Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Primoris Services Corp | |
Entity Central Index Key | 1,361,538 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,530,572 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents ($68,188 and $60,256 related to VIEs. See Note 10) | $ 134,172 | $ 170,385 |
Accounts receivable, net | 260,920 | 291,589 |
Contract assets | 262,932 | 265,902 |
Note receivable | 10,000 | |
Prepaid expenses and other current assets | 21,694 | 15,338 |
Total current assets | 689,718 | 743,214 |
Property and equipment, net | 313,937 | 311,777 |
Intangible assets, net | 42,376 | 44,800 |
Goodwill | 153,374 | 153,374 |
Other long-term assets | 3,042 | 2,575 |
Total assets | 1,202,447 | 1,255,740 |
Current liabilities: | ||
Accounts payable | 130,956 | 140,943 |
Contract liabilities | 137,380 | 169,101 |
Accrued liabilities | 99,909 | 102,168 |
Dividends payable | 3,092 | 3,087 |
Current portion of long-term debt | 63,975 | 65,464 |
Total current liabilities | 435,312 | 480,763 |
Long-term debt, net of current portion | 181,972 | 193,351 |
Deferred tax liabilities | 13,577 | 13,571 |
Other long-term liabilities | 6,090 | 5,872 |
Total liabilities | 636,951 | 693,557 |
Commitments and contingencies (See Note 16) | ||
Stockholders' equity | ||
Common stock—$.0001 par value; 90,000,000 shares authorized; 51,530,572 and 51,448,753 issued and outstanding at March 31, 2018 and December 31, 2017 | 5 | 5 |
Additional paid-in capital | 162,701 | 160,502 |
Retained earnings | 393,547 | 395,961 |
Noncontrolling interest | 9,243 | 5,715 |
Total stockholders' equity | 565,496 | 562,183 |
Total liabilities and stockholders' equity | $ 1,202,447 | $ 1,255,740 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
VIEs | ||
Cash and cash equivalents | $ 134,172 | $ 170,385 |
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 | 51,530,572 | 51,576,442 |
Common stock, shares outstanding | 51,448,753 | 51,448,753 |
VIEs | ||
VIEs | ||
Cash and cash equivalents | $ 68,188 | $ 60,256 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Revenue | $ 504,119 | $ 561,502 |
Cost of revenue | 459,559 | 506,449 |
Gross profit | 44,560 | 55,053 |
Selling, general and administrative expenses | 38,651 | 39,854 |
Operating income | 5,909 | 15,199 |
Other income (expense): | ||
Foreign exchange gain (loss) | 257 | 23 |
Other income (expense), net | (12) | |
Interest income | 272 | 69 |
Interest expense | (1,998) | (2,262) |
Income before provision for income taxes | 4,428 | 13,029 |
Provision for income taxes | (212) | (4,517) |
Net income | 4,216 | 8,512 |
Less net income attributable to noncontrolling interests | (3,528) | (821) |
Net income attributable to Primoris | $ 688 | $ 7,691 |
Dividends per common share (in dollars per share) | $ 0.060 | $ 0.055 |
Earnings per share: | ||
Basic (in dollars per share) | 0.01 | 0.15 |
Diluted (in dollars per share) | $ 0.01 | $ 0.15 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 51,479 | 51,594 |
Diluted (in shares) | 51,747 | 51,851 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 4,216 | $ 8,512 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 14,368 | 14,134 |
Amortization of intangible assets | 2,424 | 1,727 |
Stock-based compensation expense | 215 | 459 |
Gain on sale of property and equipment | (1,104) | (1,308) |
Other non-cash items | 40 | 44 |
Changes in assets and liabilities: | ||
Accounts receivable | 30,669 | 36,383 |
Contract assets | 2,970 | (4,671) |
Other current assets | (6,356) | 1,102 |
Other long-term assets | (499) | (147) |
Accounts payable | (9,987) | (43,997) |
Contract liabilities | (31,721) | 38,525 |
Accrued expenses and other current liabilities | (1,806) | (1,752) |
Other long-term liabilities | 231 | 77 |
Net cash provided by operating activities | 3,660 | 49,088 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (19,125) | (19,222) |
Issuance of a note receivable | (10,000) | |
Proceeds from sale of property and equipment | 3,734 | 1,984 |
Net cash used in investing activities | (25,391) | (17,238) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,498 | 1,148 |
Repayment of long-term debt and capital leases | (12,893) | (12,498) |
Repurchase of common stock | (4,999) | |
Dividends paid | (3,087) | (2,839) |
Net cash used in financing activities | (14,482) | (19,188) |
Net change in cash and cash equivalents | (36,213) | 12,662 |
Cash and cash equivalents at beginning of the period | 170,385 | 135,823 |
Cash and cash equivalents at end of the period | 134,172 | 148,485 |
Cash paid: | ||
Interest | 1,965 | 2,262 |
Income taxes, net of refunds received | 88 | 1,872 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Obligations incurred for the acquisition of property | 4,163 | |
Dividends declared and not yet paid | $ 3,092 | $ 2,829 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2018 | |
Nature of Business | |
Nature of Business | Note 1—Nature of Business Organization and operations — Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware, and its corporate headquarters is located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201. Unless specifically noted otherwise, as used throughout these condensed 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. Reportable Segments — We segregate our business into four reportable segments: the Power, Industrial and Engineering (“Power”) segment, the Pipeline and Underground (“Pipeline”) segment, the Utilities and Distribution (“Utilities”) segment and the Civil segment. See Note 17 – “ Reportable Segments ” for a brief description of the reportable segments and their operations. The classification of revenue 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. 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 variable interest entities ("VIEs”), the results of the Carlsbad and Wilmington joint ventures are consolidated in our financial statements. The Wilmington project was substantially complete as of December 31, 2017, and the Carlsbad project is expected to be completed in 2018. Financial information for the joint ventures is presented in Note 10 – “Noncontrolling Interests ”. 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 6— “ Business Combinations ”. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Basis of Presentation | |
Basis of Presentation | Note 2—Basis of Presentation Interim consolidated financial statements — The interim condensed consolidated financial statements for the three month periods ended March 31, 2018 and 2017 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in our Annual Report on Form 10-K, filed on February 26, 2018, which contains our audited consolidated financial statements for the year ended December 31, 2017, have been omitted. This First Quarter 2018 Report should be read in concert with our most recent Annual Report on Form 10-K. The interim financial information is unaudited. In the opinion of management, the interim information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information. Reclassification — Certain previously reported amounts have been reclassified to conform to the current year presentation. 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 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 revenue in excess of 50% of total revenue; however, the group that comprises the top ten customers varies from year to year. During the three months ended March 31, 2018, revenue generated by the top ten customers were approximately $261.7 million, which represented 51.9% of total revenue during the period. During the period, a California utility customer represented 9.3% of total revenue, and a state department of transportation customer represented 9.2% of total revenue. During the three months ended March 31, 2017, revenue generated by the top ten customers were $384.0 million, which represented 68.4% of total revenue during the period. During the period, two large pipeline projects represented 28.5% of total revenue. At March 31, 2018, approximately 6.2% of our accounts receivable were due from one customer, and that customer provided 7.4% of our revenue for the three months ended March 31, 2018. In addition, of total accounts receivable, approximately 12.6% are from one customer with whom we are currently in dispute resolution. See Note 16 – “ Commitments and Contingencies ”. At March 31, 2017, approximately 12.0% of our accounts receivable were due from one customer, and that customer provided 9.5% of our revenue for the three months ended March 31, 2017. In addition, approximately 8.9% of total accounts receivable at March 31, 2017 were from one customer with whom we are currently in dispute resolution. 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. To the extent that any plans are underfunded, the Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, requires that if we were to withdraw from an agreement or if a plan is terminated, we may incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with Generally Accepted Accounting Principles (“GAAP”), any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 3—Recent Accounting Pronouncements Recently adopted 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 and supersedes all prior revenue recognition standards including the guidance in ASC Topic 605, “ Revenue Recognition ”. Under Topic 606, 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. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. See Note 4 — “ Revenue” for further details. 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 acquired 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 adopted the ASU as of January 1, 2018, and it did not have a material impact on our consolidated financial statements. 