Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Primoris Services Corp | |
Entity Central Index Key | 0001361538 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
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 | 50,932,282 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents ($9,213 and $3,127 related to VIEs. See Note 11) | $ 73,985 | $ 151,063 |
Accounts receivable, net | 397,786 | 372,695 |
Contract assets | 366,435 | 364,245 |
Prepaid expenses and other current assets | 38,123 | 36,444 |
Total current assets | 876,329 | 924,447 |
Property and equipment, net | 369,128 | 375,884 |
Operating lease assets | 153,168 | |
Deferred tax assets | 1,492 | 1,457 |
Intangible assets, net | 78,450 | 81,198 |
Goodwill | 207,410 | 206,159 |
Other long-term assets | 4,789 | 5,002 |
Total assets | 1,690,766 | 1,594,147 |
Current liabilities: | ||
Accounts payable | 190,244 | 249,217 |
Contract liabilities | 194,094 | 189,539 |
Accrued liabilities | 165,923 | 117,527 |
Dividends payable | 3,051 | 3,043 |
Current portion of long-term debt | 66,872 | 62,488 |
Total current liabilities | 620,184 | 621,814 |
Long-term debt, net of current portion | 307,273 | 305,669 |
Noncurrent operating lease liabilities, net of current portion | 104,039 | |
Deferred tax liabilities | 7,268 | 8,166 |
Other long-term liabilities | 41,617 | 51,515 |
Total liabilities | 1,080,381 | 987,164 |
Commitments and contingencies (See Note 17) | ||
Stockholders' equity | ||
Common stock—$.0001 par value; 90,000,000 shares authorized; 50,842,902 and 51,715,518 issued and outstanding at March 31, 2019 and December 31, 2018 | 5 | 5 |
Additional paid-in capital | 147,208 | 144,048 |
Retained earnings | 459,959 | 461,075 |
Accumulated other comprehensive loss | (534) | (908) |
Noncontrolling interest | 3,747 | 2,763 |
Total stockholders’ equity | 610,385 | 606,983 |
Total liabilities and stockholders’ equity | $ 1,690,766 | $ 1,594,147 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
VIEs | ||
Cash and cash equivalents | $ 73,985 | $ 151,063 |
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 | 50,842,902 | 51,715,518 |
Common stock, shares outstanding | 50,842,902 | 51,715,518 |
VIEs | ||
VIEs | ||
Cash and cash equivalents | $ 9,213 | $ 3,127 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Revenue | $ 661,558 | $ 504,119 |
Cost of revenue | 609,098 | 459,559 |
Gross profit | 52,460 | 44,560 |
Selling, general and administrative expenses | 42,931 | 36,956 |
Merger and related costs | 1,695 | |
Operating income | 9,529 | 5,909 |
Other income (expense): | ||
Foreign exchange (loss) gain | (185) | 257 |
Other income (expense), net | (370) | (12) |
Interest income | 349 | 272 |
Interest expense | (5,592) | (1,998) |
Income before provision for income taxes | 3,731 | 4,428 |
Provision for income taxes | (795) | (212) |
Net income | 2,936 | 4,216 |
Less net income attributable to noncontrolling interests | (989) | (3,528) |
Net income attributable to Primoris | $ 1,947 | $ 688 |
Dividends per common share (in dollars per share) | $ 0.060 | $ 0.060 |
Earnings per share: | ||
Basic (in dollars per share) | 0.04 | 0.01 |
Diluted (in dollars per share) | $ 0.04 | $ 0.01 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 50,770 | 51,479 |
Diluted (in shares) | 51,188 | 51,747 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 2,936 | $ 4,216 |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustments | 374 | |
Comprehensive income | 3,310 | 4,216 |
Less net income attributable to noncontrolling interests | (989) | (3,528) |
Comprehensive income attributable to Primoris | $ 2,321 | $ 688 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Non Controlling Interest | Total |
Balance at Dec. 31, 2017 | $ 5 | $ 160,502 | $ 395,961 | $ 5,715 | $ 562,183 | |
Balance (in shares) at Dec. 31, 2017 | 51,448,753 | |||||
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||
Net income | 688 | 3,528 | 4,216 | |||
Issuance of shares to employees and directors | 1,974 | 1,974 | ||||
Issuance of shares to employees and directors (in shares) | 81,819 | |||||
Amortization of Restricted Stock Units | 215 | 215 | ||||
Dividend equivalent Units accrued - Restricted Stock Units | 10 | (10) | ||||
Dividends declared | (3,092) | (3,092) | ||||
Balance at Mar. 31, 2018 | $ 5 | 162,701 | 393,547 | 9,243 | 565,496 | |
Balance (in shares) at Mar. 31, 2018 | 51,530,572 | |||||
Balance at Dec. 31, 2018 | $ 5 | 144,048 | 461,075 | $ (908) | 2,763 | 606,983 |
Balance (in shares) at Dec. 31, 2018 | 50,715,518 | |||||
Increase (Decrease) in Stockholders' Equity Roll Forward | ||||||
Net income | 1,947 | 989 | 2,936 | |||
Foreign currency translation adjustments, net of tax | 374 | 374 | ||||
Issuance of shares to employees and directors | 2,661 | 2,661 | ||||
Issuance of shares to employees and directors (in shares) | 127,384 | |||||
Amortization of Restricted Stock Units | 487 | 487 | ||||
Dividend equivalent Units accrued - Restricted Stock Units | 12 | (12) | ||||
Distribution of non-controlling entities | (5) | (5) | ||||
Dividends declared | (3,051) | (3,051) | ||||
Balance at Mar. 31, 2019 | $ 5 | $ 147,208 | $ 459,959 | $ (534) | $ 3,747 | $ 610,385 |
Balance (in shares) at Mar. 31, 2019 | 50,842,902 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 2,936 | $ 4,216 |
Adjustments to reconcile net income to net cash provided by operating activities (net of effect of acquisitions): | ||
Depreciation | 18,952 | 14,368 |
Amortization of intangible assets | 2,748 | 2,424 |
Stock-based compensation expense | 487 | 215 |
Gain on sale of property and equipment | (2,217) | (1,104) |
Other non-cash items | 80 | 40 |
Changes in assets and liabilities: | ||
Accounts receivable | (24,722) | 30,669 |
Contract assets | (2,328) | 2,970 |
Other current assets | (2,231) | (6,356) |
Other long-term assets | 182 | (499) |
Accounts payable | (59,198) | (9,987) |
Contract liabilities | 2,590 | (31,721) |
Operating lease assets and liabilities, net | (1,447) | |
Accrued liabilities | (9,663) | (1,806) |
Other long-term liabilities | 1,735 | 231 |
Net cash (used in) provided by operating activities | (72,096) | 3,660 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (14,377) | (19,125) |
Issuance of a note receivable | (10,000) | |
Proceeds from sale of property and equipment | 4,398 | 3,734 |
Net cash used in investing activities | (9,979) | (25,391) |
Cash flows from financing activities: | ||
Borrowings under revolving line of credit | 40,000 | |
Payments on revolving line of credit | (40,000) | |
Proceeds from issuance of long-term debt | 23,105 | |
Repayment of long-term debt | (17,170) | (12,870) |
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,804 | 1,498 |
Dividends paid | (3,043) | (3,087) |
Other | (26) | (23) |
Net cash provided by (used in) financing activities | 4,670 | (14,482) |
Effect of exchange rate changes on cash and cash equivalents | 327 | |
Net change in cash and cash equivalents | (77,078) | (36,213) |
Cash and cash equivalents at beginning of the period | 151,063 | 170,385 |
Cash and cash equivalents at end of the period | 73,985 | 134,172 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest | 4,065 | 1,965 |
Cash paid for income taxes, net of refunds received | (707) | 88 |
Leased assets obtained in exchange for new operating leases | 8,847 | |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Dividends declared and not yet paid | $ 3,051 | $ 3,092 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2019 | |
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. We are incorporated in the State of Delaware, and our corporate headquarters are located at 2300 N. Field Street, Suite 1900, Dallas, Texas 75201. Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries. 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, 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 Group, Inc. (“Willbros”) for approximately $110.6 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 5— “ Business Combinations ”. Joint Ventures — We own a 50% interest in the Carlsbad Power Constructors joint venture (“Carlsbad”), which is engineering and constructing a gas-fired power generation facility located in Southern California, and its operations are included as part of the Power segment. As a result of determining that we are the primary beneficiary of the variable interest entity (“VIE”), the results of the Carlsbad joint venture are consolidated in our financial statements. The project was substantially complete as of December 31, 2018. We owned a 50% interest in the “ARB Inc. & B&M Engineering Co.” joint venture (“Wilmington”), which engineered and constructed a gas-fired power generation facility in Southern California, and its operations were included as part of the Power segment. As a result of determining that we were the primary beneficiary of the VIE, the results of the Wilmington joint venture were consolidated in our financial statements. The project has been completed, the project warranty period expired, and dissolution of the joint venture was completed in the first quarter of 2019. Financial information for the joint ventures is presented in Note 11 – “Noncontrolling Interests ”. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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 month periods ended March 31, 2019 and 2018 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 28, 2019, which contains our audited consolidated financial statements for the year ended December 31, 2018, have been omitted. This First Quarter 2019 Report on Form 10-Q should be read in conjunction 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. 