Q4 2019 Earnings Call
Greetings and welcome to the Primoris reports 2019 fourth quarter and full year results.
This time all participants are in listen only mode. A brief question answer session will follow the formal presentation.
If anyone should require operator assistant started a conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host keep talking Vice President Investor Relations. Thank you you may begin.
Thank you Doug.
Good morning, everyone. Thank you for joining us today, our speakers for today would be Tom Corrick, President and Chief Executive Officer, and Ken Dodge and our executive Vice President Chief Financial Officer.
Good morning Press release, we've also posted slides on our website that highlight key points. We plan to discuss on this call you can access somebody go into our corporate website www Dot prim dotcom and selecting investors once on the Investor site, you will find a flight to me that's in presentations section next to the webcast link for today's call.
Before we begin I'd like to remind everyone that statements made during today's call may contain certain forward looking statements.
With regard to the company's future performance words, such as estimates believes expects projects may and future or similar expressions are intended to identify forward looking statements forward looking statements inherently involve risks and uncertainties, including without limitation those discussed in this mornings press release.
I know detailed in the risk factor section and other portions in our annual report on form 10-K for the period ending December 34. It first 2019, which was filed this morning and other filings with the Securities Exchange Commission Primoris does not undertake any obligation to publicly update or revise any forward looking statements whether I'd ever.
<unk> information future events or otherwise, except as may be required under applicable securities laws I'd now like to turn the call over to our CEO Tom Mccormick. Thank you Kate.
Good morning, and thank you for joining us today to discuss our fourth quarter and full year results.
More says for your revenue suppressed $3 billion for the first time and the company's history that treatment that as a result, a hard work by all our men and women in the field as well as our project Supervisors back office support staff in our leadership team.
The team I'm extremely proud to lead.
In the fourth quarter, we were negatively impacted by severe weather and a few project delays, but we also benefited from strong execution, our solar pipeline field services in Canadian markets.
As expected our fourth quarter cash flows from operations were extremely strong. So we're able to complete our entire $50 million share repurchase program benefiting from Morrison, our shareholders and ended the year with a solid balance sheet.
Backlog at year end remained strong with 44% from long term essays in our current bidding activity makes us confident about 2020.
We are continuously reviewing our bidding procedures looking for ways to refine the process and sure ensure we are targeting the right projects with the right customers.
Our funnel of prospects looks very promising for great start to 2020.
Our focus on S.G.I. continues and we continued to be disciplined about where and how we spend our money focused focusing on initiatives that can improve efficiency at the business unit segment and corporate levels, while also making sure our people in the field have the tools and equipment they need to be successful.
Our earnings for the fourth quarter of 53 cents per share allowed us to achieve our fiscal year earnings guidance. Despite the headwinds of pipeline delays and the disappointing performance or transmission segment, as we realigned and renegotiated for the future.
I'm very pleased that we achieved our targeting guidance range and I believe it's worth noting that we did so without the benefit of some large projects that we had originally anticipated starting and 29 team.
[noise] I'll give a little more color on an individual segments, starting with the gas utilities and distribution segment.
Well revenue in our California markets was slightly down we had a good mix of work leading to better margins compared to the 2018 fourth quarter our markets throughout the Midwest for more challenged as late November so severe rain and snow and in every Midwest market in which we operate.
This kind of severe weather had a dramatic impact on productivity and labor costs, and ultimately had a negative impact on our fourth quarter revenue and earnings in that region.
However, weather does not impact the long term attractiveness of the gas utility market as we continue to see growing national recognition of the need to replace or agent gas pipeline in distribution infrastructure.
Just last year, the state of Texas passed a bill requiring a 60% increase and the replacement of the riskiest pipelines across the state and the room removal of all known cast iron pipelines by 2022.
This type of integrity or replacement work is often completed under emphasize which is the kind of recurring long term programs. The primoris excels at and we are well positioned to capitalize on these opportunities [noise].
Our other utilities segment is a transmission and distribution segment focusing on the electric TMD market. We were disappointed with the results for the segment 2019, what two of the four divisions of the seven performed well the other two divisions fell short of expectations.
We do have some rate issues in two of the divisions that I referred to above and we're working with the clients to get them adjusted the spending by some of our major utility customers in the first three quarters of the or slow down in the fourth quarter as various utility slashed their spending in Q4 for a number of internal reasons.
We were able to replace some of the revenue shortfall and are using this as an opportunity to reduce our direct costs through the rightsizing accrues.
