Q1 2025 Primoris Services Corp Earnings Call
Operator: Thank you for standing by.
Thank you for standing by my name is Kate and I will be your conference operator today.
Kate: My name is Kate, and I will be your conference operator today.
Operator: At this time, I would like to welcome everyone to the Primoris Services Corporation First Quarter 2025 Earnings Conference call-in webinar. All lines have been placed on mute to prevent any background noise.
At this time I would like to welcome everyone to the pre mortgage services Corporation first quarter, 'twenty 25 earnings conference call and webcast.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone If you would like to withdraw your question, press star 1 again. Thank you.
Blake Holcomb: I would now like to turn the call over to Blake Holcomb, Vice President, Investor Relations. Please go ahead.
Speaker Change: Blake Holcomb, Vice President Investor Relations. Please go ahead.
David King: Good morning and welcome to the Primoris First Quarter 2025 Earnings Conference Call. Joining me today with prepared comments are David King, Chairman and Interim President and Chief Executive Officer, and Ken Dodgen, Chief Financial Officer.
Speaker Change: Good morning.
Speaker Change: Morris first quarter 2025 earnings conference call.
David King: Joining me today with prepared comments are David King Chairman and interim President and Chief Executive Officer, and Ken Dodgen, Chief Financial Officer before.
David King: Before we begin, I would like to make everyone aware of certain language contained in our safe harbor statement. The company cautions that certain statements made during this call are forward-looking and are subject to various risks and uncertainties. Perhaps results may differ materially from our projections and expectations. These risks and uncertainties are discussed in our reports filed with the SEC. Forward-looking statements represent our outlook as of today, May 6, 2025. We disclaim any obligation to update these statements, except as may be required by law.
David King: Before we begin I would like to make everyone aware of certain language contained in our safe Harbor statement. The company cautions that certain statements made during this call are forward looking and are subject to various risks and uncertainties.
David King: Actual results may differ materially from our projections and expectations. These risks and uncertainties are discussed in our reports filed with the SEC.
David King: Forward looking statements represent our outlook as of today may six 2025, we disclaim any obligation to update these statements except as may be required by law.
David King: In addition, during this conference call, we will make reference to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures are available on the investor section of our website and our first quarter 2025 earnings press release, which was issued yesterday.
David King: In addition, during this conference call, we will make reference to certain non-GAAP financial measures.
David King: A reconciliation of these non-GAAP financial measures are available on the investors section of our website and our first quarter 2025 earnings press release, which was issued yesterday.
David King: I would now like to turn the call over to David King. Thank you, Blake. Good morning, and thank you for joining us today to discuss our first quarter 2025 financial and operational results. Primoris had a great start to the year, delivering higher revenue, margins, and cash flow compared to the prior year. I want to congratulate our employees on a well-executed first quarter. Their commitment to operating safely while focusing on our strategic initiatives to drive improved profitability, margin improvements, and cash flow continues to yield positive results. While uncertainty persists regarding global trade, tariff, and regulatory policy, the underlying fundamentals of our end markets remain intact with strong demand.
David King: I would now like to turn the call over to David King.
David King: Thank you Blake good morning, and thank you for joining us today to discuss our first quarter 2025 financial and operational results.
David King: <unk> had a great start to the year, delivering higher revenue margins and cash flow compared to the prior year.
David King: I want to congratulate our employees on a well executed first quarter there.
David King: Their commitment to operating safely while focusing on our strategic initiatives to drive improved profitability margin improvement and cash flow continues to yield positive results, while uncertainty persist regarding global trade tariffs and regulatory policy the underlying fundamentals of our end markets remain intact.
David King: With strong demand.
David King: As we have often commented, the outlook for ongoing investment in North American power, industrial and energy infrastructure is very favorable, and we believe Primoris is well positioned to capitalize on what we expect will be a multi-year endeavor. Many of the services we provide and projects we construct are essential to maintaining the existing infrastructure that supports our communities and is critical to future economic growth. Although we are still awaiting clarity on ultimate outcome of the evolving policy landscape, we can provide insight into what we are currently seeing and hearing from our customers and suppliers. In relation to tariffs, we do not expect to see a material impact on our operations during 2025.
