Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 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 | Sep. 30, 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 | 51,204,959 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents ($15,729 and $ 60,256 related to VIEs. See Note 11) | $ 60,039 | $ 170,385 |
Accounts receivable, net | 473,045 | 291,589 |
Contract assets | 382,492 | 265,902 |
Prepaid expenses and other current assets | 22,383 | 15,338 |
Total current assets | 937,959 | 743,214 |
Property and equipment, net | 369,123 | 311,777 |
Deferred tax assets | 13,441 | |
Intangible assets, net | 85,813 | 44,800 |
Goodwill | 208,130 | 153,374 |
Other long-term assets | 6,680 | 2,575 |
Total assets | 1,621,146 | 1,255,740 |
Current liabilities: | ||
Accounts payable | 241,288 | 140,943 |
Contract liabilities | 219,232 | 169,377 |
Accrued liabilities | 130,382 | 76,027 |
Dividends payable | 3,072 | 3,087 |
Current portion of long-term debt | 63,947 | 65,464 |
Total current liabilities | 657,921 | 454,898 |
Long-term debt, net of current portion | 306,093 | 193,351 |
Deferred tax liabilities | 13,571 | |
Other long-term liabilities | 64,652 | 31,737 |
Total liabilities | 1,028,666 | 693,557 |
Commitments and contingencies (See Note 17) | ||
Stockholders' equity | ||
Common stock—$.0001 par value; 90,000,000 shares authorized; 51,204,959 and 51,448,753 issued and outstanding at September 30, 2018 and December 31, 2017 | 5 | 5 |
Additional paid-in capital | 155,051 | 160,502 |
Retained earnings | 431,764 | 395,961 |
Accumulated other comprehensive income | 577 | |
Noncontrolling interest | 5,083 | 5,715 |
Total stockholders’ equity | 592,480 | 562,183 |
Total liabilities and stockholders’ equity | $ 1,621,146 | $ 1,255,740 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
VIEs | ||
Cash and cash equivalents | $ 60,039 | $ 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 | 51,204,959 | 51,448,753 |
Common stock, shares outstanding | 51,204,959 | 51,448,753 |
VIEs | ||
VIEs | ||
Cash and cash equivalents | $ 60,256 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Revenue | $ 908,902 | $ 608,311 | $ 2,061,808 | $ 1,800,978 |
Cost of revenue | 802,397 | 537,890 | 1,839,324 | 1,591,021 |
Gross profit | 106,505 | 70,421 | 222,484 | 209,957 |
Selling, general and administrative expenses | 51,604 | 42,321 | 132,049 | 126,835 |
Acquisition and related costs | 3,827 | 238 | 13,190 | 1,555 |
Operating income | 51,074 | 27,862 | 77,245 | 81,567 |
Other income (expense): | ||||
Investment income | 6,066 | 6,066 | ||
Foreign exchange gain | (69) | 167 | 1,444 | 299 |
Other income (expense), net | 32 | (39) | (751) | (52) |
Interest income | 932 | 228 | 1,544 | 411 |
Interest expense | (6,448) | (2,198) | (11,637) | (6,605) |
Income before provision for income taxes | 45,521 | 32,086 | 67,845 | 81,686 |
Provision for income taxes | (10,716) | (9,952) | (14,633) | (28,644) |
Net income | 34,805 | 22,134 | 53,212 | 53,042 |
Less net income attributable to noncontrolling interests | (2,114) | (1,537) | (8,118) | (3,209) |
Net income attributable to Primoris | $ 32,691 | $ 20,597 | $ 45,094 | $ 49,833 |
Dividends per common share (in dollars per share) | $ 0.060 | $ 0.055 | $ 0.180 | $ 0.170 |
Earnings per share: | ||||
Basic (in dollars per share) | 0.64 | 0.40 | 0.88 | 0.97 |
Diluted (in dollars per share) | $ 0.63 | $ 0.40 | $ 0.87 | $ 0.96 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 51,403 | 51,441 | 51,471 | 51,491 |
Diluted (in shares) | 51,735 | 51,707 | 51,760 | 51,751 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 34,805 | $ 22,134 | $ 53,212 | $ 53,042 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | 200 | 577 | ||
Comprehensive income | 35,005 | 22,134 | 53,789 | 53,042 |
Less net income attributable to noncontrolling interests | (2,114) | (1,537) | (8,118) | (3,209) |
Comprehensive income attributable to Primoris | $ 32,891 | $ 20,597 | $ 45,671 | $ 49,833 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 53,212 | $ 53,042 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities (net of effect of acquisitions): | ||
Depreciation | 47,708 | 43,064 |
Amortization of intangible assets | 8,287 | 6,184 |
Intangible asset impairment | 477 | |
Stock-based compensation expense | 748 | 911 |
Gain on short-term investments | (5,980) | |
Gain on sale of property and equipment | (3,212) | (3,880) |
Other non-cash items | 180 | 131 |
Changes in assets and liabilities: | ||
Accounts receivable | (78,819) | 54,865 |
Contract assets | (85,817) | (42,011) |
Other current assets | 11,061 | 7,186 |
Other long-term assets | (957) | (2,745) |
Accounts payable | 24,099 | (17,813) |
Contract liabilities | (11,061) | 46,210 |
Accrued liabilities | 16,400 | 17,848 |
Other long-term liabilities | 5,298 | 3,943 |
Net cash (used in) provided by operating activities | (12,873) | 161,432 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (80,766) | (57,346) |
Issuance of a note receivable | (15,000) | |
Proceeds from a note receivable | 15,000 | |
Proceeds from sale of property and equipment | 9,655 | 7,027 |
Purchase of short-term investments | (13,588) | |
Sale of short-term investments | 350 | |
Cash paid for acquisitions, net of cash and restricted cash acquired | (111,030) | (66,205) |
Net cash used in investing activities | (182,141) | (129,762) |
Cash flows from financing activities: | ||
Borrowings under revolving line of credit | 170,000 | |
Payments on revolving line of credit | (170,000) | |
Proceeds from issuance of long-term debt | 239,467 | 30,000 |
Cash distribution to non-controlling interest holder | (8,750) | |
Payment of contingent earnout liability | (1,200) | |
Repayment of long-term debt and capital leases | (127,363) | (41,279) |
Payment of debt issuance cost | (1,041) | (631) |
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,498 | 1,148 |
Repurchase of common stock | (8,479) | (4,999) |
Dividends paid | (9,271) | (8,497) |
Net cash provided by (used in) financing activities | 84,861 | (24,258) |
Effect of exchange rate changes on cash and cash equivalents | (193) | |
Net change in cash, cash equivalents and restricted cash | (110,346) | 7,412 |
Cash and cash equivalents at beginning of the period | 170,385 | 135,823 |
Cash and cash equivalents at end of the period | 60,039 | 143,235 |
Cash paid: | ||
Interest | 11,658 | 6,236 |
Income taxes, net of refunds received | 5,379 | 25,618 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Obligations incurred for the acquisition of property | 4,163 | |
Dividends declared and not yet paid | $ 3,072 | $ 2,829 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 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. Our underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. Our industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. Our transmission and distribution operations install, replace and repair gas and electric utility systems. We are incorporated in the state of Delaware, and our corporate headquarters are 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 us and our wholly-owned subsidiaries. Reportable Segments — We segregate our business into five reportable segments: the Power, Industrial and Engineering (“Power”) segment, the Pipeline and Underground (“Pipeline”) segment, the Utilities and Distribution (“Utilities”) segment, the Transmission and Distribution (“Transmission”) segment, which is a new reportable segment created in connection with the acquisition of Willbros Group, Inc. (“Willbros”), and the Civil segment. See Note 18 – “ 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. Acquisition of Willbros Group, Inc. — On June 1, 2018, we completed our acquisition of Willbros for approximately $111.0 million, net of cash and restricted cash acquired. Willbros is a specialty energy infrastructure contractor serving the oil and gas and power industries through its utility transmission and distribution, oil and gas, and Canadian operations, which principally executes industrial and power projects. The utility transmission and distribution operations formed the Transmission segment, the oil and gas operations are included in the Pipeline segment, and the Canadian operations are included in the Power segment. See Note 6— “ Business Combinations ”. Other Acquisitions — 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 operations of the Power segment, and Coastal operations are included in the Pipeline segment. See Note 6— “ Business Combinations ”. Joint Ventures —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 11 – “Noncontrolling Interests ”. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Basis of Presentation | |
Basis of Presentation | Note 2—Basis of Presentation Interim condensed consolidated financial statements — The interim condensed consolidated financial statements for the three and nine month periods ended September 30, 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 Third Quarter 2018 Report on Form 10-Q 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 period presentation. 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 and nine months ended September 30, 2018, revenue generated by the top ten customers were approximately $483.0 million and $1,045.9 million, respectively, which represented 53.1% and 50.7%, respectively, of total revenue during the applicable period. During the three and nine months ended September 30, 2018, a Midwest utility customer represented 7.9% and 8.4% of total revenue, respectively, and a California utility customer represented 8.2% and 8.6% of total revenue, respectively. During the three and nine months ended September 30, 2017, revenues generated by the top ten customers were approximately $317.2 million and $1,058.5 million, respectively, which represented 52.2% and 58.8%, respectively, of total revenues during the applicable period. During the three and nine months ended September 30, 2017, a California utility project represented 10.6% and 8.8% of total revenues, respectively, and a state department of transportation customer represented 8.4% and 9.8% of total revenues, respectively. At September 30, 2018, approximately 10.2% of our accounts receivable were due from one customer, and that customer provided 8.4% of our revenue for the nine months ended September 30, 2018. In addition, of total accounts receivable, approximately 4.4% are from one customer with whom we are currently engaged in a dispute resolution. See Note 17 – “ Commitments and Contingencies ”. At September 30, 2017, approximately 10.8% of our accounts receivable were due from one customer, and that customer provided 7.9% of our revenue for the nine months ended September 30, 2017. In addition, approximately 11.2% of total accounts receivable at September 30, 2017 were from one customer with whom we are currently engaged in a dispute resolution. Multiemployer plans — Various of our 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. In November 2011, we withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer plan, and fully paid off the withdrawal liability in the third quarter of 2018 as discussed in Note 17 — “Commitments and Contingencies” . We have no plans to withdraw from any other agreements. Derivative Instruments and Hedging Activities — We recognize all derivative instruments as either assets or liabilities on the balance sheet at their respective fair values. Our use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to variable rate debt for the duration of the term loan. The interest rate swap matures in July 2023 and is not designated as a hedge for accounting purposes. Therefore, the change in the fair value of the derivative asset or liability is reflected in net income in the Condensed Consolidated Statements of Income (mark-to-market accounting). Cash flows from derivatives settled are reported as cash flow from operating activities. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 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 occurs 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 November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)” , which requires a reporting entity to include restricted cash and restricted cash equivalents in its cash and cash-equivalent balances presented in the entity’s statement of cash flows. A reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash and restricted cash equivalents. Transfers between non-restricted and restricted cash should not be presented as cash flow activities in the statement of cash flows. Furthermore, an entity with a material restricted cash balance must disclose information regarding the nature of the restrictions. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual reporting periods. We adopted the ASU as of January 1, 2018, and it did not have a material impact on our Condensed Consolidated Statements of Cash Flows. 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 impact the determination of our business combinations. 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 clarify when to account for a change in the terms or conditions of share-based payment awards as a modification 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”. The ASU added guidance previously issued by the Securities and Exchange Commission (“SEC”) in Staff Accounting Bulletin No. 118 (“SAB 118”) to ASC 740 “Income Taxes”. SAB 118 was issued by the SEC in December 2017 to provide guidance for accounting implications of U.S. tax reform under the Tax Cuts and Jobs Act (the “Tax Act”). 