More efficient use and management of equipment.
More effective use of subcontractors and better control the sillier costs.
The customers that implemented the fourth quarter reductions have since communicated to us that the reductions were temporary and that work would return in the first quarter 2020.
We continue to have conversations with these customers just to discuss how their budget fluctuations impact our costs and to partner with them in creating a sustainable model.
It's also worth noting that it took us longer to renegotiate a long term I must say contract with one of our major clients and the team these segment, which prolong the timeframe in which we were able to realize the benefits from the new contract terms.
We should see the benefits from all these initiatives in 2020 and remain confident that long term opportunities in electrical utility market are strong.
The power industrial and engineering segment saw mixed results in the fourth quarter.
Our I must say work within industrial facilities is performing very well however, as expected we experienced revenue declines in California as the market for new natural gas fired power facilities continues to be challenged.
But much of the decline of the natural gas power market is being offset by growth in the renewable power market. Our solar project in West, Texas completed phase one in the fourth quarter and phase. Two is ahead of schedule with a projected completion date by the end of the second quarter. This year.
Over the last couple of years, we've been able to establish ourselves as a premier contractors. The utility scale solar projects. This market will be attractive for us over the next several years driven by states renewable portfolio standards and increasingly competitive pricing for solar generated electricity.
We continue to pursue additional renewable projects outside of solar such as battery storage bio diesel and bio gas facilities, one of which we announced in 2019.
Renewable natural gas market is another growth opportunity for US is developers are looking to partner with companies that can offer complete solution and for Morse is broad range of services allows us to offer customers that come up a customized solution to meet their needs.
Our Gulf Coast Industrial team had a challenging fourth quarter as to industrial projects faced additional challenges one of these projects was completed in Q4.
The second project was which was adversely impacted by multiple design changes in client delays is approaching completion and we are actively working on claims associated with project as the arlette changes resulted in adverse impact productivity impacts and increased costs.
Well I don't like to have projects. The performed poorly I think it's important to acknowledge them into learn from them.
Over the last several months, we've upgraded our team in the Gulf coast by adding additional seasoned professionals afield supervision to our staff to ensure we have the proper skill sets and expertise to execute manage the work we are pursuing.
Leaving the Gulf Coast, and jumping up to Canada, our work in the Western Canadian market continues to exceed our expectations and the majority of our work there is being done under MSR days, we're pleased with work Theyre doing and expect 2020 to be another solid year.
I'm extremely proud of the turnaround we've seen in our civil segment, excluding any Bel claims impacts the segment had a great quarter, demonstrating its ability to perform profitably and safely.
We are seeing the benefit of more disciplined execution and contract management as well as more selective bidding for heavy civil work.
Our iron M. team is working closely with our renewables and industrial teams and their full of opportunities, including site work in road construction for solar facilities, LNG plants, and industrial chemical facilities looks strong for 2020 and slightly backend loaded.
And finally, our pipeline underground segment.
The market for pipeline field services continued to grow with our revenue increasing over 50% 29 team and bidding for 2020 looks very strong.
We're expanding our field services working with our customers extend the life of existing pipelines and pipeline facilities and our pipeline market revenue was down compared compared to 28 team, but it was not unexpected as permitting and legal challenges adversely impacted the industry in 2019.
The delay in large projects projects calls many contractors to chase smaller jobs in order to keep their key employees and kras and busy which had a trickle down effect on the entire market, but we chose not to dramatically lower our margins, preferring to pass on projects rather than take on profitable work.
Our 2020 outlook is significantly improved compared to 29 team as we have several projects both union and non union that have either already started or are scheduled to start in the first quarter. This year and several bids on which we have been a form that we have been shortlisted or verbally awarded.
With regards to our largest pipeline project the Supreme Court heard oral arguments just yesterday and we expected decision in late June or early July at the earliest we would expect to go back to work on this project late in the third quarter to be clear optimism about the 20 times 20 pipeline market does not predicated on this one project and we have not include.
Did it in our 2020 guidance.
As I look across all our segments I'm extremely proud not just of their financial results, but also their safety results.
We were 24 and a half million work hours in 2019, which is a 25% increase over 2018 and didn't lose sight of our focus on safety. Our 29, 29, 10, TR IR is well below the industry average, but with safety, we're always looking for ways to improve so I've challenged our team to exceed our 2020 safety goals.
