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    Primoris Services Corp (PRIM)

    PRIM Q2 2024 EPS at $2.70–$2.90, 9–11% Utility Margin

    Reported on Jun 5, 2025 (After Market Close)
    Pre-Earnings Price$50.92Last close (Aug 6, 2024)
    Post-Earnings Price$52.27Open (Aug 7, 2024)
    Price Change
    $1.35(+2.65%)
    • Increasing regional infrastructure investments: Management highlighted that customers, particularly in Texas, are planning significant capital expenditures to support growing power demand and data center developments, positioning the company to benefit from new project wins.
    • Robust energy margins and execution strength: Executives emphasized that the Energy segment delivered strong margin improvements and is expected to perform well in the second half, supporting overall profitability.
    • Ongoing utility contract renewals and margin improvement: The discussion on MSA renewals and strategic pricing adjustments indicates that continuous contract turnovers and improved cost management will help drive utility margin expansion over time.
    • Utility revenue headwinds: Questions indicate that weaker gas operations and reliance on lapping prior-year projects raise concerns on sustaining revenue growth in the Utility segment.
    • Weather and timing uncertainties: Guidance and margin upside remain dependent on favorable weather and timely project closeouts, while adverse events or mistimed execution could pressure margins.
    • Political and regulatory uncertainty: Some utility customers are delaying investments pending election outcomes and regulatory clarity, potentially deferring project awards and impacting future growth.
    1. Utility Margins Outlook
      Q: Future utility margins in 2025?
      A: Management explained that while they have no specific targets for 2025, ongoing improvements driven by renewed MSA contracts and operational efficiencies should keep margins in the 9%–11% range, with further gains possible despite softer gas spending.

    2. EPS Guidance
      Q: What drives EPS range?
      A: They highlighted that the $2.70–$2.90 EPS guidance reflects risks such as adverse weather and early winter versus upside from strong project closeouts and storm work.

    3. Energy Margins Outlook
      Q: Can energy margins keep improving?
      A: Management noted that energy margins are already strong and, as projects advance from early phases to closeouts, they expect further margin gains.

    4. Utility Revenue Trends
      Q: What is the utility growth outlook?
      A: They are targeting single-digit revenue growth in utilities, emphasizing a shift to a more margin-focused strategy as customer investment plans evolve.

    5. Backlog Dynamics
      Q: How does backlog shift quarterly?
      A: The changes in backlog are primarily due to timing differences in contract execution, and management expects a robust backlog to roll into 2025.

    6. Wind-down Assets
      Q: Status on winding down noncore assets?
      A: They are actively divesting parts of noncore business, with recent wind-down efforts generating modest but positive proceeds and more initiatives planned into 2025.

    7. Sale Gains Impact
      Q: Are divestiture gains significant?
      A: Recent asset sales in the industrial segments produced notable gains that positively contributed to cash flow, though these proceeds were spread across multiple transactions.

    8. Gas Market Competitiveness
      Q: How competitive is gas-fired power work?
      A: The competitive landscape in gas-fired projects is moderate, with typical deals around $300 million in simple cycle or peak shaver segments, where their expertise often secures work without direct contest.

    9. Solar Investment Sentiment
      Q: How are customers viewing solar projects?
      A: Customers remain confident about solar investments, showing little concern over the upcoming election, though growth may moderate to align with realistic build rates.

    10. Communications Demand
      Q: What’s demand in communications like?
      A: Demand is steady across regions like the Southwest, with recovery from earlier setbacks supporting consistent, if moderate, growth.

    11. Weather Impact
      Q: How did weather affect operations?
      A: Weather delays were minor, briefly impacting solar and heavy civil projects, but work resumed quickly and overall margin effects were minimal.

    12. Utility Revenue Attribution
      Q: Is revenue growth due to lapping or shedding?
      A: Management described it as a combination—part intentional, margin-improving shedding and part the natural lapping of prior year projects.