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 fourth quarter of our fiscal year 2017. See Note 14 — “Income Taxes ” 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) ”. In July 2018, the FASB issued two updates to ASU 2016-02, ASU 2018-10, “Codification Improvements to Topic 842, Leases” , and ASU 2018-11, “Leases (Topic 842): Targeted Improvements” . ASU 2016-02 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, and initially required a modified retrospective transition method where a company applies the new leases standard at the beginning of the earliest period presented in the financial statements. ASU 2018-11 added an optional transition method where a company applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings. We intend to take advantage of the transition practical expedients permitted with the new standard, which among other things, allows us to carryforward the historical lease classification. In addition, we expect to elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also plan to make an accounting policy election that will keep leases with an initial term of 12 months or less off of the balance sheet and will result in recognizing those lease payments in the Consolidated Statements of Income on a straight-line basis over the lease term. While we are continuing to assess all potential impacts of the ASUs, we expect total liabilities to increase by $110.0 to $125.0 million. We expect the right of use assets to approximate the lease liability as of the date of adoption with any difference between these amounts recorded as an adjustment to retained earnings as of January 1, 2019. These estimates, which are based on our current lease portfolio may change as we continue to evaluate the new standard and as we implement a new lease accounting information system. The estimates could also change due to changes in the lease portfolio, which could include lease volume, lease commencement dates, and renewal option and lease termination expectations. We do not believe the ASUs will materially affect our consolidated net income. We will update our estimates each quarter as changes occur. We do not believe the ASUs will have a notable impact on our liquidity. Additionally, the ASUs will have no impact on our debt covenant compliance as we have already revised our credit agreements to address the impact of the ASUs. 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. In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” , which eliminates certain disclosure requirements for recurring and nonrecurring fair value measurements. The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and adds new disclosure requirements for Level 3 measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. We are currently evaluating the impact this ASU will have on our disclosures. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 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. In adopting Topic 606, we 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 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. 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 September 30, 2018, we had $1.73 billion of remaining performance obligations. We expect to recognize approximately 81% of our remaining performance obligations as revenue during the next four quarters and substantially all of the remaining balance by the year-end 2020. 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 gives 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. 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 the 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 this time. Contract modifications result from 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. 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 and nine months ended September 30, 2018, revenue recognized from performance obligations satisfied in previous periods was $2.5 million and $27.5 million, respectively. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full, including any previously recognized profit, 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. At September 30, 2018, we had approximately $90.4 million of unapproved contract modifications included in the aggregate transaction prices. These contract modifications were in the process of being negotiated in the normal course of business. Approximately $82.9 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through September 30, 2018. 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. Also, 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): September 30, December 31, 2018 2017 Unbilled revenue $ 262,510 $ 160,092 Retention receivable 91,473 66,586 Contract materials (not yet installed) 28,509 39,224 $ 382,492 $ 265,902 Contract assets increased by $116.6 million compared to December 31, 2017 due primarily to a $30.8 million increase from the acquisition of Willbros in the second quarter of 2018 and higher unbilled revenue from our legacy operations. 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): September 30, December 31, 2018 2017 Deferred revenue $ 200,865 $ 159,310 Accrued loss provision 18,367 10,067 $ 219,232 $ 169,377 Contract liabilities increased by $49.9 million compared to December 31, 2017 primarily due to a $61.0 million increase from the acquisition of Willbros in the second quarter of 2018, partially offset by lower deferred revenue from our legacy operations. Revenue recognized for the nine months ended September 30, 2018, that was included in the contract liability balance at December 31, 2017 was approximately $145.4 million. The following tables present our revenue disaggregated into various categories. Master Service Agreements (“MSA”) and Non-MSA revenue was as follows (in thousands): For the three months ended September 30, 2018 Segment MSA Non-MSA Total Power $ 48,004 $ 133,818 $ 181,822 Pipeline 14,986 198,087 213,073 Utilities 227,192 42,460 269,652 Transmission 100,227 21,299 121,526 Civil — 122,829 122,829 Total $ 390,409 $ 518,493 $ 908,902 For the nine months ended September 30, 2018 Segment MSA Non-MSA Total Power $ 90,074 $ 425,304 $ 515,378 Pipeline 34,479 326,782 361,261 Utilities 515,295 149,919 665,214 Transmission 135,744 28,236 163,980 Civil — 355,975 355,975 Total $ 775,592 $ 1,286,216 $ 2,061,808 Revenue by contract type was as follows (in thousands): For the three months ended September 30, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 85,561 $ 10,371 $ 85,890 $ 181,822 Pipeline 41,772 7,924 163,377 213,073 Utilities 42,763 144,611 82,278 269,652 Transmission 20,259 84,646 16,621 121,526 Civil 21,380 90,418 11,031 122,829 Total $ 211,735 $ 337,970 $ 359,197 $ 908,902 (1) Includes time and material and cost reimbursable plus fee contracts. For the nine months ended September 30, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 310,599 $ 36,015 $ 168,764 $ 515,378 Pipeline 82,394 58,247 220,620 361,261 Utilities 148,126 339,225 177,863 665,214 Transmission 28,259 110,103 25,618 163,980 Civil 45,803 269,630 40,542 355,975 Total $ 615,181 $ 813,220 $ 633,407 $ 2,061,808 (1) Includes time and material and cost reimbursable plus fee contracts. Each of these contract types has a different risk profile. 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 cost than originally estimated. Unit-price and cost reimbursable contracts generally subject us to lower risk. Accordingly, the associated 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 | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 2018: Cash and cash equivalents $ 60,039 $ — $ — Interest rate swap — 18 — Liabilities as of September 30, 2018: None $ — $ — $ — 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, 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 interest rate swap is measured at fair value using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals. See Note 10 – “ Derivative Instruments ” for additional information. The following table provides changes to our contingent consideration liability Level 3 fair value measurements during the nine months ended September 30, (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2018 2017 Beginning balance, January 1, $ 716 $ — FGC acquisition — 1,200 Change in fair value of contingent consideration liability during year 753 52 Payment of earn-out liability to FGC sellers (1,469) — Ending balance, September 30, $ — $ 1,252 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. Upon meeting the target, we reflect the full liability on the balance sheet and record a charge to “Other income (expense), net” for the change in the fair value of the liability from the prior period. The May 2017 acquisition of FGC included an earnout of $1.5 million, contingent upon meeting certain performance targets. The estimated fair value of the contingent consideration on the acquisition date was $1.2 million. Under ASC 805, we are required to estimate the fair value of contingent consideration based on facts and circumstances that existed as of the acquisition date and remeasure to fair value at each reporting date until the contingency is resolved. As a result of that remeasurement, we increased the fair value of the contingent consideration in the second quarter of 2018 related to the FGC performance target contemplated in their purchase agreement, and increased the liability by $0.8 million with a corresponding increase in non-operating expense. We paid the full $1.5 million liability in the third quarter of 2018. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations | |
Business Combinations | Note 6 — Business Combinations 2018 Acquisition Acquisition of Willbros Group, Inc. On June 1, 2018, we acquired all of the outstanding common stock of Willbros, a specialty energy infrastructure contractor serving the oil and gas and power industries for approximately $111.0 million, net of cash and restricted cash acquired. The total purchase price was funded through a combination of existing cash balances and borrowings under our revolving credit facility. The tables below represent the purchase consideration and preliminary estimated fair values of the assets acquired and liabilities assumed. Significant changes since our initial estimates reported in the second quarter of 2018 primarily relate to fair value adjustments to our acquired contracts, which resulted in an increase to contract liabilities of $16.7 million. In addition, fair value adjustments to our acquired lease obligations reduced our liabilities assumed by approximately $8.0 million. As a result of these and other adjustments to the initial estimated fair values of the assets acquired and liabilities assumed, goodwill increased by approximately $11.1 million since the second quarter of 2018. Adjustments recorded to the estimated fair values of the assets acquired and liabilities assumed are recognized in the period in which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date. The final determination of fair value for certain assets and liabilities is subject to further change and will be completed as soon as the information necessary to complete the analysis is obtained. These amounts, which may differ materially from these preliminary estimates, will continue to be refined and will be finalized as soon as possible, but no later than one year from the acquisition date. The primary areas of the preliminary estimates that are not yet finalized relate to property, plant and equipment, contract assets and liabilities, deferred income taxes, uncertain tax positions, and the fair value of certain contractual obligations. Purchase consideration (in thousands) Total purchase consideration $ 164,758 Less cash and restricted cash acquired (53,728) Net cash paid 111,030 Preliminary identifiable assets acquired and liabilities assumed (in thousands) Cash and restricted cash $ 53,728 Accounts receivable 102,719 Contract assets 30,762 Other current assets 17,914 Property, plant and equipment 31,286 Intangible assets: Customer relationships 47,500 Non-compete agreements 1,600 Tradename 200 Deferred income taxes 27,014 Other non-current assets 2,261 Accounts payable and accrued liabilities (116,321) Contract liabilities (61,004) Other non-current liabilities (27,657) Total identifiable net assets 110,002 Goodwill 54,756 Total purchase consideration $ 164,758 We separated the operations of Willbros among two of our segments, and created a new segment for the utility transmission and distribution operations. The utility transmission and distribution operations formed the Transmission segment, the oil and gas operations are included in the Pipeline segment, and the Canadian operations are included in the Power segment. Goodwill associated with the Willbros acquisition principally consists of expected benefits from the expansion of our services into electric utility-focused offerings and the expansion of our geographic presence. Goodwill also includes the value of the assembled workforce. We allocated $43.5 million of goodwill to the Transmission segment, $7.6 million to the Power segment, and $3.6 million to the Pipeline segment. Based on the current tax treatment, goodwill is not expected to be deductible for income tax purposes. As part of the Willbros acquisition, we acquired approximately $40.2 million of restricted cash that was pledged by Willbros to secure letters of credit. Subsequent to the acquisition, we issued new letters of credit under our Credit Facility to replace the Willbros letters of credit secured by the restricted cash. As of September 30, 2018, substantially all of the restricted cash had been released. For the three months ended September 30, 2018, Willbros contributed revenue of $175.8 million and gross profit of $18.6 million. For the period June 1, 2018, the acquisition date, to September 30, 2018, Willbros contributed revenue of $236.8 million and gross profit of $25.4 million. Acquisition related costs were $3.8 million and $13.1 million for the three and nine months ended September 30, 2018, respectively, related to the acquisition of Willbros and are included in “Merger and related costs” on the Condensed Consolidated Statements of Income. Such costs primarily consisted of severance and retention bonus costs for certain employees of Willbros, professional fees paid to advisors, and exiting or impairing certain duplicate facilities. 