During the year, we received numerous safety awards, including four business units, receiving the Liberty Mutual Safety Excellence Award recognition by the Canadian Occupational Safety magazine as one of the safest contractors in the oil and gas category.
And the 29 staying in our California Safety Award of Merit.
In addition to strong expected organic growth in our utility pipeline a renewable markets in 2020, we're looking at potential acquisitions, both smaller bolt ons as well as more sizable acquisitions, we have a strong team in place evaluating prospects and I expect we'll close at least one this year.
With a healthy backlog mix of both Emmis say a project based work strong expectations for the utility pipeline and renewable markets and a civil segment that has returned to our expected operating margin range I am confident that 2020 is going to be another successful year for the primoris family of companies.
Before handing over to can for the financial details I'd like to also let you know that we've revised our executive compensation program, while bonus calculations of always considered crucial items, such as backlog operating profit and cash flow and safety. We have now formally align these metrics with the bonus calculations for senior management management.
We believe this benefits our management team as they now have very clearly defined goals.
It also provides a path for next generation leaders to accumulate shares a primoris stock, making sure that their interests are aligned with that of our shareholders.
And with that I'll now turn it over to Ken.
Thanks, and good morning, everyone I'll focus on our fourth quarter results as well as our balance sheet cash flows and backlog and then I'll wrap up with our 2020 guidance before moving on to your questions. Our fourth quarter 2019 revenue was 789.8 million compared to 877.7 million in the fourth quarter 2018.
The decrease was primarily due to expected decline in revenue in the pipeline segment as a result of projects deferred until early 2020. This was slightly offset by our revenue growth in the power in civil segments.
Our largest customers in the quarter were three large utility customers, who accounted for a combined 21.4% of our revenue and a renewable energy company that accounted for 5.6% of our revenue and our top 10 customers now account for less than 50% of our revenue they accounted for only 44.8% of revenue in the fourth quarter and 47.2%.
Revenue for the full year.
Gross profit in the fourth quarter 2019 was 89.5 million compared to 103.3 million in the fourth quarter 2018.
The decline in gross profit was largely due to lower profit margins in the power and transmission segments and the lower revenue in the pipeline segment.
Fewer but if you recall in Q4 2018, the power segment had the benefit of a large settlement on the disputed receivable as well as the benefit of a successful close out a large power project.
In 2019, this segment Didnt have any settlements or closeouts and instead head to challenging industrial projects on the Gulf Coast that Tom previously mentioned.
This combination drove this significant profit reduction from 2018 2019.
And Tom has already mentioned the issues we are dealing within the transmission segment I'll Echo his comment that we are continuing to met organizational and operational improvements to return the segment to expected profit levels.
The overall declining gross profit was partially offset by an increase in gross profit in the civil segment, thanks to better performance, our civil projects and progress toward settling claims on the two remaining belton area projects. We continue to work through the claims process with texstar and we updated our recovery estimates on the two remaining claims in Q4 as of year end all five probably.
Next is substantially complete.
RSU expense in the fourth quarter 2019 was 48.6 million down slightly from 50 million in the fourth quarter 2018, Despite the decline as a percentage of revenue as China increased slightly to 6.2% due to the lower revenue in 2019.
For the full year SJ was 6.1% of revenue and we believe we will remain in the low 6% range going into 2020.
Interest expense in the fourth quarter 2019 was 2.6 million compared to 7.1 million in 2018 in 2019, we benefited from a $1.3 million unrealized gain on the change in fair value of our interest rate swap while in 2018. This was a 2.8 million dollar loss.
Excluding the impact of these noncash unrealized changes in the value of our swap I expect our 2020 interest expense to be roughly 4 million a quarter.
The effective tax rate on income attributable to our Morris was 29.3% for the fourth quarter and 29.1% for the year. We expect to rates continued approximately 29% for all of 2020, but it may vary slightly depending on the mix of states. We work in and the amount of premiums, we pay which are not tax deductible.
Fourth quarter net income attributable for US is 26.9 million or 53% 53 cents per fully diluted share compared to 32.4 million or 63% per fully diluted share in 2018.
For the full year, we aren't a record dollar 61 per share, which surpassed the record dollar 50 per share we set in 2018.
Looking at our cash flows as expected we had a very strong fourth quarter 158.1 million and cash flows from operations. This includes the roughly 100 million in cash we received from the sale of customers receivables and the settlement of the three built in there you claims we discussed in the third quarter.
