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Primoris Services Corp (PRIM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong growth: revenue $1.74B (+14.9% YoY), diluted EPS $0.99 (+43.3% YoY), and adjusted EPS $1.13; consolidated operating income rose to $87.6M with gross margin at 10.6% .
  • Record backlog reached $11.9B (fixed $6.09B; MSA $5.77B), positioning for continued growth; renewables approached ~$2.0B revenue in 2024 and utilities margins expanded materially .
  • 2025 guidance implies double-digit EPS growth: EPS $3.70–$3.90, adjusted EPS $4.20–$4.40, adjusted EBITDA $440–$460M; interest expense expected down to $44–$48M, and capex $90–$110M .
  • Execution and cash generation were notable catalysts: Q4 operating cash flow was a record $298.3M; FY operating cash flow was $508.3M, enabling debt reduction and net debt/EBITDA of 0.7x, ahead of 2026 goals .

What Went Well and What Went Wrong

What Went Well

  • Material margin expansion in Utilities: Q4 gross margin rose to 12.1% (from 7.4% YoY) and operating income to $50.5M (from $15.4M), aided by storm restoration work and improved productivity; management highlighted aligning resources to higher-return customers and markets .
  • Renewables strength and bookings: Renewables approached ~$2.0B revenue in 2024; Q4 bookings added nearly $900M to end the year with ~$3.1B renewables backlog, complementing EPC with BESS/Premier PV/O&M (~10% of segment revenue) .
  • Record cash generation and deleveraging: Q4 operating cash flow of $298.3M and FY $508.3M supported $150M term loan paydown in Q4 and another $100M in January; net debt/EBITDA improved to 0.7x .

What Went Wrong

  • Energy segment margin compression: Q4 Energy gross margin fell to 9.5% (from 12.0% YoY) with operating income down 17.6% due to fewer renewables closeouts and lower pipeline revenue/margins, plus weather-related delays .
  • SG&A intensity increased: Q4 SG&A rose to $96.5M (+19.6% YoY) and 5.5% of revenue (from 5.3%), driven by personnel costs and incentive compensation tied to improved operations .
  • Pipeline market softness: Bid environment remained low and competitive; Energy margins dipped and pipeline revenue decreased, with management expecting potential improvement contingent on LNG production, natural gas generation, and permitting progress .

Financial Results

Quarterly Consolidated Performance (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.56 $1.65 $1.74
Gross Margin %11.9% 12.0% 10.6%
Operating Income ($USD Millions)$86.07 $99.55 $87.59
Diluted EPS ($USD)$0.91 $1.07 $0.99
Adjusted EPS ($USD)$1.04 $1.22 $1.13

Q4 Year-over-Year Comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$1.52 $1.74
Gross Margin %10.3% 10.6%
Operating Income ($USD Millions)$74.84 $87.59
Diluted EPS ($USD)$0.69 $0.99
Adjusted EPS ($USD)$0.85 $1.13

Segment Breakdown – Q4

Segment MetricQ4 2023Q4 2024
Utilities Revenue ($USD Millions)$576.51 $664.07
Utilities Gross Profit ($USD Millions)$42.75 $80.30
Utilities Gross Margin %7.4% 12.1%
Utilities Operating Income ($USD Millions)$15.38 $50.51
Energy Revenue ($USD Millions)$952.06 $1,100.11
Energy Gross Profit ($USD Millions)$113.85 $104.30
Energy Gross Margin %12.0% 9.5%
Energy Operating Income ($USD Millions)$80.83 $66.64

KPIs and Balance Sheet

KPIFY 2023FY 2024
Operating Cash Flow ($USD Millions)$198.55 $508.31
Q4 Operating Cash Flow ($USD Millions)N/A$298.30
Backlog Total ($USD Billions)$10.89 $11.87
Fixed Backlog ($USD Billions)$5.20 $6.09
MSA Backlog ($USD Billions)$5.70 $5.77
Cash & Equivalents ($USD Millions, YE)$217.78 $455.83
Total Long-Term Debt ($USD Millions, YE)$958.27 (incl. current) $734.83 (incl. current)
Net Debt ($USD Millions, YE)N/A$279
Net Debt/EBITDA (TTM)N/A0.7x
Capex ($USD Millions)$103.01 $126.56
Dividend per Share ($USD)$0.24 $0.26

