||||||
Revised estimates in current year that impact prior period | 6,435 | 1,685 | 6,435 | 1,685 | (1,685) | |||||||
Revised estimates in current year that impact prior period | (6,435) | (6,435) | (1,540) | |||||||||
Net impact to gross margin | $ 6,435 | $ (4,750) | $ 6,435 | $ (4,750) | $ (3,225) | |||||||
EPS impact to year | $ / shares | $ 0.09 | $ (0.05) | $ 0.09 | $ (0.05) | $ (0.04) | |||||||
Gross profit | $ 68,477 | $ 70,421 | $ 84,483 | $ 55,053 | $ 68,616 | 50,129 | 43,285 | $ 39,277 | $ 278,434 | $ 201,307 | $ 219,873 | |
Texas Heavy Civil Business unit | JCG | East | ||||||||||||
Estimated net impact of change in estimate | ||||||||||||
Charge against income | 37,300 | |||||||||||
Disputed Receivables. | ||||||||||||
Foreign operations | ||||||||||||
Revenue | 27,500 | |||||||||||
Estimated net impact of change in estimate | ||||||||||||
Receivable related to a dispute with a customer | 17,900 | |||||||||||
Receipts related to disputed receivable | 38,000 | |||||||||||
Gross profit | $ 26,700 | $ 0 | ||||||||||
Accrued Expenses and Other Current Liabilities | ||||||||||||
Worker's compensation insurance | ||||||||||||
Self insurance reserve | 18,500 | 18,800 | 18,500 | 18,800 | ||||||||
Canada | ||||||||||||
Foreign operations | ||||||||||||
Assets | 12,700 | 11,800 | 12,700 | 11,800 | ||||||||
Revenue | 8,300 | 11,200 | 17,800 | |||||||||
Income (loss) before tax of Canadian operations | (300) | 800 | $ 300 | |||||||||
VIEs | ||||||||||||
Cash concentration | ||||||||||||
Cash and cash equivalents | $ 60,256 | $ 7,045 | $ 60,256 | $ 7,045 |
Summary of Significant Accoun55
Summary of Significant Accounting Policies - Customer Concentration (Details) - Revenues. - Customer concentration - Top ten customers | 12 Months Ended |
Dec. 31, 2017customeritem | |
Customer concentration | |
Number of top customers | customer | 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% |
Summary of Significant Accoun56
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | |
Property and equipment | |
Estimated useful lives of the related assets | 3 years |
Maximum | |
Property and equipment | |
Estimated useful lives of the related assets | 30 years |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | $ 170,385 | $ 135,823 |
Significant Unobservable Inputs (Level 3) | ||
Liabilities | ||
Fair value of the contingent consideration | 716 | |
Amount Recorded on Balance Sheet | ||
Assets | ||
Cash and cash equivalents | 170,385 | $ 135,823 |
Liabilities | ||
Fair value of the contingent consideration | $ 716 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration Liability (Details) $ in Thousands | May 26, 2017USD ($) | Dec. 31, 2017USD ($)item | Mar. 31, 2015USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2015USD ($) | May 31, 2017USD ($) |
Rollforward of contingent consideration liability level three fair value measurements | ||||||
Change in fair value of contingent consideration liability during year | $ (484) | $ (6,722) | ||||
FGC | ||||||
Additional information | ||||||
Contingent consideration in cash | $ 1,500 | $ 1,500 | ||||
Fair value of the contingent consideration | 1,200 | $ 1,200 | ||||
Contingent consideration credited to non-operating income | $ 500 | |||||
Payment to Q3C sellers for meeting performance targets | $ 33,000 | |||||
Q3 Contracting | ||||||
Additional information | ||||||
Payment to Q3C sellers for meeting performance targets | $ 5,000 | |||||
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | ||||||
Rollforward of contingent consideration liability level three fair value measurements | ||||||
Florida Gas Contractors acquisition | 1,200 | |||||
Change in fair value of contingent consideration liability during year | (484) | |||||
Balance at the end of the period | $ 716 | $ 716 | ||||
Additional information | ||||||
Number of unobservable inputs | item | 2 | 2 | ||||
Minimum probability of acquired entity meeting contractual operating performance target (as a percent) | 33.00% | |||||
Maximum probability of acquired entity meeting contractual operating performance target (as a percent) | 100.00% |
Business Combinations - 2017 Ac
Business Combinations - 2017 Acquisitions (Details) - USD ($) $ in Thousands | Jun. 16, 2017 | May 30, 2017 | May 26, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | May 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Business combinations | ||||||||
Goodwill | $ 153,374 | $ 153,374 | $ 127,226 | $ 124,161 | ||||
Power | ||||||||
Business combinations | ||||||||
Goodwill | 24,391 | 24,391 | 24,512 | 20,731 | ||||
Pipeline | ||||||||
Business combinations | ||||||||
Goodwill | 51,521 | 51,521 | $ 42,252 | $ 42,252 | ||||
FGC | ||||||||
Business combinations | ||||||||
Cash payment made | $ 33,000 | |||||||
Potential contingent consideration | $ 1,500 | $ 1,500 | ||||||
Contingent earnout period (in years) | 1 year | |||||||
Fair value of the contingent consideration | $ 1,200 | $ 1,200 | ||||||
Fixed assets | 4,800 | 4,800 | ||||||
Working capital | 3,300 | 3,300 | ||||||
Intangibles assets | 9,100 | 9,100 | ||||||
Goodwill | 17,000 | 17,000 | ||||||
Land and buildings | $ 3,500 | |||||||
The period of time goodwill is deductible for income tax purposes | 15 years | |||||||
Revenue since acquisition | 15,500 | |||||||
Gross profit (loss) since acquisition | $ 3,800 | |||||||
Coastal | ||||||||
Business combinations | ||||||||
Fixed assets | $ 4,000 | |||||||
Working capital | 4,600 | |||||||
Intangibles assets | 9,900 | |||||||
Goodwill | $ 9,300 | |||||||
The period of time goodwill is deductible for income tax purposes | 15 years | |||||||
Revenue since acquisition | 17,900 | |||||||
Gross profit (loss) since acquisition | $ 3,200 | |||||||
Long-term capital leases | $ 300 | |||||||
Coastal | Pipeline | ||||||||
Business combinations | ||||||||
Cash payment made | $ 27,500 | |||||||
Engineering Assets | ||||||||
Business combinations | ||||||||
Fixed assets | $ 200 | |||||||
Engineering Assets | Power | ||||||||
Business combinations | ||||||||
Cash payment made | 2,300 | |||||||
Engineering Assets | Customer relationships | ||||||||
Business combinations | ||||||||
Intangibles assets | $ 2,100 |
Business Combinations - 2016 &
Business Combinations - 2016 & 2015 Acquisitions (Details) - USD ($) $ in Thousands | Nov. 18, 2016 | Jun. 24, 2016 | Jan. 29, 2016 | Feb. 28, 2015 | Dec. 31, 2016 | Jun. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 |