In the fourth quarter, we invested approximately 16.2 million in property and equipment and for the full year, we invested 94.5 million of which $57.5 million for construction equipment.
We are almost done upgrading many of our offices in facilities and we expect our 2020 capital spending to be in the $50 million to $60 million range with almost all of that spent on construction equipment.
We're also selling equipment that we no longer need and Rightsizing, our equipment fleet as needed in 2019, our proceeds from the sale of property and equipment were 28.6 million almost 17 million higher than the 11.7 million we sold in 2018.
We plan to continue evaluating our equipment fleet in 2020, and we could expect similar levels of equipment sales.
Our balance sheet at year end was strong we were able to complete our $50 million share repurchase in December and still in the year with 120.3 million of cash.
And with borrowing capacity under our revolver of 164.2 million, we have total available liquidity of almost 285 million at year end.
Total debt was down to 351.3 million net debt was 231 million and our debt to equity ratio was 55.9% at year end.
Our weighted average interest rate at year end was just under 4%.
We believe this combination of low debt and available liquidity will enable us to take advantage of all opportunities for organic growth and strategic acquisitions in 2020.
Fix backlog at year end was a dollar seven excuse me 1.76 billion and our 12 month MSC backlog was 1.42 billion for a total backlog of 3.18 billion essentially flat compared to where we ended Q3 to 2019.
We expected during 2020, we will recognize as revenue approximately 76% of our total year end backlog.
And finally, our guidance for 2020, we expect that earnings per fully diluted share will be in a range of $1.70 to $1.90 per share. This range does not include any potential upside from Atlantic Coast pipeline project that we remain confident committed to supporting our customer when the project is ready to move forward.
With that we can turn your questions Doug.
Thank you we will now begin ducking your question and answer session. If you'd like to ask your question you May Press Star one on your telephone keypad confirmation toll indicate your line is in the question Q you May Press Star too. If you would like to move your question from the Q4 participants using speaker equipment, and maybe necessary to pick up your handset before pressing the star key.
Our first question comes from the line of.
Lee go to.
With CJS Securities. Please proceed with your question.
Got it close good morning.
Accordingly.
So just taking into account on the pipeline side. The 260 million of work you want in late January how much additional capacity do you have.
Take on additional work prior to the potential started BCP in Q4.
We had a dip it's really really the depends on the size of the project and the timing of the project. I mean is you know bid pipeline project or quick burners. So from the top of award to mobilization is fairly quick are already in the field on those projects.
If we can fit them in our schedule, we have a capacity to do probably as many as five spreads at any given time, depending on the type of work.
So it just depends on the mix and the respective sizing schedules.
And then I know you kind of explicitly.
Out of the guidance range as it relates to Q4, but what are you assuming in terms of Backfilling work in Q4 to get to that guidance range.
Our next year I understand your question Lee what exactly are you asking if you take JCP out of Q4 and your guidance is $1.70 to $1.90, presumably you'll be doing some work.
Yes, it leads to Rockford in that quarter.
Yes.
What's what's assumed in terms of Backfilling for Q4.
Less than $30 million revenue.
Okay.
And what we are not expected even if HCP gets approved this year, we had not expected to be able to do a lot of work. This year I mean, we falling of trees, maybe clearance more right away in the West Virginia, you're not to do any work in the winter you're going to be in the winter by then, especially if it's a late third quarter notice to proceed we can do some work in the Carolinas.
So, perhaps it's more than that and I believe we had less than 30 million in our in our original plan that it for HCP.
And let me let me touch on this to let me just step back to your last question first second.
Let's talk and primarily of Rockford, even with there with respect to their capacity we have a non union company that also has the cat capacity to take on multiple spreads and they are actually doing extremely well.
Got it and then just one more related to transmission I know you you mentioned a couple issues that caused the margin shortfall. This quarter can you talk a little bit about the miss a renewal and on an apples to apples basis, assuming things don't get better, which I think they will but assuming they don't get better.
How much of the new the renewal of the same essay.
Is additive to margins hopefully beginning in Q1.
Let me think about how I can answer that question without.
Well the details of that I must say.
Hi, I would expect.
On a.
Data.
Descendants basis, I'm not sure how to answer that question beyond us with it.
That's 200, roughly about two represents about $208 million worth of work that we should be able to get through the course of this year.
Our margins will be let me just say in the 8% to 10%.
Well actually gross margins will be in the 14% to 16% range all that work so.