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (GAAP)FY 2024 (as of Aug 5, 2024)$2.70–$2.90 —Raised at Q3 to $2.85–$3.00
EPS (GAAP)FY 2024 (as of Nov 4, 2024)$2.85–$3.00 —Maintained into year-end
EPS (GAAP)FY 2025—$3.70–$3.90 New; higher vs FY24 guide
Adjusted EPSFY 2024 (as of Aug 5, 2024)$3.25–$3.45 —Raised at Q3 to $3.40–$3.55
Adjusted EPSFY 2025—$4.20–$4.40 New; higher vs FY24 guide
Adjusted EBITDAFY 2024 (as of Aug 5, 2024)$400–$420M —Raised at Q3 to $405–$420M
Adjusted EBITDAFY 2025—$440–$460M New; higher vs FY24
Interest ExpenseFY 2025—$44–$48M New; lower vs FY24 actual $65.3M
Effective Tax RateFY 2025—~29% Maintained vs FY24
CapexFY 2025—$90–$110M (equipment $60–$80M) New
Segment Target Gross MarginsFY 2025Utilities 9–11%; Energy 10–12% Utilities 9–11%; Energy 10–12% Maintained
SG&A % of RevenueFY 2025Low-6% Low-6% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Data centers/AI power demandRenewables and industrial construction growth; improved execution in Utilities; raised 2024 guidance AI/data centers seen as major demand driver for generation; Texas needs significant additional capacity; strong position in natural gas generation Strengthening
Tariffs & supply chainStrong renewables demand despite macro; mix shifts "Wait and see" on BESS/solar tariffs; pass-through expected; limited 2025 impact; volatility in bookings possible Manageable risk
Utilities rate casesUtilities margins improving; storm work; execution gains Multiple rate case decisions boosted late-2024 spend; renewed MSAs at higher rates effective Jan 1 Improving
Pipeline outlookLower pipeline activity and margin vs 2023; competitive market Potential late-2025 pickup tied to LNG and natural gas generation; permitting progress needed Stabilizing-to-recover
Renewables bookings & teamsQ3 record backlog; strong renewables bookings ~$900M Q4 bookings; ~18–19 teams with plans to add; auxiliary services ~10% of revenue Expanding
Cash flow disciplineImproved working capital initiatives underway Record cash flow; $100M pulled forward from Q1’25; FY’25 CFO expects $200–$225M Normalizing at higher base

Management Commentary

  • CEO: “We finished the year with record levels of revenue, operating income, and cash flow from operations…These accomplishments enabled us to improve margins, pay down debt and set us on a solid path to accomplish the multi-year targets” .
  • CEO: “Emerging technologies…increased electrification…onshoring…are driving the demand for power generation that hasn’t been seen in decades…Primoris will play an important role” .
  • CFO: “Our adjusted EBITDA guidance is $440–$460M for 2025…guidance does not include any potential benefits from storm restoration work like we had in 2024” .
  • CEO: “We had another impressive year of [renewables] growth approaching almost $2 billion…booked nearly $900 million of backlog in the fourth quarter…Premier PV, battery storage and O&M…approaching 10% of renewables revenue” .
  • CFO: “We ended the year with cash of $456M…net debt-to-EBITDA ratio to 0.7, well ahead of our 2026 goal of 1.5x” .

Q&A Highlights

  • Solar/BESS trajectory and bookings: 2025 largely booked; some 2024 pull-forward; auxiliary services expected to offset EPC mix changes; multi-year runway into 2026/2027 .
  • Segment growth outlook: Gas low-single-digit; power delivery mid-single-digit; communications mid-to-upper-single-digit; industrial low-to-mid single-digit; heavy civil and pipeline flat in 2025 .
  • Margin drivers: Utilities Q4 margins benefited from ~$9M storm work and favorable weather; Energy margins compressed from fewer renewables closeouts and pipeline softness; normalization expected to 10–12% .
  • EBITDA guidance sensitivities: Upside from storm work, strong project closeouts (renewables/power delivery), and sustained power delivery margin improvement; divested/wound-down businesses (~$160M 2024 revenue; −$3M EBITDA) removed .
  • Texas & gas generation: Strong competitive position with internal expertise and craft; expect fair share over 3–5+ years; careful in ramp to preserve execution quality .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable at the time of this analysis due to a request limit error; therefore, we cannot provide a definitive comparison of Q4 revenue/EPS versus Street estimates (S&P Global data unavailable).
  • Given 2025 guidance (EPS $3.70–$3.90; adj. EPS $4.20–$4.40; adj. EBITDA $440–$460M) and lower interest expense ($44–$48M), sell-side models may need to incorporate: reduced interest expense, divestiture-related ~$160M revenue headwind with margin improvement, and the absence of storm benefit embedded in guidance .

Key Takeaways for Investors

  • Backlog durability and mix: $11.9B total backlog (+8.9% YoY) with fixed backlog +17% YoY and renewables momentum provide multi-quarter visibility; utility MSAs renewed at higher rates .
  • Utilities margin reset: Structural improvements (productivity, rate cases, storm response capability) lifted margins; 2025 Utilities gross margin target 9–11% with Q1 seasonality at 6–8% .
  • Energy execution and risk: Renewables strong but quarter-to-quarter closeout timing can swing margins; pipeline recovery depends on LNG/natural gas generation and permitting improvements .
  • Cash flow normalization: After record FY’24 cash from operations ($508M) and Q4 $298M with ~$100M pulled forward, expect $200–$225M in FY’25—still robust for deleveraging and selective growth .
  • Capital allocation: Lower net debt/EBITDA (0.7x), dividend increased to $0.08 per share, capex focused on equipment ($60–$80M) supports capacity while maintaining flexibility for opportunistic M&A .
  • 2025 setup: Double-digit EPS growth targeted, improved gross profit and adj. EBITDA despite divestitures, and no storm work in guidance—creating potential upside if storm activity materializes .
  • Trading implications: Near-term narrative likely driven by renewables bookings cadence, utilities margin sustainability, and signs of pipeline project awards; watch Texas Energy Fund developments and tariff clarity for BESS/solar .