2017 Acquisitions Acquisition of Florida Gas Contractors 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 and nine months ended September 30, 2018, FGC contributed revenue of $8.1 million and $24.1 million, respectively, and gross profit of $1.6 million and $6.6 million, respectively. For the three months ended September 30, 2017, FGC contributed revenue of $6.1 million and gross profit of $1.5 million. For the period May 26, 2017, the acquisition date, to September 30, 2017, FGC contributed revenue of $8.3 million and gross profit of $2.0 million. Acquisition of Engineering Assets 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. Acquisition of Coastal Field Services On June 16, 2017, we acquired certain assets and liabilities of Coastal for approximately $27.5 million. 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. During the second quarter of 2018, we finalized the estimate of the fair value of the acquired assets, which included $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. 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 and nine months ended September 30, 2018, Coastal contributed revenue of $2.8 million and $12.0 million, respectively, and gross profit of $0.3 million and $1.3 million, respectively. For the three months ended September 30, 2017, Coastal contributed revenue of $7.6 million and gross profit of $1.1 million. For the period June 16, 2017, the acquisition date, to September 30, 2017, Coastal contributed revenue of $8.6 million and gross profit of $1.5 million. Supplemental Unaudited Pro Forma Information for the three and nine months ended September 30, 2018 and 2017 The following pro forma information for the three and nine months ended September 30, 2018 and 2017 presents our results of operations as if the acquisitions of Willbros, 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; · the pro forma impact of the expense associated with the amortization of the discount for the fair value of the contingent consideration liability associated with the FGC acquisition; · the pro forma impact of nonrecurring merger and related costs directly attributable to the acquisitions; · the pro forma impact of interest expense relating to the acquisitions; and · the pro forma tax effect of both income before income taxes, and the pro forma adjustments, calculated using a tax rate of 28.0% and 40.0% for the three and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 908,902 $ 849,084 $ 2,388,020 $ 2,218,392 Income before provision for income taxes $ 45,521 $ 3,487 $ 61,709 $ 68,254 Net income attributable to Primoris $ 32,691 $ 3,438 $ 40,676 $ 41,774 Weighted average common shares outstanding: Basic 51,403 51,441 51,471 51,491 Diluted 51,735 51,707 51,760 51,751 Earnings per share: Basic $ 0.64 $ 0.07 $ 0.79 $ 0.81 Diluted $ 0.63 $ 0.07 $ 0.79 $ 0.81 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 7—Goodwill and Intangible Assets The change in goodwill by segment for the nine months ended September 30, 2018 was as follows (in thousands): Power Pipeline Utilities Transmission Civil Total Balance at January 1, 2018 $ 24,391 $ 51,521 $ 37,312 $ — $ 40,150 $ 153,374 Goodwill acquired during the year 7,645 3,570 — 43,541 — 54,756 Balance at September 30, 2018 $ 32,036 $ 55,091 $ 37,312 $ 43,541 $ 40,150 $ 208,130 At September 30, 2018 and December 31, 2017, intangible assets other than goodwill totaled $85.8 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): September 30, 2018 December 31, 2017 Weighted Gross Carrying Accumulated Gross Carrying Accumulated Tradename 9 years $ 31,390 $ (24,272) $ 32,175 $ (22,238) Customer relationships 16 years 97,400 (21,146) 49,900 (16,338) Non-compete agreements 5 years 3,500 (1,212) 1,900 (820) Other 3 years 275 (122) 275 (54) Total 15 years $ 132,565 $ (46,752) $ 84,250 $ (39,450) Amortization expense of intangible assets was $3.1 million and $2.6 million for the three months ended September 30, 2018 and 2017, respectively and amortization expense for the nine months ended September 30, 2018 and 2017 was $8.3 million and $6.2 million, 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 three months) $ 3,015 2019 11,879 2020 9,134 2021 7,897 2022 6,736 Thereafter 47,152 $ 85,813 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 8—Accounts Payable and Accrued Liabilities At September 30, 2018 and December 31, 2017, accounts payable were $241.3 million and $140.9 million, respectively. These balances included retention amounts for the same periods of approximately $14.7 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): September 30, December 31, 2018 2017 Payroll and related employee benefits $ 71,661 $ 45,708 Insurance, including self-insurance reserves 31,400 21,391 Corporate income taxes and other taxes 8,151 2,843 Other 19,170 6,085 $ 130,382 $ 76,027 |
Credit Arrangements
Credit Arrangements | 9 Months Ended |
Sep. 30, 2018 | |
Credit Arrangements | |
Credit Arrangements | Note 9—Credit Arrangements Long-term debt and credit facilities consist of the following (in thousands): September 30, December 31, 2018 2017 Term loan $ 217,250 $ — Revolving credit facility — — Commercial equipment notes 142,964 165,532 Mortgage notes 10,879 11,242 Senior secured notes — 82,143 Total debt 371,093 258,917 Unamortized debt issuance costs (1,053) (102) Total debt, net $ 370,040 $ 258,815 Less: current portion (63,947) (65,464) Long-term debt, net of current portion $ 306,093 $ 193,351 The weighted average interest rate on total debt outstanding at September 30, 2018 and December 31, 2017 was 4.1% and 3.0%, respectively. 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 September 30, 2018, interest rates ranged from 1.83% to 4.40% per annum and maturity dates ranged from April 28, 2019 to April 30, 2023. 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 three 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. Credit Agreement 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 (collectively, 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 (“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. On July 9, 2018, we entered into the First Amendment and Joinder to the Amended and Restated Credit Agreement (the “July Amendment”) with the Administrative Agent and the Lenders. On August 3, 2018, we entered into the Second Amendment to the Amended and Restated Credit Agreement (the “August Amendment”, and together with the July Amendment, the “Amendments”) with the Administrative Agent and the Lenders. The Amendments amend the Credit Agreement, dated as of September 29, 2017, among such parties. The Amendments, among other things, modify the Credit Agreement to add Capital One, N.A. and Regions Bank as Lenders, include a $220.0 million term loan (the “Term Loan”), increase the accordion feature that will allow us to increase the Term Loan or borrowing capacity under the Revolving Credit Facility by $75.0 million, and extend the maturity date of the Credit Agreement from September 29, 2022 to July 9, 2023. The Term Loan requires quarterly principal payments equal to $2.75 million, or $11.0 million per annum, for the first three years and $4.125 million, or $16.5 million per annum, for years four and five, with the balance due on July 9, 2023. The first principal payment was paid on September 28, 2018. The proceeds from the Term Loan were used to refinance and extinguish all of the Senior Notes (as discussed below), to pay down a significant portion of the borrowings under our Revolving Credit Facility that was used to finance the acquisition of Willbros, and for general corporate purposes. We capitalized $0.6 million of debt issuance costs during the third quarter of 2017 and $1.0 million during the third quarter of 2018 that is being amortized as interest expense over the life of the Credit Agreement. The principal amount of any loans under the Credit Agreement will bear variable 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. At September 30, 2018, commercial letters of credit outstanding were $50.7 million. Other than commercial letters of credit, there were no outstanding borrowings under the Revolving Credit Facility, and available borrowing capacity was $149.3 million at September 30, 2018. Loans made under the Credit 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 for all amounts under the Credit Agreement. The Credit Agreement contains various restrictive and financial covenants including, among others, senior debt/EBITDA ratio and debt service coverage requirements. In addition, the Credit Agreement includes restrictions on investments, change of control provisions and provisions in the event we dispose of more than 20% of our total assets. We were in compliance with the covenants for the Credit Agreement at September 30, 2018. On September 13, 2018, we entered into an interest rate swap agreement to manage our exposure to the fluctuations in variable interest rates. The swap effectively exchanged the interest rate on 75% of the debt outstanding under our Term Loan from variable LIBOR to a fixed rate of 2.886% per annum, in each case plus an applicable margin, which was 2.25% at September 30, 2018. See Note 10 – “ Derivative Instruments ”. Senior Secured Notes and Shelf Agreement On December 28, 2012, we entered into a $50.0 million Senior Secured Notes purchase agreement (“Senior Secured 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" and together with the Senior Secured Notes, the “Senior Notes”). The Senior Notes were funded in three tranches of $50.0 million on December 28, 2012, $25.0 million on July 25, 2013, and $25.0 million on November 9, 2015, and bore interest at annual rates of 3.65%, 3.85%, and 4.60%, respectively, paid quarterly in arrears. On July 9, 2018, we used a portion of the proceeds from the Term Loan to pay off and extinguish all of the Senior Notes, which resulted in a prepayment penalty recognized in the third quarter of 2018 of $2.3 million. 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 September 30, 2018, there were no letters of credit outstanding, and the available borrowing capacity was $8.0 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for OnQuest Canada, ULC. At September 30, 2018, OnQuest Canada, ULC was in compliance with the covenant. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments | |
Derivative Instruments | Note 10 — Derivative Instruments We are exposed to certain market risks related to changes in interest rates. To monitor and manage these market risks, we have established risk management policies and procedures. We do not enter into derivative instruments for any purpose other than hedging interest rate risk. None of our derivative instruments are used for trading purposes. Interest Rate Risk. We are exposed to variable interest rate risk as a result of variable-rate borrowings under our Credit Agreement. To manage fluctuations in cash flows resulting from changes in interest rates on a portion of our variable-rate debt, we entered into an interest rate swap agreement on September 13, 2018 with an initial notional amount of $165.0 million, or 75% of the debt outstanding under our Term Loan, which was not designated as a hedge for accounting purposes. The notional amount of the swap will be adjusted down each quarter by 75% of the required principal payments made on the Term Loan. See Note 9 – “Credit Arrangements”. The swap effectively changes the variable-rate cash flow exposure on the debt obligations to fixed rates. The fair value of outstanding interest rate swap derivatives can vary significantly from period to period depending on the total notional amount of swap derivatives outstanding and fluctuations in market interest rates compared to the interest rates fixed by the swaps. As of September 30, 2018, our outstanding interest rate swap agreement contained a notional amount of $162.9 million with a maturity date of July 10, 2023. There were no outstanding interest rate swap agreements at December 31, 2017. Credit Risk. By using derivative instruments to economically hedge exposures to changes in interest rates, we are exposed to counterparty credit risk. Credit risk is the failure of a counterparty to perform under the terms of a derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we do not possess credit risk. We minimized the credit risk in derivative instruments by entering into transactions with high quality counterparties. We have entered into netting agreements, including International Swap Dealers Association (“ISDA”) Agreements, which allow for netting of contract receivables and payables in the event of default by either party. The following table summarizes the fair value of our derivative contracts included in the Condensed Consolidated Balance Sheets (in thousands): Asset Derivatives September 30, December 31, Balance Sheet Location 2018 2017 Interest rate swap Other long-term assets $ 18 $ — Total derivatives $ 18 $ — The following table summarizes the amounts recognized with respect to our derivative instruments within the Condensed Consolidated Statements of Income (in thousands): Amount of Loss Recognized in Income on Derivatives Three Months Ended Nine Months Ended Location of Loss Recognized in September 30, September 30, Income on Derivatives 2018 2017 2018 2017 Interest rate swap Interest expense $ 33 $ — $ 33 $ — |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interests | |
