Primoris Services Corporation · NYSE:PRIM
Primoris Services — Q3 2022 Earnings Presentation
37 slides from Primoris Services's earnings presentation, November 2022
Slide 1: Primoris Services Corporation: Building Momentum
Primoris Services Corporation Building M o m e n t u m November 2022
Slide 2: Notice to Investors
Notice to Investors This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements give the current expectations of the Company’s management. Words such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”
Slide 3: Who We Are
Who We Are Primoris Services Corporation – Building America’s Infrastructure » Leading scale player with $4.0 bn in TTM Our Our Vision Visio revenue To be a leader in every market we serve and to be a » Comprehensive suite of critical trusted service provider and partner to our clients infrastructur
Slide 4: Primoris – Why Invest?
Primoris – Why Invest? Our low-risk business model provides Diverse Business Mix framework for strong, consistent growth 3Q 2022 Revenue 3Q 2022 Backlog Our Value Proposition 6% 8% Utilities 35% » Comprehensive suite of critical 47% 47% Energy/ Renewables infrastructure services 57% Pipeline Service
Slide 5: Our Reporting Segments and Markets We Serve
Our Reporting Segments and Markets We Serve Utilities Energy / Renewables Pipeline Services Power Delivery Communications Power Plants Renewables Large Diameter Small Diameter Gathering End Markets Served Refining Regulated Natural Gas Highways, Bridges, Petrochemicals Water / Drainage and Airports
Slide 6: Utilities Segment
Primoris: Building America’s Infrastructure Utilities Segment Sales ($M) $1,891 $1,658 Regulator Station $887 $907 2019 2020 2021 TTM Backlog ($M) $1,889 $1,558 $1,350 $1,384 $1,462 • Capturing long-term tailwinds from growing infrastructure Broadband spendFiber and Cable in Communications and Power
Slide 7: Energy and Renewables Segment
Primoris: Building America’s Infrastructure Energy and Renewables Segment Sales ($M) $1,815 $1,408 $1,217 $1,229 2019 2020 2021 TTM Backlog ($M) $2,879 $3,125 $2,455 $2,433 $1,225 • High-growth utility-scale solar projects supplemented by growing stream of solar distributed generation projects suppo
Slide 8: Pipeline Services Segment
Primoris: Building America’s Infrastructure Pipeline Services Segment Sales ($M) $897 $505 $431 $270 2019 2020 2021 TTM Backlog ($M) $458 $168 $164 $130 $135 • Focusing on smaller projects in field service and pipeline integrity and maintenance to mitigate risk Segment Highlights • Anticipating mark
Slide 9: Execution Track Record Driving Long-Term Profitable Growth
Execution Track Record Driving Long-Term Profitable Growth Leverage core platform to address large growing market opportunity Expanding service mix to meet our customers’ lifecycle needs Disciplined risk management strategy Thoughtful expansion into new end markets 8
Slide 10: Financial Overview
P-C Primoris Financial Overview
Slide 11: Master Service Agreement (MSA) Revenue Progress
Master Service Agreement (MSA) Revenue Progress $2,000 50% 46% 46% $1,800 44% 45% $1,600 39% $1,400 38% 40% % Total Revenue $1,200 35% $MMs $1,000 29% 30% $800 28% $600 25% $400 20% $200 $- 15% 2016 2017 2018 2019 2020 2021 3Q 2022 LTM MSA Revenue % Total Revenue MSA revenue helps improve revenue an
Slide 12: Controlling SG&A
Controlling SG&A $4.5 23.5% $4.0 $4.0 $3.5 $3.5 $3.5 18.5% SG&A % of Revenue $3.1 $3.0 $2.9 13.5% $ in Billions $2.5 $2.4 $2.0 $2.0 8.5% $1.5 7.0% 7.2% 6.1% 6.6% 6.2% 6.2% 5.8% $1.0 3.5% 2016 2017 2018 2019 2020 2021 3Q 2022 LTM Revenue SG&A % of Revenue Managing support cost structure while growing
Slide 13: Backlog Summary at 9/30/2022
