Primoris Services : Q2'20 Conference Presentation

PRIM Q2 2020 Earnings Call

August 4, 2020

Disclosure Regarding Forward‐Looking Statements

This presentation contains certain forward‐looking statements that reflect, when made, the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including with regard to the Company's future performance. Forward‐looking statements include all statements that are not historical facts and can be identified by terms such as "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "potential", "predicts", "projects", "should", "will", "would" or similar expressions. Forward‐looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of regulation and the economy, generally. Forward‐looking statements inherently involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward‐looking statements. Actual results may differ materially as a result of a number of factors, including, among other things, customer timing, project duration, weather, and general economic conditions; changes in our mix of customers, projects, contracts and business; regional or national and/or general economic conditions and demand for our services; price, volatility, and expectations of future prices of oil, natural gas, and natural gas liquids; variations and changes in the margins of projects performed during any particular quarter; increases in the costs to perform services caused by changing conditions; the termination, or expiration of existing agreements or contracts; the budgetary spending patterns of customers; increases in construction costs that we may be unable to pass through to our customers; cost or schedule overruns on fixed‐price contracts; availability of qualified labor for specific projects; changes in bonding requirements and bonding availability for existing and new agreements; the need and availability of letters of credit; costs we incur to support growth, whether organic or through acquisitions; the timing and volume of work under contract; losses experienced in our operations; the results of the review of prior period accounting on certain projects; developments in governmental investigations and/or inquiries; intense competition in the industries in which we operate; failure to obtain favorable results in existing or future litigation or regulatory proceedings, dispute resolution proceedings or claims, including claims for additional costs; failure of our partners, suppliers or subcontractors to perform their obligations; cyber‐security breaches; failure to maintain safe worksites; risks or uncertainties associated with events outside of our control, including severe weather conditions, public health crises and pandemics (such as COVID‐ 19), political crises or other catastrophic events; client delays or defaults in making payments; the availability of credit and restrictions imposed by credit facilities; failure to implement strategic and operational initiatives; risks or uncertainties associated with acquisitions, dispositions and investments; possible information technology interruptions or inability to protect intellectual property; the Company's failure, or the failure of our agents or partners, to comply with laws; the Company's ability to secure appropriate insurance; new or changing legal requirements, including those relating to environmental, health and safety matters; the loss of one or a few clients that account for a significant portion of the Company's revenues; asset impairments; and risks arising from the inability to successfully integrate acquired businesses. In addition to information included in this presentation, additional information about these and other risks can be found in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10‐K for the year ended December 31, 2019, and our other filings with the Securities and Exchange Commission ("SEC"). Such filings are available on the SEC's website at www.sec.gov. Given these risks and uncertainties, you should not place undue reliance on forward‐looking statements. Primoris does not undertake any obligation to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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2020 Second Quarter Key Financial Items

Record Q2 revenue of $908.2 million

Record Q2 net income of $33.0 million

Q2 SG&A 5.7% of revenue

Q2 cash flow from operations of $66.1 million

Backlog of $3.5 Billion

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2020 Second Quarter Summary

Revenue	Net Income
(in millions)	(in millions)

$908.2	$33.0

$789.9

$17.8

2020 Q1

2019 Q22020 Q22019 Q22020 Q2

Cash Flow from Operations	Total Backlog
(in millions)	(in billions)

$66.1
$3.2	$3.5

2019 Q2	2020 Q2	43% MSA
	35% MSA
$(24.4)
			June 30, 2019		June 30, 2020

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Backlog Summary at 6/30/2020

Backlog Mix

Civil

17%Power

26%

Transmission

12%

Utilities	Pipeline
19%	26%

Total Backlog ($MMs)

$4,000
$3,500
$3,000
$2,500										$1,759	$2,305
$2,000									$1,476
		$2,126
$1,500			$1,824
	$1,517
$1,000
									$1,418
$500			$672	$775	$1,284	$1,221
$571
$‐
2015	2016	2017	2018	2019	Q2
											2020
					MSA			Fixed

12.3%

Total

CAGR

18.4%

MSA

CAGR

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2020 Q2 vs. 2019 Q2 Segment Results

$ in thousands

2020 Q2		Power		Pipeline		Utilities	Transmission		Civil		TOTAL
Revenue	$	157,476	$	289,559	$	230,175	$	109,948	$	121,058	$	908,216
Gross Profit	$	6,703	$	27,030	$	42,392	$	13,445	$	11,397	$	100,967
Gross Margin		4.3%		9.3%		18.4%		12.2%		9.4%		11.1%
2019 Q2		Power		Pipeline		Utilities	Transmission		Civil		TOTAL
Revenue	$	172,170	$	137,243	$	222,312	$	135,354	$	122,850	$	789,929
Gross Profit	$	23,167	$	11,531	$	30,866	$	10,200	$	4,767	$	80,531
Gross Margin		13.5%		8.4%		13.9%		7.5%		3.9%		10.2%

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Growing Revenue While Controlling SG&A

9.0%

8.0%

7.0%

7.9%

7.0%

7.2%

$3,500

$3,000

SG&A % of Revenue

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

6.2%	6.1%	$2,500
		5.9%	Revenue
		$2,000
		$1,500	$MMs
		$1,000

$500

$‐

2015	2016	2017	2018	2019	Q2 2020 LTM
			SG&A % of Revenue		Revenue

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Consistent Earnings Per Share Growth

$1.80

$1.61 $1.60

$1.50

$1.40

2017 2018 2019 2020E

*2017, 2018, and 2019 earnings per fully diluted share are actual. 2020E is guidance as of 8/4/20.

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2020 Second Quarter Key Takeaways

Primoris had a record second quarter, with strong

growth in both revenue and earnings.

Extremely strong cash flow contributed to an already

strong balance sheet.

Civil and Transmission segments delivering margins

within target range.

Utility and renewables work driving growth into 2021.

Primoris continues to focus on the safety of our

employees, customers, and communities.

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