Business combinations | |||||||||||
Purchase price allocation adjustments | $ (121) | ||||||||||
Operating income | 106,288 | $ 57,749 | $ 67,769 | ||||||||
Goodwill | $ 127,226 | $ 124,161 | 153,374 | 127,226 | $ 124,161 | ||||||
Pipe Jacking | |||||||||||
Business combinations | |||||||||||
Purchase of property, plant and equipment | $ 13,400 | ||||||||||
Aevenia | |||||||||||
Business combinations | |||||||||||
Fair value of consideration | $ 22,300 | ||||||||||
Fixed assets | 11,200 | ||||||||||
Intangibles assets | 3,800 | ||||||||||
Goodwill | 5,200 | ||||||||||
Working capital | $ 2,100 | ||||||||||
Revenue since acquisition | 23,700 | 24,500 | 26,400 | ||||||||
Gross profit (loss) since acquisition | $ 2,400 | 1,400 | $ 1,000 | ||||||||
Mueller | |||||||||||
Business combinations | |||||||||||
Fair value of consideration | $ 4,100 | ||||||||||
Fixed assets | $ 2,000 | ||||||||||
Goodwill | 2,000 | ||||||||||
Fair value of inventory acquired | $ 100 | ||||||||||
The period of time goodwill is deductible for income tax purposes | 15 years | ||||||||||
Northern | |||||||||||
Business combinations | |||||||||||
Fair value of consideration | $ 6,900 | ||||||||||
Purchase price allocation adjustments | $ (100) | ||||||||||
Intangibles assets | 3,000 | ||||||||||
Goodwill | 3,700 | ||||||||||
Working capital | $ 100 | ||||||||||
The period of time goodwill is deductible for income tax purposes | 15 years | ||||||||||
Revenue since acquisition | 2,000 | 19,100 | |||||||||
Gross profit (loss) since acquisition | $ 600 | $ 1,100 |
Business Combinations - Assets
Business Combinations - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 16, 2017 | Jun. 30, 2016 | Feb. 28, 2015 | |
Business combinations | |||||||
Cash paid for acquisitions | $ 66,205 | $ 10,997 | $ 22,302 | ||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Intangible assets | 21,125 | 3,000 | 3,850 | ||||
Goodwill | 153,374 | 127,226 | 124,161 | ||||
Purchase price allocation adjustments | (121) | ||||||
2017 Acquisition | |||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Accounts receivable | 10,721 | ||||||
Costs and estimated earnings in excess of billings | 580 | ||||||
Inventory and other assets | 2,352 | ||||||
Property, plant and equipment | 12,402 | ||||||
Intangible assets | 21,125 | ||||||
Goodwill | 26,269 | ||||||
Accounts payable | (3,380) | ||||||
Billings in excess of costs and estimated earnings | (447) | ||||||
Accrued expenses | (2,096) | ||||||
Total | 67,526 | ||||||
2016 Acquisition | |||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Accounts receivable | 1,606 | ||||||
Inventory and other assets | 64 | ||||||
Property, plant and equipment | 2,133 | ||||||
Intangible assets | 3,000 | ||||||
Goodwill | 5,781 | ||||||
Accounts payable | (726) | ||||||
Accrued expenses | (861) | ||||||
Total | 10,997 | ||||||
2015 Acquisitions | |||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Accounts receivable | 2,734 | ||||||
Inventory and other assets | 1,476 | ||||||
Property, plant and equipment | 11,173 | ||||||
Intangible assets | 3,850 | ||||||
Goodwill | 5,152 | ||||||
Accounts payable | (743) | ||||||
Accrued expenses | (1,340) | ||||||
Total | 22,302 | ||||||
Aevenia | |||||||
Business combinations | |||||||
Cash paid for acquisitions | $ 22,302 | ||||||
Coastal | |||||||
Business combinations | |||||||
Cash paid for acquisitions | 27,519 | ||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Property, plant and equipment | $ 4,000 | ||||||
Goodwill | $ 9,300 | ||||||
Engineering | |||||||
Business combinations | |||||||
Cash paid for acquisitions | 2,315 | ||||||
FGC | |||||||
Business combinations | |||||||
Cash paid for acquisitions | 36,492 | ||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Property, plant and equipment | 4,800 | ||||||
Goodwill | 17,000 | ||||||
Northern | |||||||
Business combinations | |||||||
Cash paid for acquisitions | $ (121) | 6,889 | |||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Goodwill | $ 3,700 | ||||||
Cash | 100 | ||||||
Purchase price allocation adjustments | $ (100) | ||||||
Mueller | |||||||
Business combinations | |||||||
Cash paid for acquisitions | $ 4,108 | ||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Property, plant and equipment | $ 2,000 | ||||||
Goodwill | $ 2,000 | ||||||
Aevenia | |||||||
Fair value of the assets acquired and the liabilities assumed | |||||||
Property, plant and equipment | $ 11,200 | ||||||
Goodwill | $ 5,200 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquired intangible assets | |||
Fair Value | $ 21,125 | $ 3,000 | $ 3,850 |
Pro forma results | |||
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent) | 28.20% | 44.20% | |
Revenues | $ 2,406,062 | $ 2,092,872 | |
Income before provision for income taxes | 107,055 | 57,280 | |
Net income attributable to Primoris | $ 73,626 | $ 31,415 | |
Weighted average common shares outstanding: | |||
Basic (in shares) | 51,481 | 51,762 | |
Diluted (in shares) | 51,741 | 51,989 | |
Earnings per share: | |||
Basic (in dollars per share) | $ 1.43 | $ 0.61 | |
Diluted (in dollars per share) | $ 1.42 | $ 0.60 | |
Tradename | |||
Acquired intangible assets | |||
Fair Value | $ 2,150 | ||
Tradename | Minimum | |||
Acquired intangible assets | |||
Amortization Period | 1 year | ||
Tradename | Maximum | |||
Acquired intangible assets | |||
Amortization Period | 3 years | ||
Non-compete agreements | |||
Acquired intangible assets | |||
Fair Value | $ 550 | 1,350 | |
Non-compete agreements | Minimum | |||
Acquired intangible assets | |||
Amortization Period | 2 years | ||
Non-compete agreements | Maximum | |||
Acquired intangible assets | |||
Amortization Period | 5 years | ||
Customer relationships | |||
Acquired intangible assets | |||
Fair Value | $ 18,150 | $ 3,000 | $ 2,500 |
Customer relationships | Minimum | |||
Acquired intangible assets | |||
Amortization Period | 5 years | ||
Customer relationships | Maximum | |||
Acquired intangible assets | |||
Amortization Period | 10 years | ||
Other | |||
Acquired intangible assets | |||
Amortization Period | 3 years | ||
Fair Value | $ 275 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Receivable. | ||
Contracts receivable, net of allowance for doubtful accounts of $480 at December 31, 2017 and $1,030 at December 31, 2016, respectively | $ 286,113 | $ 340,871 |