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 that is approximately 50% of total revenue; however, the group that comprises the top ten customers varies from year to year. During the three months ended March 31, 2019, revenue generated by the top ten customers were approximately $324.7 million, which represented 49.1% of total revenue during the period. During the three months ended March 31, 2019, an electric utility customer represented 9.0%, and a midstream energy customer represented 6.3% of total revenue, respectively. During the three months ended March 31, 2018, revenues generated by the top ten customers were approximately $261.7 million, which represented 51.9% of total revenues during the period. During the three months ended March 31, 2018, a California utility customer represented 9.3% of total revenues, and a state department of transportation customer represented 9.2% of total revenues. At March 31, 2019, approximately 9.7% of our accounts receivable were due from one customer, and that customer provided 9.0% of our revenue for the three months ended March 31, 2019. On January 29, 2019, one of our utility customers filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As of March 31, 2019, the utility customer comprised approximately 9.0% of our total accounts receivable. In addition to accounts receivable, there is approximately $36.0 million in unbilled revenue, net as of March 31, 2019. For the three months ended March 31, 2019, the customer accounted for approximately 5.5% of our total revenue. A portion of the accounts receivable balance is past due, but we do not believe a reserve for the accounts receivable and unbilled revenue is appropriate at this time. However, we will closely monitor our current and future potential exposure. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 3—Recent Accounting Pronouncements Recently adopted accounting pronouncements In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ”, with several clarifying updates. ASU 2016-02 requires 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 also requires 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 requires a modified retrospective transition method where a company applies the new lease standard at (i) the beginning of the earliest period presented in the financial statements, or (ii) the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings. We adopted the new standard as of January 1, 2019 using the modified retrospective transition method and elected to apply the new lease standard at the adoption date. See Note 16 — “ Leases ” for further details. 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, with early adoption permitted. We adopted the standard on January 1, 2019, and it did not have an impact on our financial position, results of operations, or cash flows. Recently issued accounting pronouncements not yet adopted 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. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4—Fair Value Measurements ASC Topic 820, “ Fair Value Measurements and Disclosures ”, defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, our financial assets and liabilities that are required to be measured at fair value at March 31, 2019 and December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Significant Quoted Prices Other Significant in Active Markets Observable Unobservable for Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets as of March 31, 2019: Cash and cash equivalents $ 73,985 $ — $ — Liabilities as of March 31, 2019: Interest rate swap $ — $ 4,276 $ — Assets as of December 31, 2018: Cash and cash equivalents $ 151,063 $ — $ — Liabilities as of December 31, 2018: Interest rate swap $ — $ 2,829 $ — 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. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations | |
Business Combinations | Note 5 — 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 $110.6 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 $21.7 million. In addition, fair value adjustments to our acquired insurance liabilities and lease obligations reduced our liabilities assumed by approximately $9.3 million and $8.0 million, respectively. 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 $10.3 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 (54,138) Net cash paid 110,620 Preliminary identifiable assets acquired and liabilities assumed (in thousands) Cash and restricted cash $ 54,138 Accounts receivable 102,758 Contract assets 30,762 Other current assets 18,712 Property, plant and equipment 30,522 Intangible assets: Customer relationships 47,500 Tradename 200 Deferred income taxes 24,915 Other non-current assets 2,261 Accounts payable and accrued liabilities (114,141) Contract liabilities (66,037) Other non-current liabilities (20,868) Total identifiable net assets 110,722 Goodwill 54,036 Total purchase consideration $ 164,758 We separated the operations of Willbros among two of our existing segments, and created a new segment for the utility transmission and distribution operations called 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 $51.6 million of goodwill to the Transmission segment, $1.6 million to the Power segment, and $0.8 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 March 31, 2019, substantially all of the restricted cash had been released. For the three months ended March 31, 2019, Willbros contributed revenue of $157.8 million and gross profit of $7.6 million. Acquisition related costs were $1.7 million for the three months ended March 31, 2018, 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 professional fees paid to advisors. Supplemental Unaudited Pro Forma Information for the three months ended March 31, 2018 The following pro forma information for the three months ended March 31, 2018 presents our results of operations as if the acquisitions of Willbros had occurred at the beginning of 2018. 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; · the pro forma impact of nonrecurring merger and related costs directly attributable to the acquisition; · the pro forma impact of interest expense relating to the acquisition; 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% for the three months ended March 31, 2018. 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 Willbros acquisition been completed on January 1, 2018. 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 acquisition. Three Months Ended March 31, 2018 (unaudited) Revenue $ 705,099 Loss before provision for income taxes $ (2,120) Net loss attributable to Primoris $ (4,027) Weighted average common shares outstanding: Basic 51,479 Diluted 51,747 Loss per share: Basic $ (0.08) Diluted $ (0.08) |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue | |
Revenue | Note 6—Revenue 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. ASC 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation. As of March 31, 2019, we had $1.65 billion of remaining performance obligations. We expect to recognize approximately 64% of our remaining performance obligations as revenue during the next four quarters and substantially all of the remaining balance by the first quarter of 2021. 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 months ended March 31, 2019, revenue recognized from performance obligations satisfied in previous periods was $6.5 million. 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 March 31, 2019, we had approximately $73.5 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 $68.8 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through March 31, 2019. 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, which arise when revenue has been recorded but the amount will not be billed until a later date; · retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and · contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project. Contract assets consist of the following (in thousands): March 31, December 31, 2019 2018 Unbilled revenue $ 257,058 $ 249,577 Retention receivable 89,034 88,953 Contract materials (not yet installed) 20,343 25,715 $ 366,435 $ 364,245 Contract assets increased by $2.2 million compared to December 31, 2018 due primarily to higher unbilled revenue, partially offset by a reduction in contract materials net yet installed. The caption “Contract liabilities” in the Condensed Consolidated Balance Sheets represents deferred revenue on billings in excess of contract revenue recognized to date, and the accrued loss provision. Contract liabilities consist of the following (in thousands): March 31, December 31, 2019 2018 Deferred revenue $ 188,146 $ 182,232 Accrued loss provision 5,948 7,307 $ 194,094 $ 189,539 Contract liabilities increased by $4.6 million compared to December 31, 2018 primarily due to an increase in deferred revenue, partially offset by a reduction in the accrued loss provision. Revenue recognized for the three months ended March 31, 2019, that was included in the contract liability balance at December 31, 2018 was approximately $123.8 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 March 31, 2019 Segment MSA Non-MSA Total Power $ 49,195 $ 96,188 $ 145,383 Pipeline 21,849 112,965 134,814 Utilities 119,462 26,744 146,206 Transmission 101,723 16,720 118,443 Civil 650 116,062 116,712 Total $ 292,879 $ 368,679 $ 661,558 For the three months ended March 31, 2018 Segment MSA Non-MSA Total Power $ 19,398 $ 147,157 $ 166,555 Pipeline 7,280 50,303 57,583 Utilities 119,767 46,943 166,710 Transmission — — — Civil — 113,271 113,271 Total $ 146,445 $ 357,674 $ 504,119 Revenue by contract type was as follows (in thousands): For the three months ended March 31, 2019 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 75,143 $ 6,613 $ 63,627 $ 145,383 Pipeline 17,227 374 117,213 134,814 Utilities 22,767 67,878 55,561 146,206 Transmission 8,463 105,841 4,139 118,443 Civil 22,685 78,494 15,533 116,712 Total $ 146,285 $ 259,200 $ 256,073 $ 661,558 (1) Includes time and material and cost reimbursable plus fee contracts. For the three months ended March 31, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 116,655 $ 11,112 $ 38,788 $ 166,555 Pipeline 12,520 18,645 26,418 57,583 Utilities 64,064 66,751 35,895 166,710 Transmission — — — — Civil 9,643 87,080 16,548 113,271 Total $ 202,882 $ 183,588 $ 117,649 $ 504,119 (1) Includes time and material and cost reimbursable plus fee contracts. Each of these contract types 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 fixed-price 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. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 7—Goodwill and Intangible Assets The change in goodwill by segment for the three months ended March 31, 2019 was as follows (in thousands): Power Pipeline Utilities Transmission Civil Total Balance at January 1, 2019 $ 25,933 $ 52,285 $ 37,312 $ 50,479 $ 40,150 $ 206,159 Adjustments to identifiable assets acquired and liabilities assumed 36 19 — 1,196 — 1,251 Balance at March 31, 2019 $ 25,969 $ 52,304 $ 37,312 $ 51,675 $ 40,150 $ 207,410 The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are on a straight-line basis (in thousands): March 31, 2019 December 31, 2018 Weighted Gross Carrying Accumulated Intangible assets, net Gross Carrying Accumulated Intangible assets, net Tradename 9 years $ 31,390 $ (26,040) $ 5,350 $ 31,390 $ (25,156) $ 6,234 Customer relationships 16 years 97,400 (25,012) 72,388 97,400 (23,079) 74,321 Non-compete agreements 5 years 1,900 (1,295) 605 1,900 (1,387) 513 Other 3 years 275 (168) 107 275 (145) 130 Total 15 years $ 130,965 $ (52,515) $ 78,450 $ 130,965 $ (49,767) $ 81,198 Amortization expense of intangible assets was $2.7 million and $2.4 million for the three months ended March 31, 2019 and 2018, respectively. Estimated future amortization expense for intangible assets is as follows (in thousands): Estimated Intangible Amortization For the Years Ending December 31, Expense 2019 (remaining nine months) $ 8,624 2020 8,814 2021 7,577 2022 6,416 2023 5,581 Thereafter 41,438 $ 78,450 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 8—Accounts Payable and Accrued Liabilities At March 31, 2019 and December 31, 2018, accounts payable included retention amounts of approximately $9.6 million and $13.2 million, respectively. These amounts owed to subcontractors have been retained pending contract completion and customer acceptance of jobs. The following is a summary of accrued liabilities (in thousands): March 31, December 31, 2019 2018 Payroll and related employee benefits $ 62,985 $ 60,509 Current operating lease liability 53,835 — Insurance, including self-insurance reserves 31,835 41,379 Corporate income taxes and other taxes 5,131 5,040 Other 12,137 10,599 $ 165,923 $ 117,527 |
Credit Arrangements
Credit Arrangements | 3 Months Ended |
Mar. 31, 2019 | |
Credit Arrangements | |
Credit Arrangements | Note 9—Credit Arrangements Long-term debt and credit facilities consist of the following (in thousands): March 31, December 31, 2019 2018 Term loan $ 211,750 $ 214,500 Revolving credit facility — — Commercial equipment notes 136,409 127,458 Mortgage notes 26,933 27,200 Total debt 375,092 369,158 Unamortized debt issuance costs (947) (1,001) Total debt, net $ 374,145 $ 368,157 Less: current portion (66,872) (62,488) Long-term debt, net of current portion $ 307,273 $ 305,669 The weighted average interest rate on total debt outstanding at March 31, 2019 and December 31, 2018 was 3.9% and 4.1%, respectively. Credit Agreement Our credit agreement consists of a $220.0 million term loan and 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. The credit agreement also includes an accordion feature that would allow us to increase the borrowing capacity thereunder by $75.0 million, subject to obtaining additional or increased lender commitments. The maturity date of the credit agreement is July 9, 2023. At March 31, 2019, letters of credit outstanding were $52.0 million. Other than commercial letters of credit, there were no outstanding borrowings under the Revolving Credit Facility, and available borrowing capacity was $148.0 million at March 31, 2019. The credit agreement contains various restrictive and financial covenants including, among others, a 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 March 31, 2019. Canadian Credit Facility We have a demand credit facility for $4.0 million in Canadian dollars with a Canadian bank for purposes of issuing commercial letters of credit in Canada. At March 31, 2019, commercial letters of credit outstanding were $0.2 in Canadian dollars, and the available borrowing capacity was $3.8 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for OnQuest Canada, ULC, our wholly owned subsidiary. At March 31, 2019, OnQuest Canada, ULC was in compliance with the covenant. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2019 | |
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. 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 March 31, 2019, and December 31, 2018, our outstanding interest rate swap agreement contained a notional amount of $158.8 million and $160.9 million, respectively, with a maturity date of July 10, 2023. 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 minimize 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): Liability Derivatives March 31, December 31, Balance Sheet Location 2019 2018 Interest rate swap Other long-term liabilities $ 4,276 $ 2,829 Total derivatives $ 4,276 $ 2,829 The following table summarizes the amounts recognized with respect to our derivative instruments within the Condensed Consolidated Statements of Income (in thousands): Three Months Ended Location of Loss Recognized March 31, on Derivatives 2019 2018 Interest rate swap Interest expense $ 1,596 $ — Cash flows from derivatives settled are reported as cash flows from operating activities. |
Noncontrolling Interests
Noncontrolling Interests | 3 Months Ended |
Mar. 31, 2019 | |
Noncontrolling Interests | |
Noncontrolling Interests | Note 11 — Noncontrolling Interests We own a 50% interest in the Carlsbad joint venture and we owned a 50% interest in the Wilmington joint venture, 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, only the tax effect of 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 March 31, 2019 2018 Revenue $ 4,024 $ 41,820 Net income attributable to noncontrolling interests $ 989 $ 3,114 The Carlsbad joint venture made no distributions to the partners and we made no capital contributions to the Carlsbad joint venture during the three months ended March 31, 2019 and 2018. The project was substantially complete as of December 31, 2018. The carrying value of the assets and liabilities associated with the operations of the Carlsbad joint venture are included in our Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2019 2018 Cash $ 9,213 $ 3,117 Accounts receivable $ 1,028 $ 4,451 Contract assets $ 300 $ 8,158 Accounts payable $ 431 $ 2,279 Contract liabilities $ 1,903 $ 5,946 Due to Primoris $ 708 $ 1,979 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 March 31, 2019 2018 Revenue $ — $ 1,484 Net income attributable to noncontrolling interests $ — $ 414 The project has been completed, the project warranty period has expired, and the dissolution of the joint venture was completed in the first quarter of 2019. The Wilmington joint venture made a final immaterial distribution to the noncontrolling interest and to us during the three months ended March 31, 2019. No distributions were made during the three months ended March 31, 2018. In addition, we did not make any capital contributions to the Wilmington joint venture during the three months ended March 31, 2019 and 2018. The carrying value of the assets and liabilities associated with the operations of the Wilmington joint venture were included in our Condensed Consolidated Balance Sheet and were immaterial at December 31, 2018. 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 March 31, 2019 Amounts Amounts Cash $ 9,213 $ 73,985 Accounts receivable $ 1,028 $ 397,786 Contract assets $ 300 $ 366,435 Accounts payable $ 431 $ 190,244 Contract liabilities $ 1,903 $ 194,094 At December 31, 2018 Cash $ 3,127 $ 151,063 Accounts receivable $ 4,451 $ 372,695 Contract assets $ 8,158 $ 364,245 Accounts payable $ 2,279 $ 249,217 Contract liabilities $ 5,946 $ 189,539 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation. | |
Stock-Based Compensation | Note 12—Stock-Based Compensation In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Our Board of Directors has granted 398,927 Restricted Stock Units (“Units”), net of forfeitures 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 March 31, 2019, a total of 203,403 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 (remaining nine months) 55,945 2020 11,067 2021 122,649 2022 3,522 2023 2,341 195,524 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 $0.5 million and $0.2 million in compensation expense for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019, approximately $3.0 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 March 31, 2019, a total of 5,727 Dividend Equivalent Units were accrued. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | Note 13—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. 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 three months ended March 31, 2019 and 2018 was 21.3% and 4.8%, respectively. Excluding noncontrolling interest, the effective tax rate on income attributable to Primoris for the three months ended March 31, 2019 and 2018 was 29.0% and 23.5%, respectively. For the first three months of 2019, our tax rate differs from the U.S. federal statutory rate of 21% primarily due to the impact of state income taxes and nondeductible components of per diem expenses. For the first three 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. 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 temporary differences between the financial reporting bases and tax bases of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based upon consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income, the length of the tax asset carryforward periods, and tax planning strategies. The effects of remeasurement of deferred tax assets and liabilities resulting from changes in tax rates are recognized in income in the period of enactment. |