Noncontrolling Interests | Note 11 — 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’s operating activities began in 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue $ 18,415 $ 28,722 $ 89,672 $ 65,725 Net income attributable to noncontrolling interests $ 2,101 $ 550 $ 7,545 $ 930 The Carlsbad joint venture made distributions of $5.0 million to the noncontrolling interest and $5.0 million to us during the three and nine months ended September 30, 2018. No distributions were made during the nine months ended September 30, 2017. In addition, we did not make any capital contributions to the Carlsbad joint venture during the nine months ended September 30, 2018 and 2017. The project is expected to be completed in 2018. The carrying value of the assets and liabilities associated with the operations of the Carlsbad joint venture are included in our Condensed Consolidated Balance Sheets as follows (in thousands): September 30, December 31, 2018 2017 Cash $ 14,992 $ 44,308 Accounts receivable $ 109 $ 15,343 Contract assets $ 12,620 $ — Contract liabilities $ 9,624 $ 42,743 Accounts payable $ 2,673 $ 12,352 Due to Primoris $ 5,778 $ — Wilmington Joint Venture The Wilmington joint venture’s operating activities began in October 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue $ — $ 5,143 $ 1,921 $ 29,742 Net income attributable to noncontrolling interests $ 13 $ 987 $ 573 $ 2,279 The Wilmington joint venture made distributions of $3.8 million to the noncontrolling interest and $3.8 million to us during the three and nine months ended September 30, 2018. No distributions were made during the nine months ended September 30, 2017. In addition, we did not make any capital contributions to the Wilmington joint venture during the nine months ended September 30, 2018 and 2017. The project is complete, the warranty period expired in October 2018, and dissolution of the joint venture is expected in November 2018. 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): September 30, December 31, 2018 2017 Cash $ 737 $ 15,948 Accounts receivable $ — $ 598 Contract liabilities $ 212 $ 1,480 Accounts payable $ — $ 759 Due to Primoris $ — $ 7,428 Summary – Joint Venture Balance Sheets The following table summarizes the total balance sheet amounts for the Carlsbad and Wilmington joint ventures, which are included in our Condensed Consolidated Balance Sheets, and the total consolidated balance sheet amounts (in thousands): Joint Venture Consolidated At September 30, 2018 Amounts Amounts Cash $ 15,729 $ 60,039 Accounts receivable $ 109 $ 473,045 Contract assets $ 12,620 $ 382,492 Accounts payable $ 2,673 $ 241,288 Contract liabilities $ 9,836 $ 219,232 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 $ 169,377 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions | |
Related Party Transactions | Note 12—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 also 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 first quarter of 2017, we paid $0.2 million in lease payments to SIGI for the use of these properties, and have not made any payments since. 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 | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation. | |
Stock-Based Compensation | Note 13—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 379,912 Restricted Stock Units (“Units”) to employees under the Equity Plan. The grants were documented in RSU Award Agreements, which provide for a vesting schedule and require continuing employment of the employee. The Units are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying RSU Award Agreement. At September 30, 2018, a total of 202,121 Units were vested. The vesting schedule for the remaining Units are as follows: Number of Units For the Years Ending December 31, to Vest 2019 52,834 2020 6,674 2021 118,283 177,791 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 $0.3 million and $0.2 million in compensation expense for the three months ended September 30, 2018 and 2017, respectively, and $0.7 million and $0.9 million for the nine months ended September 30, 2018 and 2017, respectively. At September 30, 2018, approximately $3.5 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 2.5 years. Vested Units accrue “Dividend Equivalent Units” (as defined in the Equity Plan), which will be accrued as additional Units. At September 30, 2018, a total of 4,472 Dividend Equivalent Units were accrued. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | Note 14—Income Taxes We are subject to 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 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. These provisional estimates must be finalized during a one-year “measurement period” similar to that used when accounting for business combinations. We remain provisional under SAB 118 as of September 30, 2018 while we finalize our assessment of foreign tax credit availability and the recently issued guidance concerning depreciation and executive compensation. During the three and nine months ended September 30, 2018, we recorded expense of $0.8 million for changes to provisional estimates for foreign tax credits net of associated valuation allowances. We do not include the income tax expense or benefit related to the net earnings or loss attributable to noncontrolling interest in our income tax expense as the entities are considered pass-through entities and, as such, the income tax expense or benefit is attributable to its owners. The effective tax rate on income including noncontrolling interests for the nine months ended September 30, 2018 and 2017 was 21.6% and 35.1%, respectively. Excluding noncontrolling interest, the effective tax rate on income attributable to Primoris for the nine months ended September 30, 2018 and 2017 was 24.5% and 36.5%, respectively. For the first nine months of 2018, our 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. For the first nine months of 2017, our tax rate differs from the U.S. federal statutory rate of 35% primarily due to the impact of state income taxes and nondeductible components of per diem expenses, partially offset by benefits recorded to the third quarter rate for prior year provision-to-return adjustments, including the 2017 impact of research and development tax credits to be claimed in all open years. Our U.S. federal income tax returns are generally no longer subject to examination for tax years before 2015. 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 2013. 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 | 9 Months Ended |
Sep. 30, 2018 | |
Dividends and Earnings Per Share | |
Dividends and Earnings Per Share | Note 15—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 $ May 4, 2018 June 29, 2018 July 13, 2018 $ August 2, 2018 September 28, 2018 October 15, 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 and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net income attributable to Primoris $ 32,691 $ 20,597 $ 45,094 $ 49,833 Denominator: Weighted average shares for computation of basic earnings per share 51,403 51,441 51,471 51,491 Dilutive effect of shares issued to independent directors 4 4 3 4 Dilutive effect of restricted stock units (1) 328 262 286 256 Weighted average shares for computation of diluted earnings per share 51,735 51,707 51,760 51,751 Earnings per share attributable to Primoris: Basic $ 0.64 $ 0.40 $ 0.88 $ 0.97 Diluted $ 0.63 $ 0.40 $ 0.87 $ 0.96 (1) Represents the dilutive effect of the grant of Units and vested Dividend Equivalent Units for the respective periods presented. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity | |
Stockholders' Equity | Note 16—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. In August 2018 and 2017, we issued 10,092 shares and 11,448 shares of common stock, respectively, as part of the quarterly compensation of the non-employee members of the Board of Directors. As discussed in Note 13 — “Stock–Based Compensation” , as of September 30, 2018, the Board of Directors has granted a total of 379,912 shares of Units under the Equity Plan and these Units have accrued 4,472 Dividend Equivalent Units. Share repurchase plan In May 2018, our Board of Directors authorized a $5.0 million share repurchase program. In August 2018, our Board of Directors approved an increase to the share repurchase program to $20.0 million. Under the share repurchase program, we can, 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 three and the nine months ended September 30, 2018, we purchased and cancelled 335,705 shares of common stock, which in the aggregate, equaled $8.5 million, at an average price of $25.26 per share. The share repurchase program expires on December 31, 2018. 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 common stock, which in the aggregate, equaled $5.0 million, at an average price of $23.10 per share. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 17—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 and nine months ended September 30, 2018 was $15.7 million and $32.4 million, respectively, compared to $6.8 million and $18.8 million, respectively, for the same periods in 2017. Total lease expense associated with operating leases acquired in the Willbros acquisition for the three months ended September 30, 2018 and from the acquisition date of June 1, 2018 to September 30, 2018 was approximately $7.7 million and $10.5 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. We paid the remaining $4.3 million liability in the third quarter of 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 nine months ended September 30, 2018, we increased our forecasted remediation costs based on bids received by the NTTA from third-party contractors, and increased our liability by $3.8 million. We also spent $0.5 million for remediation during the nine months ended September 30, 2018. While we continue to monitor the progress toward remediation and the total remediation costs, at this time we cannot determine the eventual remediation cost. At September 30, 2018, the remaining accrual balance was $18.5 million. Legal proceedings — We have been engaged in a 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 had a receivable of $32.9 million with a reserve of approximately $17.9 million included in “Contract liabilities” at December 31, 2017. During the second quarter of 2018, we reached a partial settlement and received a payment on the receivable balance of $12.0 million. As of September 30, 2018, our receivable was $20.9 million and our reserve was $11.6 million. In addition, we reflected another partial settlement of $9.0 million during the third quarter of 2018, which resulted in gross profit of $6.2 million for the three and nine months ended September 30, 2018. The $9.0 million payment was received subsequent to September 30, 2018, which reduced our receivable balance to $11.9 million, and is fully reserved 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 remaining surety who has provided lien and stop payment release bonds for the total amount owed. A trial date has been tentatively set for November 26, 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 — During the fourth quarter of 2014, the staff of the SEC began inquiring about certain percentage-of-completion contract revenue recognition practices of the Company during 2013 and 2014. Since that time, we cooperated and responded to the staff’s inquiries in connection with this matter. We settled this matter and the inquiry was closed during the third quarter of 2018. Litigation matters from the acquisition of Willbros — In the fourth quarter of 2014, Willbros announced a restatement of its Condensed Consolidated Financial Statements for the March 2014 and June 2014 quarters. Two shareholder derivative lawsuits were filed purportedly on behalf of Willbros in connection with the restatement. One of the lawsuits was voluntarily dismissed by the plaintiff on April 23, 2015. On October 24, 2016, the Court dismissed the second lawsuit with prejudice. Plaintiffs’ motion for reconsideration was denied on December 21, 2016. Plaintiffs filed a Notice of Appeal on January 20, 2017. The appeal is assigned to the 14th Court of Appeals, Houston, Texas. The court heard oral argument in the appeal on January 30, 2018, but it has not yet issued an opinion. We believe that any judgement would be fully funded by Willbros’ insurance carriers. Bonding — At September 30, 2018 and December 31, 2017, the Company had bid and completion bonds issued and outstanding totaling approximately $508.5 million and $705.7 million, respectively. |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Segments | |