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. We adopted the ASU as of January 1, 2018, and it did not have a material impact on our consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-05, “Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”, to add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118 (“SAB 118”), to ASC 740 “Income Taxes”. SAB 118 was issued by the SEC in December 2017 to provide immediate guidance for accounting implications of U.S. tax reform under the Tax Cuts and Jobs Act (the “Tax Act”), which became effective for us on January 1, 2018. We have evaluated the potential impacts of SAB 118 and have applied this guidance to our consolidated financial statements and related disclosures beginning in the second quarter of its fiscal year 2018. See Note 13 for additional information on SAB 118 and the impacts of the Tax Act. Recently issued accounting pronouncements not yet adopted 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 continue to assess the effect the guidance will have on our existing accounting policies and consolidated financial statements. We expect there will be an increase in assets and liabilities on the Consolidated Balance Sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities. We are currently in the process of inventorying embedded leases and have not yet determined the impact to our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, " Simplifying the Test for Goodwill Impairment ". ASU 2017-04 removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019 and will be applied prospectively. We do not expect the adoption of ASU 2017-04 to have an impact on our financial position, results of operations or cash flows. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2018 | |
Revenue | |
Revenue | Note 4—Revenue On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Adoption changed our accounting policy for revenue recognition. Results for periods prior to January 1, 2018 are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605. The cumulative impact of adopting Topic 606 was immaterial and did not require an adjustment to retained earnings. However, we have reclassified prior year balance sheet and cash flow amounts to conform to current year presentation. We generate revenue under a range of contracting types, 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 and is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For time and material and cost reimbursable plus fee contracts, revenue is recognized primarily on an input basis, based on contract costs incurred as defined within the respective contracts. Costs to obtain contracts are generally not significant and are expensed in the period incurred. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as more than one performance obligation. Topic 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation. As of March 31, 2018, we had $1.88 billion of remaining performance obligations. We expect to recognize approximately 64% of our remaining performance obligations as revenue during the next four quarters and the remaining balance thereafter. Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue 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 revenue 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. The nature of our contracts give rise to several types of variable consideration, including contract modifications (change orders and claims), liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. Contracts are often modified to account for changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which 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 contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent we believe we have an enforceable right and it is probable that a significant reversal of cumulative revenue recognized will not occur. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. At March 31, 2018, we had unapproved contract modifications included in aggregate transaction prices that totaled approximately $81.0 million. These contract modifications were in the process of being negotiated in the normal course of business. Approximately $68.8 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through March 31, 2018. 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 under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. In the three months ended March 31, 2018, revenue recognized from performance obligations satisfied in previous periods was $21.3 million. 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 “Contract liabilities” on the Condensed Consolidated Balance Sheets. For contract revenue recognized over time, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods. 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 the transaction price, 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. The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability. The caption “Contract assets” in the Condensed Consolidated Balance Sheets represents the following: · unbilled revenue (formerly costs and estimated earnings in excess of billings) which arise when revenue has been recorded but the amount will not be billed until a later date; · retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and · contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project. Contract assets consist of the following (in thousands): March 31, December 31, 2018 2017 Unbilled revenue $ 160,649 $ 160,092 Retention receivable 64,155 66,586 Contract materials (not yet installed) 38,128 39,224 $ 262,932 $ 265,902 Contract assets decreased by $3.0 million compared to December 31, 2017 due primarily to reductions in our retention receivable from the completion of certain construction milestones. The caption “Contract liabilities” in the Condensed Consolidated Balance Sheets represents deferred revenue (formerly billings in excess of costs and estimated earnings) on billings in excess of contract revenue recognized to date, and the accrued loss provision. Contract liabilities consist of the following (in thousands): March 31, December 31, 2018 2017 Deferred revenue $ 129,679 $ 159,034 Accrued loss provision 7,701 10,067 $ 137,380 $ 169,101 Contract liabilities decreased $31.7 million compared to December 31, 2017 primarily due to lower deferred revenue. Revenue recognized for the three months ended March 31, 2018, that was included in the contract liability balance at the beginning of the year was approximately $120.0 million. The following tables present our revenue disaggregated into various categories. MSA and Non-MSA revenue was as follows (in thousands): For the three months ended March 31, 2018 Segment MSA Non-MSA Total Power $ 19,398 $ 147,157 $ 166,555 Pipeline 7,280 50,303 57,583 Utilities 119,767 46,943 166,710 Civil — 113,271 113,271 Total $ 146,445 $ 357,674 $ 504,119 Revenue by contract type was as follows (in thousands): For the three months ended March 31, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 116,655 $ 11,112 $ 38,788 $ 166,555 Pipeline 12,520 18,645 26,418 57,583 Utilities 64,064 66,751 35,895 166,710 Civil 9,643 87,080 16,548 113,271 Total $ 202,882 $ 183,588 $ 117,649 $ 504,119 (1) Includes time and material and cost reimbursable plus fee contracts. Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Unit-price and cost reimbursable contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under these contracts, our profit may vary if actual costs vary significantly from the negotiated rates. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 5—Fair Value Measurements ASC Topic 820, “ Fair Value Measurements and Disclosures ” defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, our financial assets and liabilities that are required to be measured at fair value at March 31, 2018 and December 31, 2017 (in thousands): Fair Value Measurements at Reporting Date Significant Quoted Prices Other Significant in Active Markets Observable Unobservable for Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets as of March 31, 2018: Cash and cash equivalents $ 134,172 $ — $ — Liabilities as of March 31, 2018: Contingent consideration $ — $ — $ 728 Assets as of December 31, 2017: Cash and cash equivalents $ 170,385 $ — $ — Liabilities as of December 31, 2017: Contingent consideration $ — $ — $ 716 Other financial instruments not listed in the table consist of accounts receivable, note 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 three months ended March 31, 2018 (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2018 Beginning balance, January 1, $ 716 Change in fair value of contingent consideration liability during year 12 Ending balance, March 31, $ 728 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 of the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations | |
Business Combinations | Note 6 — Business Combinations On May 26, 2017, we acquired certain assets of FGC, a utility contractor specializing in underground natural gas infrastructure, for approximately $33.0 million in cash. In addition, the sellers could receive a contingent earnout amount of up to $1.5 million over a one-year period ending May 26, 2018, based on the achievement of certain operating targets. The estimated fair value of the potential contingent consideration as of 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. For the three months ended March 31, 2018, FGC contributed revenue of $7.6 million and gross profit of $2.2 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 Power segment operations and no separate financial results were maintained. Therefore, it is impracticable for us to report separately the amounts of revenue and gross profit included in the Condensed Consolidated Statements of Income. On June 16, 2017, we acquired certain assets and liabilities of Coastal 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 the second quarter of 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. For the three months ended March 31, 2018, Coastal contributed revenue of $5.0 million and gross profit of $0.4 million. Supplemental Unaudited Pro Forma Information for the three months ended March 31, 2018 and 2017 The following pro forma information for the three months ended March 31, 2018 and 2017 presents our results of operations as if the acquisitions of FGC and Coastal had occurred at the beginning of 2017. 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 income before income taxes, and the pro forma adjustments, calculated using a tax rate of 23.5% and 37.0% for the three months ended March 31, 2018 and 2017, 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, 2017. 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. Three Months Ended March 31, 2018 2017 (unaudited) (unaudited) Revenue $ 504,119 $ 577,142 Income before provision for income taxes $ 4,428 $ 14,156 Net income attributable to Primoris $ 688 $ 8,401 Weighted average common shares outstanding: Basic 51,479 51,594 Diluted 51,747 51,851 Earnings per share: Basic $ 0.01 $ 0.16 Diluted $ 0.01 $ 0.16 Pending merger with Willbros Group, Inc. On March 27, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Waco Acquisition Vehicle, Inc., our wholly owned subsidiary (“Merger Sub”) and Willbros Group, Inc., (“Willbros”), pursuant to which Merger Sub will merge with and into Willbros (the “Merger”), with Willbros surviving the Merger as our wholly-owned subsidiary. The Merger Agreement includes customary representations, warranties and covenants. At the effective time of the Merger, we will pay $0.60 per share for all of Willbros’ outstanding common stock and will settle all of the existing Willbros debt obligations, for a purchase price of approximately $100.0 million. The Merger Agreement is expected to close in the second quarter of 2018, subject to satisfaction of customary closing conditions, including approval of the Merger Agreement by the requisite vote of Willbros’ stockholders. In connection with the Merger, we agreed to provide, at our discretion, up to $20.0 million in secured bridge financing to support Willbros’ working capital needs through the Closing Date (as defined in the Merger Agreement). At March 31, 2018, we had provided $10.0 million in secured bridge financing which is shown as a Note receivable on the Condensed Consolidated Balance Sheets. We are under no obligation to provide any future advances. In the event the Merger does not close, we expect the note to be repaid in 2018. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 7—Goodwill and Intangible Assets Goodwill by segment was recorded as follows (in thousands): March 31, December 31, Reporting Segment 2018 2017 Power $ 24,391 $ 24,391 Pipeline 51,521 51,521 Utilities 37,312 37,312 Civil 40,150 40,150 Total Goodwill $ 153,374 $ 153,374 At March 31, 2018 and December 31, 2017, intangible assets other than goodwill totaled $42.4 million and $44.8 million, respectively, net of amortization. The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are on a straight-line basis (in thousands): March 31, 2018 December 31, 2017 Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Tradename 9 years $ 31,790 $ (22,836) $ 32,175 $ (22,238) Customer relationships 10 years 49,900 (17,661) 49,900 (16,338) Non-compete agreements 5 years 1,900 (915) 1,900 (820) Other 3 years 275 (77) 275 (54) $ 83,865 $ (41,489) $ 84,250 $ (39,450) Amortization expense of intangible assets was $2.4 million and $1.7 million for the three months ended March 31, 2018 and 2017, respectively. Estimated future amortization expense for intangible assets is as follows (in thousands): Estimated Intangible For the Years Ending Amortization December 31, Expense 2018 (remaining nine months) $ 7,084 2019 9,193 2020 6,442 2021 5,202 2022 4,048 Thereafter 10,407 $ 42,376 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 8—Accounts Payable and Accrued Liabilities At March 31, 2018 and December 31, 2017, accounts payable were $131.0 million and $140.9 million, respectively. These balances included retention amounts for the same periods of approximately $14.0 million and $13.5 million, respectively. The retention amounts are due to subcontractors and have been retained pending contract completion and customer acceptance of jobs. The following is a summary of accrued expenses and other current liabilities (in thousands): March 31, December 31, 2018 2017 Payroll and related employee benefits $ 41,530 $ 45,708 Insurance, including self-insurance reserves 47,282 47,256 Corporate income taxes and other taxes 3,051 2,843 Other 8,046 6,361 $ 99,909 $ 102,168 |
Credit Arrangements
Credit Arrangements | 3 Months Ended |
Mar. 31, 2018 | |
Credit Arrangements | |
Credit Arrangements | Note 9—Credit Arrangements Long-term debt and credit facilities consist of the following (in thousands): March 31, December 31, 2018 2017 Commercial equipment notes $ 152,759 $ 165,532 Mortgage notes 11,145 11,242 Revolving credit facility — — Senior secured notes 82,143 82,143 Total debt 246,047 258,917 Unamortized debt issuance costs (100) (102) Total debt, net $ 245,947 $ 258,815 Less: current portion (63,975) (65,464) Long-term debt, net of current portion $ 181,972 $ 193,351 The weighted average interest rate on total debt outstanding at March 31, 2018 and December 31, 2017 was 3.0%. 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 March 31, 2018, interest rates ranged from 1.78% to 3.51% per annum and maturity dates ranging 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, and contains an accordion feature that will allow us to increase the borrowing capacity thereunder from $200.0 million up to $250.0 million, subject to obtaining additional or increased lender commitments. 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 are 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 $20.3 million at March 31, 2018. Other than commercial letters of credit, there were no borrowings under the Credit Agreement during the three months ended March 31, 2018, and available borrowing capacity at March 31, 2018 was $179.7 million. Senior Secured Notes and Shelf Agreement On December 28, 2012, we entered into a $50.0 million Senior Secured Notes purchase agreement (“Senior Notes”) and a $25.0 million private shelf agreement (the “Notes Agreement”) by and among 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 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 March 31, 2018. 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 March 31, 2018, letters of credit outstanding was $0.5 million in Canadian dollars, and the available borrowing capacity was $7.5 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for OnQuest Canada, ULC. At March 31, 2018, OnQuest Canada, ULC was in compliance with the covenant. |
Noncontrolling Interests
Noncontrolling Interests | 3 Months Ended |
Mar. 31, 2018 | |
Noncontrolling Interests | |
Noncontrolling Interests | Note 10 — 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, the tax effect of only our share of the income was recognized by us. The net assets of the joint ventures are restricted for use by the specific project and are not available for our general operations. Carlsbad Joint Venture The Carlsbad joint venture operating activities began in 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended March 31, 2018 2017 Revenue $ 41,820 $ 10,800 Net income attributable to noncontrolling interests $ 3,114 $ 368 The Carlsbad joint venture made no distributions to the partners, and we made no capital contributions to the Carlsbad joint venture during the three months ended March 31, 2018. 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 Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2018 2017 Cash $ 51,862 $ 44,308 Accounts receivable $ 18,621 $ 15,343 Contract liabilities $ 34,092 $ 42,743 Accounts payable $ 6,220 $ 12,352 Due to Primoris $ 19,385 $ — Wilmington Joint Venture The Wilmington joint venture operating activities began in October 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended March 31, 2018 2017 Revenue $ 1,484 $ 12,310 Net income attributable to noncontrolling interests $ 414 $ 453 The Wilmington joint venture made no distributions to the partners, and we made no capital contributions to the Wilmington joint venture during the three months ended March 31, 2018. The project was substantially complete as of December 31, 2017. The carrying value of the assets and liabilities associated with the operations of the Wilmington joint venture are included in our Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2018 2017 Cash $ 16,326 $ 15,948 Accounts receivable $ 467 $ 598 Contract liabilities $ 606 $ 1,480 Accounts payable $ 83 $ 759 Due to Primoris $ 8,397 $ 7,428 Summary – Joint Venture Balance Sheets The following table summarizes the total balance sheet amounts for the two joint ventures, which are included in our Condensed Consolidated Balance Sheets, and the total consolidated balance sheet amounts (in thousands): Joint Venture Consolidated At March 31, 2018 Amounts Amounts Cash $ 68,188 $ 134,172 Accounts receivable $ 19,088 $ 260,920 Accounts payable $ 6,303 $ 130,956 Contract liabilities $ 34,698 $ 137,380 At December 31, 2017 Cash $ 60,256 $ 170,385 Accounts receivable $ 15,941 $ 291,589 Accounts payable $ 13,111 $ 140,943 Contract liabilities $ 44,223 $ 169,101 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | Note 11—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 in 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 three months ended March 31, 2018 and 2017, we paid $0 and $0.2 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. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Stock-Based Compensation. | |