Dividends and Earnings Per Shar
Dividends and Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Dividends and Earnings Per Share | |
Dividends and Earnings Per Share | Note 14—Dividends and Earnings Per Share We have paid or declared cash dividends during 2019 and 2018 as follows: Declaration Date Record Date Payable Date Amount Per Share 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 $ November 2, 2018 December 31, 2018 January 15, 2019 $ February 26, 2019 March 29, 2019 April 15, 2019 $ The payment of future dividends is contingent upon our revenue and earnings, capital requirements and our general financial condition, as well as contractual restrictions and other considerations deemed relevant by the Board of Directors. The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018 (in thousands, except per share amounts). Three Months Ended March 31, 2019 2018 Numerator: Net income attributable to Primoris $ 1,947 $ 688 Denominator: Weighted average shares for computation of basic earnings per share 50,770 51,479 Dilutive effect of shares issued to independent directors 8 6 Dilutive effect of restricted stock units (1) 410 262 Weighted average shares for computation of diluted earnings per share 51,188 51,747 Earnings per share attributable to Primoris: Basic $ 0.04 $ 0.01 Diluted $ 0.04 $ 0.01 (1) Represents the dilutive effect of the grant of Units and vested Dividend Equivalent Units for the respective periods presented. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | Note 15—Stockholders’ Equity Common stock We issued 114,106 and 71,757 shares of common stock in the three months ended March 31, 2019 and 2018, respectively, 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 $1.8 million and $1.5 million in the three months ended March 31, 2019 and 2018, respectively. 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 the three months ended March 31, 2019 were for bonus amounts earned in 2018, and the number of shares was calculated at 75% of the average daily closing market price during December 2018. The shares purchased in the three months ended March 31, 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. In the three months ended March 31, 2019 and 2018, we issued 13,278 and 10,062 shares of common stock, respectively, as part of the quarterly compensation of the non-employee members of the Board of Directors. As discussed in Note 12 — “Stock–Based Compensation” , as of March 31, 2019, the Board of Directors has granted a total of 398,927 shares of Units, net of forfeitures under the Equity Plan and these Units have accrued 5,727 Dividend Equivalent Units. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | Note 16—Leases We lease administrative and fabrication facilities, which are generally longer-term, project specific facilities or yards, and construction equipment under non-cancelable operating leases. On January 1, 2019, we adopted ASC 842, “ Leases ” using the modified retrospective method and elected to apply the new lease standard at the adoption date. The cumulative impact of adopting ASC 842 was immaterial and did not require an adjustment to retained earnings. In adopting ASC 842, we changed our accounting policy for leases. Under the modified retrospective method, results for periods prior to January 1, 2019, are not adjusted and continue to be reported in accordance with our historic accounting under ASC 840, “Leases” . We elected certain transition practical expedients permitted with the new standard, which among other things, allowed us to carry forward the historical lease classification. In addition, we elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We also made an accounting policy election in which leases with an initial term of 12 months or less are not recorded on the balance sheet and lease payments are recognized in the Condensed Consolidated Statements of Income on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Operating leases are included in operating lease assets, accrued liabilities, and noncurrent operating lease liabilities on our Condensed Consolidated Balance Sheets. Operating lease assets and operating lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. In determining our lease term, we include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease expense from minimum lease payments is recognized on a straight-line basis over the lease term. Our leases have remaining lease terms that expire at various dates through 2029, some of which may include options to extend the leases for up to 5 years. The exercise of lease extensions is at our sole discretion. Periodically, we sublease excess facility space, but any sublease income is generally not significant. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease expense are as follows (in thousands): Three Months Ended March 31, 2019 2018 (1) Operating lease expense $ 16,513 (1) $ 6,832 (2) ________________________________________ (1) Includes short-term leases and variable lease costs, which are immaterial. (2) Reported in accordance with our historical accounting under ASC 840, “ Leases ”. Our operating lease liabilities are reported on the Condensed Consolidated Balance Sheet as follows (in thousands): March 31, 2019 Accrued liabilities $ 53,835 Noncurrent operating lease liabilities 104,039 $ 157,874 The future minimum lease payments under non-cancelable operating leases are as follows (in thousands): Future Minimum For the Years Ending December 31, Lease Payments 2019 (remaining nine months) $ 47,682 2020 49,169 2021 33,352 2022 18,339 2023 10,424 Thereafter 13,509 Total lease payments $ 172,475 Less imputed interest (14,601) Total $ 157,874 Other information related to operating leases is as follows (in thousands, except lease term and discount rate): Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 16,996 Weighted-average remaining lease term on operating leases (years) 3.89 Weighted-average discount rate on operating leases |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 17—Commitments and Contingencies 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 pay a third-party contractor approved by the NTTA to complete the remediation. In the event that the total remediation costs exceed the $22.4 million, the second defendant would pay 20% of the excess amount and we would pay for 80% of the excess amount. During the three months ended March 31, 2019, we increased our liability by $0.6 million. We also spent $1.5 million for remediation during the three months ended March 31, 2019. 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 March 31, 2019, the remaining accrual balance was $17.6 million. Legal proceedings — 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 probable but not reasonably estimable, we do not accrue for a potential litigation loss. Management is unable to ascertain the ultimate outcome of other claims and legal proceedings; however, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles/self-insurance retention, management believes that it has meritorious defenses to such claims and believes that the reasonably possible outcome of such claims will not, individually or in the aggregate, have a material adverse effect on our consolidated results of operations, financial condition or cash flow. Bonding — At March 31, 2019 and December 31, 2018, the Company had bid and completion bonds issued and outstanding totaling approximately $490.0 million and $554.9 million, respectively. |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2019 | |
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, 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 gas utility line installation and maintenance, gas 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 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 was as follows (in thousands): For the three months ended March 31, 2019 2018 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 145,383 $ 166,555 Pipeline 134,814 57,583 Utilities 146,206 166,710 Transmission 118,443 — — Civil 116,712 113,271 Total $ 661,558 $ 504,119 Segment Gross Profit Gross profit by segment was as follows (in thousands): For the three months ended March 31, 2019 2018 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 20,198 $ 24,071 Pipeline 15,016 7,891 Utilities 8,241 9,051 Transmission 6,628 — — Civil 2,377 3,547 Total $ 52,460 $ 44,560 Segment Goodwill The amount of goodwill recorded by each segment at March 31, 2019 and at December 31, 2018 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 4.6% and 1.0% generated from sources outside of the United States during the three months ended March 31, 2019 and 2018, respectively, principally in Canada. At March 31, 2019 and December 31, 2018, approximately 3.2% of total assets were located outside of the United States. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events. | |