Reportable Segments | Note 18—Reportable Segments We segregate our business into five reportable segments: the Power segment, the Pipeline segment, the Utilities segment, the Transmission segment, which is a new reportable segment created in connection with the acquisition of Willbros, 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 in Canada 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 Transmission segment operates primarily in the Southeastern and Gulf Coast regions of the United States and specializes in a range of services in electric and gas transmission and distribution, including comprehensive engineering, procurement, maintenance and construction, repair, and restoration of utility infrastructure. 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 and nine months ended September 30, 2018 and 2017 were as follows (in thousands): For the three months ended September 30, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 181,822 $ 154,178 Pipeline 213,073 84,357 Utilities 269,652 246,524 Transmission 121,526 — Civil 122,829 123,252 Total $ 908,902 $ 608,311 For the nine months ended September 30, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 515,378 $ 443,191 Pipeline 361,261 402,425 Utilities 665,214 576,446 Transmission (1) 163,980 — Civil 355,975 378,916 Total $ 2,061,808 $ 1,800,978 (1) Represents results from the June 1, 2018 acquisition date of Willbros to September 30, 2018 . Segment Gross Profit Gross profit by segment for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands): For the three months ended September 30, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 32,077 $ 18,842 Pipeline 24,999 12,084 Utilities 35,348 36,081 Transmission 13,958 — Civil 123 3,414 Total $ 106,505 $ 70,421 For the nine months ended September 30, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 76,674 $ 52,498 Pipeline 43,568 79,575 Utilities 78,963 76,701 Transmission (1) 19,679 — Civil 3,600 1,183 Total $ 222,484 $ 209,957 (1) Represents results from the June 1, 2018 acquisition date of Willbros to September 30, 2018 . Segment Goodwill The amount of goodwill recorded by each segment at September 30, 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 2.5% generated from sources outside of the United States, principally in Canada. At September 30, 2018 and December 31, 2017, approximately 3.0% of total assets were located outside of the United States. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events. | |
Subsequent Events | Note 19—Subsequent Events Cash Dividend On November 2, 2018, the Board of Directors declared a cash dividend of $0.06 per share of common stock for stockholders of record as of December 31, 2018, payable on or about January 15, 2019. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Basis of Presentation | |
Reclassification | Reclassification — Certain previously reported amounts have been reclassified to conform to the current period presentation. |
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 and nine months ended September 30, 2018, revenue generated by the top ten customers were approximately $483.0 million and $1,045.9 million, respectively, which represented 53.1% and 50.7%, respectively, of total revenue during the applicable period. During the three and nine months ended September 30, 2018, a Midwest utility customer represented 7.9% and 8.4% of total revenue, respectively, and a California utility customer represented 8.2% and 8.6% of total revenue, respectively. During the three and nine months ended September 30, 2017, revenues generated by the top ten customers were approximately $317.2 million and $1,058.5 million, respectively, which represented 52.2% and 58.8%, respectively, of total revenues during the applicable period. During the three and nine months ended September 30, 2017, a California utility project represented 10.6% and 8.8% of total revenues, respectively, and a state department of transportation customer represented 8.4% and 9.8% of total revenues, respectively. At September 30, 2018, approximately 10.2% of our accounts receivable were due from one customer, and that customer provided 8.4% of our revenue for the nine months ended September 30, 2018. In addition, of total accounts receivable, approximately 4.4% are from one customer with whom we are currently engaged in a dispute resolution. See Note 17 – “ Commitments and Contingencies ”. At September 30, 2017, approximately 10.8% of our accounts receivable were due from one customer, and that customer provided 7.9% of our revenue for the nine months ended September 30, 2017. In addition, approximately 11.2% of total accounts receivable at September 30, 2017 were from one customer with whom we are currently engaged in a dispute resolution. |
Multiemployer plans | Multiemployer plans — Various of our 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. In November 2011, we withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer plan, and fully paid off the withdrawal liability in the third quarter of 2018 as discussed in Note 17 — “Commitments and Contingencies” . We have no plans to withdraw from any other agreements. |
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. In adopting Topic 606, we 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 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. 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 September 30, 2018, we had $1.73 billion of remaining performance obligations. We expect to recognize approximately 81% of our remaining performance obligations as revenue during the next four quarters and substantially all of the remaining balance by the year-end 2020. 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 gives 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. 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 the 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 this time. Contract modifications result from 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. 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 and nine months ended September 30, 2018, revenue recognized from performance obligations satisfied in previous periods was $2.5 million and $27.5 million, respectively. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full, including any previously recognized profit, 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. At September 30, 2018, we had approximately $90.4 million of unapproved contract modifications included in the aggregate transaction prices. These contract modifications were in the process of being negotiated in the normal course of business. Approximately $82.9 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through September 30, 2018. 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. Also, 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. |
Derivative instruments and hedging activities | Derivative Instruments and Hedging Activities — We recognize all derivative instruments as either assets or liabilities on the balance sheet at their respective fair values. Our use of derivatives consists of an interest rate swap agreement. The interest rate swap agreement was entered into to improve the predictability of cash flows from interest payments related to variable rate debt for the duration of the term loan. The interest rate swap matures in July 2023 and is not designated as a hedge for accounting purposes. Therefore, the change in the fair value of the derivative asset or liability is reflected in net income in the Condensed Consolidated Statements of Income (mark-to-market accounting). Cash flows from derivatives settled are reported as cash flow from operating activities. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of contract assets | Contract assets consist of the following (in thousands): September 30, December 31, 2018 2017 Unbilled revenue $ 262,510 $ 160,092 Retention receivable 91,473 66,586 Contract materials (not yet installed) 28,509 39,224 $ 382,492 $ 265,902 |
Schedule of contract liabilities | Contract liabilities consist of the following (in thousands): September 30, December 31, 2018 2017 Deferred revenue $ 200,865 $ 159,310 Accrued loss provision 18,367 10,067 $ 219,232 $ 169,377 |
Schedule of revenue disaggregation by various categories | Master Service Agreements (“MSA”) and Non-MSA revenue was as follows (in thousands): For the three months ended September 30, 2018 Segment MSA Non-MSA Total Power $ 48,004 $ 133,818 $ 181,822 Pipeline 14,986 198,087 213,073 Utilities 227,192 42,460 269,652 Transmission 100,227 21,299 121,526 Civil — 122,829 122,829 Total $ 390,409 $ 518,493 $ 908,902 For the nine months ended September 30, 2018 Segment MSA Non-MSA Total Power $ 90,074 $ 425,304 $ 515,378 Pipeline 34,479 326,782 361,261 Utilities 515,295 149,919 665,214 Transmission 135,744 28,236 163,980 Civil — 355,975 355,975 Total $ 775,592 $ 1,286,216 $ 2,061,808 Revenue by contract type was as follows (in thousands): For the three months ended September 30, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 85,561 $ 10,371 $ 85,890 $ 181,822 Pipeline 41,772 7,924 163,377 213,073 Utilities 42,763 144,611 82,278 269,652 Transmission 20,259 84,646 16,621 121,526 Civil 21,380 90,418 11,031 122,829 Total $ 211,735 $ 337,970 $ 359,197 $ 908,902 (1) Includes time and material and cost reimbursable plus fee contracts. For the nine months ended September 30, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 310,599 $ 36,015 $ 168,764 $ 515,378 Pipeline 82,394 58,247 220,620 361,261 Utilities 148,126 339,225 177,863 665,214 Transmission 28,259 110,103 25,618 163,980 Civil 45,803 269,630 40,542 355,975 Total $ 615,181 $ 813,220 $ 633,407 $ 2,061,808 (1) Includes time and material and cost reimbursable plus fee contracts. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 2018: Cash and cash equivalents $ 60,039 $ — $ — Interest rate swap — 18 — Liabilities as of September 30, 2018: None $ — $ — $ — 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 nine months ended September 30, (in thousands): Significant Unobservable Inputs (Level 3) Contingent Consideration Liability 2018 2017 Beginning balance, January 1, $ 716 $ — FGC acquisition — 1,200 Change in fair value of contingent consideration liability during year 753 52 Payment of earn-out liability to FGC sellers (1,469) — Ending balance, September 30, $ — $ 1,252 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business combinations | |
Schedule of pro forma results | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 908,902 $ 849,084 $ 2,388,020 $ 2,218,392 Income before provision for income taxes $ 45,521 $ 3,487 $ 61,709 $ 68,254 Net income attributable to Primoris $ 32,691 $ 3,438 $ 40,676 $ 41,774 Weighted average common shares outstanding: Basic 51,403 51,441 51,471 51,491 Diluted 51,735 51,707 51,760 51,751 Earnings per share: Basic $ 0.64 $ 0.07 $ 0.79 $ 0.81 Diluted $ 0.63 $ 0.07 $ 0.79 $ 0.81 |
Willbros Group, Inc | |
Business combinations | |
Summary of the fair value of assets acquired and the liabilities assumed | Purchase consideration (in thousands) Total purchase consideration $ 164,758 Less cash and restricted cash acquired (53,728) Net cash paid 111,030 Preliminary identifiable assets acquired and liabilities assumed (in thousands) Cash and restricted cash $ 53,728 Accounts receivable 102,719 Contract assets 30,762 Other current assets 17,914 Property, plant and equipment 31,286 Intangible assets: Customer relationships 47,500 Non-compete agreements 1,600 Tradename 200 Deferred income taxes 27,014 Other non-current assets 2,261 Accounts payable and accrued liabilities (116,321) Contract liabilities (61,004) Other non-current liabilities (27,657) Total identifiable net assets 110,002 Goodwill 54,756 Total purchase consideration $ 164,758 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by reporting unit | The change in goodwill by segment for the nine months ended September 30, 2018 was as follows (in thousands): Power Pipeline Utilities Transmission Civil Total Balance at January 1, 2018 $ 24,391 $ 51,521 $ 37,312 $ — $ 40,150 $ 153,374 Goodwill acquired during the year 7,645 3,570 — 43,541 — 54,756 Balance at September 30, 2018 $ 32,036 $ 55,091 $ 37,312 $ 43,541 $ 40,150 $ 208,130 |
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): September 30, 2018 December 31, 2017 Weighted Gross Carrying Accumulated Gross Carrying Accumulated Tradename 9 years $ 31,390 $ (24,272) $ 32,175 $ (22,238) Customer relationships 16 years 97,400 (21,146) 49,900 (16,338) Non-compete agreements 5 years 3,500 (1,212) 1,900 (820) Other 3 years 275 (122) 275 (54) Total 15 years $ 132,565 $ (46,752) $ 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 three months) $ 3,015 2019 11,879 2020 9,134 2021 7,897 2022 6,736 Thereafter 47,152 $ 85,813 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 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): September 30, December 31, 2018 2017 Payroll and related employee benefits $ 71,661 $ 45,708 Insurance, including self-insurance reserves 31,400 21,391 Corporate income taxes and other taxes 8,151 2,843 Other 19,170 6,085 $ 130,382 $ 76,027 |
Credit Arrangements (Tables)
Credit Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Credit Arrangements | |
Schedule of long-term debt and credit facilities | Long-term debt and credit facilities consist of the following (in thousands): September 30, December 31, 2018 2017 Term loan $ 217,250 $ — Revolving credit facility — — Commercial equipment notes 142,964 165,532 Mortgage notes 10,879 11,242 Senior secured notes — 82,143 Total debt 371,093 258,917 Unamortized debt issuance costs (1,053) (102) Total debt, net $ 370,040 $ 258,815 Less: current portion (63,947) (65,464) Long-term debt, net of current portion $ 306,093 $ 193,351 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments | |
Schedule of fair values of our derivative contracts included in the Condensed Consolidated Balance Sheets | The following table summarizes the fair value of our derivative contracts included in the Condensed Consolidated Balance Sheets (in thousands): Asset Derivatives September 30, December 31, Balance Sheet Location 2018 2017 Interest rate swap Other long-term assets $ 18 $ — Total derivatives $ 18 $ — |
Schedule of derivative instruments within the Condensed Consolidated Statements of Income | The following table summarizes the amounts recognized with respect to our derivative instruments within the Condensed Consolidated Statements of Income (in thousands): Amount of Loss Recognized in Income on Derivatives Three Months Ended Nine Months Ended Location of Loss Recognized in September 30, September 30, Income on Derivatives 2018 2017 2018 2017 Interest rate swap Interest expense $ 33 $ — $ 33 $ — |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 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 Carlsbad and Wilmington joint ventures, which are included in our Condensed Consolidated Balance Sheets, and the total consolidated balance sheet amounts (in thousands): Joint Venture Consolidated At September 30, 2018 Amounts Amounts Cash $ 15,729 $ 60,039 Accounts receivable $ 109 $ 473,045 Contract assets $ 12,620 $ 382,492 Accounts payable $ 2,673 $ 241,288 Contract liabilities $ 9,836 $ 219,232 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 $ 169,377 |
Carlsbad | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | The Carlsbad joint venture’s operating activities began in 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue $ 18,415 $ 28,722 $ 89,672 $ 65,725 Net income attributable to noncontrolling interests $ 2,101 $ 550 $ 7,545 $ 930 |
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): September 30, December 31, 2018 2017 Cash $ 14,992 $ 44,308 Accounts receivable $ 109 $ 15,343 Contract assets $ 12,620 $ — Contract liabilities $ 9,624 $ 42,743 Accounts payable $ 2,673 $ 12,352 Due to Primoris $ 5,778 $ — |
Wilmington | |
Schedule of joint venture operating activities included in the Company's consolidated statements of income | The Wilmington joint venture’s operating activities began in October 2015 and are included in our Condensed Consolidated Statements of Income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue $ — $ 5,143 $ 1,921 $ 29,742 Net income attributable to noncontrolling interests $ 13 $ 987 $ 573 $ 2,279 |
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): September 30, December 31, 2018 2017 Cash $ 737 $ 15,948 Accounts receivable $ — $ 598 Contract liabilities $ 212 $ 1,480 Accounts payable $ — $ 759 Due to Primoris $ — $ 7,428 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Schedule of units activity | Number of Units For the Years Ending December 31, to Vest 2019 52,834 2020 6,674 2021 118,283 177,791 |
Dividends and Earnings Per Sh_2
Dividends and Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 $ May 4, 2018 June 29, 2018 July 13, 2018 $ August 2, 2018 September 28, 2018 October 15, 2018 $ |
Schedule of computation of basic and diluted earnings per share | The table below presents the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net income attributable to Primoris $ 32,691 $ 20,597 $ 45,094 $ 49,833 Denominator: Weighted average shares for computation of basic earnings per share 51,403 51,441 51,471 51,491 Dilutive effect of shares issued to independent directors 4 4 3 4 Dilutive effect of restricted stock units (1) 328 262 286 256 Weighted average shares for computation of diluted earnings per share 51,735 51,707 51,760 51,751 Earnings per share attributable to Primoris: Basic $ 0.64 $ 0.40 $ 0.88 $ 0.97 Diluted $ 0.63 $ 0.40 $ 0.87 $ 0.96 (1) 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) | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Segments | |
Schedule of revenue by segment | Revenue by segment for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands): For the three months ended September 30, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 181,822 $ 154,178 Pipeline 213,073 84,357 Utilities 269,652 246,524 Transmission 121,526 — Civil 122,829 123,252 Total $ 908,902 $ 608,311 For the nine months ended September 30, 2018 2017 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 515,378 $ 443,191 Pipeline 361,261 402,425 Utilities 665,214 576,446 Transmission (1) 163,980 — Civil 355,975 378,916 Total $ 2,061,808 $ 1,800,978 (1) Represents results from the June 1, 2018 acquisition date of Willbros to September 30, 2018 . |
Schedule of gross profit by segment | Gross profit by segment for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands): For the three months ended September 30, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 32,077 $ 18,842 Pipeline 24,999 12,084 Utilities 35,348 36,081 Transmission 13,958 — Civil 123 3,414 Total $ 106,505 $ 70,421 For the nine months ended September 30, 2018 2017 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 76,674 $ 52,498 Pipeline 43,568 79,575 Utilities 78,963 76,701 Transmission (1) 19,679 — Civil 3,600 1,183 Total $ 222,484 $ 209,957 (1) Represents results from the June 1, 2018 acquisition date of Willbros to September 30, 2018 . |
Nature of Business (Details)
Nature of Business (Details) $ in Thousands | Jun. 01, 2018USD ($)segment | Jun. 16, 2017USD ($) | May 30, 2017USD ($) | May 26, 2017USD ($) | Sep. 30, 2018USD ($)segmentitem | Sep. 30, 2017USD ($) |
Nature of Business | ||||||
Number of reportable segments | segment | 5 | |||||
Number of joint ventures | item | 2 | |||||
Number of variable interest entities | item | 2 | |||||
Purchase consideration, net of cash acquired | $ 111,030 | $ 66,205 | ||||
Willbros Group, Inc | ||||||
Nature of Business | ||||||
Number of reportable segments | segment | 2 | |||||
Purchase consideration, net of cash acquired | $ 111,030 | |||||
Total purchase consideration | 164,758 | |||||
Transmission | Willbros Group, Inc | ||||||
Nature of Business | ||||||
Purchase consideration, net of cash acquired | $ 111,000 | |||||
Utilities | FGC | ||||||
Nature of Business | ||||||
Total purchase consideration | $ 37,700 | |||||
Pipeline | Coastal | ||||||
Nature of Business | ||||||
Total purchase consideration | $ 27,500 | |||||
Power | Engineering Assets | ||||||
Nature of Business | ||||||
Total purchase consideration | $ 2,300 | |||||
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 | 9 Months Ended | ||||
Sep. 30, 2018USD ($)customer | Sep. 30, 2017USD ($)customer | Sep. 30, 2018USD ($)customeritem | Sep. 30, 2017USD ($)customer | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Customer concentration | ||||||
Number of top customers | customer | 10 | |||||
Number of calendar years in which top customers typically generate minimum specified percentage of revenue | item | 1 | |||||
Minimum percentage of revenues generated by top ten customers | 50.00% | |||||
Revenue | $ | $ 908,902 | $ 2,061,808 | ||||
Cash, cash equivalents and restricted cash | ||||||
Cash and cash equivalents | $ | 60,039 | 60,039 | $ 170,385 | |||
Cash, cash equivalents and restricted cash | $ | $ 60,039 | $ 143,235 | $ 60,039 | $ 143,235 | $ 170,385 | $ 135,823 |
Revenues. | Customer concentration | Top ten customers | ||||||
Customer concentration | ||||||
Number of top customers | customer | 10 | 10 | 10 | 10 | ||
Revenue | $ | $ 483,000 | $ 317,200 | $ 1,045,900 | $ 1,058,500 | ||
Percentage of concentration risk | 53.10% | 52.20% | 50.70% | 58.80% | ||
Revenues. | Customer concentration | One customer | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 8.40% | 7.90% | ||||
Revenues. | Customer concentration | Midwest utility customer | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 7.90% | 8.40% | ||||
Revenues. | Customer concentration | California utility customer | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 8.20% | 8.60% | ||||
Revenues. | Customer concentration | California utility project | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 10.60% | 8.80% | ||||
Revenues. | Customer concentration | A State department of transportation | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 8.40% | 9.80% | ||||
Accounts receivable | Customer concentration | One customer | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 10.20% | 10.80% | ||||
Number of customers | customer | 1 | 1 | ||||
Accounts receivable | Customer concentration | Disputed Receivables | ||||||
Customer concentration | ||||||
Percentage of concentration risk | 4.40% | 11.20% | ||||
Number of customers | customer | 1 | 1 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Recent Accounting Pronouncements | ||
Total liabilities | $ 1,028,666 | $ 693,557 |
Minimum | Forecast Adjustment | ASU 2016-02 | ||
Recent Accounting Pronouncements | ||
Total liabilities | 110,000 | |
Maximum | Forecast Adjustment | ASU 2016-02 | ||
Recent Accounting Pronouncements | ||
Total liabilities | $ 125,000 |
Revenue - Performance obligatio
Revenue - Performance obligations (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | |
Revenue | ||
Remaining performance obligations | $ 1,730 | $ 1,730 |
Percentage of remaining performance obligation expected to be recognized in period | 81.00% | |
Amount of contract modifications included in the expected contract value. | 90.4 | $ 90.4 |
Amount of contract modifications recognized as revenue on a cumulative catch-up basis | 82.9 | |
Revenue recognized from performance obligations satisfied in previous periods | $ 2.5 | $ 27.5 |
Revenue - Performance obligat_2
Revenue - Performance obligations - 2018-04-01 (Details) | Sep. 30, 2018 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | |
Revenue expected timing | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | 12 months |
Revenue - Contract assets (Deta
Revenue - Contract assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Unbilled revenue | $ 262,510 | $ 160,092 | |
Retention receivable | 91,473 | 66,586 | |
Contract materials (not yet installed) | 28,509 | 39,224 | |
Contract assets | 382,492 | $ 265,902 | |
Increase in contract assets | $ 116,600 | ||
Willbros Group, Inc | |||
Increase in contract assets | $ 30,800 |
Revenue - Contract liabilities
Revenue - Contract liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Deferred revenue | $ 200,865 | $ 159,310 | |
Accrued loss provision | 18,367 | 10,067 | |
Contract liabilities | 219,232 | $ 169,377 | |
Increase in contract liabilities | 49,900 | ||
Revenue recognized included in contract liability at beginning of period | $ 145,400 | ||
Willbros Group, Inc | |||
Increase in contract liabilities | $ 61,000 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue by customer type and contract type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue | ||
Revenue | $ 908,902 | $ 2,061,808 |
Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 211,735 | 615,181 |
Unit price | ||
Disaggregation of Revenue | ||
Revenue | 337,970 | 813,220 |
Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 359,197 | 633,407 |
MSA | ||
Disaggregation of Revenue | ||
Revenue | 390,409 | 775,592 |
Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 518,493 | 1,286,216 |
Power | ||
Disaggregation of Revenue | ||
Revenue | 181,822 | 515,378 |
Power | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 85,561 | 310,599 |
Power | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 10,371 | 36,015 |
Power | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 85,890 | 168,764 |
Power | MSA | ||
Disaggregation of Revenue | ||
Revenue | 48,004 | 90,074 |
Power | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 133,818 | 425,304 |
Pipeline | ||
Disaggregation of Revenue | ||
Revenue | 213,073 | 361,261 |
Pipeline | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 41,772 | 82,394 |
Pipeline | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 7,924 | 58,247 |
Pipeline | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 163,377 | 220,620 |
Pipeline | MSA | ||
Disaggregation of Revenue | ||
Revenue | 14,986 | 34,479 |
Pipeline | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 198,087 | 326,782 |
Utilities | ||
Disaggregation of Revenue | ||
Revenue | 269,652 | 665,214 |
Utilities | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 42,763 | 148,126 |
Utilities | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 144,611 | 339,225 |
Utilities | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 82,278 | 177,863 |
Utilities | MSA | ||
Disaggregation of Revenue | ||
Revenue | 227,192 | 515,295 |
Utilities | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 42,460 | 149,919 |
Transmission | ||
Disaggregation of Revenue | ||
Revenue | 121,526 | 163,980 |
Transmission | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 20,259 | 28,259 |
Transmission | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 84,646 | 110,103 |
Transmission | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 16,621 | 25,618 |
Transmission | MSA | ||
Disaggregation of Revenue | ||
Revenue | 100,227 | 135,744 |
Transmission | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 21,299 | 28,236 |
Civil | ||
Disaggregation of Revenue | ||
Revenue | 122,829 | 355,975 |
Civil | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 21,380 | 45,803 |
Civil | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 90,418 | 269,630 |
Civil | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 11,031 | 40,542 |