Stock-Based Compensation | Note 12—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. At March 31, 2018, a total of 173,650 Units were vested. The vesting schedule for the remaining Units are as follows: Number of Units For the Years Ending December 31, to Vest 2018 (remaining nine months) 28,471 2019 51,552 2020 5,392 85,415 Under guidance of ASC Topic 718 “ Compensation — Stock Compensation ”, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award). The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant. Stock compensation expense for the Units is being amortized using the straight-line method over the service period. We recognized $0.2 million and $0.5 million in compensation expense for the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018, approximately $1.0 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 1.4 years. Vested Units accrue “Dividend Equivalent Units” (as defined in the Equity Plan), which will be accrued as additional Units. At March 31, 2018, a total of 3,521 Dividend Equivalent Units were accrued. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 13—Income Taxes We are subject to extensive tax liabilities imposed by multiple jurisdictions. We determine our best estimate of the annual effective tax rate at each interim period using expected annual pre-tax earnings, statutory tax rates, and available tax planning opportunities. Certain significant or unusual items are separately recognized in the quarter in which they occur which can cause variability in the effective tax rate from quarter to quarter. We recognize interest and penalties related to uncertain tax positions, if any, as an income tax expense. The Tax Act was signed into law on December 22, 2017. This legislation makes significant changes to the U.S. Internal Revenue Code including a reduction of the U.S. federal corporate income tax rate from 35% to 21% beginning on January 1, 2018. Other changes require complex computations not previously provided in U.S. tax law. Given the significance of the legislation, the SEC staff issued SAB 118 which provides guidance on accounting for uncertainties of the effects of the Tax Act. Specifically, SAB 118 allowed companies to record provisional estimates of the impact of the Tax Act in the period ended December 31, 2017. The provisional estimates are to be finalized during a one year “measurement period” similar to that used when accounting for business combinations. Our measurement period remains open as we continue to evaluate the effects of the Tax Act on our deductions for tax depreciation and executive compensation accruals. No changes to the provisional estimates occurred during the three months ended March 31, 2018. The effective tax rate on income including noncontrolling interests for the three months ended March 31, 2018 and 2017 was 4.8% and 34.7%, respectively. Excluding noncontrolling interest, the effective tax rate on income attributable to Primoris for the three months ended March 31, 2018 and 2017 was 23.5% and 37.0%, respectively. Our 2018 tax rate differs from the U.S. federal statutory rate of 21% primarily due to the impact of state income taxes, investment tax credits, and nondeductible components of per diem expenses. Our 2017 tax rate differs from the U.S. federal statutory rate of 35% primarily due to state income taxes, the Domestic Production Activity Deduction, and nondeductible components of per diem expenses. Our U.S. 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, our state and foreign income tax returns are generally no longer subject to examination for tax years before 2012. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of our assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse. The effects of remeasurement of deferred tax assets and liabilities resulting from changes in tax rates are recognized in income in the period of enactment. |
Dividends and Earnings Per Shar
Dividends and Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Dividends and Earnings Per Share | |
Dividends and Earnings Per Share | Note 14—Dividends and Earnings Per Share We have paid or declared cash dividends during 2018 and 2017 as follows: Declaration Date Record Date Payable Date Amount Per Share 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 $ February 21, 2018 March 30, 2018 April 13, 2018 $ The payment of future dividends is contingent upon our revenue 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 three months ended March 31, 2018 and 2017 (in thousands, except per share amounts). Three Months Ended March 31, 2018 2017 Numerator: Net income attributable to Primoris $ 688 $ 7,691 Denominator: Weighted average shares for computation of basic earnings per share 51,479 51,594 Dilutive effect of shares issued to independent directors 6 7 Dilutive effect of restricted stock units (1) 262 250 Weighted average shares for computation of diluted earnings per share 51,747 51,851 Earnings per share attributable to Primoris: Basic $ 0.01 $ 0.15 Diluted $ 0.01 $ 0.15 (1) Represents the dilutive effect of the grant of Units and vested Dividend Equivalent Units for the respective periods presented. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity | |
Stockholders' Equity | Note 15—Stockholders’ Equity Common stock — We issued 71,757 shares of common stock in February 2018 and 65,429 shares of common stock in February 2017 under our long-term retention plan (“LTR Plan”). The shares were purchased by the participants in the LTR Plan with payment made to us of $1.5 million in February 2018 and $1.1 million in February 2017. 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 2018 were for bonus amounts earned in 2017, and the number of shares was calculated at 75% of the average closing market price of December 2017. The shares purchased in February 2017 were for bonus amounts earned in 2016, and the number of shares was calculated at 75% of the average closing market price of January 2017. In February 2018 and 2017, we issued 10,062 shares and 11,784 shares of common stock, respectively, as part of the quarterly compensation of the non-employee members of the Board of Directors. As discussed in Note 12 — “Stock–Based Compensation” , as of March 31, 2018, the Board of Directors has granted a total of 259,065 shares of Units under the Equity Plan and these Units have accrued 3,521 Dividend Equivalent Units. 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. There were no share repurchases authorized in the three months ended March 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 16—Commitments and Contingencies Leases — We lease certain property and equipment under non-cancellable operating leases which expire at various dates through 2023. The leases require us to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”. Total lease expense during the three months ended March 31, 2018 and 2017 was $6.8 million and $6.1 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”) in order to mitigate additional liability in connection with the significantly underfunded Plan. During the first quarter of 2016, we received a final payment schedule for our withdrawal liability. Based on this schedule, the liability recorded at March 31, 2018 was $4.5 million, which is included in Accrued liabilities on the Condensed Consolidated Balance Sheets. 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 the three months ended March 31, 2018, we increased our liability by $0.3 million and spent $0.2 million for remediation. At March 31, 2018, the remaining accrual balance was $15.3 million. Legal proceedings — We have been engaged in dispute resolution to collect money we believe we are owed for a 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 revenue 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 $17.7 million included in “Contract liabilities”. 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 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 — At March 31, 2018 and December 31, 2017, the Company had bid and completion bonds issued and outstanding totaling approximately $678.9 million and $705.7 million, respectively. |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2018 | |
Reportable Segments | |
Reportable Segments | Note 17—Reportable Segments We segregate our business into four reportable segments: the Power segment, the Pipeline segment, the Utilities segment, and the Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to the segment. Driving the 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 revenue 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 revenue and gross profit, which were immaterial, have been eliminated in the following tables. Segment Revenue Revenue by segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands): For the three months ended March 31, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 166,555 $ 131,240 Pipeline 57,583 183,445 Utilities 166,710 116,980 Civil 113,271 129,837 Total $ 504,119 $ 561,502 Segment Gross Profit Gross profit by segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands): For the three months ended March 31, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 24,071 $ 15,524 Pipeline 7,891 28,125 Utilities 9,051 8,273 Civil 3,547 3,131 Total $ 44,560 $ 55,053 Segment Goodwill The amount of goodwill recorded by segment at March 31, 2018 and at December 31, 2017 is presented in Note 7 – “ Goodwill and Intangible Assets” . Geographic Region — Revenue and Total Assets The majority of our revenue is derived from customers in the United States with approximately 1.0% generated from sources outside of the United States. At March 31, 2018 and December 31, 2017, approximately 1.0% of total assets were located outside of the United States. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events. | |