Subsequent Events | Note 19—Subsequent Events Cash Dividend On May 3, 2019, the Board of Directors declared a cash dividend of $0.06 per share of common stock for stockholders of record as of June 28, 2019, payable on or about July 15, 2019. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Revenue recognition | 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. ASC 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation. As of March 31, 2019, we had $1.65 billion of remaining performance obligations. We expect to recognize approximately 64% of our remaining performance obligations as revenue during the next four quarters and substantially all of the remaining balance by the first quarter of 2021. 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 months ended March 31, 2019, revenue recognized from performance obligations satisfied in previous periods was $6.5 million. 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 March 31, 2019, we had approximately $73.5 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 $68.8 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through March 31, 2019. 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, 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. |
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 that is approximately 50% of total revenue; however, the group that comprises the top ten customers varies from year to year. During the three months ended March 31, 2019, revenue generated by the top ten customers were approximately $324.7 million, which represented 49.1% of total revenue during the period. During the three months ended March 31, 2019, an electric utility customer represented 9.0%, and a midstream energy customer represented 6.3% of total revenue, respectively. During the three months ended March 31, 2018, revenues generated by the top ten customers were approximately $261.7 million, which represented 51.9% of total revenues during the period. During the three months ended March 31, 2018, a California utility customer represented 9.3% of total revenues, and a state department of transportation customer represented 9.2% of total revenues. At March 31, 2019, approximately 9.7% of our accounts receivable were due from one customer, and that customer provided 9.0% of our revenue for the three months ended March 31, 2019. On January 29, 2019, one of our utility customers filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As of March 31, 2019, the utility customer comprised approximately 9.0% of our total accounts receivable. In addition to accounts receivable, there is approximately $36.0 million in unbilled revenue, net as of March 31, 2019. For the three months ended March 31, 2019, the customer accounted for approximately 5.5% of our total revenue. A portion of the accounts receivable balance is past due, but we do not believe a reserve for the accounts receivable and unbilled revenue is appropriate at this time. However, we will closely monitor our current and future potential exposure. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities which are required to be measured at fair value | The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, our financial assets and liabilities that are required to be measured at fair value at March 31, 2019 and December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Significant Quoted Prices Other Significant in Active Markets Observable Unobservable for Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets as of March 31, 2019: Cash and cash equivalents $ 73,985 $ — $ — Liabilities as of March 31, 2019: Interest rate swap $ — $ 4,276 $ — Assets as of December 31, 2018: Cash and cash equivalents $ 151,063 $ — $ — Liabilities as of December 31, 2018: Interest rate swap $ — $ 2,829 $ — |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business combinations | |
Schedule of pro forma results | Three Months Ended March 31, 2018 (unaudited) Revenue $ 705,099 Loss before provision for income taxes $ (2,120) Net loss attributable to Primoris $ (4,027) Weighted average common shares outstanding: Basic 51,479 Diluted 51,747 Loss per share: Basic $ (0.08) Diluted $ (0.08) |
Willbros | |
Business combinations | |
Summary of the identifiable assets acquired and liabilities assumed | Purchase consideration (in thousands) Total purchase consideration $ 164,758 Less cash and restricted cash acquired (54,138) Net cash paid 110,620 Preliminary identifiable assets acquired and liabilities assumed (in thousands) Cash and restricted cash $ 54,138 Accounts receivable 102,758 Contract assets 30,762 Other current assets 18,712 Property, plant and equipment 30,522 Intangible assets: Customer relationships 47,500 Tradename 200 Deferred income taxes 24,915 Other non-current assets 2,261 Accounts payable and accrued liabilities (114,141) Contract liabilities (66,037) Other non-current liabilities (20,868) Total identifiable net assets 110,722 Goodwill 54,036 Total purchase consideration $ 164,758 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue | |
Schedule of contract assets | Contract assets consist of the following (in thousands): March 31, December 31, 2019 2018 Unbilled revenue $ 257,058 $ 249,577 Retention receivable 89,034 88,953 Contract materials (not yet installed) 20,343 25,715 $ 366,435 $ 364,245 |
Schedule of contract liabilities | Contract liabilities consist of the following (in thousands): March 31, December 31, 2019 2018 Deferred revenue $ 188,146 $ 182,232 Accrued loss provision 5,948 7,307 $ 194,094 $ 189,539 |
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 March 31, 2019 Segment MSA Non-MSA Total Power $ 49,195 $ 96,188 $ 145,383 Pipeline 21,849 112,965 134,814 Utilities 119,462 26,744 146,206 Transmission 101,723 16,720 118,443 Civil 650 116,062 116,712 Total $ 292,879 $ 368,679 $ 661,558 For the three months ended March 31, 2018 Segment MSA Non-MSA Total Power $ 19,398 $ 147,157 $ 166,555 Pipeline 7,280 50,303 57,583 Utilities 119,767 46,943 166,710 Transmission — — — Civil — 113,271 113,271 Total $ 146,445 $ 357,674 $ 504,119 Revenue by contract type was as follows (in thousands): For the three months ended March 31, 2019 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 75,143 $ 6,613 $ 63,627 $ 145,383 Pipeline 17,227 374 117,213 134,814 Utilities 22,767 67,878 55,561 146,206 Transmission 8,463 105,841 4,139 118,443 Civil 22,685 78,494 15,533 116,712 Total $ 146,285 $ 259,200 $ 256,073 $ 661,558 (1) Includes time and material and cost reimbursable plus fee contracts. For the three months ended March 31, 2018 Segment Fixed-price Unit-price Cost reimbursable (1) Total Power $ 116,655 $ 11,112 $ 38,788 $ 166,555 Pipeline 12,520 18,645 26,418 57,583 Utilities 64,064 66,751 35,895 166,710 Transmission — — — — Civil 9,643 87,080 16,548 113,271 Total $ 202,882 $ 183,588 $ 117,649 $ 504,119 (1) Includes time and material and cost reimbursable plus fee contracts. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets | |
Schedule of goodwill by reporting unit | The change in goodwill by segment for the three months ended March 31, 2019 was as follows (in thousands): Power Pipeline Utilities Transmission Civil Total Balance at January 1, 2019 $ 25,933 $ 52,285 $ 37,312 $ 50,479 $ 40,150 $ 206,159 Adjustments to identifiable assets acquired and liabilities assumed 36 19 — 1,196 — 1,251 Balance at March 31, 2019 $ 25,969 $ 52,304 $ 37,312 $ 51,675 $ 40,150 $ 207,410 |
Summary of intangible asset categories, amounts and the average amortization periods | The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are on a straight-line basis (in thousands): March 31, 2019 December 31, 2018 Weighted Gross Carrying Accumulated Intangible assets, net Gross Carrying Accumulated Intangible assets, net Tradename 9 years $ 31,390 $ (26,040) $ 5,350 $ 31,390 $ (25,156) $ 6,234 Customer relationships 16 years 97,400 (25,012) 72,388 97,400 (23,079) 74,321 Non-compete agreements 5 years 1,900 (1,295) 605 1,900 (1,387) 513 Other 3 years 275 (168) 107 275 (145) 130 Total 15 years $ 130,965 $ (52,515) $ 78,450 $ 130,965 $ (49,767) $ 81,198 |
Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for intangible assets is as follows (in thousands): Estimated Intangible Amortization For the Years Ending December 31, Expense 2019 (remaining nine months) $ 8,624 2020 8,814 2021 7,577 2022 6,416 2023 5,581 Thereafter 41,438 $ 78,450 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounts Payable and Accrued Liabilities | |
Summary of accrued expenses and other current liabilities | The following is a summary of accrued liabilities (in thousands): March 31, December 31, 2019 2018 Payroll and related employee benefits $ 62,985 $ 60,509 Current operating lease liability 53,835 — Insurance, including self-insurance reserves 31,835 41,379 Corporate income taxes and other taxes 5,131 5,040 Other 12,137 10,599 $ 165,923 $ 117,527 |
Credit Arrangements (Tables)
Credit Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Credit Arrangements | |
Schedule of long-term debt and credit facilities | Long-term debt and credit facilities consist of the following (in thousands): March 31, December 31, 2019 2018 Term loan $ 211,750 $ 214,500 Revolving credit facility — — Commercial equipment notes 136,409 127,458 Mortgage notes 26,933 27,200 Total debt 375,092 369,158 Unamortized debt issuance costs (947) (1,001) Total debt, net $ 374,145 $ 368,157 Less: current portion (66,872) (62,488) Long-term debt, net of current portion $ 307,273 $ 305,669 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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): Liability Derivatives March 31, December 31, Balance Sheet Location 2019 2018 Interest rate swap Other long-term liabilities $ 4,276 $ 2,829 Total derivatives $ 4,276 $ 2,829 |
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): Three Months Ended Location of Loss Recognized March 31, on Derivatives 2019 2018 Interest rate swap Interest expense $ 1,596 $ — |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 Amounts Amounts Cash $ 9,213 $ 73,985 Accounts receivable $ 1,028 $ 397,786 Contract assets $ 300 $ 366,435 Accounts payable $ 431 $ 190,244 Contract liabilities $ 1,903 $ 194,094 At December 31, 2018 Cash $ 3,127 $ 151,063 Accounts receivable $ 4,451 $ 372,695 Contract assets $ 8,158 $ 364,245 Accounts payable $ 2,279 $ 249,217 Contract liabilities $ 5,946 $ 189,539 |