Civil | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | $ 122,829 | $ 355,975 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | $ 60,039 | $ 170,385 |
Significant Unobservable Inputs (Level 3) | ||
Liabilities | ||
Fair value of the contingent consideration | $ 716 | |
Interest rate swap | Significant Other Observable Inputs (Level2) | ||
Assets | ||
Derivative asset | $ 18 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration Liability (Details) $ in Thousands | May 26, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | May 31, 2017USD ($) |
Additional information | ||||||
Number of unobservable inputs | item | 2 | 2 | ||||
Minimum probability of acquired entity meeting contractual operating performance target (as a percent) | 33.00% | |||||
Maximum probability of acquired entity meeting contractual operating performance target (as a percent) | 100.00% | |||||
Contingent consideration credited to non-operating income | $ 32 | $ (39) | $ (751) | $ (52) | ||
FGC | ||||||
Additional information | ||||||
Potential contingent consideration | $ 1,500 | $ 1,500 | ||||
Fair value of the contingent consideration | 1,200 | $ 1,200 | ||||
Cash payment made | $ 33,000 | $ 1,500 | ||||
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | ||||||
Rollforward of contingent consideration liability level three fair value measurements | ||||||
Beginning balance | 716 | |||||
Change in fair value of contingent consideration liability during year | 753 | 52 | ||||
Payment of earn out liability to FGC sellers | $ (1,469) | |||||
Ending balance | $ 1,252 | 1,252 | ||||
Contingent Consideration Liability | Significant Unobservable Inputs (Level 3) | FGC | ||||||
Rollforward of contingent consideration liability level three fair value measurements | ||||||
FGC acquisition | $ 1,200 |
Business Combinations - 2018 Ac
Business Combinations - 2018 Acquisitions (Details) $ in Thousands | Jun. 01, 2018USD ($)segment | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Business combinations | |||||||
Net cash paid | $ 111,030 | $ 66,205 | |||||
Fair value of net assets acquired | |||||||
Goodwill | $ 208,130 | $ 208,130 | $ 208,130 | $ 153,374 | |||
Number of reportable segments | segment | 5 | ||||||
Revenue | 908,902 | $ 2,061,808 | |||||
Gross profit | 106,505 | $ 70,421 | 222,484 | 209,957 | |||
Acquisition and related costs | 3,827 | 238 | 13,190 | 1,555 | |||
Power | |||||||
Fair value of net assets acquired | |||||||
Goodwill | 32,036 | 32,036 | 32,036 | 24,391 | |||
Revenue | 181,822 | 515,378 | |||||
Gross profit | 32,077 | 18,842 | 76,674 | 52,498 | |||
Pipeline | |||||||
Fair value of net assets acquired | |||||||
Goodwill | 55,091 | 55,091 | 55,091 | $ 51,521 | |||
Revenue | 213,073 | 361,261 | |||||
Gross profit | 24,999 | $ 12,084 | 43,568 | $ 79,575 | |||
Transmission | |||||||
Fair value of net assets acquired | |||||||
Goodwill | 43,541 | 43,541 | 43,541 | ||||
Revenue | 121,526 | 163,980 | |||||
Gross profit | 13,958 | 19,679 | |||||
Willbros Group, Inc | |||||||
Business combinations | |||||||
Increase in contract liabilities | 16,700 | ||||||
Decrease in lease obligations | (8,000) | ||||||
Increase in goodwill | 11,100 | ||||||
Total purchase consideration | $ 164,758 | ||||||
Less cash and restricted cash acquired | (53,728) | ||||||
Net cash paid | 111,030 | ||||||
Fair value of net assets acquired | |||||||
Cash and restricted cash | 53,728 | ||||||
Accounts receivable | 102,719 | ||||||
Contract assets | 30,762 | ||||||
Other current assets | 17,914 | ||||||
Property, plant and equipment | 31,286 | ||||||
Deferred income taxes | 27,014 | ||||||
Other non-current assets | 2,261 | ||||||
Accounts payable and accrued liabilities | (116,321) | ||||||
Contract liabilities | (61,004) | ||||||
Other non-current liabilities | (27,657) | ||||||
Total identifiable net assets | 110,002 | ||||||
Goodwill | $ 54,756 | ||||||
Number of reportable segments | segment | 2 | ||||||
Restricted cash | $ 40,200 | ||||||
Revenue | 175,800 | ||||||
Gross profit | 18,600 | ||||||
Revenue since acquisition | 236,800 | ||||||
Gross profit since acquisition | $ 25,400 | ||||||
Acquisition and related costs | $ 3,800 | $ 13,100 | |||||
Willbros Group, Inc | Power | |||||||
Fair value of net assets acquired | |||||||
Goodwill | 7,600 | ||||||
Willbros Group, Inc | Pipeline | |||||||
Fair value of net assets acquired | |||||||
Goodwill | 3,600 | ||||||
Willbros Group, Inc | Transmission | |||||||
Business combinations | |||||||
Net cash paid | 111,000 | ||||||
Fair value of net assets acquired | |||||||
Goodwill | 43,500 | ||||||
Willbros Group, Inc | Customer relationships | |||||||
Fair value of net assets acquired | |||||||
Intangibles assets | 47,500 | ||||||
Willbros Group, Inc | Non-compete agreements | |||||||
Fair value of net assets acquired | |||||||
Intangibles assets | 1,600 | ||||||
Willbros Group, Inc | Tradename | |||||||
Fair value of net assets acquired | |||||||
Intangibles assets | $ 200 |
Business Combinations - 2017 Ac
Business Combinations - 2017 Acquisitions (Details) - USD ($) $ in Thousands | Jun. 16, 2017 | May 30, 2017 | May 26, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | May 31, 2017 |
Business combinations | ||||||||||||
Goodwill | $ 208,130 | $ 208,130 | $ 153,374 | |||||||||
Revenue | 908,902 | 2,061,808 | ||||||||||
Gross profit | 106,505 | $ 70,421 | 222,484 | $ 209,957 | ||||||||
FGC | ||||||||||||
Business combinations | ||||||||||||
Cash payment made | $ 33,000 | 1,500 | ||||||||||
Potential contingent consideration | $ 1,500 | $ 1,500 | ||||||||||
Contingent earnout period (in years) | 1 year | |||||||||||
Fair value of the contingent consideration | $ 1,200 | $ 1,200 | ||||||||||
Fixed assets | 4,800 | |||||||||||
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 | 8,100 | 6,100 | 24,100 | |||||||||
Gross profit | 1,600 | 1,500 | 6,600 | |||||||||
Revenue since acquisition | $ 8,300 | |||||||||||
Gross profit since acquisition | $ 2,000 | |||||||||||
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 | |||||||||||
Revenue | 2,800 | 7,600 | 12,000 | |||||||||
Gross profit | $ 300 | $ 1,100 | $ 1,300 | |||||||||
Revenue since acquisition | $ 8,600 | |||||||||||
Gross profit since acquisition | $ 1,500 | |||||||||||
Coastal | Customer relationships | ||||||||||||
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 | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pro forma results | ||||
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent) | 28.00% | 40.00% | 28.00% | 40.00% |
Revenues | $ 908,902 | $ 849,084 | $ 2,388,020 | $ 2,218,392 |
Income before provision for income taxes | 45,521 | 3,487 | 61,709 | 68,254 |
Net income (loss) attributable to Primoris | $ 32,691 | $ 3,438 | $ 40,676 | $ 41,774 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 51,403 | 51,441 | 51,471 | 51,491 |
Diluted (in shares) | 51,735 | 51,707 | 51,760 | 51,751 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.64 | $ 0.07 | $ 0.79 | $ 0.81 |
Diluted (in dollars per share) | $ 0.63 | $ 0.07 | $ 0.79 | $ 0.81 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill | |
Goodwill, Beginning Balance | $ 153,374 |
Goodwill acquired during the year | 54,756 |
Goodwill, Ending Balance | 208,130 |
Power | |
Goodwill | |
Goodwill, Beginning Balance | 24,391 |
Goodwill acquired during the year | 7,645 |
Goodwill, Ending Balance | 32,036 |
Pipeline | |
Goodwill | |
Goodwill, Beginning Balance | 51,521 |
Goodwill acquired during the year | 3,570 |
Goodwill, Ending Balance | 55,091 |
Utilities | |
Goodwill | |
Goodwill, Beginning Balance | 37,312 |
Goodwill, Ending Balance | 37,312 |
Transmission | |
Goodwill | |
Goodwill acquired during the year | 43,541 |
Goodwill, Ending Balance | 43,541 |
Civil | |
Goodwill | |
Goodwill, Beginning Balance | 40,150 |
Goodwill, Ending Balance | $ 40,150 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Intangible assets | |||||
Weighted Average Life | 15 years | ||||
Gross Carrying Amount | $ 132,565 | $ 132,565 | $ 84,250 | ||
Accumulated Amortization | (46,752) | (46,752) | (39,450) | ||
Amortization expense of intangible assets | 3,100 | $ 2,600 | 8,287 | $ 6,184 | |
Estimated future amortization expense for intangible assets | |||||
2018 (remaining six months) | 3,015 | 3,015 | |||
2,019 | 11,879 | 11,879 | |||
2,020 | 9,134 | 9,134 | |||
2,021 | 7,897 | 7,897 | |||
2,022 | 6,736 | 6,736 | |||
Thereafter | 47,152 | 47,152 | |||
Total | 85,813 | $ 85,813 | $ 44,800 | ||
Tradename | |||||
Intangible assets | |||||
Weighted Average Life | 9 years | 9 years | |||
Gross Carrying Amount | 31,390 | $ 31,390 | $ 32,175 | ||
Accumulated Amortization | (24,272) | $ (24,272) | $ (22,238) | ||
Customer relationships | |||||
Intangible assets | |||||
Weighted Average Life | 16 years | 16 years | |||
Gross Carrying Amount | 97,400 | $ 97,400 | $ 49,900 | ||
Accumulated Amortization | (21,146) | $ (21,146) | $ (16,338) | ||
Non-compete agreements | |||||
Intangible assets | |||||
Weighted Average Life | 5 years | 5 years | |||
Gross Carrying Amount | 3,500 | $ 3,500 | $ 1,900 | ||
Accumulated Amortization | (1,212) | $ (1,212) | $ (820) | ||
Other | |||||
Intangible assets | |||||
Weighted Average Life | 3 years | 3 years | |||
Gross Carrying Amount | 275 | $ 275 | $ 275 | ||
Accumulated Amortization | $ (122) | $ (122) | $ (54) |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 241,288 | $ 140,943 |
Retention amounts included in accounts payable | 14,700 | 13,500 |
Accrued expenses and other current liabilities | ||
Payroll and related employee benefits | 71,661 | 45,708 |
Insurance, including self-insurance reserves | 31,400 | 21,391 |
Corporate income taxes and other taxes | 8,151 | 2,843 |
Other | 19,170 | 6,085 |
Total accrued expenses and other current liabilities | $ 130,382 | $ 76,027 |
Credit Arrangements (Details)
Credit Arrangements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Credit arrangements | ||
Total debt | $ 371,093 | $ 258,917 |
Unamortized debt issuance costs | (1,053) | (102) |
Total debt, net | 370,040 | 258,815 |
Less: current portion | (63,947) | (65,464) |
Long-term debt, net of current portion | 306,093 | 193,351 |
Term Loan | ||
Credit arrangements | ||
Total debt, net | 217,250 | |
Commercial equipment notes | ||
Credit arrangements | ||
Total debt | 142,964 | 165,532 |
Mortgages | ||
Credit arrangements | ||
Total debt, net | $ 10,879 | 11,242 |
Senior secured notes | ||
Credit arrangements | ||
Total debt, net | $ 82,143 |
Credit Arrangements - Narrative
Credit Arrangements - Narrative (Details) $ in Thousands, $ in Millions | Aug. 03, 2018USD ($) | Jun. 03, 2015USD ($) | Dec. 31, 2015USD ($)loanbuilding | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($)loanbuilding | Nov. 09, 2015USD ($)item | Sep. 30, 2018CAD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 29, 2017USD ($) | Sep. 28, 2017USD ($) | Jul. 25, 2013USD ($) | Dec. 28, 2012USD ($) |
Credit arrangements | ||||||||||||||
Weighted average interest rate (as a percent) | 3.00% | 4.10% | 4.10% | |||||||||||
Commercial equipment notes | Minimum | ||||||||||||||
Credit arrangements | ||||||||||||||
Interest rate (as a percent) | 1.83% | 1.83% | ||||||||||||
Commercial equipment notes | Maximum | ||||||||||||||
Credit arrangements | ||||||||||||||
Interest rate (as a percent) | 4.40% | 4.40% | ||||||||||||
Mortgages | ||||||||||||||
Credit arrangements | ||||||||||||||
Interest rate (as a percent) | 5.00% | |||||||||||||
Number of assets secured | building | 3 | |||||||||||||
Number of mortgages assumed | loan | 3 | |||||||||||||
Assumed notes | $ 4,200 | |||||||||||||
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 | |||||||||||||
Principal amount | $ 8,000 | |||||||||||||
Number of assets secured | building | 2 | |||||||||||||
Senior secured notes | ||||||||||||||
Credit arrangements | ||||||||||||||
Interest rate (as a percent) | 4.60% | 3.85% | 3.65% | |||||||||||
Principal amount | $ 25,000 | $ 25,000 | $ 50,000 | |||||||||||
Number of tranches | item | 3 | |||||||||||||
Prepayment penalty | $ 2,300 | |||||||||||||
Notes Agreement | ||||||||||||||
Credit arrangements | ||||||||||||||
Principal amount | $ 25,000 | |||||||||||||
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 | ||||||||||||||
Principal amount | $ 75,000 | |||||||||||||
Credit Agreement | ||||||||||||||
Credit arrangements | ||||||||||||||
Maximum borrowing capacity | $ 200,000 | $ 125,000 | ||||||||||||
Potential increase per the accordion feature | $ 75,000 | |||||||||||||
Debt issuance costs | $ 1,000 | $ 600 | ||||||||||||
Borrowings outstanding | 0 | |||||||||||||
Additional Period to Issue Notes | 3 years | |||||||||||||
Available borrowing capacity | 149,300 | |||||||||||||
Credit Agreement | Federal funds rate | ||||||||||||||
Credit arrangements | ||||||||||||||
Basis spread on variable rate (as a percent) | 0.50% | |||||||||||||
Credit Agreement | Minimum | ||||||||||||||
Credit arrangements | ||||||||||||||
Prepayment to be paid on debt | $ 5,000 | |||||||||||||
Restrictions on investments, change of control provisions and provisions as a percentage of total assets to be disposed off | 20.00% | |||||||||||||
Credit Agreement | Credit Agreement | ||||||||||||||
Credit arrangements | ||||||||||||||
Maximum borrowing capacity | 200,000 | |||||||||||||
Maximum borrowing capacity with accordion feature | 250,000 | |||||||||||||
Credit Agreement | Commercial letters of credit | ||||||||||||||
Credit arrangements | ||||||||||||||
Commercial letters of credit outstanding | $ 50,700 | |||||||||||||