Subsequent Event | Note 18—Subsequent Events Cash Dividend – On May 4, 2018, the Board of Directors declared a cash dividend of $0.06 per common share for stockholders of record as of June 29, 2018, payable on or about July 13, 2018. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Basis of Presentation | |
Reclassification | Reclassification — Certain previously reported amounts have been reclassified to conform to the current year presentation. |
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 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 revenue in excess of 50% of total revenue; however, the group that comprises the top ten customers varies from year to year. During the three months ended March 31, 2018, revenue generated by the top ten customers were approximately $261.7 million, which represented 51.9% of total revenue during the period. During the period, a California utility customer represented 9.3% of total revenue, and a state department of transportation customer represented 9.2% of total revenue. During the three months ended March 31, 2017, revenue generated by the top ten customers were $384.0 million, which represented 68.4% of total revenue during the period. During the period, two large pipeline projects represented 28.5% of total revenue. At March 31, 2018, approximately 6.2% of our accounts receivable were due from one customer, and that customer provided 7.4% of our revenue for the three months ended March 31, 2018. In addition, of total accounts receivable, approximately 12.6% are from one customer with whom we are currently in dispute resolution. See Note 16 – “ Commitments and Contingencies ”. At March 31, 2017, approximately 12.0% of our accounts receivable were due from one customer, and that customer provided 9.5% of our revenue for the three months ended March 31, 2017. In addition, approximately 8.9% of total accounts receivable at March 31, 2017 were from one customer with whom we are currently in dispute resolution. |
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. To the extent that any plans are underfunded, the Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, requires that if we were to withdraw from an agreement or if a plan is terminated, we may incur a withdrawal obligation. The potential withdrawal obligation may be significant. In accordance with Generally Accepted Accounting Principles (“GAAP”), any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated. |
Revenue recognition | On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Adoption changed our accounting policy for revenue recognition. Results for periods prior to January 1, 2018 are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605. The cumulative impact of adopting Topic 606 was immaterial and did not require an adjustment to retained earnings. However, we have reclassified prior year balance sheet and cash flow amounts to conform to current year presentation. We generate revenue under a range of contracting types, 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 and is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For time and material and cost reimbursable plus fee contracts, revenue is recognized primarily on an input basis, based on contract costs incurred as defined within the respective contracts. Costs to obtain contracts are generally not significant and are expensed in the period incurred. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as more than one performance obligation. Topic 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation. As of March 31, 2018, we had $1.88 billion of remaining performance obligations. We expect to recognize approximately 64% of our remaining performance obligations as revenue during the next four quarters and the remaining balance thereafter. Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue 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 revenue 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. The nature of our contracts give rise to several types of variable consideration, including contract modifications (change orders and claims), liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. Contracts are often modified to account for changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which 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 contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent we believe we have an enforceable right and it is probable that a significant reversal of cumulative revenue recognized will not occur. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. At March 31, 2018, we had unapproved contract modifications included in aggregate transaction prices that totaled approximately $81.0 million. These contract modifications were in the process of being negotiated in the normal course of business. Approximately $68.8 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through March 31, 2018. 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 under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. In the three months ended March 31, 2018, revenue recognized from performance obligations satisfied in previous periods was $21.3 million. 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 “Contract liabilities” on the Condensed Consolidated Balance Sheets. For contract revenue recognized over time, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods. 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 the transaction price, 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. The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability. The caption “Contract assets” in the Condensed Consolidated Balance Sheets represents the following: · unbilled revenue (formerly costs and estimated earnings in excess of billings) which arise when revenue has been recorded but the amount will not be billed until a later date; · retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and · contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue | |
Schedule of contract assets | Contract assets consist of the following (in thousands): March 31, December 31, 2018 2017 Unbilled revenue $ 160,649 $ 160,092 Retention receivable 64,155 66,586 Contract materials (not yet installed) 38,128 39,224 $ 262,932 $ 265,902 |
Schedule of contract liabilities | Contract liabilities consist of the following (in thousands): March 31, December 31, 2018 2017 Deferred revenue $ 129,679 $ 159,034 Accrued loss provision 7,701 10,067 $ 137,380 $ 169,101 |
Schedule of revenue disaggregation by various categories | MSA and Non-MSA revenue was as follows (in thousands): For the three months ended March 31, 2018 Segment MSA Non-MSA Total Power $ 19,398 $ 147,157 $ 166,555 Pipeline 7,280 50,303 57,583 Utilities 119,767 46,943 166,710 Civil — 113,271 113,271 Total $ 146,445 $ 357,674 $ 504,119 Revenue by contract type was as follows (in thousands): For the three months ended March 31, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 116,655 $ 11,112 $ 38,788 $ 166,555 Pipeline 12,520 18,645 26,418 57,583 Utilities 64,064 66,751 35,895 166,710 Civil 9,643 87,080 16,548 113,271 Total $ 202,882 $ 183,588 $ 117,649 $ 504,119 (1) Includes time and material and cost reimbursable plus fee contracts. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 Topic 820, our financial assets and liabilities that are required to be measured at fair value at March 31, 2018 and December 31, 2017 (in thousands): Fair Value Measurements at Reporting Date Significant Quoted Prices Other Significant in Active Markets Observable Unobservable for Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets as of March 31, 2018: Cash and cash equivalents $ 134,172 $ — $ — Liabilities as of March 31, 2018: Contingent consideration $ — $ — $ 728 Assets as of December 31, 2017: Cash and cash equivalents $ 170,385 $ — $ — Liabilities as of December 31, 2017: Contingent consideration $ — $ — $ 716 |
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 three months ended March 31, 2018 (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2018 Beginning balance, January 1, $ 716 Change in fair value of contingent consideration liability during year 12 Ending balance, March 31, $ 728 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations | |
Schedule of pro forma results | Three Months Ended March 31, 2018 2017 (unaudited) (unaudited) Revenue $ 504,119 $ 577,142 Income before provision for income taxes $ 4,428 $ 14,156 Net income attributable to Primoris $ 688 $ 8,401 Weighted average common shares outstanding: Basic 51,479 51,594 Diluted 51,747 51,851 Earnings per share: Basic $ 0.01 $ 0.16 Diluted $ 0.01 $ 0.16 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by reporting unit | Goodwill by segment was recorded as follows (in thousands): March 31, December 31, Reporting Segment 2018 2017 Power $ 24,391 $ 24,391 Pipeline 51,521 51,521 Utilities 37,312 37,312 Civil 40,150 40,150 Total Goodwill $ 153,374 $ 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 on a straight-line basis (in thousands): March 31, 2018 December 31, 2017 Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Tradename 9 years $ 31,790 $ (22,836) $ 32,175 $ (22,238) Customer relationships 10 years 49,900 (17,661) 49,900 (16,338) Non-compete agreements 5 years 1,900 (915) 1,900 (820) Other 3 years 275 (77) 275 (54) $ 83,865 $ (41,489) $ 84,250 $ (39,450) |
Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for intangible assets is as follows (in thousands): Estimated Intangible For the Years Ending Amortization December 31, Expense 2018 (remaining nine months) $ 7,084 2019 9,193 2020 6,442 2021 5,202 2022 4,048 Thereafter 10,407 $ 42,376 |
Accounts Payable and Accrued 29
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 (in thousands): March 31, December 31, 2018 2017 Payroll and related employee benefits $ 41,530 $ 45,708 Insurance, including self-insurance reserves 47,282 47,256 Corporate income taxes and other taxes 3,051 2,843 Other 8,046 6,361 $ 99,909 $ 102,168 |
Credit Arrangements (Tables)
Credit Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Credit Arrangements | |
Schedule of long-term debt and credit facilities | Long-term debt and credit facilities consist of the following (in thousands): March 31, December 31, 2018 2017 Commercial equipment notes $ 152,759 $ 165,532 Mortgage notes 11,145 11,242 Revolving credit facility — — Senior secured notes 82,143 82,143 Total debt 246,047 258,917 Unamortized debt issuance costs (100) (102) Total debt, net $ 245,947 $ 258,815 Less: current portion (63,975) (65,464) Long-term debt, net of current portion $ 181,972 $ 193,351 |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | The following table summarizes the total balance sheet amounts for the two joint ventures, which are included in our Condensed Consolidated Balance Sheets, and the total consolidated balance sheet amounts (in thousands): Joint Venture Consolidated At March 31, 2018 Amounts Amounts Cash $ 68,188 $ 134,172 Accounts receivable $ 19,088 $ 260,920 Accounts payable $ 6,303 $ 130,956 Contract liabilities $ 34,698 $ 137,380 At December 31, 2017 Cash $ 60,256 $ 170,385 Accounts receivable $ 15,941 $ 291,589 Accounts payable $ 13,111 $ 140,943 Contract liabilities $ 44,223 $ 169,101 |
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 Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended March 31, 2018 2017 Revenue $ 41,820 $ 10,800 Net income attributable to noncontrolling interests $ 3,114 $ 368 |
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 Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2018 2017 Cash $ 51,862 $ 44,308 Accounts receivable $ 18,621 $ 15,343 Contract liabilities $ 34,092 $ 42,743 Accounts payable $ 6,220 $ 12,352 Due to Primoris $ 19,385 $ — |
Wilmington | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | The Wilmington joint venture operating activities began in October 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended March 31, 2018 2017 Revenue $ 1,484 $ 12,310 Net income attributable to noncontrolling interests $ 414 $ 453 |
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 Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2018 2017 Cash $ 16,326 $ 15,948 Accounts receivable $ 467 $ 598 Contract liabilities $ 606 $ 1,480 Accounts payable $ 83 $ 759 Due to Primoris $ 8,397 $ 7,428 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stock-Based Compensation | |
Schedule of units activity | Number of Units For the Years Ending December 31, to Vest 2018 (remaining nine months) 28,471 2019 51,552 2020 5,392 85,415 |
Dividends and Earnings Per Sh33
Dividends and Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Dividends and Earnings Per Share | |
Schedule of cash dividends paid or declared | Declaration Date Record Date Payable Date Amount Per Share 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 $ February 21, 2018 March 30, 2018 April 13, 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 three months ended March 31, 2018 and 2017 (in thousands, except per share amounts). Three Months Ended March 31, 2018 2017 Numerator: Net income attributable to Primoris $ 688 $ 7,691 Denominator: Weighted average shares for computation of basic earnings per share 51,479 51,594 Dilutive effect of shares issued to independent directors 6 7 Dilutive effect of restricted stock units (1) 262 250 Weighted average shares for computation of diluted earnings per share 51,747 51,851 Earnings per share attributable to Primoris: Basic $ 0.01 $ 0.15 Diluted $ 0.01 $ 0.15 Represents the dilutive effect of the grant of Units and vested Dividend Equivalent Units for the respective periods presented. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Reportable Segments | |
Schedule of revenue by segment | Revenue by segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands): For the three months ended March 31, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 166,555 $ 131,240 Pipeline 57,583 183,445 Utilities 166,710 116,980 Civil 113,271 129,837 Total $ 504,119 $ 561,502 |
Schedule of gross profit by segment | Gross profit by segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands): For the three months ended March 31, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 24,071 $ 15,524 Pipeline 7,891 28,125 Utilities 9,051 8,273 Civil 3,547 3,131 Total $ 44,560 $ 55,053 |
Nature of Business (Details)
Nature of Business (Details) $ in Millions | Jun. 16, 2017USD ($) | May 30, 2017USD ($) | May 26, 2017USD ($) | Mar. 31, 2018segmentitem |
Nature of Business | ||||
Number of reportable segments | segment | 4 | |||
Number of joint ventures | item | 2 | |||
Number of variable interest entities | item | 2 | |||
Amount of purchase of assets and liabilities | $ 2.3 | |||
Utilities | FGC | ||||
Nature of Business | ||||
Amount of purchase of assets and liabilities | $ 37.7 | |||
Pipeline | Coastal | ||||
Nature of Business | ||||
Amount of purchase of assets and liabilities | $ 27.5 | |||
Carlsbad | ||||
Nature of Business | ||||
Ownership percentage | 50.00% | |||
Wilmington | ||||
Nature of Business | ||||
Ownership percentage | 50.00% |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)customeritem | Mar. 31, 2017USD ($)customer | |
Customer concentration | ||
Number of top customers | 10 | |
Number of calendar years in which top customers typically generate minimum specified percentage of revenue | item | 1 | |
Minimum percentage of revenues generated by top ten customers | 50.00% | |
Revenue | $ | $ 504,119 | |
Revenues. | Customer concentration | Top ten customers | ||
Customer concentration | ||
Number of top customers | 10 | 10 |
Revenue | $ | $ 261,700 | $ 384,000 |
Percentage of concentration risk | 51.90% | 68.40% |
Revenues. | Customer concentration | Two large pipeline projects | ||
Customer concentration | ||
Percentage of concentration risk | 28.50% | |
Revenues. | Customer concentration | California utility | ||
Customer concentration | ||
Percentage of concentration risk | 9.30% | |
Revenues. | Customer concentration | A State department of transportation | ||
Customer concentration | ||
Percentage of concentration risk | 9.20% | |
Revenues. | Customer concentration | One customer | ||
Customer concentration | ||
Percentage of concentration risk | 7.40% | 9.50% |
Accounts receivable | Customer concentration | One customer | ||
Customer concentration | ||
Percentage of concentration risk | 6.20% | 12.00% |
Number of customers | 1 | 1 |
Accounts receivable | Customer concentration | Disputed Receivables | ||
Customer concentration | ||
Percentage of concentration risk | 12.60% | 8.90% |
Number of customers | 1 |
Revenue - Performance obligatio
Revenue - Performance obligations (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue | |
Remaining performance obligations | $ 1,880 |
Percentage of remaining performance obligation expected to be recognized in period | 64.00% |
Revenue recognized from performance obligations satisfied in previous periods | $ 21.3 |
Amount of contract modifications included in the expected contract value. | 81 |
Amount of contract modifications recognized as revenue on a cumulative catch-up basis | $ 68.8 |
Revenue - Contract assets (Deta
Revenue - Contract assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Revenue | ||
Unbilled revenue | $ 160,649 | $ 160,092 |
Retention receivable | 64,155 | 66,586 |
Uninstalled contract materials | 38,128 | 39,224 |
Contract assets | 262,932 | $ 265,902 |
Decrease in contract with customer asset | $ (3,000) |
Revenue - Contract liabilities
Revenue - Contract liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Revenue | ||
Deferred revenue | $ 129,679 | $ 159,034 |
Accrued loss provision | 7,701 | 10,067 |
Contract Liabilities | 137,380 | $ 169,101 |
Decrease in contract liabilities | (31,700) | |
Revenue recognized included in contract liability at beginning of period | $ 120,000 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue by customer type and contract type (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue | |
Revenue | $ 504,119 |
Fixed price | |
Disaggregation of Revenue | |
Revenue | 202,882 |
Unit price | |
Disaggregation of Revenue | |
Revenue | 183,588 |
Cost reimbursable | |
Disaggregation of Revenue | |
Revenue | 117,649 |
MSA | |
Disaggregation of Revenue | |
Revenue | 146,445 |
Non-MSA | |
Disaggregation of Revenue | |
Revenue | 357,674 |
Power | |
Disaggregation of Revenue | |
Revenue | 166,555 |
Power | Fixed price | |
Disaggregation of Revenue | |
Revenue | 116,655 |
Power | Unit price | |
Disaggregation of Revenue | |
Revenue | 11,112 |
Power | Cost reimbursable | |
Disaggregation of Revenue | |
Revenue | 38,788 |