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 March 31, 2019 2018 Revenue $ 4,024 $ 41,820 Net income attributable to noncontrolling interests $ 989 $ 3,114 |
Schedule of the carrying value of the assets and liabilities included in the Company's consolidated balance sheets | The carrying value of the assets and liabilities associated with the operations of the Carlsbad joint venture are included in our Condensed Consolidated Balance Sheets as follows (in thousands): March 31, December 31, 2019 2018 Cash $ 9,213 $ 3,117 Accounts receivable $ 1,028 $ 4,451 Contract assets $ 300 $ 8,158 Accounts payable $ 431 $ 2,279 Contract liabilities $ 1,903 $ 5,946 Due to Primoris $ 708 $ 1,979 |
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 March 31, 2019 2018 Revenue $ — $ 1,484 Net income attributable to noncontrolling interests $ — $ 414 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation. | |
Schedule of units activity | Number of Units For the Years Ending December 31, to Vest 2019 (remaining nine months) 55,945 2020 11,067 2021 122,649 2022 3,522 2023 2,341 195,524 |
Dividends and Earnings Per Sh_2
Dividends and Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Dividends and Earnings Per Share | |
Schedule of cash dividends paid or declared | We have paid or declared cash dividends during 2019 and 2018 as follows: Declaration Date Record Date Payable Date Amount Per Share 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 $ November 2, 2018 December 31, 2018 January 15, 2019 $ February 26, 2019 March 29, 2019 April 15, 2019 $ |
Schedule of computation of basic and diluted earnings per share | The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018 (in thousands, except per share amounts). Three Months Ended March 31, 2019 2018 Numerator: Net income attributable to Primoris $ 1,947 $ 688 Denominator: Weighted average shares for computation of basic earnings per share 50,770 51,479 Dilutive effect of shares issued to independent directors 8 6 Dilutive effect of restricted stock units (1) 410 262 Weighted average shares for computation of diluted earnings per share 51,188 51,747 Earnings per share attributable to Primoris: Basic $ 0.04 $ 0.01 Diluted $ 0.04 $ 0.01 (1) Represents the dilutive effect of the grant of Units and vested Dividend Equivalent Units for the respective periods presented. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Summary of components of lease expense | The components of lease expense are as follows (in thousands): Three Months Ended March 31, 2019 2018 (1) Operating lease expense $ 16,513 (1) $ 6,832 (2) ________________________________________ (1) Includes short-term leases and variable lease costs, which are immaterial. (2) Reported in accordance with our historical accounting under ASC 840, “ Leases ”. |
Summary of operating lease liabilities | Our operating lease liabilities are reported on the Condensed Consolidated Balance Sheet as follows (in thousands): March 31, 2019 Accrued liabilities $ 53,835 Noncurrent operating lease liabilities 104,039 $ 157,874 |
Summary of future minimum lease payments under non-cancelable operating leases | The future minimum lease payments under non-cancelable operating leases are as follows (in thousands): Future Minimum For the Years Ending December 31, Lease Payments 2019 (remaining nine months) $ 47,682 2020 49,169 2021 33,352 2022 18,339 2023 10,424 Thereafter 13,509 Total lease payments $ 172,475 Less imputed interest (14,601) Total $ 157,874 |
Summary of other information related to operating leases | Other information related to operating leases is as follows (in thousands, except lease term and discount rate): Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 16,996 Weighted-average remaining lease term on operating leases (years) 3.89 Weighted-average discount rate on operating leases |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Reportable Segments | |
Schedule of revenue by segment | Revenue by segment was as follows (in thousands): For the three months ended March 31, 2019 2018 % of % of Total Total Segment Revenue Revenue Revenue Revenue Power $ 145,383 $ 166,555 Pipeline 134,814 57,583 Utilities 146,206 166,710 Transmission 118,443 — — Civil 116,712 113,271 Total $ 661,558 $ 504,119 |
Schedule of gross profit by segment | Gross profit by segment was as follows (in thousands): For the three months ended March 31, 2019 2018 % of % of Segment Segment Segment Gross Profit Revenue Gross Profit Revenue Power $ 20,198 $ 24,071 Pipeline 15,016 7,891 Utilities 8,241 9,051 Transmission 6,628 — — Civil 2,377 3,547 Total $ 52,460 $ 44,560 |
Nature of Business (Details)
Nature of Business (Details) $ in Thousands | Jun. 01, 2018USD ($)segment | Mar. 31, 2019segment |
Nature of Business | ||
Number of reportable segments | segment | 5 | |
Willbros | ||
Nature of Business | ||
Number of reportable segments | segment | 2 | |
Purchase consideration, net of cash acquired | $ | $ 110,620 | |
Transmission | Willbros | ||
Nature of Business | ||
Purchase consideration, net of cash acquired | $ | $ 110,600 | |
Carlsbad | ||
Nature of Business | ||
Ownership percentage | 50.00% | |
Wilmington | ||
Nature of Business | ||
Ownership percentage | 50.00% |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)customeritem | Mar. 31, 2018USD ($)customer | Dec. 31, 2018USD ($) | |
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% | ||
Unbilled revenue | $ 257,058 | $ 249,577 | |
Revenue | 661,558 | $ 504,119 | |
Utility Company under Chapter 11 | |||
Customer concentration | |||
Unbilled revenue | $ 36,000 | ||
Revenues | Customer concentration | Top ten customers | |||
Customer concentration | |||
Number of top customers | customer | 10 | 10 | |
Percentage of concentration risk | 49.10% | 51.90% | |
Revenue | $ 324,700 | $ 261,700 | |
Revenues | Customer concentration | One customer | |||
Customer concentration | |||
Percentage of concentration risk | 9.00% | ||
Revenues | Customer concentration | Midwest utility customer | |||
Customer concentration | |||
Percentage of concentration risk | 9.00% | ||
Revenues | Customer concentration | California utility customer | |||
Customer concentration | |||
Percentage of concentration risk | 6.30% | ||
Revenues | Customer concentration | California utility project | |||
Customer concentration | |||
Percentage of concentration risk | 9.30% | ||
Revenues | Customer concentration | A State department of transportation | |||
Customer concentration | |||
Percentage of concentration risk | 9.20% | ||
Revenues | Customer concentration | Utility Company under Chapter 11 | |||
Customer concentration | |||
Percentage of concentration risk | 5.50% | ||
Accounts receivable | Customer concentration | One customer | |||
Customer concentration | |||
Percentage of concentration risk | 9.70% | ||
Number of customers | customer | 1 | ||
Accounts receivable | Customer concentration | Utility Company under Chapter 11 | |||
Customer concentration | |||
Percentage of concentration risk | 9.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | $ 73,985 | $ 151,063 |
Interest rate swap | Significant Other Observable Inputs (Level2) | ||
Liabilities | ||
Derivative liability | $ 4,276 | $ 2,829 |
Business Combinations - 2018 Ac
Business Combinations - 2018 Acquisitions (Details) $ in Thousands | Jun. 01, 2018USD ($)segment | Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) |
Business combinations | ||||
Increase in goodwill | $ 1,251 | |||
Fair value of net assets acquired | ||||
Goodwill | $ 207,410 | $ 206,159 | ||
Number of reportable segments | segment | 5 | |||
Revenue | $ 661,558 | $ 504,119 | ||
Gross profit | 52,460 | 44,560 | ||
Merger and related costs | 1,695 | |||
Transmission | ||||
Business combinations | ||||
Increase in goodwill | 1,196 | |||
Fair value of net assets acquired | ||||
Goodwill | 51,675 | 50,479 | ||
Revenue | 118,443 | |||
Gross profit | 6,628 | |||
Power | ||||
Business combinations | ||||
Increase in goodwill | 36 | |||
Fair value of net assets acquired | ||||
Goodwill | 25,969 | 25,933 | ||
Revenue | 145,383 | 166,555 | ||
Gross profit | 20,198 | 24,071 | ||
Pipeline | ||||
Business combinations | ||||
Increase in goodwill | 19 | |||
Fair value of net assets acquired | ||||
Goodwill | 52,304 | $ 52,285 | ||
Revenue | 134,814 | 57,583 | ||
Gross profit | 15,016 | 7,891 | ||
Willbros | ||||
Business combinations | ||||
Increase in contract liabilities | 21,700 | |||
Decrease in insurance liabilities | (9,300) | |||
Decrease in lease obligations | (8,000) | |||
Increase in goodwill | 10,300 | |||
Total purchase consideration | $ 164,758 | |||
Less cash and restricted cash acquired | (54,138) | |||
Net cash paid | 110,620 | |||
Fair value of net assets acquired | ||||
Cash and restricted cash | 54,138 | |||
Accounts receivable | 102,758 | |||
Contract assets | 30,762 | |||
Other current assets | 18,712 | |||
Property, plant and equipment | 30,522 | |||
Deferred income taxes | 24,915 | |||
Other non-current assets | 2,261 | |||
Accounts payable and accrued liabilities | (114,141) | |||
Contract liabilities | (66,037) | |||
Other non-current liabilities | (20,868) | |||
Total identifiable net assets | 110,722 | |||
Goodwill | $ 54,036 | |||
Number of reportable segments | segment | 2 | |||
Restricted cash | $ 40,200 | |||
Revenue | 157,800 | |||
Gross profit | $ 7,600 | |||
Merger and related costs | $ 1,700 | |||
Willbros | Transmission | ||||
Business combinations | ||||
Net cash paid | 110,600 | |||
Fair value of net assets acquired | ||||
Goodwill | 51,600 | |||