David King: And we have often commented the outlook for ongoing investment in North American power industrial and energy infrastructure is very favorable and we believe for Morris is well position to capitalize on what we expect will be a multi year endeavor.
David King: Many of the services, we provide and projects we construct are essential to maintaining the existing infrastructure that supports our communities and is critical to future economic growth.
David King: Although we are still awaiting clarity on the ultimate outcome of the evolving policy landscape. We can provide insight into what we are currently seeing and hearing from our customers and suppliers.
David King: In relation to tariffs, we do not expect to see a material impact on our operations during 2025.
David King: Most of the materials and components associated with our work are supplied by the customer, many of which have the ability to source necessary components and materials domestically, or have sufficient inventory of imported goods to move forward with their existing plan. For our equipment and materials we supply to our projects, we are confident in our ability to source from a diverse group of mostly domestic suppliers. In cases where we may need to procure from outside the U.S., we believe the incremental cost under the current tariff regime for these smaller components would not significantly increase the overall cost of the project.
David King: Most of the materials and components associated with our work are supplied by the customer many of which have the ability to source necessary components and materials domestically.
David King: Or have sufficient inventory of imported goods to move forward with their existing plans, so our equipment and materials, we supply to our project. We are confident in our ability to source from a diverse group of mostly domestic suppliers in.
David King: Cases, where we may need to procure from outside the U S. We believe the incremental cost in the current tariff regime for these smaller component would not significantly increase the overall cost of the project <unk>.
David King: Additionally, the vast majority of our contract include terms and conditions that allow us to pass along these incremental costs to the customer. Prolonged economic and regulatory uncertainty could, in future quarters, lead customers rethinking the economics and timing of their projects in 2026 and beyond. But as of now, we are optimistic that we will continue to book new work throughout the year in order to maintain or potentially grow our backlog given the elevated demand for critical infrastructure services.
David King: Additionally, the vast majority of our contract include terms and conditions that allow us to pass along these incremental cost to the customer.
David King: Prolonged economic and regulatory uncertainty could in future quarters lead customers rethinking the economics and timing of their projects in 2026 and beyond but as of now we are optimistic that we will continue to book new work throughout the year in order to maintain or potentially grow our backlog given the elevated demand for.
David King: Our critical infrastructure services.
David King: I'll now provide some comments on performance for the quarter by second. Beginning with the utilities segment, we had a very solid operational performance and activity during a quarter where we typically see a seasonal low in revenue and margins. In Q1, each of our utilities businesses exceeded our expectations and exceeded the prior year revenue and gross profit. In gas operations, we had increased activity on the West Coast and favorable project close-outs that helped support margin-improved growth. While we did see our typical slow start in the Midwest due to colder weather, we were able to ramp up on a strong backlog of work in the region.
David King: I'll now provide some comments on performance for the quarter by segment.
David King: Beginning with the utility segment, we had a very solid operational performance and activity during a quarter, where we typically see a seasonal low in revenue and margins in Q1, each of our utilities business has exceeded our expectations and exceeded the prior year revenue and gross profit in gas operations, we had increased activity on the west coast.
David King: And favorable project Closeouts that helps support margin improvement.
David King: While we did see our typical slow start in the mid west due to colder weather, we were able to ramp up on our strong backlog of work in that region.
David King: In communications, we continue to see expansion in fiber to the home bills and increased system maintenance work in several new and existing geographic areas. We also had an almost $20 million increase in fiber loop network build revenue compared to prior year. We are seeing a growing list of opportunities to support customers with these network build-outs in major metropolitan areas in the Central and Western United States.
David King: Communications, we continue to see expansion in fiber to the home builds and increased system maintenance work and several new and existing geographic areas.
David King: We also had an almost $20 million increase in fiber loop network build revenue compared to prior year. We are seeing a growing list of opportunities to support customers with these network build outs in major metropolitan areas in the central and Western United States.
David King: However, the biggest driver of improved performance compared to last year was in the power delivery business. We had several clients release work sooner than anticipated to begin the year, which drove revenues and productivity higher. We are also seeing increased engagement from clients regarding grid resiliency plans and several public utility commissions are approving transmission line buildouts that we believe will lead to several opportunities in key service locations. We are pleased with the progress we have made in driving higher margins and cash flow in power delivery.