Backlog Summary at 9/30/2022 Total Backlog* Mix Total Backlog* ($MMs) $6,000 35% $5,472 8% $5,000 $4,003 $4,000 $3,413 $3,177 $2,798 $2,777 $3,000 $2,599 $2,760 $2,479 $1,759 $2,000 $1,476 $1,640 $2,126 $1,824 $1,000 $2,059 $1,284 $1,418 $1,137 $1,524 57% $672 $775 $0 Utilities Energy/Renewables Pip
Slide 14: 2022 Guidance
2022 Guidance As of November 8, 2022 » Full Year 2022 Earnings Per Share (“EPS”): » Capital Expenditures Q4 of 2022: » $2.31 to $2.51 per diluted share » $20M to $30M; » Includes $15M to $25M for construction » Maintained Full Year 2022 Adjusted EPS: equipment » $2.39 to $2.59 per diluted share » Ta
Slide 15: Strategic Capital Allocation Priorities
Strategic Capital Allocation Priorities • Focused on driving shareholder value and maintaining balance sheet flexibility Continuing to invest organically to drive growth with new services Organic Growth and customers in attractive end markets De-leveraging through profitable growth and cash flow gen
Slide 16: Reg G Reconciliation
P-C Primoris Reg G Reconciliation
Slide 17: Reconciliation of Adjusted Net Income & Adjusted EPS
Schedule 1: Reconciliation of Adjusted Net Income & Adjusted EPS 3Q 2022 vs. 3Q 2021 Adjusted Net Income & Adjusted EPS Primoris defines Adjusted Net Income as net income (loss) adjusted for certain items including, (i) non‐cash stock‐based compensation expense; (ii) transaction/integration and rela
Slide 18: Reconciliation of EBITDA & Adjusted EBITDA
Schedule 2: Reconciliation of EBITDA & Adjusted EBITDA 3Q 2022 vs. 3Q 2021 EBITDA and Adjusted EBITDA Primoris defines EBITDA as net income (loss) before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for certain items including, (i) non‐cash sto
Slide 19: Reconciliation of Non-GAAP Forecasted Guidance FY 2022
Schedule 3: Reconciliation of Non-GAAP Forecasted Guidance FY 2022 Adjusted Net Income & EPS to Adjusted EPS for the year ending December 31, 2022 The following table sets forth a reconciliation of the forecasted GAAP net income attributable to Primoris to Adjusted Net Income and EPS to Adjusted EPS
Slide 20: Why Invest in Primoris
P-C Primoris Why Invest in Primoris
Slide 21: Key Investment Highlights
• Key Investment Highlights 1 Leading Provider of Critical Infrastructure Services 2 Multiple Secular Tailwinds Supporting Growth 3 Diversified and Well-Tenured Blue Chip Client Base 4 Business Model Intentionally Designed to Limit Risk and Drive Predictability 5 Differentiated Employee Base and Ski
Slide 22: Leading Provider of Critical Infrastructure Services
1 Leading Provider of Critical Infrastructure • Services Predictable, Lifecycle Focus on Consistent Non-Discretionary Solutions Customer Needs Project Execution Spend » Design / » Utilities » Safety » On-Time Engineering Completion » Communications » Efficiency » Procurement » Profitable Execution »
Slide 23: Multiple Secular Tailwinds Supporting Growth
2 Multiple Secular Tailwinds Supporting Growth • Multiple independent positive trends fueling infrastructure spend in both the near and long-term Market Opportunity Growth Drivers Power Delivery » Grid upgrade and maintenance requirements $75 Bn(1) » System hardening » Weather hardening and prepared
Slide 24: Diversified & Well-Tenured Blue Chip Client Base
3 Diversified & Well-Tenured Blue Chip Client Base • Segments Select Primoris Customers Average Tenure(1) 2021 Revenue Breakdown by Customer Customer 1 5.9% Customer 2 Utilities 25 5.6% Customer 3 Years 5.6% Customer 4 5.3% Customer 5 Others 4.0% 57.0% Customer 6 4.0% Customer 7 4.0% Energy / 21 Cus
Slide 25: Business Model Intentionally Designed to Limit Risk & Drive Predictability
4 Business Model Intentionally Designed to • Limit Risk & Drive Predictability MSA Focused Service Offering… Revenue Mix (2021) Improved » Recurring MSA reduces sales and marketing expenses Economics » Supports investments in scale / network density » Increased revenue stability Resilient » Increase