Retention receivable | 66,586 | 46,394 |
Contracts receivable and retention | 352,699 | 387,265 |
Other accounts receivable | 5,476 | 735 |
Accounts receivable, net | 358,175 | 388,000 |
Allowance for doubtful accounts | $ 480 | $ 1,030 |
Costs and Estimated Earnings 64
Costs and Estimated Earnings on Uncompleted Contracts (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Costs and Estimated Earnings on Uncompleted Contracts | ||
Costs incurred on uncompleted contracts | $ 6,040,678 | $ 5,391,124 |
Gross profit recognized | 519,173 | 456,871 |
Costs and Estimated Earnings on Uncompleted Contracts | 6,559,851 | 5,847,995 |
Less: billings to date | (6,558,793) | (5,821,983) |
Net cost and estimated earnings in excess of billings | 1,058 | 26,012 |
Amount included in consolidated balance sheet | ||
Costs and estimated earnings in excess of billings | 160,092 | 138,618 |
Billings in excess of costs and estimated earnings | (159,034) | (112,606) |
Net cost and estimated earnings in excess of billings | $ 1,058 | $ 26,012 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | ||
Gross property and equipment | $ 614,889 | $ 545,783 |
Less: accumulated depreciation and amortization | (303,112) | (268,437) |
Property and equipment, net | $ 311,777 | 277,346 |
Minimum | ||
Property and equipment | ||
Useful Life | 3 years | |
Maximum | ||
Property and equipment | ||
Useful Life | 30 years | |
Land and buildings | ||
Property and equipment | ||
Gross property and equipment | $ 82,755 | 56,878 |
Useful Life | 30 years | |
Leasehold improvements | ||
Property and equipment | ||
Gross property and equipment | $ 12,601 | 12,147 |
Office equipment | ||
Property and equipment | ||
Gross property and equipment | $ 8,888 | 8,083 |
Office equipment | Minimum | ||
Property and equipment | ||
Useful Life | 3 years | |
Office equipment | Maximum | ||
Property and equipment | ||
Useful Life | 5 years | |
Construction equipment | ||
Property and equipment | ||
Gross property and equipment | $ 392,454 | 368,241 |
Construction equipment | Minimum | ||
Property and equipment | ||
Useful Life | 3 years | |
Construction equipment | Maximum | ||
Property and equipment | ||
Useful Life | 7 years | |
Transportation equipment | ||
Property and equipment | ||
Gross property and equipment | $ 101,855 | 98,113 |
Transportation equipment | Minimum | ||
Property and equipment | ||
Useful Life | 3 years | |
Transportation equipment | Maximum | ||
Property and equipment | ||
Useful Life | 18 years | |
Construction in progress | ||
Property and equipment | ||
Gross property and equipment | $ 16,336 | $ 2,321 |
Goodwill and Intangible Asset66
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill | |||||
Goodwill, Beginning Balance | $ 127,226 | $ 124,161 | |||
Goodwill acquired during the year | 26,269 | 5,781 | |||
Goodwill impairment | $ (2,716) | 0 | (2,716) | $ (401) | |
Purchase price allocation adjustments | (121) | ||||
Goodwill, Ending Balance | $ 124,161 | 153,374 | 127,226 | 124,161 | |
Power | |||||
Goodwill | |||||
Goodwill, Beginning Balance | 24,512 | 20,731 | |||
Goodwill acquired during the year | 3,781 | ||||
Purchase price allocation adjustments | (121) | ||||
Goodwill, Ending Balance | 20,731 | 24,391 | 24,512 | 20,731 | |
Pipeline | |||||
Goodwill | |||||
Goodwill, Beginning Balance | 42,252 | 42,252 | |||
Goodwill acquired during the year | 9,269 | ||||
Goodwill, Ending Balance | 42,252 | 51,521 | 42,252 | 42,252 | |
Utilities | |||||
Goodwill | |||||
Goodwill, Beginning Balance | 20,312 | 18,312 | |||
Goodwill acquired during the year | 17,000 | 2,000 | |||
Goodwill, Ending Balance | 18,312 | 37,312 | 20,312 | 18,312 | |
Civil | |||||
Goodwill | |||||
Goodwill, Beginning Balance | 40,150 | 42,866 | |||
Goodwill impairment | (2,716) | ||||
Goodwill, Ending Balance | 42,866 | $ 40,150 | $ 40,150 | $ 42,866 | |
Cardinal Contractors | |||||
Goodwill | |||||
Goodwill impairment | $ (400) |
Goodwill and Intangible Asset67
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets | ||||
Gross Carrying Amount | $ 84,250 | $ 66,314 | ||
Accumulated Amorization | (39,450) | (33,473) | ||
Amortization expense of intangible assets | 8,689 | 6,597 | $ 6,793 | |
Estimated future amortization expense for intangible assets | ||||
2,018 | 9,541 | |||
2,019 | 9,193 | |||
2,020 | 6,442 | |||
2,021 | 5,203 | |||
2,022 | 4,048 | |||
Thereafter | 10,373 | |||
Total | $ 44,800 | 32,841 | ||
Tradename | ||||
Intangible assets | ||||
Amortization Period | 9 years | |||
Gross Carrying Amount | $ 32,175 | 30,485 | ||
Accumulated Amorization | $ (22,238) | (18,733) | ||
Impairment of intangible asset | $ 500 | |||
Customer relationships | ||||
Intangible assets | ||||
Amortization Period | 10 years | |||
Gross Carrying Amount | $ 49,900 | 33,579 | ||
Accumulated Amorization | $ (16,338) | (13,439) | ||
Non-compete agreements | ||||
Intangible assets | ||||
Amortization Period | 5 years | |||
Gross Carrying Amount | $ 1,900 | 2,250 | ||
Accumulated Amorization | $ (820) | $ (1,301) | ||
Other | ||||
Intangible assets | ||||
Amortization Period | 3 years | |||
Gross Carrying Amount | $ 275 | |||
Accumulated Amorization | $ (54) |
Accounts Payable and Accrued 68
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities | ||
Retention amounts included in accounts payable | $ 13,500 | $ 10,600 |
Accrued expenses and other current liabilities | ||
Payroll and related employee benefits | 45,708 | 43,768 |
Insurance, including self-insurance reserves | 47,256 | 42,546 |
Reserve for estimated losses on uncompleted contracts | 10,067 | 12,801 |
Corporate income taxes and other taxes | 2,843 | 3,368 |
Other | 5,513 | 5,523 |
Total accrued expenses and other current liabilities | $ 111,387 | $ 108,006 |
Capital Leases (Details)
Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Capital Leases | ||
Total assets under capital leases | $ 3,100 | $ 2,500 |
Accumulated depreciation of assets under capital leases | 1,900 | 2,300 |
Net book value of assets under capital leases | 1,200 | 200 |
Future minimum lease payments required under capital leases | ||
2,018 | 134 | |
2,019 | 98 | |
2,020 | 90 | |
2,021 | 11 | |
Total minimum lease payments | 333 | |
Amounts representing interest | (5) | |
Net present value of minimum lease payments | 328 | |