That does that does that answer your question without really giving you a lot of details on that Amazon.
That's super helpful. I guess is there any way to put that in compared to what that work would have done this year.
If we were just doing work for that same client. This year at those same levels those margins would be low single digits got it perfect.
Our next question comes from the line of Sean Eastman from Keybanc Capital markets. Please proceed with your question.
Hi, Thanks for taking my question.
First one for me is just on the industrial projects in the Gulf Coast and I think last quarter you guys. It said in a expected the drag there to be contained in the third quarter sounds like one of the project is now done in the fourth quarter, but.
When is the next one completing and I'm just curious how does this continue to be a drag in early 20 or does the outlook reflect.
Returned to.
Normalized margin performance they are coming out of the date.
So let me ask let's answer your question I'll address the one that the project finished in fourth quarter. Unfortunately for projects that go bad there kind of we look at them as the gift that keeps on giving and they named just took a little bit longer to get that project finished in the second project is gone into 2020, primarily because of the you heard me talk about design changes and client led change.
As they have continued to see we've seen multiple changes on this project that have pushed the work scope out and the schedule out we'll finish that here in the next couple of weeks. So that project. We finished the next couple of weeks, we're talking to the client.
Now about selling our clients and all the discussions are going very positively. So that we look to have that behind us here within the next two to three weeks.
New projects actually the kick off the year that that particular group is doing pretty well they've they've been successful winning some work and their performance. So far. This year is good we brought like I said in my statement earlier that we brought in some new key people primarily field level type people to help make sure we get the rights skill sets in place not that we didnt have.
Some good people, but we would that some they need to concentrate on managing their contracts a little bit better and that some people concentrate on some work in the field and we're seeing the benefit of that now so I think here to see a return to traditional performance.
Here in the coming weeks, we're seeing it now actually.
Okay, Great. That's helpful. And then on the Civil claims side would you guys. We want to quantify how much that helped relative to internal expectation in the fourth quarter, and then and then or the claims resolution. They're all done at this point or is there more to come in 2020 and is there some.
With that built into the 2020 outlook.
Yes, so we don't really comment on individual customers and on claims.
Realization, especially at this point in the process.
But with respect to resolution it is in the Triple C process and Tom jump in here wherever you want to but it's a legal process that we have no control over on less texstar chooses to pull it out and settle with US yeah, our expectation would our hopes would be that we can settle these two claims this year.
They don't go well I guess that could go on for.
Over the course of another year.
Our expectation is that we said we set a precedent in the resolution of the first three claims.
And then we're talking to tax dot now and will enter into some more.
Detailed discussions here in the coming months about truck pulling those possible the possibility of pulling those out of the CCC process and selling them based on the precedent setting a three earlier claim settlements.
Got it and then as we think about.
Just visibility around this initial 2020 outlook what would be some of the major things that have yet to happen to hit sort of the midpoint like for example, I think the big solar projects flowing through right now completed many year you know do we need to see another big solar wind in the first half to head yes.
Guar any kind of color, maybe that chunk year project side.
Developments, there well ill kind of touch on three our pipeline, both our union and non Union pipeline groups are continuing to be successful on bids there. Although we haven't announced some that we haven't signed a contract you have we been form that we are either.
The short listed below better or the or verbally awarded the work and just going now going to work through contract terms on several projects in excess of a couple of hundred million dollars as well as our field services group. That's also part of that pipeline segment is having some successes that we haven't yet finalized the contracts in 2020, but but we expect.
Those to be announced here in the coming weeks finalized and announced in the coming weeks and then we have received a limited notice to proceed on a large solar project that we were asked so now moving forward on that once we sign that contract.
Well formalize it in announcing its a fairly sizable project as well. So we're seeing we've had a very good start to 2024 when it comes to new business taken.
And I guess.
Just to wrap that up you know if we see those.
Pipe project and final negotiations.
Yes, mobilize and if we see this.
Large solar project mobilized.
Is that indicative of upside to the outlook are those things already built in.
Well, it's really too early in here you're here, we're talking to you in February right now the even say, but that it would be we'd be in probably better position in any year that I'm since I've been.
With this company than we have in the past so it'd be a great start to the year to have that much work in backlog moving forward because basically what that would do it would reserves space for the HCP project were to move forward in the fourth third or fourth quarter, but it would basically give our put both our pipeline groups that capacity.
We have net we haven't seen in past years.
Okay got it I'll leave it there thanks very much for the time to him.
