Primoris Services Q2 Earnings Call Highlights

Primoris Services Q2 Earnings Call Highlights

Second-quarter results weakened: Revenue fell 10.7% to just under $1.7 billion, while gross margin dropped to 4.9% from 12.3% due largely to cost overruns and lower activity in renewable projects.

Backlog reached a record: Primoris won more than $3.9 billion in new awards, lifting total backlog to nearly $13.9 billion, with strong demand for natural-gas generation, utilities and pipeline construction.

Guidance was maintained, but cash-flow expectations fell: The company kept its 2026 EPS and adjusted EBITDA outlooks, while cutting projected free cash flow to $150 million–$200 million from $350 million–$400 million because of renewable-project impacts.

Primoris Services NYSE: PRIM reported lower second-quarter revenue and profitability as cost overruns and reduced activity in its renewables business weighed on results, while the company pointed to record bookings and backlog across utility, natural gas generation, pipeline and electrical construction markets.

Revenue for the second quarter was just under $1.7 billion, down approximately $200 million, or 10.7%, from the prior-year period. Chief Financial Officer Ken Dodgen said the decline was driven by a 19.2% decrease in energy-segment revenue, primarily reflecting lower renewable activity. Higher natural gas generation and pipeline activity, along with contributions from the PayneCrest acquisition during May and June, partially offset the decline.

The utility segment generated revenue growth of $19.6 million, or 2.8%, driven by gas operations and power delivery. That growth was partly offset by reduced communications revenue as fiber-to-the-home programs transition toward BEAD-funded projects.

Gross profit fell to $82.4 million from the prior year, while gross margin declined to 4.9% from 12.3%. The energy segment posted slightly negative gross margin during the quarter, compared with 10.8% a year earlier, as renewable-project cost overruns and lower renewable revenue outweighed improvements in pipeline and contributions from PayneCrest.

President and Chief Executive Officer Koti Vadlamudi said the second quarter reflected “the majority of the impact” from a limited number of renewable energy projects experiencing margin pressure. The company identified six projects with cost overruns. Two are now complete, three are expected to reach substantial completion in the third quarter, and the final project is expected to achieve mechanical completion in early November and substantial completion by year-end.

Vadlamudi said the remaining renewables portfolio, which includes more than two dozen projects, is performing within expectations on average. He said many projects are delivering margins above their original estimates, while some are modestly below original margins. The six identified projects remain the focus of the company’s remediation efforts.

Primoris expects energy-segment gross margins of 6% to 8% for full-year 2026. Dodgen said margins are expected to improve sequentially, with energy margins in a 6% to 8% range in the third quarter and an 8% to 10% range in the fourth quarter. Management expects the segment to return to its historical 10% to 12% margin range in 2027.

Vadlamudi said the company has strengthened operational oversight, pre-construction planning, risk management and accountability in response to the renewable-project issues. He also said Primoris intends to maintain discipline in project selection, geographical markets and contract terms.

Primoris secured more than $3.9 billion in new awards ...