Less: current portion of capital lease obligations | (132) | (188) |
Long-term capital lease obligation | $ 196 | $ 15 |
Credit Arrangements (Details)
Credit Arrangements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Credit arrangements | ||
Total debt | $ 258,917 | $ 261,570 |
Unamortized debt issuance costs | (102) | (231) |
Total debt, net | 258,815 | 261,339 |
Less: current portion | (65,464) | (58,189) |
Long-term debt, net of current portion | 193,351 | 203,150 |
Scheduled maturities of long-term debt | ||
2,018 | 65,464 | |
2,019 | 62,014 | |
2,020 | 50,755 | |
2,021 | 33,939 | |
2,022 | 24,144 | |
Thereafter | 22,601 | |
Commercial equipment notes | ||
Credit arrangements | ||
Total debt, net | 165,532 | 161,148 |
Mortgages | ||
Credit arrangements | ||
Total debt, net | 11,242 | 7,564 |
Senior Notes | ||
Credit arrangements | ||
Total debt, net | $ 82,143 | $ 92,858 |
Credit Arrangements - Backgroun
Credit Arrangements - Background (Details) $ in Thousands, CAD in Millions | Nov. 09, 2015USD ($)payment | Jun. 03, 2015USD ($) | Jul. 25, 2013USD ($)payment | Dec. 31, 2017USD ($)building | Dec. 31, 2015USD ($)loanbuilding | Dec. 31, 2017CAD | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 29, 2017USD ($) | Sep. 28, 2017USD ($) | Dec. 28, 2012USD ($) |
Senior Notes | |||||||||||
Credit arrangements | |||||||||||
Initial principal amount | $ 25,000 | $ 50,000 | |||||||||
Interest rate (as a percent) | 4.60% | 3.65% | 3.65% | ||||||||
Required principal payment | $ 3,600 | $ 7,100 | |||||||||
Number of annual principal payments | payment | 7 | ||||||||||
Senior Notes | Minimum | |||||||||||
Credit arrangements | |||||||||||
Prepayment to be paid on debt | $ 5,000 | ||||||||||
Notes Agreement | |||||||||||
Credit arrangements | |||||||||||
Initial principal amount | $ 25,000 | $ 25,000 | |||||||||
Interest rate (as a percent) | 3.85% | ||||||||||
Required principal payment | $ 3,600 | ||||||||||
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 | ||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | |||||||||
Assumed notes | $ 4,200 | ||||||||||
Commercial equipment notes | Minimum | |||||||||||
Credit arrangements | |||||||||||
Interest rate (as a percent) | 1.78% | 1.78% | |||||||||
Commercial equipment notes | 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 | ||||||||||
Initial principal amount | $ 8,000 | ||||||||||
Number of assets secured | building | 2 | ||||||||||
Interest rate (as a percent) | 4.30% | ||||||||||
Credit Agreement | |||||||||||
Credit arrangements | |||||||||||
Maximum borrowing capacity | $ 200,000 | $ 125,000 | |||||||||
Debt issuance costs | $ 600 | ||||||||||
Available borrowing capacity | $ 180,500 | ||||||||||
Additional period of time 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 credit facility | |||||||||||
Credit arrangements | |||||||||||
Maximum borrowing capacity | 200,000 | ||||||||||
Borrowings outstanding | 0 | ||||||||||
Credit Agreement | Commercial letters of credit | |||||||||||
Credit arrangements | |||||||||||
Total commercial letters of credit outstanding | 19,500 | ||||||||||
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 | ||||||||||
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 | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($)item | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Noncontrolling Interests | |||||||||||
Number of joint ventures | item | 2 | 2 | |||||||||
Revenue | $ 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | $ 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | $ 2,379,995 | $ 1,996,948 | $ 1,929,415 |
Net income attributable to noncontrolling interests | 4,496 | 1,002 | 279 | ||||||||
Tax effect on income recognized | 28,433 | 21,146 | 23,946 | ||||||||
Distributions to non-controlling interests | 29 | ||||||||||
Cash | 170,385 | 135,823 | 170,385 | 135,823 | |||||||
Accounts receivable | 358,175 | 388,000 | 358,175 | 388,000 | |||||||
Costs and estimated earnings in excess of billings | 160,092 | 138,618 | 160,092 | 138,618 | |||||||
Billings in excess of costs and estimated earnings | 159,034 | 112,606 | 159,034 | 112,606 | |||||||
Other current liabilities | 480,763 | 449,938 | 480,763 | 449,938 | |||||||
Accounts payable | 140,943 | 168,110 | 140,943 | 168,110 | |||||||
Carlsbad | |||||||||||
Noncontrolling Interests | |||||||||||
Revenue | 110,669 | 7,254 | 2,887 | ||||||||
Net income attributable to noncontrolling interests | 1,780 | 325 | 172 | ||||||||
Tax effect on income recognized | 0 | ||||||||||
Distributions to partners | 0 | ||||||||||
Capital contributions | 0 | ||||||||||
Cash | 44,308 | 4,630 | 44,308 | 4,630 | |||||||
Accounts receivable | 15,343 | 15,343 | |||||||||
Costs and estimated earnings in excess of billings | 124 | 124 | |||||||||
Billings in excess of costs and estimated earnings | 42,743 | 3,426 | 42,743 | 3,426 | |||||||
Accounts payable | 12,352 | 286 | 12,352 | 286 | |||||||
Due to Primoris | 46 | 46 | |||||||||
Wilmington | |||||||||||
Noncontrolling Interests | |||||||||||
Revenue | 31,638 | 19,781 | 1,364 | ||||||||
Net income attributable to noncontrolling interests | 2,716 | 677 | 48 | ||||||||
Tax effect on income recognized | 0 | ||||||||||
Distributions to partners | 0 | ||||||||||
Capital contributions | 0 | ||||||||||
Cash | 15,948 | 2,415 | 15,948 | 2,415 | |||||||
Accounts receivable | 598 | 4,242 | 598 | 4,242 | |||||||
Billings in excess of costs and estimated earnings | 1,480 | 2,572 | 1,480 | 2,572 | |||||||
Accounts payable | 759 | 602 | 759 | 602 | |||||||
Due to Primoris | 7,428 | 2,035 | 7,428 | 2,035 | |||||||
Carlsbad and Wilmington | |||||||||||
Noncontrolling Interests | |||||||||||
Cash | 60,256 | 7,045 | 60,256 | 7,045 | |||||||
Accounts receivable | 15,941 | 4,242 | 15,941 | 4,242 | |||||||
Costs and estimated earnings in excess of billings | 124 | 124 | |||||||||
Billings in excess of costs and estimated earnings | 44,223 | 5,998 | 44,223 | 5,998 | |||||||
Accounts payable | $ 13,111 | $ 888 | $ 13,111 | 888 | |||||||
Power | |||||||||||
Noncontrolling Interests | |||||||||||
Number of joint ventures | item | 2 | 2 | |||||||||
Revenue | $ 606,125 | $ 478,653 | $ 466,292 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Future minimum lease payments required under non-cancelable operating leases | |||
2,018 | $ 18,608 | ||
