Primoris Services Corporation · NYSE:PRIM
Primoris Services — CJS Securities Conference 2022
38 slides from Primoris Services's conference presentation, Jul 12, 2022
Slide 1: Primoris Services Corporation: Building Momentum
Primoris Services Corporation Building M o m e n t u m July 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 $3.5bn in Our Our Vision Visio 2021 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 at a Glance
Primoris at a Glance Primoris By the Numbers (1) Diverse Business Mix 1Q 2022 Revenue 3Q 2022 1Q 2021 Backlog $3.5bn 8% 3% Revenue 36% 46% 46% $4.025 bn 40% 61% Backlog (2) Master Service Agreement (MSA) Backlog (2) Utilities Energy/ Renewables Pipeline Services <$5mm 78% Average Contract Size Reimb
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 Regulator Station Distribution Line Commercial Residential Service Line Gas Meter Residential Transformer Distribution Wind Line Distribution Substation Transmission Transmission 5G LTE Substation & Wireless Battery Broadband Fiber and Ca
Slide 7: Energy and Renewables Segment
Primoris: Building America’s Infrastructure Energy and Renewables Segment Digester Compressor and Petrochemicals and Renewable Meter Stations Refined Products Natural Gas (RNG) Power Plant Gas Processing Other Carbon Ethanol Plant Capture Facilities Biomass Thermal Steam Methane Gasification Reforme
Slide 8: Pipeline Services Segment
Primoris: Building America’s Infrastructure Pipeline Services Segment Consumers and Compressor and Water Treatment Plant Gas Processing End Users Oil and Gas Meter Stations Production Wells Power Plant Gas Fractionation Refined Products Ethanol Plant Oil Tanks, Terminals, Pump Stations, and Petroche
Slide 9: Consistent Execution Track Record Driving Long-Term Profitable Growth
Consistent 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: 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 9
Slide 11: Environment: How We Live Our Commitment
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 12: Society: How We Live Our Commitment
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 13: Governance: How We Live Our Commitment
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 14: Why Invest in Primoris
P-c Primoris Why Invest in Primoris
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: Differentiated Employee Base & Skilled Labor Advantage
5 Differentiated Employee Base & Skilled • Labor Advantage Primoris has more than 10,800 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 21: 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 22: Acquisition of PLH Group
P-c Primoris Acquisition of PLH Group
Slide 23: Transaction Summary
Transaction Summary • Primoris to acquire PLH Group for an all-cash purchase price of $470 million – LTM adjusted EBITDA of ~$54 million, plus estimated annual synergy benefit Purchase – Implied EV / LTM Adjusted EBITDA multiple of 7.3x1,2 Price and • Estimated annual synergy benefit of $10.0 millio
Slide 24: 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 25: 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 26: 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 27: 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 End Market
Slide 28: 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
Slide 29: Financial Overview
P-c Primoris Financial Overview
Slide 30: MSA Revenue
MSA Revenue $1,800 50% 47% 46% $1,600 44% 45% $1,400 39% 38% 40% $1,200 % Total Revenue $1,000 35% $MMs $800 29% 30% 28% $600 25% $400 20% $200 $- 15% 2016 2017 2018 2019 2020 2021 1Q 2022 LTM MSA Revenue % Total Revenue 29
Slide 31: Backlog Summary at 3/31/2022
Backlog Summary at 3/31/2022 Total Backlog* Mix *MSA Backlog includes anticipated MSA revenue for the next 12 months 3% 36% Total Backlog* ($MMs) *MSA Backlog includes anticipated MSA revenue for the next 12 months $4,500 $4,000 $3,500 $3,000 $2,479 $2,420 61% $2,500 $1,759 Utilities Energy/Renewabl
Slide 32: Controlling SG&A
Controlling SG&A $4.0 23.5% $3.5 $3.5 $3.5 $3.5 $3.1 18.5% $2.9 SG&A % of Revenue $3.0 $ in Billions $2.5 $2.4 13.5% $2.0 $2.0 8.5% $1.5 7.0% 7.2% 6.6% 6.7% 6.2% 6.1% 5.8% $1.0 3.5% 2016 2017 2018 2019 2020 2021 1Q 2022 LTM Revenue SG&A % of Revenue 31
Slide 33: 2022 Guidance
2022 Guidance As of May 9, 2022 » Raised Earnings Per Share (“EPS”) » $2.20 to $2.40 per fully diluted share » Raised Adjusted EPS: » $2.49 to $2.69 » Targeted Revenue Growth by segment: 2022 » 2022 SG&A as a percentage of revenue: » Utilities: Increase of 8 - 10% » low-to-mid mix 6% » Energy/Renewa
Slide 34: 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 in Organic Growth attractive end markets Transforming the business through disciplined, accretive M&A in M&A str
Slide 35: Reg G Reconciliation
P-c Primoris Reg G Reconciliation
Slide 36: Reconciliation of Adjusted Net Income & Adjusted EPS 1Q 2022 vs. 1Q 2021
Schedule 1: Reconciliation of Adjusted Net Income & Adjusted EPS 1Q 2022 vs. 1Q 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 37: Reconciliation of EBITDA & Adjusted EBITDA 1Q 2022 vs. 1Q 2021
Schedule 2: Reconciliation of EBITDA & Adjusted EBITDA 1Q 2022 vs. 1Q 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 38: 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