Willbros | Power | ||||
Fair value of net assets acquired | ||||
Goodwill | 1,600 | |||
Willbros | Pipeline | ||||
Fair value of net assets acquired | ||||
Goodwill | 800 | |||
Willbros | Customer relationships | ||||
Fair value of net assets acquired | ||||
Intangibles assets | 47,500 | |||
Willbros | Tradename | ||||
Fair value of net assets acquired | ||||
Intangibles assets | $ 200 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Pro forma results | |
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent) | 28.00% |
Revenues | $ 705,099 |
Loss before provision for income taxes | (2,120) |
Net loss attributable to Primoris | $ (4,027) |
Weighted average common shares outstanding: | |
Basic (in shares) | shares | 51,479 |
Diluted (in shares) | shares | 51,747 |
Loss per share: | |
Basic (in dollars per share) | $ / shares | $ (0.08) |
Diluted (in dollars per share) | $ / shares | $ (0.08) |
Revenue - Performance obligatio
Revenue - Performance obligations (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Revenue | |
Remaining performance obligations | $ 1,650 |
Revenue recognized from performance obligations satisfied in previous periods | 6.5 |
Amount of contract modifications included in the expected contract value. | 73.5 |
Amount of unapproved contract modifications recognized as revenue on a cumulative catch-up basis | $ 68.8 |
Revenue - Performance obligat_2
Revenue - Performance obligations - 2019-04-01 (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | 3 Months Ended |
Mar. 31, 2019 | |
Revenue expected timing | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | 12 months |
Percentage of remaining performance obligation expected to be recognized in period | 64.00% |
Revenue - Contract assets (Deta
Revenue - Contract assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Revenue | ||
Unbilled revenue | $ 257,058 | $ 249,577 |
Retention receivable | 89,034 | 88,953 |
Contract materials (not yet installed) | 20,343 | 25,715 |
Contract assets | 366,435 | $ 364,245 |
Increase in contract assets | $ 2,200 |
Revenue - Contract liabilities
Revenue - Contract liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Revenue | ||
Deferred revenue | $ 188,146 | $ 182,232 |
Accrued loss provision | 5,948 | 7,307 |
Contract liabilities | 194,094 | $ 189,539 |
Increase in contract liabilities | 4,600 | |
Revenue recognized included in contract liability at beginning of period | $ 123,800 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue by customer type and contract type (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue | ||
Revenue | $ 661,558 | $ 504,119 |
Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 146,285 | 202,882 |
Unit price | ||
Disaggregation of Revenue | ||
Revenue | 259,200 | 183,588 |
Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 256,073 | 117,649 |
MSA | ||
Disaggregation of Revenue | ||
Revenue | 292,879 | 146,445 |
Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 368,679 | 357,674 |
Power | ||
Disaggregation of Revenue | ||
Revenue | 145,383 | 166,555 |
Power | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 75,143 | 116,655 |
Power | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 6,613 | 11,112 |
Power | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 63,627 | 38,788 |
Power | MSA | ||
Disaggregation of Revenue | ||
Revenue | 49,195 | 19,398 |
Power | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 96,188 | 147,157 |
Pipeline | ||
Disaggregation of Revenue | ||
Revenue | 134,814 | 57,583 |
Pipeline | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 17,227 | 12,520 |
Pipeline | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 374 | 18,645 |
Pipeline | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 117,213 | 26,418 |
Pipeline | MSA | ||
Disaggregation of Revenue | ||
Revenue | 21,849 | 7,280 |
Pipeline | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 112,965 | 50,303 |
Utilities | ||
Disaggregation of Revenue | ||
Revenue | 146,206 | 166,710 |
Utilities | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 22,767 | 64,064 |
Utilities | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 67,878 | 66,751 |
Utilities | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 55,561 | 35,895 |
Utilities | MSA | ||
Disaggregation of Revenue | ||
Revenue | 119,462 | 119,767 |
Utilities | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 26,744 | 46,943 |
Transmission | ||
Disaggregation of Revenue | ||
Revenue | 118,443 | |
Transmission | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 8,463 | |
Transmission | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 105,841 | |
Transmission | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 4,139 | |
Transmission | MSA | ||
Disaggregation of Revenue | ||
Revenue | 101,723 | |
Transmission | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | 16,720 | |
Civil | ||
Disaggregation of Revenue | ||
Revenue | 116,712 | 113,271 |
Civil | Fixed price | ||
Disaggregation of Revenue | ||
Revenue | 22,685 | 9,643 |
Civil | Unit price | ||
Disaggregation of Revenue | ||
Revenue | 78,494 | 87,080 |
Civil | Cost reimbursable | ||
Disaggregation of Revenue | ||
Revenue | 15,533 | 16,548 |
Civil | MSA | ||
Disaggregation of Revenue | ||
Revenue | 650 | |
Civil | Non-MSA | ||
Disaggregation of Revenue | ||
Revenue | $ 116,062 | $ 113,271 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill | |
Goodwill, Beginning Balance | $ 206,159 |
Adjustments to identifiable assets acquired and liabilities assumed | 1,251 |
Goodwill, Ending Balance | 207,410 |
Power | |
Goodwill | |
Goodwill, Beginning Balance | 25,933 |
Adjustments to identifiable assets acquired and liabilities assumed | 36 |
Goodwill, Ending Balance | 25,969 |
Pipeline | |
Goodwill | |
Goodwill, Beginning Balance | 52,285 |
Adjustments to identifiable assets acquired and liabilities assumed | 19 |
Goodwill, Ending Balance | 52,304 |
Utilities | |
Goodwill | |
Goodwill, Beginning Balance | 37,312 |
Goodwill, Ending Balance | 37,312 |
Transmission | |
Goodwill | |
Goodwill, Beginning Balance | 50,479 |
Adjustments to identifiable assets acquired and liabilities assumed | 1,196 |
Goodwill, Ending Balance | 51,675 |
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 | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Intangible assets | |||
Gross Carrying Amount | $ 130,965 | $ 130,965 | |
Accumulated Amortization | (52,515) | (49,767) | |
Amortization expense of intangible assets | 2,748 | $ 2,424 | |
Estimated future amortization expense for intangible assets | |||
2019 (remaining nine months) | 8,624 | ||
2020 | 8,814 | ||
2021 | 7,577 | ||
2022 | 6,416 | ||
2023 | 5,581 | ||
Thereafter | 41,438 | ||
Total | 78,450 | 81,198 | |
Tradename | |||
Intangible assets | |||
Gross Carrying Amount | 31,390 | 31,390 | |
Accumulated Amortization | (26,040) | (25,156) | |
Estimated future amortization expense for intangible assets | |||
Total | 5,350 | 6,234 | |
Customer relationships | |||
Intangible assets | |||
Gross Carrying Amount | 97,400 | 97,400 | |
Accumulated Amortization | (25,012) | (23,079) | |
Estimated future amortization expense for intangible assets | |||
Total | 72,388 | 74,321 | |
Non-compete agreements | |||
Intangible assets | |||
Gross Carrying Amount | 1,900 | 1,900 | |
Accumulated Amortization | (1,295) | (1,387) | |
Estimated future amortization expense for intangible assets | |||
Total | 605 | 513 | |
Other | |||
Intangible assets | |||
Gross Carrying Amount | 275 | 275 | |
Accumulated Amortization | (168) | (145) | |
Estimated future amortization expense for intangible assets | |||
Total | $ 107 | $ 130 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 190,244 | $ 249,217 |
Retention amounts included in accounts payable | 9,600 | 13,200 |
Accrued liabilities | ||
Payroll and related employee benefits | 62,985 | 60,509 |
Current operating lease liability | 53,835 | |
Insurance, including self-insurance reserves | 31,835 | 41,379 |
Corporate income taxes and other taxes | 5,131 | 5,040 |
Other | 12,137 | 10,599 |
Total accrued liabilities | $ 165,923 | $ 117,527 |
Credit Arrangements (Details)
Credit Arrangements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Credit arrangements | ||
Total debt | $ 375,092 | $ 369,158 |
Unamortized debt issuance costs | (947) | (1,001) |
Total debt, net | 374,145 | 368,157 |
Less: current portion | (66,872) | (62,488) |
Long-term debt, net of current portion | 307,273 | 305,669 |
Term Loan | ||
Credit arrangements | ||
Total debt, net | 211,750 | 214,500 |
Commercial equipment notes | ||
Credit arrangements | ||
Total debt | 136,409 | 127,458 |
Mortgages | ||
Credit arrangements | ||
Total debt, net | $ 26,933 | $ 27,200 |
Credit Arrangements - Narrative
Credit Arrangements - Narrative (Details) $ in Millions, $ in Millions | 3 Months Ended | |||
Mar. 31, 2019USD ($) | Mar. 31, 2019CAD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018 | |
Credit arrangements | ||||
Weighted average interest rate (as a percent) | 3.90% | 3.90% | 4.10% | |
Credit Agreement | ||||
Credit arrangements | ||||
Potential increase per the accordion feature | $ 75 | |||
Available borrowing capacity | $ 148 | |||
Credit 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% | |||
Credit Agreement | Revolving Credit Facility | ||||
Credit arrangements | ||||
Maximum borrowing capacity | 200 | |||
Borrowings outstanding | 0 | |||
Credit Agreement | Commercial letters of credit | ||||
Credit arrangements | ||||
Maximum borrowing capacity | 200 | |||
Letters of credit outstanding | 52 | |||
Term Loan | ||||
Credit arrangements | ||||
Maximum borrowing capacity | $ 220 | |||
Canadian Credit Facility | ||||
Credit arrangements | ||||
Maximum borrowing capacity | $ 4 | |||
Available borrowing capacity | 3.8 | |||