2,019 | 13,214 | ||
2,020 | 8,027 | ||
2,021 | 4,095 | ||
2,022 | 342 | ||
Total | 44,286 | ||
Leases | |||
Total lease expense | 25,500 | $ 22,500 | $ 21,800 |
Real Property | |||
Future minimum lease payments required under non-cancelable operating leases | |||
2,018 | 5,027 | ||
2,019 | 3,900 | ||
2,020 | 2,464 | ||
2,021 | 1,428 | ||
2,022 | 331 | ||
Total | 13,150 | ||
Equipment | |||
Future minimum lease payments required under non-cancelable operating leases | |||
2,018 | 13,581 | ||
2,019 | 9,314 | ||
2,020 | 5,563 | ||
2,021 | 2,667 | ||
2,022 | 11 | ||
Total | $ 31,136 |
Commitments and Contingencies74
Commitments and Contingencies (Details) $ in Thousands | Feb. 25, 2015USD ($) | Dec. 31, 2017USD ($)item | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Nov. 30, 2012USD ($) | Nov. 30, 2011USD ($) |
Commitments and contingencies | |||||||||||||||
Billings in excess of costs and estimated earnings | $ 159,034 | $ 112,606 | $ 159,034 | $ 112,606 | |||||||||||
Revenue | 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | 2,379,995 | 1,996,948 | $ 1,929,415 | ||||
Gross Profit | 68,477 | $ 70,421 | $ 84,483 | $ 55,053 | 68,616 | 50,129 | 43,285 | $ 39,277 | 278,434 | 201,307 | $ 219,873 | ||||
Withdrawal liability recorded | $ 4,700 | 5,700 | $ 4,700 | 5,700 | $ 7,600 | $ 7,500 | |||||||||
Disputed Receivables. | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Receivable recorded relating to the project | 17,900 | ||||||||||||||
Receipts related to disputed receivable | 38,000 | ||||||||||||||
Revenue | 27,500 | ||||||||||||||
Gross Profit | 26,700 | $ 0 | |||||||||||||
Construction Projects | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Number of projects under litigation | item | 1 | 1 | |||||||||||||
Construction Project One | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Receivable recorded relating to the project | $ 32,900 | $ 32,900 | |||||||||||||
Billings in excess of costs and estimated earnings | 17,900 | 17,900 | |||||||||||||
Construction Project Two | Disputed Receivables. | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Receipts related to disputed receivable | 38,000 | ||||||||||||||
Revenue | 27,500 | ||||||||||||||
Gross Profit | $ 26,700 | $ 0 | |||||||||||||
JCG | North Texas Tollway Authority v. James Construction Group, LLC | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Settlement | $ 17,000 | ||||||||||||||
Expected remediation cost | 22,400 | ||||||||||||||
Remaining accrual balance | $ 15,200 | $ 15,200 | |||||||||||||
Percentage of expected costs second defendant would pay | 20.00% | 20.00% | |||||||||||||
Percentage of expected costs Company would pay | 80.00% | 80.00% | |||||||||||||
Increase in liability | $ 1,900 | ||||||||||||||
Remediation costs | 3,700 | ||||||||||||||
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 | ||||||||||||||
Bonding | |||||||||||||||
Commitments and contingencies | |||||||||||||||
Bid and completion bonds issued and outstanding | $ 705,700 | $ 680,000 | $ 705,700 | $ 680,000 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | |
Segment reporting information | |||||||||||
Number of reportable segments | segment | 3 | ||||||||||
Revenue | $ 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | $ 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | $ 2,379,995 | $ 1,996,948 | $ 1,929,415 |
% of Total Revenue | 100.00% | 100.00% | 100.00% | ||||||||
Gross Profit | $ 68,477 | $ 70,421 | $ 84,483 | $ 55,053 | $ 68,616 | $ 50,129 | $ 43,285 | $ 39,277 | $ 278,434 | $ 201,307 | $ 219,873 |
% of Revenue | 11.70% | 10.10% | 11.40% | ||||||||
Power | |||||||||||
Segment reporting information | |||||||||||
Revenue | $ 606,125 | $ 478,653 | $ 466,292 | ||||||||
% of Total Revenue | 25.50% | 24.00% | 24.20% | ||||||||
Gross Profit | $ 65,675 | $ 49,807 | $ 53,620 | ||||||||
% of Revenue | 10.80% | 10.40% | 11.50% | ||||||||
Pipeline | |||||||||||
Segment reporting information | |||||||||||
Revenue | $ 465,570 | $ 401,931 | $ 299,365 | ||||||||
% of Total Revenue | 19.50% | 20.10% | 15.50% | ||||||||
Gross Profit | $ 92,087 | $ 68,100 | $ 24,685 | ||||||||
% of Revenue | 19.80% | 16.90% | 8.20% | ||||||||
Utilities | |||||||||||
Segment reporting information | |||||||||||
Revenue | $ 806,523 | $ 637,212 | $ 587,047 | ||||||||
% of Total Revenue | 33.90% | 31.90% | 30.40% | ||||||||
Gross Profit | $ 113,037 | $ 100,071 | $ 96,450 | ||||||||
% of Revenue | 14.00% | 15.70% | 16.40% | ||||||||
Civil | |||||||||||
Segment reporting information | |||||||||||
Revenue | $ 501,777 | $ 479,152 | $ 576,711 | ||||||||
% of Total Revenue | 21.10% | 24.00% | 29.90% | ||||||||
Gross Profit | $ 7,635 | $ (16,671) | $ 45,118 | ||||||||
% of Revenue | 1.50% | (3.50%) | 7.80% |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Total Assets by Geographic Area (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues and total assets by geographic area | |||
% of Revenue | 100.00% | 100.00% | 100.00% |
Non-United States | |||
Revenues and total assets by geographic area | |||
% of Revenue | 1.00% | ||
Canada | |||
Revenues and total assets by geographic area | |||
% of total assets | 1.00% | 1.00% |
Customer Concentrations (Detail
Customer Concentrations (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)customeritem | Dec. 31, 2016USD ($)customer | Dec. 31, 2015USD ($) | |
Customer concentrations | |||||||||||
Amount | $ 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | $ 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | $ 2,379,995 | $ 1,996,948 | $ 1,929,415 |
Civil | |||||||||||
Customer concentrations | |||||||||||
Amount | 501,777 | 479,152 | 576,711 | ||||||||
Pipeline | |||||||||||
Customer concentrations | |||||||||||
Amount | 465,570 | 401,931 | 299,365 | ||||||||
Power | |||||||||||
Customer concentrations | |||||||||||
Amount | 606,125 | 478,653 | 466,292 | ||||||||
Utilities | |||||||||||
Customer concentrations | |||||||||||
Amount | 806,523 | 637,212 | 587,047 | ||||||||
Revenues. | Customer concentration | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 912,725 | $ 910,007 | $ 944,223 | ||||||||
Percentage | 38.40% | 45.60% | 48.90% | ||||||||
Revenues. | Customer concentration | State DOT | Civil | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 222,142 | $ 193,049 | $ 183,847 | ||||||||
Percentage | 9.30% | 9.70% | 9.50% | ||||||||