Slide 26: Differentiated Employee Base & Skilled Labor Advantage
5 Differentiated Employee Base & Skilled • Labor Advantage Primoris has more than 13,000 employees with opportunities for continued skill enhancements Project Management Skills Training Training Primoris supports continuous skills training, both through on-site programs Lays the foundation of skills
Slide 27: Multiple Strategies to Drive Disciplined Long-Term Growth
6 Multiple Strategies to Drive Disciplined • Long-Term Growth Grow Targeted Improve Continue Pursue Maintain Strong Markets + Services Mix + Cross-Selling + Accretive M&A = Financial Profile Accretive Growth Driven By: 5-Year Revenue CAGR of 12% Seek well- Solid Gross respected, Margin Performance e
Slide 28: Our Commitment
Our Commitment Our commitment to excellence includes: » Our impact on the ENVIRONMENT » Our contribution to SOCIETY » Our high standards of corporate GOVERNANCE Established Environmental, Social & Corporate Governance (ESG) Committee in 2020. Achieved MSCI ESG Rating of “A” in 2022 27
Slide 29: Environment
How We Live Our Commitment ENVIRONMENT Actively managing environmental Supporting broader environmental impacts of our operations goals by focusing on sustainable Implementing energy-efficient solutions for our clients technology in many of our own Utility-scale solar projects facilities Biofu
Slide 30: Society
How We Live Our Commitment SOCIETY Fostering a workplace that is reflective of, and contributes to, our diverse society Employees: Vendors/Communities: 45% of our overall workforce Proactive mentorship with DBE suppliers, identify as culturally diverse including investing in, sharing assets with
Slide 31: Governance
How We Live Our Commitment GOVERNANCE Following good corporate governance practices to support financial, operational and strategic objectives Code of Conduct updated in 2021 Mandatory Board retirement 78% of Board is independent age of 75 100% of Committees are chaired by Stock ownership
Slide 32: Acquisition of PLH Group
P-C Primoris Acquisition of PLH Group
Slide 33: PLH Group At-a-Glance
PLH Group At-a-Glance Key Stats and Highlights Key Business Offerings • First-to-last mile electric transmission and distribution $733 mm $54 mm services providing installation, maintenance and other specialized LTM revenue LTM adjusted EBITDA Power ~61% services Delivery 2021A • PLH has full range
Slide 34: Advancing Our Strategy
Advancing Our Strategy PLH Group is aligned with Primoris’ long-term goals and accelerates our growth plans Deepen Power Delivery market Transforms Electric & Gas Utility presence service offerings Broaden geographic reach, Presence in highly attractive expand service offerings Sunbelt and Californi
Slide 35: Pro Forma Utility Presence Offers Attractive, National Footprint
Pro Forma Utility Presence Offers Attractive, National Footprint in the Fastest Growing Markets Pro Forma Utility Locations • Enhances exposure to the Sunbelt region • Establishes bulkhead in New England • Offers complementary coverage in California and Western Canada Primoris Utility Locations PLH
Slide 36: Continuing to Transform the Primoris Portfolio
Continuing to Transform the Primoris Portfolio PLH Group expands Primoris’ share of both highly-attractive Utility exposure and lower-risk MSA revenue Primoris (Pre-FIH) Primoris 2021 Primoris Pro Forma 2021 Utility End Market Mix Increases from 39% to 53% Pipeline3 Pipeline 11% Pipeline Gas 12% Gas
Slide 37: Executing on our Strategy to Pursue Accretive M&A
Executing on our Strategy to Pursue Accretive M&A PLH Group “checks the box” for Primoris’ stated M&A criteria Acquisition Rationale and Strategy PLH Group • Leadership position in new geography • Enhances presence and capabilities in an existing geography • Provides new customers or enhances ex