Power | MSA | |
Disaggregation of Revenue | |
Revenue | 19,398 |
Power | Non-MSA | |
Disaggregation of Revenue | |
Revenue | 147,157 |
Pipeline | |
Disaggregation of Revenue | |
Revenue | 57,583 |
Pipeline | Fixed price | |
Disaggregation of Revenue | |
Revenue | 12,520 |
Pipeline | Unit price | |
Disaggregation of Revenue | |
Revenue | 18,645 |
Pipeline | Cost reimbursable | |
Disaggregation of Revenue | |
Revenue | 26,418 |
Pipeline | MSA | |
Disaggregation of Revenue | |
Revenue | 7,280 |
Pipeline | Non-MSA | |
Disaggregation of Revenue | |
Revenue | 50,303 |
Utilities | |
Disaggregation of Revenue | |
Revenue | 166,710 |
Utilities | Fixed price | |
Disaggregation of Revenue | |
Revenue | 64,064 |
Utilities | Unit price | |
Disaggregation of Revenue | |
Revenue | 66,751 |
Utilities | Cost reimbursable | |
Disaggregation of Revenue | |
Revenue | 35,895 |
Utilities | MSA | |
Disaggregation of Revenue | |
Revenue | 119,767 |
Utilities | Non-MSA | |
Disaggregation of Revenue | |
Revenue | 46,943 |
Civil | |
Disaggregation of Revenue | |
Revenue | 113,271 |
Civil | Fixed price | |
Disaggregation of Revenue | |
Revenue | 9,643 |
Civil | Unit price | |
Disaggregation of Revenue | |
Revenue | 87,080 |
Civil | Cost reimbursable | |
Disaggregation of Revenue | |
Revenue | 16,548 |
Civil | Non-MSA | |
Disaggregation of Revenue | |
Revenue | $ 113,271 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | $ 134,172 | $ 170,385 |
Significant Unobservable Inputs (Level 3) | ||
Liabilities | ||
Fair value of the contingent consideration | $ 728 | $ 716 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration Liability (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)item | |
Additional information | |
Number of unobservable inputs | item | 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% |
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | |
Rollforward of contingent consideration liability level three fair value measurements | |
Balance at the beginning of the period | $ 716 |
Change in fair value of contingent consideration liability during year | 12 |
Balance at the end of the period | $ 728 |
Business Combinations - 2017 Ac
Business Combinations - 2017 Acquisitions (Details) - USD ($) $ in Thousands | Jun. 16, 2017 | May 30, 2017 | May 26, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Business combinations | ||||||
Goodwill | $ 153,374 | $ 153,374 | ||||
Revenue | 504,119 | |||||
Gross profit | 44,560 | $ 55,053 | ||||
FGC | ||||||
Business combinations | ||||||
Cash payment made | $ 33,000 | |||||
Potential contingent consideration | $ 1,500 | |||||
Contingent earnout period (in years) | 1 year | |||||
Fair value of the contingent consideration | $ 1,200 | |||||
Fixed assets | 4,800 | |||||
Working capital | 3,300 | |||||
Goodwill | 17,000 | |||||
Land and buildings | $ 3,500 | |||||
The period of time goodwill is deductible for income tax purposes | 15 years | |||||
Revenue | 7,600 | |||||
Gross profit | 2,200 | |||||
FGC | Customer relationships | ||||||
Business combinations | ||||||
Intangibles assets | $ 9,100 | |||||
Engineering Assets | ||||||
Business combinations | ||||||
Cash payment made | $ 2,300 | |||||
Fixed assets | 200 | |||||
Engineering Assets | Customer relationships | ||||||
Business combinations | ||||||
Intangibles assets | $ 2,100 | |||||
Coastal | ||||||
Business combinations | ||||||
Cash payment made | $ 27,500 | |||||
Fixed assets | 4,000 | |||||
Working capital | 4,600 | |||||
Goodwill | 9,300 | |||||
Long-term capital leases | $ 300 | |||||
The period of time goodwill is deductible for income tax purposes | 15 years | |||||
Gross profit | $ 400 | |||||
Coastal | Customer relationships and tradename | ||||||
Business combinations | ||||||
Intangibles assets | $ 9,900 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Pro forma results | ||
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent) | 23.50% | 37.00% |
Revenues | $ 504,119 | $ 577,142 |
Income before provision for income taxes | 4,428 | 14,156 |
Net income attributable to Primoris | $ 688 | $ 8,401 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 51,479 | 51,594 |
Diluted (in shares) | 51,747 | 51,851 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.01 | $ 0.16 |
Diluted (in dollars per share) | $ 0.01 | $ 0.16 |
Business Combinations - Willbro
Business Combinations - Willbros Merger Agreement (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 27, 2018 | May 30, 2017 | Mar. 31, 2018 |
Nature of Business | |||
Purchase price | $ 2.3 | ||
Willbros Group, Inc. | |||
Nature of Business | |||
Share price of acquired entity | $ 0.60 | ||
Purchase price | $ 100 | ||
Maximum amount of secured bridge financing to be provided | $ 20 | ||
Willbros Group, Inc. | Note Receivable | |||
Nature of Business | |||
Amount of secured bridge financing provided | $ 10 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill | ||
Goodwill | $ 153,374 | $ 153,374 |
Power | ||
Goodwill | ||
Goodwill | 24,391 | 24,391 |
Pipeline | ||
Goodwill | ||
Goodwill | 51,521 | 51,521 |
Utilities | ||
Goodwill | ||
Goodwill | 37,312 | 37,312 |
Civil | ||
Goodwill | ||
Goodwill | $ 40,150 | $ 40,150 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Intangible assets | |||
Gross Carrying Amount | $ 83,865 | $ 84,250 | |
Accumulated Amortization | (41,489) | (39,450) | |
Amortization expense of intangible assets | 2,424 | $ 1,727 | |
Estimated future amortization expense for intangible assets | |||
2018 (remaining nine months) | 7,084 | ||
2,019 | 9,193 | ||
2,020 | 6,442 | ||
2,021 | 5,202 | ||
2,022 | 4,048 | ||
Thereafter | 10,407 | ||
Total | $ 42,376 | $ 44,800 | |
Tradename | |||
Intangible assets | |||
Weighted Average Life | 9 years | 9 years | |
Gross Carrying Amount | $ 31,790 | $ 32,175 | |
Accumulated Amortization | $ (22,836) | $ (22,238) | |
Customer relationships | |||
Intangible assets | |||
Weighted Average Life | 10 years | 10 years | |
Gross Carrying Amount | $ 49,900 | $ 49,900 | |
Accumulated Amortization | $ (17,661) | $ (16,338) | |
Non-compete agreements | |||
Intangible assets | |||
Weighted Average Life | 5 years | 5 years | |
Gross Carrying Amount | $ 1,900 | $ 1,900 | |
Accumulated Amortization | $ (915) | (820) | |
Other | |||
Intangible assets | |||
Weighted Average Life | 3 years | ||
Gross Carrying Amount | $ 275 | 275 | |
Accumulated Amortization | $ (77) | $ (54) |
Accounts Payable and Accrued 48
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 130,956 | $ 140,943 |
Retention amounts included in accounts payable | 14,000 | 13,500 |
Accrued expenses and other current liabilities | ||
Payroll and related employee benefits | 41,530 | 45,708 |
Insurance, including self-insurance reserves | 47,282 | 47,256 |
Corporate income taxes and other taxes | 3,051 | 2,843 |
Other | 8,046 | 6,361 |
Total accrued expenses and other current liabilities | $ 99,909 | $ 102,168 |
Credit Arrangements (Details)
Credit Arrangements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Credit arrangements | ||
Total debt | $ 246,047 | $ 258,917 |
Unamortized debt issuance costs | (100) | (102) |
Total debt, net | 245,947 | 258,815 |
Less: current portion | (63,975) | (65,464) |
Long-term debt, net of current portion | 181,972 | 193,351 |
Commercial equipment notes | ||
Credit arrangements | ||
Total debt, net | 152,759 | 165,532 |
Mortgages | ||
Credit arrangements | ||
Total debt, net | 11,145 | 11,242 |
Senior secured notes | ||
Credit arrangements | ||
Total debt, net | $ 82,143 | $ 82,143 |
Credit Arrangements - Narrative
Credit Arrangements - Narrative (Details) $ in Millions, $ in Millions | Nov. 09, 2015USD ($)payment | Jun. 03, 2015USD ($) | Jul. 25, 2013USD ($)payment | Dec. 31, 2015USD ($)loanbuilding | Mar. 31, 2018USD ($) | Mar. 31, 2018CAD ($)building | Mar. 31, 2018USD ($) | Dec. 31, 2017 | Sep. 30, 2017USD ($) | Sep. 29, 2017USD ($) | Sep. 28, 2017USD ($) | Dec. 28, 2012USD ($) |
Credit arrangements | ||||||||||||
Weighted average interest rate (as a percent) | 3.00% | 3.00% | 3.00% | |||||||||
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% | ||||||||||
Mortgages | ||||||||||||
Credit arrangements | ||||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | ||||||||||
Number of assets secured | building | 3 | |||||||||||
Assumed notes | $ 4.2 | |||||||||||
Secured mortgage notes, maturing on January 1, 2031 | ||||||||||||
Credit arrangements | ||||||||||||
Interest rate (as a percent) | 4.30% | |||||||||||
Number of secured mortgage notes payable to a bank | loan | 2 | |||||||||||
Initial principal amount | $ 8 | |||||||||||
Number of assets secured | building | 2 | |||||||||||
Senior secured notes | ||||||||||||
Credit arrangements | ||||||||||||
Interest rate (as a percent) | 4.60% | 3.65% | 3.65% | |||||||||
Initial principal amount | $ 25 | $ 50 | ||||||||||
Number of annual principal payments | payment | 7 | |||||||||||
Required principal payment | $ 3.6 | $ 7.1 | ||||||||||
Senior secured notes | Minimum | ||||||||||||
Credit arrangements | ||||||||||||
Prepayment to be paid on debt | $ 5 | |||||||||||
Notes Agreement | ||||||||||||
Credit arrangements | ||||||||||||
Interest rate (as a percent) | 3.85% | |||||||||||
Initial principal amount | $ 25 | $ 25 | ||||||||||
Number of annual principal payments | payment | 7 | |||||||||||
Required principal payment | $ 3.6 | |||||||||||
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 | |||||||||||
Credit Agreement | ||||||||||||
Credit arrangements | ||||||||||||
Maximum borrowing capacity | $ 200 | $ 125 | ||||||||||
Debt issuance costs | $ 0.6 | |||||||||||
Additional Period to Issue Notes | 3 years | |||||||||||