Revenues. | Customer concentration | Public gas and electric utility | Utilities | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 210,747 | $ 184,002 | $ 120,507 | ||||||||
Percentage | 8.90% | 9.20% | 6.20% | ||||||||
Revenues. | Customer concentration | Private gas and electric utility | Utilities | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 190,659 | $ 201,443 | $ 173,232 | ||||||||
Percentage | 8.00% | 10.10% | 9.00% | ||||||||
Revenues. | Customer concentration | Chemical/Energy Producer | Power/Civil | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 160,995 | $ 208,458 | $ 173,931 | ||||||||
Percentage | 6.80% | 10.40% | 9.00% | ||||||||
Revenues. | Customer concentration | Pipeline Operator | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 128,182 | ||||||||||
Percentage | 5.40% | ||||||||||
Revenues. | Customer concentration | Pipeline Operator | Maximum | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Percentage | 5.00% | 5.00% | |||||||||
Revenues. | Customer concentration | Pipeline Operator | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 123,055 | ||||||||||
Percentage | 6.20% | ||||||||||
Revenues. | Customer concentration | Pipeline Operator | Maximum | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Percentage | 5.00% | 5.00% | |||||||||
Revenues. | Customer concentration | Pipeline Operator | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 165,578 | ||||||||||
Percentage | 8.60% | ||||||||||
Revenues. | Customer concentration | Pipeline Operator | Maximum | Pipeline | |||||||||||
Customer concentrations | |||||||||||
Percentage | 5.00% | 5.00% | |||||||||
Revenues. | Customer concentration | Gas utility | Utilities | |||||||||||
Customer concentrations | |||||||||||
Amount | $ 127,128 | ||||||||||
Percentage | 6.60% | ||||||||||
Revenues. | Customer concentration | Gas utility | Maximum | Utilities | |||||||||||
Customer concentrations | |||||||||||
Percentage | 5.00% | 5.00% | |||||||||
Revenues. | Customer concentration | Top ten customers | |||||||||||
Customer concentrations | |||||||||||
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% | ||||||||||
Percentage | 56.40% | 60.40% | 59.40% | ||||||||
Number of top customers | customer | 10 | ||||||||||
Revenues. | Customer concentration | One customer | |||||||||||
Customer concentrations | |||||||||||
Percentage | 8.90% | 6.20% | |||||||||
Accounts receivable | Customer concentration | One customer | |||||||||||
Customer concentrations | |||||||||||
Percentage | 4.30% | 20.80% | |||||||||
Number of customers | customer | 1 | 1 |
Multiemployer Plans (Details)
Multiemployer Plans (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | |
Multiemployer plans | |||
Number of pension plans in which annual contribution was made by the entity during last three years | item | 78 | ||
Number of pension plans in which the entity contributed | item | 0 | 0 | 2 |
Contributions for significant plans | $ 29,430 | $ 20,544 | $ 21,566 |
Contributions to other multiemployer plans | 17,505 | 13,639 | 12,730 |
Total contributions made | 46,935 | 34,183 | 34,296 |
One Plan | |||
Multiemployer plans | |||
Contributions for specified plans | 2,200 | ||
Second Plan | |||
Multiemployer plans | |||
Contributions for specified plans | 500 | ||
Central Pension Fund of the International Union of Operating Engineers and Participating Employers | |||
Multiemployer plans | |||
Contributions for significant plans | 7,562 | 5,373 | 5,659 |
Pipeline Industry Benefit Fund | |||
Multiemployer plans | |||
Contributions for significant plans | 6,050 | 2,740 | 3,783 |
Laborers International Union of North America National (Industrial) Pension Fund | |||
Multiemployer plans | |||
Contributions for significant plans | 4,658 | 2,415 | 3,287 |
Southern California Pipetrades Trust Funds | |||
Multiemployer plans | |||
Contributions for significant plans | 3,219 | 2,614 | 2,180 |
Laborers Pension Trust Fund for Northern California | |||
Multiemployer plans | |||
Contributions for significant plans | 2,945 | 3,598 | 3,150 |
National Pension Fund | |||
Multiemployer plans | |||
Contributions for significant plans | 2,548 | 2,161 | 2,106 |
Operating Engineer Trust Funds | |||
Multiemployer plans | |||
Contributions for significant plans | $ 2,448 | $ 1,643 | $ 1,401 |
Company Retirement Plans (Detai
Company Retirement Plans (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
United States | 401(k) Plan | |||
Company retirement plans | |||
Maximum contribution by employees (as a percent) | 100.00% | ||
Employer match of employee contributions on first level of eligible compensation (as a percent) | 100.00% | ||
Percentage of eligible compensation, first level, matched by employer | 3.00% | ||
Employer match of employee contributions on the second level of eligible compensation (as a percent) | 50.00% | ||
Percentage of eligible compensation, second level, partially matched by employer | 2.00% | ||
Employer discretionary contributions | $ 0 | $ 0 | $ 0 |
Employer's contribution | $ 4,100 | $ 3,900 | $ 3,700 |
Canada | On Quest Canada, ULC RRSP-DPSP Plan | |||
Company retirement plans | |||
Number of components of the plan | item | 2 | ||
Employer match of employee contributions on first level of eligible compensation (as a percent) | 100.00% | ||
Percentage of eligible compensation, first level, matched by employer | 3.00% | ||
Employer match of employee contributions on the second level of eligible compensation (as a percent) | 50.00% | ||
Percentage of eligible compensation, second level, partially matched by employer | 2.00% | ||
Number of years of employment as a vesting period of DPSP portion | 1 year | ||
Employer's contribution | $ 100 |
Deferred Compensation Agreeme80
Deferred Compensation Agreements and Stock-Based Compensation (Details) - LTR Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred compensation agreements | |||
Percentage of participant's annual earned bonus deferred | 50.00% | ||
Period of deferral of annual earned bonus | 1 year | ||
Total deferred compensation liability | $ 5,700 | $ 4,500 | |
Maximum percentage of participant's earned bonus amount up to which common stock can be purchased in a stock purchase plan | 16.67% | ||
Percentage of average market closing prices used in determining number of common stock that could be purchased by participants | 75.00% | 75.00% | 75.00% |
