Primoris Services Corporation (NYSE:PRIM), a leading specialty contractor in the utility, energy, and renewables markets, has reported its first quarter 2024 financial results, showcasing a strong start to the year. The company's revenue for the full year 2023 reached $5.72 billion, with a net income of $126.15 million and operating cash flow of $198.55 million. The first quarter of 2024 saw the company continue its positive momentum, delivering impressive financial performance.

Financials

Revenue for the first quarter of 2024 came in at $1.41 billion, an increase of 12.4% compared to the same period in the prior year. This growth was primarily driven by the company's Energy segment, which saw a 33.4% increase in revenue, offsetting a 9.0% decline in the Utilities segment. The Energy segment's strong performance was attributed to increased activity in the renewables and industrial construction markets, as well as the timing of certain project work being pulled forward from the second and third quarters.

Gross profit for the first quarter of 2024 was $133.4 million, a 33.7% increase from the same period in 2023. Gross margins expanded to 9.4% from 7.9% in the prior year, with the Energy segment leading the way with a 10.5% gross margin. This margin expansion was driven by an improved revenue mix, with the company's higher-margin renewables and industrial construction work offsetting the decline in lower-margin pipeline work.

Selling, general, and administrative (SG&A) expenses increased by $10.6 million, or 13.6%, compared to the first quarter of 2023, primarily due to increased personnel costs to support the company's revenue growth. However, as a percentage of revenue, SG&A remained consistent with the prior year period.

Net income for the first quarter of 2024 was $18.9 million, a significant improvement from the $1.3 million reported in the same period of 2023. Earnings per share (EPS) increased to $0.35, up from $0.02 in the prior year quarter. Adjusted EPS, which excludes certain one-time items, was $0.29 higher than the prior year.

Liquidity

The company's balance sheet and liquidity position remain strong, with $178 million in cash and $273 million in available borrowing capacity under its revolving credit facility as of March 31, 2024. The company's trailing 12-month net debt-to-EBITDA ratio stood at 2.0x at the end of the quarter.

Backlog

Backlog, a key indicator of future revenue, totaled $10.6 billion as of March 31, 2024, slightly lower than the $10.9 billion reported at the end of 2023. This decrease was primarily due to the timing of new project awards, which the company expects to resume in the coming quarters.

Outlook

Looking ahead, Primoris is maintaining its full-year 2024 guidance, with EPS expected to be in the range of $2.50 to $2.70, adjusted EPS in the range of $3.05 to $3.25, and adjusted EBITDA between $395 million and $415 million. The company's management expressed increased confidence in achieving the higher end of the guidance range, given the strong start to the year and positive momentum across its end markets.

Business Overview

Utilities Segment

The company's Utilities segment, which operates primarily in the United States, saw revenue decline by 9.0% in the first quarter of 2024 compared to the same period in the prior year. This was primarily due to the completion of a major substation project in 2023 and a slower start in the communications market. Gross profit in the Utilities segment decreased by 12.2%, with margins declining slightly to 6.0% from 6.2% in the prior year quarter.

Energy Segment

In contrast, the Energy segment, which operates in both the United States and Canada, delivered a strong performance, with revenue increasing by 33.4% and gross profit rising by 57.0%. This growth was driven by increased activity in the renewables and industrial construction markets, as well as improved margins in the company's Canadian operations and western U.S. projects.

Geographic Distribution

Geographically, the majority of Primoris' revenue, approximately 93.7%, was derived from customers in the United States, with the remaining 6.3% generated from sources outside the U.S., primarily in Canada.

Recent Developments

The company's management team remains focused on executing its strategy to improve profitability and cash flow, while maintaining a strong safety and operational performance. Primoris is well-positioned to capitalize on the growing demand for infrastructure solutions, particularly in the areas of energy transition, grid modernization, and facility construction to support supply chain shifts.

Conclusion

Overall, Primoris' solid first quarter results and maintained guidance for the full year 2024 demonstrate the company's ability to navigate the current market environment and deliver value to its shareholders. With a strong backlog, healthy balance sheet, and strategic focus on high-growth markets, Primoris is poised to continue its positive momentum throughout the remainder of 2024 and beyond.