Our next question comes from the line of Brent Thielman with da Davidson. Please proceed with your question.
Hey, Thanks, Good morning, good morning to Brent.
Ed question or follow up question on the transmission business. How quickly do you expect those margins to kind of come back to levels. You were talking about or is it you think it kind of comes in stages. This year.
Well again their businesses cyclical like it like some of our other businesses that they rely heavily on MSG networks of the first quarter is going to kind of be slow as clients start ramp coming up and getting approval under budgets and rolling out their budgets and rolling out that work I think it's going to be against second third fourth quarter is which is when we expect to see it.
Okay. Okay, and then on the you Andy segment I think through the first year in a while we havent seen it grow I understand there's been some sort of extraordinary reasons for that this year. How do you think about that business reversing that trend in 2020, what kind of growth do you think it can see meaning and a scenario where we're at whether it's complex.
Well, there's other factors are kind of how.
Well, you're not I don't think you're going to see a lot of growth in California, I think if we can continue to just maintain the work that we have out there I think thats great were where we'll see growth is the opportunities for Q Threec and Pds, which are two of the other business units in that segment to rate go into different regions.
And when MSN continue to win AMA say work and to reduce some of their MSR work I think thats, where the opportunities are.
And that's the expectation for both of those business units this year as well.
Okay and that feedback from the California customers as margins to return to normalcy year after.
Well when you're doing replacement work at some point in time you work your way through some of that we have with some of the clients and we're doing we're doing some new work out there for those clients. It's just it's it's being able to balance that workload that being able to get the work out through that are engineers and get the work released also has some impact on it but it's just we've been working on that California market for a long time.
And at some point in time, if that work would fly is going to flatten out a little bit.
Okay, and then the tower industrial business I mean, you had really strong booking here in 2019, it it sounds like maybe some of the larger.
The Gulf coast opportunities that are out there shifted ride a little bit maybe maybe you could talk a little bit what youre seeing that the near wheel house in that region and I guess you now you can you imagine for the level of bookings in 2020.
Well, let me go out to California first for our Union part of that that that segment. They were able to actually last year, although they had a little bit they fell a little bit short of the revenue actually did extremely well last year on winning work and it was they didnt have one large projects that they want it was all in the backbone of MSR work in small capital.
Projects.
Thank you will see the same with them this year, although they have a couple opportunities right now project that they're short listed on they went it's fairly sizable it's north of $100 million.
We expect to hear back about it here in the coming weeks, if I go to the Gulf Coast, there's still opportunities to grow that business, we're seeing a lot of opportunities.
Prospects a lot opportunities to bid work, we're just trying to be careful about making sure that we have the right teams in place and then we have the right execution strategy to make sure that those projects are successful add I don't think it's there's not a limit right now that we're saying in the Texas and Louisiana area for work.
Markets, making sure that we're pursuing the right projects with the right customers I think there are going to be some more LNG projects going forward, there's there's some chemical projects and in.
Petrochemical projects also that we're we've been talking to clients for a long time on projects that we expected to be awarded in 2019 that have pushed and I think we have.
We are pretty good favor pretty was good position on those projects. It where are they were they to go forward in 2020.
Okay, great. Thank you.
Our next question comes from the line of added Paul Hammer with Thompson Davis. Please proceed with your question.
Hey, good morning, guys nice.
Born Adam Adam.
What is.
Sold out and Union and non Union pipe, what does revenue look like for that 10 use segment in that scenario.
I'll, let Ken answer that he's got to.
For 2020.
No not even 2020, just like if you had full utilization for a year how much revenue could you do oh.
Oh, well, let's see we finished the year with a little over 500 million in that segment full bore going probably eight to 900 million.
Okay.
And that's with all the spreads working like Tom was talking about and kind of sequenced up nicely. So that we have jobs, finishing up and crews rolling on to other jobs as well, but that didn't include the field service group, which could be.
Another another 250 million correct.
You can literally doubled that segment versus 2019.
Yes, and the I'd be careful about saying that but you all everything would have to hit just right exactly what I think that certainly there's opportunity for growth there.
Yes, how much of and to Tom's point about the field services business right. That's not a segment type business like it like it is on the mainline pipeline construction. It's all about work crews who are onsite at various facilities and small and medium sized projects that average anywhere from three to 4 million on the small side up to 12 to 15 million on the law.
Outside.
But with jobs, you've already announced plus these verbal awards.