Deferred Compensation Agreeme81
Deferred Compensation Agreements and Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | 56 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Weighted Average Grant Date Fair Value per Unit | ||||
Accrued dividend equivalent units | 3,097 | 3,097 | ||
Restricted Stock Units | ||||
Units | ||||
Granted, Units | 259,065 | |||
Weighted Average Grant Date Fair Value per Unit | ||||
Number of Units to Vest | 85,415 | 85,415 | ||
Restricted Stock Units | 2018 | ||||
Weighted Average Grant Date Fair Value per Unit | ||||
Number of Units to Vest | 28,471 | 28,471 | ||
Restricted Stock Units | 2019 | ||||
Weighted Average Grant Date Fair Value per Unit | ||||
Number of Units to Vest | 51,552 | 51,552 | ||
Restricted Stock Units | 2020 | ||||
Weighted Average Grant Date Fair Value per Unit | ||||
Number of Units to Vest | 5,392 | 5,392 | ||
Equity Plan | Restricted Stock Units | ||||
Units | ||||
Beginning Balance, Units | 149,809 | |||
Granted, Units | 10,000 | 100,553 | 0 | 259,065 |
Vested, Units | (74,394) | |||
Ending Balance, Units | 85,415 | 149,809 | 85,415 | |
Weighted Average Grant Date Fair Value per Unit | ||||
Beginning Balance, Weighted Average Grant Date Fair Value per Unit | $ 24.70 | |||
Granted, Weighted Average Grant Date Fair Value per Unit | 22.90 | $ 23.87 | ||
Vested, Weighted Average Grant Date Fair Value per Unit | 25.53 | |||
Ending Balance, Weighted Average Grant Date Fair Value per Unit | $ 23.76 | $ 24.70 | $ 23.76 | |
Total fair value of Units vested | $ 1,700 | $ 600 | $ 900 | |
Number of vested units | 173,650 | 173,650 | ||
Compensation expense recognized | $ 1,100 | $ 1,600 | $ 1,100 | |
Unrecognized compensation expense | $ 1,200 | $ 1,200 | ||
Period to recognize unrecognized compensation expense | 1 year 7 months 6 days | |||
Accrued dividend equivalent units | 3,097 | 3,097 | ||
Executives | Equity Plan | Restricted Stock Units | ||||
Units | ||||
Granted, Units | 259,065 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2017USD ($)loan | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Feb. 28, 2017item | |
Related party transactions | |||||
Number of leased properties | item | 3 | ||||
Mortgages | |||||
Related party transactions | |||||
Assumed notes | $ 4.2 | ||||
SIGI | |||||
Related party transactions | |||||
Lease payments to related party | $ 0.2 | $ 0.8 | $ 0.8 | ||
Purchase of properties | $ 12.8 | ||||
SIGI | Mortgages | |||||
Related party transactions | |||||
Number of mortgages assumed | loan | 3 | ||||
Assumed notes | $ 4.2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current provision (benefit) | |||
Federal | $ 21,509 | $ 4,726 | $ 26,948 |
State | 3,371 | 5,423 | 3,640 |
Foreign | (188) | 92 | 362 |
Total | 24,692 | 10,241 | 30,950 |
Deferred provision (benefit) | |||
Federal | 1,958 | 11,560 | (7,099) |
State | 1,219 | (727) | 155 |
Foreign | (36) | 72 | (60) |
Total | 3,141 | 10,905 | (7,004) |
Change in valuation allowance | 600 | ||
Total | $ 28,433 | $ 21,146 | $ 23,946 |
Reconciliation of income tax expense compared to the amount of income tax expense that would result by applying U.S. federal statutory income tax rate to pre-tax income | |||
U.S. federal statutory income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
State taxes, net of federal income tax impact (as a percent) | 2.90% | 6.40% | 4.20% |
Foreign tax credit (as a percent) | (0.00%) | (0.40%) | (0.50%) |
Canadian income tax (benefit) provision (as a percent) | (0.20%) | 0.40% | 0.50% |
Domestic production activities deduction (as a percent) | (2.30%) | (1.10%) | (3.90%) |
Nondeductible meals & entertainment (as a percent) | 2.80% | 5.40% | 5.10% |
Other items (as a percent) | (0.70%) | (1.50%) | (1.00%) |
Effective tax rate excluding the impact of the Tax Act and income attributable to noncontrolling interests (as a percent) | 37.50% | 44.20% | 39.40% |
Deferred tax liability remeasurement benefit from the Tax Act | (9.30%) | 0.00% | 0.00% |
Effective tax rate excluding income attributable to noncontrolling interests (as a percent) | 28.20% | 44.20% | 39.40% |
Impact of income from noncontrolling interests on effective tax rate (as a percent) | (1.20%) | (0.90%) | (0.20%) |
Effective tax rate (as a percent) | 27.00% | 43.30% | 39.20% |
Estimated net tax benefit of Tax Act | $ 9,400 | ||
Deferred tax assets: | |||
Accrued compensation | 3,323 | $ 5,804 | |
Accrued workers compensation | 6,197 | 9,855 | |
Capital loss carryforward | 1,077 | ||
Foreign tax credit | 1,456 | 1,349 | |
Insurance reserves | 2,544 | 3,248 | |
Loss reserves | 2,215 | 4,841 | |
Pension liability | 1,979 | ||
State income taxes | 2,233 | 2,011 | |
Other | 202 | 288 | |
Total deferred tax assets | 18,170 | 30,452 | |
Deferred tax liabilities | |||
Depreciation and amortization | (30,555) | (38,327) | |
Prepaid expense and other | (586) | (1,955) | |
Total deferred tax liabilities | (31,141) | (40,282) | |
Valuation allowance | (600) | ||
Net deferred tax liabilities | $ (13,571) | $ (9,830) | |
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 | ||
Reconciliation and aggregate changes for unrecognized tax benefits | |||
Beginning balance | $ 456 | ||
Increases in balances for tax positions taken during the current year | $ 592 | ||
Settlements and effective settlements with tax authorities | $ (456) | ||
Total | 592 | ||
State | |||
Deferred tax liabilities | |||
Net operating loss | 800 | ||
Tax credit carryforward | 1,100 | ||
Foreign | |||
Deferred tax liabilities | |||
Tax credit carryforward | 1,500 | ||
Minimum | |||
Deferred tax liabilities | |||
Reasonably possible decrease in unrecognized tax benefits | 0 | ||
Maximum | |||
Deferred tax liabilities | |||
Reasonably possible decrease in unrecognized tax benefits | $ 100 |
Dividends and Earnings Per Sh84
Dividends and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Nov. 02, 2016 | Aug. 03, 2016 | May 02, 2016 | Feb. 22, 2016 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Earnings Per Share | |||||||||||||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.225 | $ 0.220 | $ 0.205 | ||||||||
Numerator: | |||||||||||||||||||
Net income | $ 23,808 | $ 22,134 | $ 22,396 | $ 8,512 | $ 14,766 | $ 4,756 | $ 5,287 | $ 2,916 | $ 76,850 | $ 27,725 | $ 37,151 | ||||||||
Net income attributable to noncontrolling interests | (4,496) | (1,002) | (279) | ||||||||||||||||
