Executive Summary / Key Takeaways

• Primoris Services Corporation is strategically positioned to capitalize on a multi-decade North American infrastructure supercycle, driven by surging demand for power generation, grid modernization, and the explosive growth of data centers.
• The company delivered record financial performance in the third quarter of 2025, with double-digit revenue, operating income, and earnings growth, alongside robust operating cash flow and significant balance sheet deleveraging.
• Primoris's diversified service portfolio, encompassing utility-scale renewables, natural gas generation, and critical utility infrastructure, provides a resilient business model and specialized execution capabilities that differentiate it in a competitive market.
• Despite near-term booking timing shifts in the Energy segment due to tariff uncertainties, management anticipates a strong rebound in bookings in Q4 2025 and into 2026, with significant opportunities in natural gas generation and an emerging upcycle in pipelines.
• The company's updated 2025 guidance reflects increased confidence in achieving the higher end of its EPS, Adjusted EPS, and Adjusted EBITDA ranges, underpinned by structural margin improvements in the Utilities segment and disciplined capital allocation.

Primoris at the Forefront of North America's Infrastructure Transformation

Primoris Services Corporation, founded in 1960 and headquartered in Dallas, Texas, stands as a critical enabler of North America's evolving infrastructure landscape. The company operates through two core segments: Utilities and Energy, providing a comprehensive suite of construction, maintenance, replacement, fabrication, and engineering services across the United States and Canada. This strategic focus has allowed Primoris to consistently grow its revenue and operating income since 2016, transforming into a premier solutions provider with a broad geographic footprint and deep technical expertise.

The current market backdrop presents a generational opportunity for infrastructure solutions. Emerging technologies, the increasing electrification of industry, and a growing interest in onshoring critical supply chain aspects are driving power generation demand not seen in decades. This includes the explosive growth of data centers, which, while currently representing less than 10% of Primoris's revenue, are a significant area of future opportunity. Primoris is actively evaluating nearly $1.7 billion of work related to data centers, expected to be contracted by year-end 2025, offering services from early-stage site preparation and power generation to utility infrastructure and fiber network construction. The company is also preparing bids for over $2.5 billion in natural gas generation projects and tracking $20 billion to $30 billion in solar projects through 2028.

In this dynamic environment, Primoris competes with industry giants such as Quanta Services (PWR), MYR Group (MYRG), and MasTec (MTZ). While Quanta Services often benefits from greater scale and a larger operational footprint, Primoris differentiates itself through a diversified service portfolio and specialized execution capabilities. MYR Group, with its concentrated focus on electrical construction, may exhibit faster execution in certain T&D projects. MasTec, with significant overlap in energy and renewables, leverages its telecommunications focus for an edge in tech-driven projects. Primoris's integrated approach across segments, offering bundled solutions and emphasizing maintenance and engineering services, fosters stronger customer loyalty and provides a resilient revenue stream. The company's ability to handle complex, high-value projects requiring specialized expertise and equipment forms a competitive moat, supporting its market positioning as a comprehensive solution partner.

Operational Excellence and Differentiated Capabilities

Primoris's competitive edge is rooted in its operational "technology" – a combination of advanced project management methodologies, specialized equipment, and a highly skilled workforce capable of executing complex engineering, procurement, and construction (EPC) projects. This operational prowess translates directly into tangible benefits for clients and shareholders. For instance, in utility-scale solar and battery storage, this expertise enabled record revenue, outpacing expectations by over $400 million in the third quarter of 2025 alone and $900 million year-to-date. This performance underscores the company's efficiency in project execution and timely delivery.

The company's track record for successful execution on gas generation projects has earned it an excellent reputation, positioning Primoris as a leader in constructing gas-fired power facilities. This capability is particularly critical as growth is driven by the further electrification of industry and the escalating power demands of data centers. While specific quantitative metrics on efficiency gains from these operational capabilities are not always disclosed, management consistently highlights "improved productivity" and "efficient execution" as key drivers of enhanced profitability and cash flow. The "Premier PV" offering, a complementary product within its renewables business, is also growing, approaching 10% of renewables revenue, indicating market acceptance of its integrated solutions.