David King: However, the biggest driver of improved performance compared to last year was in the power delivery business. We had several class release work sooner than anticipated to begin the year, which drove revenues and productivity higher.
David King: We are also seeing increased engagement from clients regarding grid resiliency plans and several public utility commissions are improving transmission line build outs that we believe will lead to several opportunities in key service locations.
David King: We are pleased with the progress we have made in driving higher margins and cash flow in power delivery.
David King: Our teams have successfully taken on the challenge of upholding the priority to safety. while operating with improved efficiency and productivity. This combined with an increasing mix of project work we see on the horizon, as well as further optimization of our service areas and contracts, has us optimistic about the prospect of future margin expansion in the years ahead.
David King: Our teams have successfully taken on the challenge of upholding the priority to safety.
David King: Operating with improved efficiency and productivity. This combined with an increasing mix of project work, we see on the horizon as well as further optimization of our service areas in contracts has us optimistic about the prospect of future margin expansion in the years ahead.
David King: Moving on to the energy segment, we achieved significant top-line and operating income growth driven by record revenue in renewables. We started or made substantial progress on several utility-scale solar projects during the quarter and also had increased revenue contribution from each of the Premier PV, battery storage, and O&M compared to the first quarter of last year. We recognize that the uncertainty around the solar market has been heightened in recent months given the changing regulatory, tax, and tariff environment. We continue to monitor and evaluate how changes to the Inflation Reduction Act, anti-dumping, and other tariffs could impact our customers and their plans.
David King: Moving on to the energy segment, we achieved significant top line and operating income growth driven by record revenue in renewables, we started or have made substantial progress on several utility scale solar projects during the quarter and also had increased revenue contribution from each of the Premier PV battery.
David King: Storage and O&M compared to the first quarter of last year.
David King: We recognize that the uncertainty around the solar market has been heightened in recent months given the changing regulatory tax and tariff environment. We continue to monitor and evaluate how changes to the inflation reduction act anti dumping and other tariffs could impact our customers and their plans.
David King: Based on our assessment of the market conditions currently, we do not anticipate material changes to our revenue or new contract signings in 2025. Many of our customers have solar panels and materials needed to continue executing on the projects under contract, and many potential projects that are being evaluated have domestic supply. One area of our renewable business we believe could be the most impacted by future bookings would be the battery storage materials sourced from outside the United States, particularly China. The market conditions in solar in the U.S. economy remain dynamic, however, we believe that the growing need for generation capacity will continue to create opportunities for solar and other forms of power generation in the future.
David King: Based on our assessment of the market conditions currently we do not anticipate material changes to our revenue our new contract signings in 2025.
David King: Many of our customers have solar panels and materials needed to continue executing on the projects under contract and many potential projects that are being evaluated half domestic supplier.
David King: One area of our renewables business, we believe could be the most impacted by future bookings would be the battery storage materials sourced from outside the United States, particularly China.
David King: The market conditions in solar in the U S economy remain dynamic. However, we believe that the growing need for generation capacity will continue to create opportunities for solar and other forms of power generation in the future looking at the other areas of the energy segment the growth in renewables helped to offset lower industrial and pipeline revenue from the prior.
David King: Looking at the other areas of the energy segment, the growth in renewables helped to offset lower industrial and pipeline revenue from the prior year. Although industrial revenue declined due to the completion of certain projects and the wind down of non-core businesses in 2024, we did see improvement in margin performance. The market demand for natural gas generation resources continues to be favorable, and we have a number of opportunities to book new projects in 2025. We have the benefit of being selective on the projects, customers, and contract terms, and will remain diligent in bidding and winning projects that we view as the most attractive and that align with our expertise.
David King: Year.
David King: Although industrial revenue declined due to the completion of certain projects in the wind down or divesting of non core businesses in 2024.
David King: We did see improvement in margin performance.
David King: The market demand for natural gas generation resources continues to be favorable and we have a number of opportunities to both new projects in 2025.
David King: We have the benefit of being selective on the projects customers and contract terms and we will remain diligent in bidding and winning projects that we view as the most attractive and aligned with our expertise.