Net income attributable to Primoris | $ 22,521 | $ 20,597 | $ 21,545 | $ 7,691 | $ 14,470 | $ 4,504 | $ 5,056 | $ 2,693 | $ 72,354 | $ 26,723 | $ 36,872 | ||||||||
Denominator (shares in thousands): | |||||||||||||||||||
Weighted average shares for computation of basic earnings per share | 51,449 | 51,441 | 51,437 | 51,594 | 51,771 | 51,780 | 51,772 | 51,725 | 51,481 | 51,762 | 51,647 | ||||||||
Dilutive effect of shares issued to independent directors | 3 | 3 | 2 | ||||||||||||||||
Dilutive effect of restricted stock units | 257 | 224 | 149 | ||||||||||||||||
Weighted average shares for computation of diluted earnings per share | 51,711 | 51,707 | 51,688 | 51,851 | 52,021 | 52,034 | 52,022 | 51,881 | 51,741 | 51,989 | 51,798 | ||||||||
Earnings per share attributable to Primoris: | |||||||||||||||||||
Basic earnings per share (in dollars per share) | $ 0.44 | $ 0.40 | $ 0.42 | $ 0.15 | $ 0.28 | $ 0.09 | $ 0.10 | $ 0.05 | $ 1.41 | $ 0.52 | $ 0.71 | ||||||||
Diluted earnings per share (in dollars per share) | $ 0.44 | $ 0.40 | $ 0.42 | $ 0.15 | $ 0.28 | $ 0.09 | $ 0.10 | $ 0.05 | $ 1.40 | $ 0.51 | $ 0.71 |
Dividends and Earnings Per Sh85
Dividends and Earnings Per Share - Dilutive Effect (Details) - shares | 12 Months Ended | 56 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Earnings per share | ||||
Accrued Dividend Equivalent Units | 3,097 | 3,097 | ||
Restricted Stock Units | ||||
Earnings per share | ||||
Granted, Units | 259,065 | |||
Equity Plan | Restricted Stock Units | ||||
Earnings per share | ||||
Granted, Units | 10,000 | 100,553 | 0 | 259,065 |
Accrued Dividend Equivalent Units | 3,097 | 3,097 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 56 Months Ended | ||||||||
Aug. 31, 2017shares | Feb. 28, 2017USD ($)shares | Dec. 31, 2016USD ($)$ / sharesshares | Aug. 31, 2016USD ($)shares | Feb. 29, 2016shares | Aug. 31, 2015shares | Mar. 31, 2015shares | Mar. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($)item$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2017$ / sharesshares | |
Common Stock | ||||||||||||
Common stock, shares authorized | 90,000,000 | 90,000,000 | 90,000,000 | 90,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Common stock, shares issued | 51,576,442 | 51,448,753 | 51,576,442 | 51,448,753 | ||||||||
Common stock, shares outstanding | 51,576,442 | 51,448,753 | 51,576,442 | 51,448,753 | ||||||||
Number of holders of common stock | item | 365 | |||||||||||
Shares of common stock issued as a part of quarterly compensation of non-employee members of the Board of Directors | 11,448 | 11,784 | 11,745 | 10,450 | 9,748 | 8,168 | ||||||
Period of restriction on trade for shares issued to non-employee members of the board of directors under the Primoris Long-term Retention Plan | 1 year | |||||||||||
Aggregate purchase price up to which shares can be acquired under share repurchase program | $ | $ 5,000 | $ 5,000 | ||||||||||
Number of shares purchased and cancelled under the share repurchase program | 207,800 | 216,350 | 0 | |||||||||
Amount paid for shares purchased and cancelled under share repurchase program | $ | $ 5,000 | $ 5,000 | ||||||||||
Amount paid for shares purchased and cancelled under share repurchase program (per share) | $ / shares | $ 24.02 | $ 23.10 | ||||||||||
Preferred Stock | ||||||||||||
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||
Par value of preferred stock (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | 0 | 0 | |||||||
Warrants | ||||||||||||
Warrants outstanding (in shares) | 0 | 0 | 0 | 0 | 0 | |||||||
Restricted Stock Units | ||||||||||||
Common Stock | ||||||||||||
Granted, Units | 259,065 | |||||||||||
LTR Plan | ||||||||||||
Common Stock | ||||||||||||
Shares of common stock issued under the long-term incentive plan | 65,429 | 85,907 | 96,828 | |||||||||
Amount received in exchange for shares of common stock under a long term incentive plan | $ | $ 1,100 | $ 1,400 | $ 1,600 | |||||||||
Trading restriction | 6 months | |||||||||||
Percentage of average market closing prices used in determining number of common stock that could be purchased by participants | 75.00% | 75.00% | 75.00% | |||||||||
Equity Plan | ||||||||||||
Common Stock | ||||||||||||
Shares of common stock reserved for issuance upon exercise of all future stock option grants, SARS and grants of restricted shares under the 2013 Equity Plan | 1,853,494 | 1,853,494 | ||||||||||
Equity Plan | Restricted Stock Units | ||||||||||||
Common Stock | ||||||||||||
Granted, Units | 10,000 | 100,553 | 0 | 259,065 |
Selected Quarterly Financial 87
Selected Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Information | |||||||||||
Revenue | $ 579,017 | $ 608,311 | $ 631,165 | $ 561,502 | $ 601,863 | $ 507,828 | $ 456,811 | $ 430,446 | $ 2,379,995 | $ 1,996,948 | $ 1,929,415 |
Gross Profit | 68,477 | 70,421 | 84,483 | 55,053 | 68,616 | 50,129 | 43,285 | 39,277 | 278,434 | 201,307 | 219,873 |
Impairment of goodwill | 2,716 | 0 | 2,716 | 401 | |||||||
Net income | 23,808 | 22,134 | 22,396 | 8,512 | 14,766 | 4,756 | 5,287 | 2,916 | 76,850 | 27,725 | 37,151 |
Net income attributable to Primoris | $ 22,521 | $ 20,597 | $ 21,545 | $ 7,691 | $ 14,470 | $ 4,504 | $ 5,056 | $ 2,693 | $ 72,354 | $ 26,723 | $ 36,872 |
Earnings per share: | |||||||||||
Basic earnings per share (in dollars per share) | $ 0.44 | $ 0.40 | $ 0.42 | $ 0.15 | $ 0.28 | $ 0.09 | $ 0.10 | $ 0.05 | $ 1.41 | $ 0.52 | $ 0.71 |
Diluted earnings per share (in dollars per share) | $ 0.44 | $ 0.40 | $ 0.42 | $ 0.15 | $ 0.28 | $ 0.09 | $ 0.10 | $ 0.05 | $ 1.40 | $ 0.51 | $ 0.71 |
Weighted average common shares outstanding: | |||||||||||
Basic (in shares) | 51,449 | 51,441 | 51,437 | 51,594 | 51,771 | 51,780 | 51,772 | 51,725 | 51,481 | 51,762 | 51,647 |
Diluted (in shares) | 51,711 | 51,707 | 51,688 | 51,851 | 52,021 | 52,034 | 52,022 | 51,881 | 51,741 | 51,989 | 51,798 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 21, 2018 | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Nov. 02, 2016 | Aug. 03, 2016 | May 02, 2016 | Feb. 22, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Cash Dividend | ||||||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.225 | $ 0.220 | $ 0.205 | |
Subsequent Events | ||||||||||||
Cash Dividend | ||||||||||||
Cash dividend declared (in dollars per share) | $ 0.06 |