Term Loan | ||||||||||||||
Credit arrangements | ||||||||||||||
Principal amount | 220,000 | |||||||||||||
Interest rate swap agreement | 75.00% | |||||||||||||
Derivative fixed interest rate (as a percent) | 2.886% | 2.886% | ||||||||||||
Term Loan | LIBOR | ||||||||||||||
Credit arrangements | ||||||||||||||
Basis spread on variable rate (as a percent) | 2.25% | |||||||||||||
Term Loan | First Three Years | ||||||||||||||
Credit arrangements | ||||||||||||||
Quarterly principal payment | 2,750 | |||||||||||||
Annual principal payments | $ 11,000 | |||||||||||||
Number of years payments are to be made | 3 years | |||||||||||||
Term Loan | Next Two Years | ||||||||||||||
Credit arrangements | ||||||||||||||
Quarterly principal payment | $ 4,125 | |||||||||||||
Annual principal payments | $ 16,500 | |||||||||||||
Canadian Credit Facility | ||||||||||||||
Credit arrangements | ||||||||||||||
Available borrowing capacity | $ 8 | |||||||||||||
Canadian Credit Facility | Commercial letters of credit | ||||||||||||||
Credit arrangements | ||||||||||||||
Maximum borrowing capacity | $ 8 | |||||||||||||
Annual fee (as a percent) | 1.00% | |||||||||||||
Canadian Credit Facility | Commercial letters of credit | Maximum | ||||||||||||||
Credit arrangements | ||||||||||||||
Term of credit facility | 5 years |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Millions | Sep. 13, 2018USD ($) | Sep. 30, 2018USD ($)instrument | Dec. 31, 2017agreement |
Derivative Instruments | |||
Number of Instruments used for trading | instrument | 0 | ||
Interest rate swap | |||
Derivative Instruments | |||
Notional Amount | $ | $ 165 | $ 162.9 | |
Notional amount interest rate | 75.00% | ||
Notional amount adjustment | 75.00% | ||
Interest rate swap agreements outstanding | agreement | 0 |
Derivative Instruments - Deriva
Derivative Instruments - Derivative contract and instruments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | |
Derivative Instruments | ||
Asset Derivatives | $ 18 | $ 18 |
Interest rate swap | Interest expense | ||
Derivative Instruments | ||
Amount of Loss Recognized in Income on Derivatives | (33) | (33) |
Interest rate swap | Other long-term assets | ||
Derivative Instruments | ||
Asset Derivatives | $ 18 | $ 18 |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)item | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Noncontrolling Interests | ||||||
Number of joint ventures | item | 2 | 2 | 2 | |||
Tax effect on income recognized | $ 10,716 | $ 9,952 | $ 14,633 | $ 28,644 | ||
Revenue | 908,902 | 2,061,808 | ||||
Net income attributable to noncontrolling interests | 2,114 | 1,537 | 8,118 | 3,209 | ||
Cash | $ 60,039 | 60,039 | 60,039 | $ 170,385 | ||
Accounts receivable | 473,045 | 473,045 | 473,045 | 291,589 | ||
Contract assets | 382,492 | 382,492 | 382,492 | 265,902 | ||
Accounts payable | 241,288 | 241,288 | 241,288 | 140,943 | ||
Contract liabilities | 219,232 | 219,232 | 219,232 | 169,377 | ||
Carlsbad | ||||||
Noncontrolling Interests | ||||||
Revenue | 18,415 | 28,722 | 89,672 | 65,725 | ||
Net income attributable to noncontrolling interests | 2,101 | 550 | 7,545 | 930 | ||
Distributions to partners | 5,000 | 5,000 | ||||
Non-controlling interest distribution | 0 | |||||
Cash | 14,992 | 14,992 | 14,992 | 44,308 | ||
Accounts receivable | 109 | 109 | 109 | 15,343 | ||
Contract assets | 12,620 | 12,620 | 12,620 | |||
Accounts payable | 2,673 | 2,673 | 2,673 | 12,352 | ||
Contract liabilities | 9,624 | 9,624 | 9,624 | 42,743 | ||
Due to Primoris | 5,778 | 5,778 | 5,778 | |||
Carlsbad | Non Controlling Interest | ||||||
Noncontrolling Interests | ||||||
Distributions to partners | 5,000 | 5,000 | ||||
Wilmington | ||||||
Noncontrolling Interests | ||||||
Revenue | 5,143 | 1,921 | 29,742 | |||
Net income attributable to noncontrolling interests | 13 | $ 987 | 573 | 2,279 | ||
Distributions to partners | 3,800 | 3,800 | ||||
Non-controlling interest distribution | $ 0 | |||||
Cash | 737 | 737 | 737 | 15,948 | ||
Accounts receivable | 598 | |||||
Accounts payable | 759 | |||||
Contract liabilities | 212 | 212 | 212 | 1,480 | ||
Due to Primoris | 7,428 | |||||
Wilmington | Non Controlling Interest | ||||||
Noncontrolling Interests | ||||||
Distributions to partners | 3,800 | 3,800 | ||||
Carlsbad and Wilmington | ||||||
Noncontrolling Interests | ||||||
Cash | 15,729 | 15,729 | 15,729 | 60,256 | ||
Accounts receivable | 109 | 109 | 109 | 15,941 | ||
Contract assets | 12,620 | 12,620 | 12,620 | |||
Accounts payable | 2,673 | 2,673 | 2,673 | 13,111 | ||
Contract liabilities | $ 9,836 | $ 9,836 | $ 9,836 | $ 44,223 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)loan | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)loan | Feb. 28, 2017item | |
Mortgages | ||||
Related party transactions | ||||
Number of mortgages assumed | loan | 3 | |||
Assumed notes | $ 4.2 | |||
SIGI | ||||
Related party transactions | ||||
Number of leased properties | item | 3 | |||
Purchase of properties | $ 12.8 | |||
Lease payments to related party | $ 0.2 | |||
SIGI | Mortgages | ||||
Related party transactions | ||||
Number of mortgages assumed | loan | 3 | |||
Assumed notes | $ 4.2 | $ 4.2 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Equity Plan - Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 65 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | |
Stock-based compensation | |||||
Units granted | 379,912 | ||||
Number of vested units | 202,121 | 202,121 | 202,121 | ||
Number of unvested units | 177,791 | 177,791 | 177,791 | ||
Compensation expense recognized | $ 300 | $ 200 | $ 700 | $ 900 | |
Unrecognized compensation expense | $ 3,500 | $ 3,500 | $ 3,500 | ||
Period to recognize unrecognized compensation expense | 2 years 6 months | ||||
Accrued dividend equivalent units | 4,472 | 4,472 | 4,472 | ||
2,019 | |||||
Stock-based compensation | |||||
Number of Units to Vest | 52,834 | 52,834 | 52,834 | ||
2,020 | |||||
Stock-based compensation | |||||
Number of Units to Vest | 6,674 | 6,674 | 6,674 | ||
2,021 | |||||
Stock-based compensation | |||||
Number of Units to Vest | 118,283 | 118,283 | 118,283 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 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) | 21.60% | 35.10% | ||
Effective tax rate on income before provision for income taxes and noncontrolling interests (as a percent) | 24.50% | 36.50% | ||
Income tax expense related to 2017 tax act and changes related to foreign tax credits | $ 0.8 | |||
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 Sh_3
Dividends and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Aug. 02, 2018 | May 04, 2018 | Feb. 21, 2018 | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Dividends and Earnings Per Share | |||||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.060 | $ 0.055 | $ 0.180 | $ 0.170 |
Numerator: | |||||||||||
Net income attributable to Primoris | $ 32,691 | $ 20,597 | $ 45,094 | $ 49,833 | |||||||
Denominator: | |||||||||||
Weighted average shares for computation of basic earnings per share | 51,403 | 51,441 | 51,471 | 51,491 | |||||||
Dilutive effect of shares issued to independent directors | 4 | 4 | 3 | 4 | |||||||
Dilutive effect of restricted stock units | 328 | 262 | 286 | 256 | |||||||
Weighted average shares for computation of diluted earnings per share | 51,735 | 51,707 | 51,760 | 51,751 | |||||||
Earnings per share attributable to Primoris: | |||||||||||
Basic earnings per share (in dollars per share) | $ 0.64 | $ 0.40 | $ 0.88 | $ 0.97 | |||||||
Diluted earnings per share (in dollars per share) | $ 0.63 | $ 0.40 | $ 0.87 | $ 0.96 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 65 Months Ended | |||||
Aug. 31, 2018 | Feb. 28, 2018 | Aug. 31, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Sep. 30, 2018 | May 31, 2018 | |
Share repurchase plan | |||||||
Aggregate purchase price up to which shares can be acquired under share repurchase program | $ 20 | $ 5 | $ 5 | ||||
Number of shares purchased and cancelled under the share repurchase program | 335,705 | 216,350 | |||||
Amount paid for shares purchased and cancelled under share repurchase program | $ 8.5 | $ 5 | |||||
Amount paid for shares purchased and cancelled under share repurchase program (per share) | $ 25.26 | $ 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 | 10,092 | 10,062 | 11,448 | 11,784 | |||
Equity Plan | Restricted Stock Units | |||||||
Common Stock | |||||||
Granted, Units | 379,912 | ||||||
Accrued dividend equivalent units | 4,472 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Leases | |||||
Total lease expense | $ 15.7 | $ 6.8 | $ 32.4 | $ 18.8 | |
Willbros Group, Inc | |||||
Leases | |||||
Total lease expense | $ 7.7 | $ 10.5 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal (Details) $ in Thousands | Feb. 25, 2015USD ($) | Nov. 05, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2014USD ($)lawsuit | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Commitments and contingencies | |||||||||
Gross profit | $ 106,505 | $ 70,421 | $ 222,484 | $ 209,957 | |||||
JCG | North Texas Tollway Authority v. James Construction Group, LLC | |||||||||
Commitments and contingencies | |||||||||
Liability recorded on litigation | $ 17,000 | $ 3,800 | |||||||
Expected remediation cost on settlement | 22,400 | ||||||||
Percentage of expected costs second defendant would pay | 20.00% | 20.00% | |||||||
Percentage of expected costs Company would pay | 80.00% | 80.00% | |||||||
Payment for remediation | $ 500 | ||||||||
Accrual balance | $ 18,500 | 18,500 | |||||||
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 | ||||||||
Willbros Group, Inc | |||||||||
Commitments and contingencies | |||||||||
Number of lawsuits | lawsuit | 2 | ||||||||
Disputed Receivables | |||||||||
Commitments and contingencies | |||||||||
Additional partial settlement | 9,000 | ||||||||
Receivable recorded relating to the project | $ 11,900 | 20,900 | $ 32,900 | 20,900 | |||||
Gross profit | 6,200 | 6,200 | |||||||
Reserve | 11,600 | 11,600 | |||||||
Receipts related to disputed receivable | $ 9,000 | $ 12,000 | |||||||
Disputed Receivables | Customer Liabilities | |||||||||
Commitments and contingencies | |||||||||
Reserve | 17,900 | 17,900 | |||||||
Withdrawal liability for multiemployer pension plan | |||||||||
Commitments and contingencies | |||||||||
Payment of liability | 4,300 | ||||||||
Bonding | |||||||||
Commitments and contingencies | |||||||||
Bid and completion bonds issued and outstanding | $ 508,500 | $ 508,500 | $ 705,700 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Segment reporting information | ||||
Number of reportable segments | segment | 5 | |||
Revenue | $ 908,902 | $ 608,311 | $ 2,061,808 | $ 1,800,978 |
% of Total Revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Profit | $ 106,505 | $ 70,421 | $ 222,484 | $ 209,957 |
% of Revenue | 11.70% | 11.60% | 10.80% | 11.70% |
Power | ||||
Segment reporting information | ||||
Revenue | $ 181,822 | $ 154,178 | $ 515,378 | $ 443,191 |
% of Total Revenue | 20.00% | 25.30% | 25.00% | 24.60% |
Gross Profit | $ 32,077 | $ 18,842 | $ 76,674 | $ 52,498 |
% of Revenue | 17.60% | 12.20% | 14.90% | 11.80% |
Pipeline | ||||
Segment reporting information | ||||
Revenue | $ 213,073 | $ 84,357 | $ 361,261 | $ 402,425 |
% of Total Revenue | 23.40% | 13.90% | 17.50% | 22.40% |
Gross Profit | $ 24,999 | $ 12,084 | $ 43,568 | $ 79,575 |
% of Revenue | 11.70% | 14.30% | 12.10% | 19.80% |
Utilities | ||||
Segment reporting information | ||||
Revenue | $ 269,652 | $ 246,524 | $ 665,214 | $ 576,446 |
% of Total Revenue | 29.70% | 40.50% | 32.30% | 32.00% |
Gross Profit | $ 35,348 | $ 36,081 | $ 78,963 | $ 76,701 |
% of Revenue | 13.10% | 14.60% | 11.90% | 13.30% |
Transmission | ||||
Segment reporting information | ||||
Revenue | $ 121,526 | $ 163,980 | ||
% of Total Revenue | 13.40% | 0.00% | 7.90% | 0.00% |
Gross Profit | $ 13,958 | $ 19,679 | ||
% of Revenue | 11.50% | 0.00% | 12.00% | 0.00% |
Civil | ||||
Segment reporting information | ||||
Revenue | $ 122,829 | $ 123,252 | $ 355,975 | $ 378,916 |
% of Total Revenue | 13.50% | 20.30% | 17.30% | 21.00% |
Gross Profit | $ 123 | $ 3,414 | $ 3,600 | $ 1,183 |
% of Revenue | 0.10% | 2.80% | 1.00% | 0.30% |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Total Assets by Geographic Area (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenues and total assets by geographic area | |||||
% of Revenue | 100.00% | 100.00% | 100.00% | 100.00% | |
Non-United States | |||||
Revenues and total assets by geographic area | |||||
% of total assets | 3.00% | 3.00% | |||
Non-United States | Maximum | |||||
Revenues and total assets by geographic area | |||||
% of Revenue | 2.50% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 02, 2018 | Aug. 03, 2018 | Aug. 02, 2018 | May 04, 2018 | Feb. 21, 2018 | Nov. 02, 2017 | Aug. 02, 2017 | May 05, 2017 | Feb. 21, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Cash Dividend | |||||||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.055 | $ 0.055 | $ 0.055 | $ 0.060 | $ 0.055 | $ 0.180 | $ 0.170 | ||
Credit Agreement | |||||||||||||
Credit Agreement | |||||||||||||
Potential increase per the accordion feature | $ 75 | ||||||||||||
Term Loan | |||||||||||||
Credit Agreement | |||||||||||||
Principal amount | $ 220 | ||||||||||||
Term Loan | First Three Years | |||||||||||||
Credit Agreement | |||||||||||||
Number of years payments are to be made | 3 years | ||||||||||||
Subsequent Events | |||||||||||||
Cash Dividend | |||||||||||||
Cash dividend declared (in dollars per share) | $ 0.06 |