Available borrowing capacity | $ 179.7 | |||||||||||
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 | |||||||||||
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 | |||||||||||
Maximum borrowing capacity with accordion feature | 250 | |||||||||||
Borrowings outstanding | 0 | |||||||||||
Credit Agreement | Commercial letters of credit | ||||||||||||
Credit arrangements | ||||||||||||
Commercial letters of credit outstanding | 20.3 | |||||||||||
Canadian Credit Facility | ||||||||||||
Credit arrangements | ||||||||||||
Available borrowing capacity | $ 7.5 | |||||||||||
Canadian Credit Facility | Commercial letters of credit | ||||||||||||
Credit arrangements | ||||||||||||
Maximum borrowing capacity | $ 8 | |||||||||||
Commercial letters of credit outstanding | $ 0.5 | |||||||||||
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 | ||
Mar. 31, 2018USD ($)item | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Noncontrolling Interests | |||
Number of joint ventures | item | 2 | ||
Tax effect on income recognized | $ 212 | $ 4,517 | |
Revenue | 504,119 | ||
Net income attributable to noncontrolling interests | 3,528 | 821 | |
Cash | 134,172 | $ 170,385 | |
Accounts receivable | 260,920 | 291,589 | |
Contract assets | 262,932 | 265,902 | |
Accounts payable | 130,956 | 140,943 | |
Contract liabilities | 137,380 | 169,101 | |
Carlsbad | |||
Noncontrolling Interests | |||
Revenue | 41,820 | 10,800 | |
Net income attributable to noncontrolling interests | 3,114 | 368 | |
Distributions to partners | 0 | ||
Capital contributions | 0 | ||
Cash | 51,862 | 44,308 | |
Accounts receivable | 18,621 | 15,343 | |
Accounts payable | 6,220 | 12,352 | |
Contract liabilities | 34,092 | 42,743 | |
Wilmington | |||
Noncontrolling Interests | |||
Revenue | 1,484 | 12,310 | |
Net income attributable to noncontrolling interests | 414 | $ 453 | |
Distributions to partners | 0 | ||
Capital contributions | 0 | ||
Cash | 16,326 | 15,948 | |
Accounts receivable | 467 | 598 | |
Accounts payable | 83 | 759 | |
Contract liabilities | 606 | 1,480 | |
Due to Primoris | 8,397 | 7,428 | |
Carlsbad and Wilmington | |||
Noncontrolling Interests | |||
Cash | 68,188 | 60,256 | |
Accounts receivable | 19,088 | 15,941 | |
Accounts payable | 6,303 | 13,111 | |
Contract liabilities | $ 34,698 | $ 44,223 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2017USD ($)loan | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Feb. 28, 2017item | |
Mortgages | ||||
Related party transactions | ||||
Assumed notes | $ 4,200 | |||
SIGI | ||||
Related party transactions | ||||
Number of leased properties | item | 3 | |||
Purchase of properties | $ 12,800 | |||
Lease payments to related party | $ 0 | $ 200 | ||
SIGI | Mortgages | ||||
Related party transactions | ||||
Number of mortgages assumed | loan | 3 | |||
Assumed notes | $ 4,200 | $ 4,200 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Equity Plan - Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 59 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | |
Stock-based compensation | |||
Units granted | 259,065 | ||
Number of vested units | 173,650 | 173,650 | |
Number of unvested units | 85,415 | 85,415 | |
Compensation expense recognized | $ 200 | $ 500 | |
Unrecognized compensation expense | $ 1,000 | $ 1,000 | |
Period to recognize unrecognized compensation expense | 1 year 4 months 24 days | ||
Accrued dividend equivalent units | 3,521 | 3,521 | |
2018 (remaining nine months) | |||
Stock-based compensation | |||
Number of Units to Vest | 28,471 | 28,471 | |
2,019 | |||
Stock-based compensation | |||
Number of Units to Vest | 51,552 | 51,552 | |
2,020 | |||
Stock-based compensation | |||
Number of Units to Vest | 5,392 | 5,392 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income Taxes | ||||
U.S. federal statutory income tax rate (as a percent) | 21.00% | 35.00% | 35.00% | |
Effective tax rate on income before provision for income taxes including income attributable to noncontrolling interests (as a percent) | 4.80% | 34.70% | ||
Effective tax rate on income before provision for income taxes and noncontrolling interests (as a percent) | 23.50% | 37.00% | ||
Minimum period of statute of limitations of state and foreign jurisdictions | 3 years | |||
Maximum period of statute of limitations of state and foreign jurisdictions | 5 years |
Dividends and Earnings Per Sh55
Dividends and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Feb. 21, 2018 | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Dividends and Earnings Per Share | |||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.060 | $ 0.055 |
Numerator: | |||||||
Net income attributable to Primoris | $ 688 | $ 7,691 | |||||
Denominator: | |||||||
Weighted average shares for computation of basic earnings per share | 51,479 | 51,594 | |||||
Dilutive effect of shares issued to independent directors | 6 | 7 | |||||
Dilutive effect of restricted stock units | 262 | 250 | |||||
Weighted average shares for computation of diluted earnings per share | 51,747 | 51,851 | |||||
Earnings per share attributable to Primoris: | |||||||
Basic earnings per share (in dollars per share) | $ 0.01 | $ 0.15 | |||||
Diluted earnings per share (in dollars per share) | $ 0.01 | $ 0.15 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 59 Months Ended | |||
Mar. 31, 2018 | Feb. 28, 2018 | Mar. 31, 2017 | Feb. 28, 2017 | Mar. 31, 2018 | |
Share repurchase plan | |||||
Aggregate purchase price up to which shares can be acquired under share repurchase program | $ 5 | ||||
Number of shares purchased and cancelled under the share repurchase program | 0 | 216,350 | |||
Amount paid for shares purchased and cancelled under share repurchase program | $ 5 | ||||
Amount paid for shares purchased and cancelled under share repurchase program (per share) | $ 23.10 | ||||
LTR Plan | |||||
Common Stock | |||||
Shares of common stock issued under the long-term incentive plan | 71,757 | 65,429 | |||
Amount received in exchange for shares of common stock under a long term incentive plan | $ 1.5 | $ 1.1 | |||
Percentage of average market closing prices used in determining number of common stock that could be purchased by participants | 75.00% | 75.00% | |||
Equity Plan | |||||
Common Stock | |||||
Shares of common stock issued as a part of quarterly compensation of non-employee members of the Board of Directors | 10,062 | 11,784 | |||
Equity Plan | Restricted Stock Units | |||||
Common Stock | |||||
Granted, Units | 259,065 | ||||
Accrued dividend equivalent units | 3,521 | 3,521 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Commitments and Contingencies. | ||
Total lease expense | $ 6.8 | $ 6.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Feb. 25, 2015 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2014 |
Commitments and contingencies | |||||
Revenue | $ 504,119 | ||||
Gross Profit | 44,560 | $ 55,053 | |||
Accrued Liabilities | |||||
Commitments and contingencies | |||||
Withdrawal liability recorded | 4,500 | ||||
JCG | North Texas Tollway Authority v. James Construction Group, LLC | |||||
Commitments and contingencies | |||||
Liability recorded on litigation | $ 17,000 | $ 300 | |||
Expected remediation cost on settlement | 22,400 | ||||
Percentage of expected costs second defendant would pay | 20.00% | ||||
Percentage of expected costs Company would pay | 80.00% | ||||
Payment for remediation | $ 200 | ||||
Accrual balance | 15,300 | ||||
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 | ||||
Disputed Receivables | |||||
Commitments and contingencies | |||||
Receivable recorded relating to the project | $ 32,900 | ||||
Disputed Receivables | Customer Liabilities | |||||
Commitments and contingencies | |||||
Reserve | 17,700 | ||||
Bonding | |||||
Commitments and contingencies | |||||
Bid and completion bonds issued and outstanding | $ 678,900 | $ 705,700 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segment reporting information | ||
Number of reportable segments | segment | 4 | |
Revenue | $ 504,119 | $ 561,502 |
% of Total Revenue | 100.00% | 100.00% |
Gross Profit | $ 44,560 | $ 55,053 |
% of Revenue | 8.80% | 9.80% |
Power | ||
Segment reporting information | ||
Revenue | $ 166,555 | $ 131,240 |
% of Total Revenue | 33.00% | 23.40% |
Gross Profit | $ 24,071 | $ 15,524 |
% of Revenue | 14.50% | 11.80% |
Pipeline | ||
Segment reporting information | ||
Revenue | $ 57,583 | $ 183,445 |
% of Total Revenue | 11.40% | 32.70% |
Gross Profit | $ 7,891 | $ 28,125 |
% of Revenue | 13.70% | 15.30% |
Utilities | ||
Segment reporting information | ||
Revenue | $ 166,710 | $ 116,980 |
% of Total Revenue | 33.10% | 20.80% |
Gross Profit | $ 9,051 | $ 8,273 |
% of Revenue | 5.40% | 7.10% |
Civil | ||
Segment reporting information | ||
Revenue | $ 113,271 | $ 129,837 |
% of Total Revenue | 22.50% | 23.10% |
Gross Profit | $ 3,547 | $ 3,131 |
% of Revenue | 3.10% | 2.40% |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Total Assets by Geographic Area (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Revenues and total assets by geographic area | |||
% of Revenue | 100.00% | 100.00% | |
Non-United States | |||
Revenues and total assets by geographic area | |||
% of total assets | 1.00% | 1.00% | |
Non-United States | Maximum | |||
Revenues and total assets by geographic area | |||
% of Revenue | 1.00% |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | May 04, 2018 | Feb. 21, 2018 | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Cash Dividend | ||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.060 | $ 0.055 | |
Subsequent Events | ||||||||
Cash Dividend | ||||||||
Cash dividend declared (in dollars per share) | $ 0.06 |