You think you're on the run rate towards peak at the end of the year.
Maybe not peak, but definitely toward the higher into the range yes. Okay.
And then if they CP.
That's just gravy.
Actually got it okay I get it.
And then.
Oh that California Candy contract you one has that ramped up yet doesnt MSK with a big California utility on that on the power side. It well, it's working it's not it's not ramped up again first quarter slow.
But just getting that approved the ended last year, we probably had 35 40 cruise they've wanted us to ramp up to Trabi twice that but we reserve the right.
To limit that until I can show us the backlog of work and probably in that same mode. This year. So I think it's going to be a little bit slow in the first quarter. It will ramp up in the second third fourth quarter.
So.
We're looking forward to seeing that grow.
Okay, and then on the on the underground on the pipe side the distribution work in California has that.
You said they told you is going to ramp in Q1, but have you seen that yet.
No. We don't expect it really to see a lot of that until Q2 as far as now we got a pipeline project out there. There is a smaller project that will be handled by that underground group that will kick off but it's very typical for lot of that were not just start picking up into Q2.
Okay. So you guys like California overall.
The gas utility and electric utility.
Good demand outlook, but it really picks up Q2, and then in the back half, yes. It really starts ramping up cute towards the end of Q2 in Q3 in Q4.
That's helpful and then last one for me the.
The solar contracts I guess haven't fully fleshed out.
That opportunity, but you sound very upbeat like what are you seeing on the bidding side and what's the typical size of these jobs to primoris.
Hi, there they will there anywhere from 50 million to.
North of 280 million.
We have we think we've had a real good niche in that 100 to 250 280 million dollar range. There's a.
Inordinate amount of opportunities. There you just have to partner up with or or match up with the right client or the right partner. So lot of these are developers chasing.
PPA season, and we make sure that are our pricing is in line with what their expectations are we have several that we've done work for that have other opportunities they've been very pleased with our performance. So I think you could go out theres enough out there for us to any contractor that has experienced to go out and get themselves in trouble. They would have wanted to take on too much work.
You had to be careful make sure that you have the right staffing levels to to put on those projects because they are there.
Quite different than our industrial construction projects and they're much more of a production facility type of project than they are in industrial project. So the different type of mindset that takes to do that type of work how quickly do they burn.
Once you get through engineering I mean, typically finished one at about a year and a half a large larger scale project. The road runner project, we will have been in the field for probably out a year and a half when we can face to finishes in this summer.
Okay, great. Thanks.
Thanks, Adam Thanks, Adam.
As a reminder, it is star one to ask your question. Our next question comes from the line of who Julio Romero with Sidoti and company. Please proceed with your question.
They Oreo and good morning, everyone Hey.
So just piggybacking on that last question about solar and maybe renewable in general.
Seems like one thing that May set you apart is your ability to maybe offer more of a comprehensive solution. Then some peers in the space can you just talk about that and if thats a differentiator as as those renewable jobs get more competitive overtime.
We think it is because we can we can get up involved upfront with a client and look at US go look at aside put a price on that side to help them develop their scope Calvin determine what that cost per megawatt may be some make sure. It fits in their model and then move forward with detailed design, we have companies in our I'd M. group in our heavy civil group.
Then on projects have done the site clearing and grading any sole stabilization built the roads up to the top of a may suffer project. We can do we can build the sub stations form we can run the transmission lines and do the interconnects for them and then we can build the solar design and build the solar plant. So.
Really and truly where effectively not that all clients use all our services, but were a one stop shop with respect to that.
Got it that's helpful and just housekeeping question I think you mentioned.
We should assume.
Similar to 2019.
$20 million, so proceeds from equipment sales for 2020.
Well, yes, I don't know that we can assume 28, because we don't know what that rightsizing is going to be but I would not a surprise me to see us have higher levels of proceeds from equipment sales in 2020 than we had historically historically you know we kind of been in that $9 million to $12 million range, and so whether or not it will be 28 or not I don't know, but it should.
Be higher than that on to 12 that we've historically experienced prior to 2019.
Understood. Thanks for taking the questions and best of luck in 22.
Thanks earlier.
There are no further questions in the queue I'd like to hand, the call back to management for closing remarks.
Well first of all thank everybody for joining us it was.
And I take it was a successful year, we had some.
Some opportunities and things that we need to work on and improve on I think we're well we've got the is well underway and.
Looking forward to successful 2020 for all our for more family of companies. Thanks for joining us.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.