Canadian Credit Facility | Commercial letters of credit | ||||
Credit arrangements | ||||
Letters of credit outstanding | $ 0.2 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Millions | Sep. 13, 2018USD ($) | Mar. 31, 2019USD ($)instrument | Dec. 31, 2018USD ($) |
Derivative Instruments | |||
Number of Instruments used for trading | instrument | 0 | ||
Interest rate swap | |||
Derivative Instruments | |||
Notional Amount | $ | $ 165 | $ 158.8 | $ 160.9 |
Notional amount interest rate | 75.00% | ||
Notional amount adjustment | 75.00% |
Derivative Instruments - Deriva
Derivative Instruments - Derivative contract and instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments | ||
Liability Derivatives | $ 4,276 | $ 2,829 |
Interest rate swap | Interest expense | ||
Derivative Instruments | ||
Amount of Loss Recognized on Derivatives | 1,596 | |
Interest rate swap | Other long-term liabilities | ||
Derivative Instruments | ||
Liability Derivatives | $ 4,276 | $ 2,829 |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Noncontrolling Interests | |||
Revenue | $ 661,558 | $ 504,119 | |
Net income attributable to noncontrolling interests | 989 | 3,528 | |
Distributions to non-controlling interests | 5 | ||
Cash | 73,985 | $ 151,063 | |
Accounts receivable | 397,786 | 372,695 | |
Contract assets | 366,435 | 364,245 | |
Accounts payable | 190,244 | 249,217 | |
Contract liabilities | 194,094 | 189,539 | |
Non Controlling Interest | |||
Noncontrolling Interests | |||
Distributions to non-controlling interests | $ 5 | ||
Carlsbad | |||
Noncontrolling Interests | |||
Ownership interest (as a percent) | 50.00% | ||
Wilmington | |||
Noncontrolling Interests | |||
Ownership interest (as a percent) | 50.00% | ||
Carlsbad and Wilmington | |||
Noncontrolling Interests | |||
Cash | $ 9,213 | 3,127 | |
Accounts receivable | 1,028 | 4,451 | |
Contract assets | 300 | 8,158 | |
Accounts payable | 431 | 2,279 | |
Contract liabilities | 1,903 | 5,946 | |
Carlsbad | |||
Noncontrolling Interests | |||
Revenue | 4,024 | 41,820 | |
Net income attributable to noncontrolling interests | 989 | 3,114 | |
Distributions to partners | 0 | 0 | |
Capital contributions | 0 | 0 | |
Cash | 9,213 | 3,117 | |
Accounts receivable | 1,028 | 4,451 | |
Contract assets | 300 | 8,158 | |
Accounts payable | 431 | 2,279 | |
Contract liabilities | 1,903 | 5,946 | |
Due to Primoris | $ 708 | $ 1,979 | |
Wilmington | |||
Noncontrolling Interests | |||
Revenue | 1,484 | ||
Net income attributable to noncontrolling interests | 414 | ||
Non-controlling interest distribution | $ 0 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Equity Plan - Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 71 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
Stock-based compensation | |||
Units granted | 398,927 | ||
Number of vested units | 203,403 | 203,403 | |
Number of unvested units | 195,524 | 195,524 | |
Compensation expense recognized | $ 500 | $ 200 | |
Unrecognized compensation expense | $ 3,000 | $ 3,000 | |
Period to recognize unrecognized compensation expense | 2 years 6 months | ||
Accrued dividend equivalent units | 5,727 | 5,727 | |
2019 (remaining nine months) | |||
Stock-based compensation | |||
Number of Units to Vest | 55,945 | 55,945 | |
2020 | |||
Stock-based compensation | |||
Number of Units to Vest | 11,067 | 11,067 | |
2021 | |||
Stock-based compensation | |||
Number of Units to Vest | 122,649 | 122,649 | |
2022 | |||
Stock-based compensation | |||
Number of Units to Vest | 3,522 | 3,522 | |
2023 | |||
Stock-based compensation | |||
Number of Units to Vest | 2,341 | 2,341 | |
Executives | |||
Stock-based compensation | |||
Units granted | 398,927 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes | ||
Federal statutory income tax rate (as a percent) | 21.00% | 21.00% |
Effective tax rate on income before provision for income taxes including income attributable to noncontrolling interests (as a percent) | 21.30% | 4.80% |
Effective tax rate on income before provision for income taxes and noncontrolling interests (as a percent) | 29.00% | 23.50% |
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 | Feb. 26, 2019 | Nov. 02, 2018 | Aug. 02, 2018 | May 04, 2018 | Feb. 21, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Dividends and Earnings Per Share | |||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 |
Numerator: | |||||||
Net income attributable to Primoris | $ 1,947 | $ 688 | |||||
Denominator: | |||||||
Weighted average shares for computation of basic earnings per share | 50,770 | 51,479 | |||||
Dilutive effect of shares issued to independent directors | 8 | 6 | |||||
Dilutive effect of restricted stock units | 410 | 262 | |||||
Weighted average shares for computation of diluted earnings per share | 51,188 | 51,747 | |||||
Earnings per share attributable to Primoris: | |||||||
Basic earnings per share (in dollars per share) | $ 0.04 | $ 0.01 | |||||
Diluted earnings per share (in dollars per share) | $ 0.04 | $ 0.01 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 71 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
LTR Plan | |||
Common Stock | |||
Shares of common stock issued under the long-term incentive plan | 114,106 | 71,757 | |
Amount received in exchange for shares of common stock under a long term incentive plan | $ 1.8 | $ 1.5 | |
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 | 13,278 | 10,062 | |
Equity Plan | Restricted Stock Units | |||
Common Stock | |||
Granted, Units | 398,927 | ||
Accrued dividend equivalent units | 5,727 | 5,727 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense and Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Carryforward of historical lease classification | true | |
Determine the reasonably certain lease term for existing leases | true | |
Options to extend leases | true | |
Components of lease expense | ||
Operating lease expense | $ 16,513 | $ 6,832 |
Operating lease liabilities | ||
Accrued liabilities | $ 53,835 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Noncurrent operating lease liabilities, net of current portion | $ 104,039 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Noncurrent operating lease liabilities, net of current portion | |
Operating lease liabilities | $ 157,874 | |
Maximum | ||
Renewal term | 5 years |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Future minimum lease payments under non-cancelable operating leases | |
2019 (remaining nine months) | $ 47,682 |
2020 | 49,169 |
2021 | 33,352 |
2022 | 18,339 |
2023 | 10,424 |
Thereafter | 13,509 |
Total lease payments | 172,475 |
Less imputed interest | (14,601) |
Total | $ 157,874 |
Leases - Other Information Rela
Leases - Other Information Related to Operating Leases (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | $ 16,996 |
Weighted-average remaining lease term on operating leases (years) | 3 years 10 months 21 days |
Weighted-average discount rate on operating leases | 4.51% |
Commitments and Contingencies -
Commitments and Contingencies - Legal (Details) - USD ($) $ in Millions | Feb. 25, 2015 | Mar. 31, 2019 | Dec. 31, 2018 |
JCG | North Texas Tollway Authority v. James Construction Group, LLC | |||
Commitments and contingencies | |||
Expected remediation cost on settlement | $ 17 | ||
Percentage of expected costs second defendant would pay | 20.00% | ||
Percentage of expected costs Company would pay | 80.00% | ||
Remaining accrual balance | $ 17.6 | ||
Expected remediation cost | 22.4 | ||
Increase in liability | 0.6 | ||
Remediation costs | 1.5 | ||
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 | $ 5.4 | ||
Bonding | |||
Commitments and contingencies | |||
Bid and completion bonds issued and outstanding | $ 490 | $ 554.9 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | |
Segment reporting information | ||
Number of reportable segments | segment | 5 | |
Revenue | $ 661,558 | $ 504,119 |
% of Total Revenue | 100.00% | 100.00% |
Gross Profit | $ 52,460 | $ 44,560 |
% of Revenue | 7.90% | 8.80% |
Power | ||
Segment reporting information | ||
Revenue | $ 145,383 | $ 166,555 |
% of Total Revenue | 22.00% | 33.00% |
Gross Profit | $ 20,198 | $ 24,071 |
% of Revenue | 13.90% | 14.50% |
Pipeline | ||
Segment reporting information | ||
Revenue | $ 134,814 | $ 57,583 |
% of Total Revenue | 20.40% | 11.40% |
Gross Profit | $ 15,016 | $ 7,891 |
% of Revenue | 11.10% | 13.70% |
Utilities | ||
Segment reporting information | ||
Revenue | $ 146,206 | $ 166,710 |
% of Total Revenue | 22.10% | 33.10% |
Gross Profit | $ 8,241 | $ 9,051 |
% of Revenue | 5.60% | 5.40% |
Transmission | ||
Segment reporting information | ||
Revenue | $ 118,443 | |
% of Total Revenue | 17.90% | |
Gross Profit | $ 6,628 | |
% of Revenue | 5.60% | |
Civil | ||
Segment reporting information | ||
Revenue | $ 116,712 | $ 113,271 |
% of Total Revenue | 17.60% | 22.50% |
Gross Profit | $ 2,377 | $ 3,547 |
% of Revenue | 2.00% | 3.10% |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Total Assets by Geographic Area (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Revenues and total assets by geographic area | |||
% of Revenue | 100.00% | 100.00% | |
Non-United States | |||
Revenues and total assets by geographic area | |||
% of Revenue | 4.60% | 1.00% | |
% of total assets | 3.20% | 3.20% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | May 03, 2019 | Feb. 26, 2019 | Nov. 02, 2018 | Aug. 02, 2018 | May 04, 2018 | Feb. 21, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Cash Dividend | ||||||||
Cash dividend declared (in dollars per share) | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | $ 0.060 | |
Credit Agreement | ||||||||
Credit Agreement | ||||||||
Potential increase per the accordion feature | $ 75 | |||||||
Subsequent Events | ||||||||
Cash Dividend | ||||||||
Cash dividend declared (in dollars per share) | $ 0.06 |