Primoris's strategic intent is to continuously refine these operational capabilities. The company is expanding its teams and investing in training to manage a growing number of projects, particularly in natural gas generation and EPC network builds tied to data centers. This focus on operational excellence, rather than proprietary hardware, is central to its strategy, contributing to its competitive moat by enabling it to undertake projects that demand a high level of specialized skill and integrated service delivery. This approach directly supports margin expansion, as seen with gas generation margins running at the upper end of the 10%-12% range, which are accretive to overall energy margins.

Financial Strength and Strategic Capital Allocation

Primoris's strategic emphasis on improved margins, earnings growth, and cash flow generation has yielded impressive financial results. For the third quarter ended September 30, 2025, the company reported revenue of $2.18 billion, a significant 32.1% increase over the prior year. Net income surged by approximately 61% to $94.6 million, translating to diluted earnings per share of $1.73. Adjusted EPS saw a robust increase of over 54% to $1.88 per share, while Adjusted EBITDA grew 32% to $168.7 million.

Gross profit for the quarter rose 18.7% to $235.7 million, though gross margins slightly compressed to 10.8% from 12% in the prior year, primarily due to a reduction in higher-margin storm work in the Utilities segment and fewer project closeouts in the Energy segment compared to 2024. However, for the nine months ended September 30, 2025, gross profit increased 23% to $638.1 million, with gross margins remaining consistent at 11.2%. Selling, general, and administrative (SG&A) expenses as a percentage of revenue declined to 4.5% in Q3 2025 and 5.3% for the nine-month period, demonstrating effective cost control and operating leverage.

The company's balance sheet reflects significant strengthening. As of September 30, 2025, cash and cash equivalents stood at $431.4 million, contributing to total liquidity of $746 million.

A key highlight was the payment of $100 million on its term loan during Q3 2025, which reduced the trailing 12-month net debt-to-EBITDA ratio to a healthy 0.1x.

Operating cash flow for the nine months ended September 30, 2025, was $327.5 million, an increase of $117.5 million year-over-year, driven by higher net income and improved working capital efficiency.

Capital expenditures for the nine-month period were approximately $108.2 million, supporting organic growth, with an additional $15 million to $20 million projected for the remainder of 2025. The Board also authorized a $150 million share purchase program through April 2028, signaling confidence in future cash generation and a commitment to shareholder returns.

Segmental Performance: Driving Growth and Margin Expansion

Utilities Segment

The Utilities segment continues to be a robust growth engine for Primoris. In Q3 2025, segment revenue increased 10.7% to $737.5 million, and for the nine months, it grew 12.3% to $1.99 billion. This growth was fueled by increased activity across all service lines, particularly in gas operations, power delivery, and communications. Gas operations demonstrated resilient activity and margins, benefiting from increased customer spending in the Midwest, Southeast, and Texas. Communications revenue and margins also saw double-digit growth, driven by broadband expansion and major EPC network build-outs tied to data centers.

Power Delivery achieved its best revenue quarter in recent years, with rapidly increasing demand and faster release of work orders. The Utilities segment backlog reached an all-time high of nearly $6.6 billion, reflecting strong demand for power, gas, and communication services. While Q3 2025 gross margins for the segment decreased to 11.7% from 13.1% in the prior year due to reduced higher-margin storm work, management expects full-year 2025 Utilities margins to be in the 10% to 12% range, a structural improvement driven by better rates on renewed MSA contracts and enhanced crew productivity.

Energy Segment

The Energy segment, despite experiencing a higher-than-anticipated backlog burn rate, remains a significant growth driver. Q3 2025 revenue surged 47% to $1.49 billion, and for the nine months, it increased 30.7% to $3.83 billion. The Renewables business had a record revenue quarter, with utility-scale EPC and battery storage accelerating, outpacing expectations by over $400 million in Q3 and $900 million year-to-date. Full-year 2025 Renewables revenue is now projected to be closer to $3 billion, an increase from the previous estimate of $2.6 billion.

Industrial Services also saw impressive revenue growth, driven by natural gas generation activity reaching levels not seen in over a decade. Primoris is a leader in constructing gas-fired power facilities, a market propelled by further electrification and data center demand. The Pipeline business, which faced headwinds earlier in the year, is now seeing an emerging upcycle, with bids materializing for several large projects and a positive shift anticipated in Q4 2025. While Q3 2025 gross margins for the Energy segment decreased to 10.1% from 11% due to fewer project closeouts in 2025 and increased costs on certain renewables projects from unfavorable weather, management expects margin improvement as the year closes out and into 2026.

Outlook and Guidance: A Clear Path Forward

Primoris's updated full-year 2025 guidance reflects strong confidence in its operational momentum and market opportunities. The company now expects EPS to be between $4.75 and $4.95 per fully diluted share, and Adjusted EPS between $5.35 and $5.55 per fully diluted share. Adjusted EBITDA guidance has been raised to $510 million to $530 million, with the potential to reach the upper end with favorable Q4 weather. This guidance incorporates a reduced interest expense forecast of $30 million to $32 million, driven by continued debt reduction and lower interest rates, and an effective tax rate of approximately 28.5%. Gross capital expenditures are projected to be between $110 million and $130 million, supporting ongoing growth.

Management anticipates a strong finish to 2025, with Energy segment bookings in Q4 expected to achieve a book-to-bill ratio well north of 1, potentially as high as 1.2 or 1.3. This includes over $600 million already booked and another $600 million expected within 30 days for the Energy segment. While Renewables revenue growth is expected to decelerate in 2026 to a couple of hundred million due to booking delays experienced in 2025, it is projected to return to a normal cadence of $300 million to $400 million annually in 2027 and 2028. The Pipeline business, currently a $300 million to $350 million revenue stream, could see a significant jump of $100 million to $150 million in 2026 with the award of one or two large projects. Overall, the company maintains a high degree of visibility to new awards across solar, natural gas generation, and midstream pipeline, positioning it for continued success into 2026 and beyond.

Managing the Headwinds: Risks and Mitigation

Despite the optimistic outlook, Primoris operates in an environment with inherent risks. Macroeconomic factors, including inflation, tariffs, and commodity price volatility, continue to be monitored. The company has experienced increased operating costs, and while it attempts to recover these through price escalation provisions in contracts, there can be delays or caps that impact profitability. Tariff uncertainties, particularly concerning battery storage materials sourced from outside the U.S., could impact future bookings, although current projects are largely unaffected due to existing material supplies or domestic sourcing. Primoris is developing contingency plans, including alternative sourcing and supplier diversification, to mitigate these impacts.

The cyclical and seasonal nature of the construction industry, particularly weather-related disruptions, can affect quarterly revenue and profitability. Furthermore, accounting for long-term contracts involves significant judgment, and unforeseen events can alter cost estimates, impacting project profitability. Customer concentration is also a factor, with the top ten customers typically generating 40% to 50% of total revenue. Backlog, while substantial at $11.1 billion, is not a guarantee of future revenue, as MSA work is not contractually obligated, and projects can be terminated. However, Primoris's diversified portfolio, disciplined bidding, and focus on strong customer relationships are key strategies to manage these risks and ensure long-term stability.

Conclusion

Primoris Services Corporation is demonstrating remarkable resilience and strategic foresight in a rapidly evolving infrastructure landscape. The company's record-setting financial performance in Q3 2025, characterized by robust revenue growth, expanding earnings, and exceptional cash flow generation, underscores the effectiveness of its disciplined operational strategy. By leveraging its diversified service portfolio and specialized execution capabilities in high-demand areas like utility-scale renewables, natural gas generation, and critical utility infrastructure, Primoris is well-positioned to capture a significant share of the generational investment flowing into North America's energy and utility sectors.

While the company remains vigilant against macroeconomic uncertainties and competitive pressures, its strong balance sheet, proactive risk mitigation strategies, and clear growth roadmap provide a compelling investment thesis. The anticipated rebound in Energy segment bookings, coupled with structural margin improvements in Utilities and emerging tailwinds in pipelines, points to sustained profitable growth. Primoris's commitment to operational excellence and strategic capital allocation positions it not just as a participant, but as a key enabler of the continent's infrastructure modernization, promising continued value creation for shareholders in the years ahead.