David King: In summary, we are encouraged by our performance in the first quarter and the positive trends we see across the business, despite the challenges from the macroeconomic uncertainty. We are focused on controlling what we can control and staying in close communication with our customers to ensure we have the crews and equipment to execute on their projects. Although it is early in the year and circumstances can change rapidly, we are optimistic that we have the opportunity to achieve or even exceed 2025 financial and operational goals.
David King: In summary, we are encouraged by our performance in the first quarter and the positive trends, we see across the business. Despite the challenges from the macroeconomic uncertainty we are focused on controlling what we can control and staying in close communication with our customers to ensure we have the crews and equipment to execute on their projects.
David King: Although it is early in the year and circumstances can change rapidly. We are optimistic that we have the opportunity to achieve or even exceed 2025 financial and operational goals.
Ken Dodgen: And now I'll turn it over to Ken to discuss our financial results. Thanks, David, and good morning, everyone. Revenue for the first quarter was $1.6 billion, an increase of $235 million, or 16.7% from the prior year. driven by growth in both our energy and utility sector. The energy segment was up 161 million, or 17% from the prior year, driven by strong growth in solar from the startup of new projects awarded in the second half of last year. The utility segment was up over $75 million, or 15.5%, as our power delivery, gas operations, and communications businesses all grew revenue compared to the previous year.
Ken: Now I'll turn it over to Ken to discuss our financial results.
Ken: Thanks, David and good morning, everyone revenue for the first quarter was $1 6 billion, an increase of $235 million or 16, 7% from the prior year driven by growth in both our energy and utility segments.
Ken: The energy segment was up $161 million or 17% from the prior year driven by strong growth in solar from the startup of new projects awarded in the second half of last year.
Ken: The utility segment was up over $75 million or 15, 5% as our power delivery gas operations and communications businesses, all grew revenue compared to the prior year.
Ken Dodgen: Gross profit for the first quarter was approximately $171 million, an increase of $37 million, or 28% from the prior year. This was due to higher revenue and improved profitability, particularly in our power delivery Gross margins were 10.4% for the quarter compared to 9.4% in the prior quarter. Looking further at our segments, in the utility segments, gross profit was $51.6 million, up $22.1 million compared to the prior year. This was driven by higher revenue in the gas operations business and the continuation of work orders assigned in the latter part of Q4, additional communication work on fiber loops, and significant improvement in power delivery profitability during We are pleased with the progress we are seeing in executing on our plans to drive higher margins in the power delivery.
Ken: Gross profit for the first quarter was approximately $171 million, an increase of $37 million or 28% from the prior year.
Ken: This was due to higher revenue and improved profitability, particularly in our power delivery business gross margins were 10, 4% for the quarter compared to nine 4% in the prior year.
Ken: Looking further at our segments in the utility segment gross profit was $51 6 million up $22 1 million compared to the prior year. This was driven by higher revenue in the gas operations business from a continuation of work orders assigned in the latter part of Q4 additional communication work on fiber loops and.
Ken: Significant improvement in power delivery profitability during the quarter. We are pleased with the progress we are seeing in executing on our plans to drive higher margins in the power delivery business, we have negotiated higher rates on contract renewals driven better performance in certain businesses and we are seeing more opportunities for transmission and substation work gross.
Ken Dodgen: We have negotiated higher rates on contract renewals, driven better performance in certain businesses, and we are seeing more opportunities for transmission and subsistence. Gross margins in utilities increased to 9.2% from 6% in the prior year, largely due to the improved execution in power delivery and growth in higher margin gas operations and communication. We expect to see margins increase sequentially in Q2 and Q3 driven by normal seasonality in order to reach our goal of low to mid 10% margins for the full year. In the energy segment, gross profit was just over $119 million for the quarter, a $15.2 million increase from the prior year due to higher revenue in our renewables.
Ken: Margins and utilities increased to nine 2% from 6% in the prior year largely due to the improved execution in power delivery and growth in higher margin gas operations and communications activity.
Ken: We expect to see margins increase sequentially in Q2, and Q3 driven by normal seasonality in order to reach our goal of low to mid 10% margins for the full year.
Ken: In the energy segment gross profit was just over $119 million for the quarter of $15 2 million increase from the prior year due to higher revenue in our renewables business.
Ken Dodgen: Gross margins were 10.7 percent, down slightly from the prior year of 11. The slightly lower gross margins were a result of fewer project closeouts and the ramping up of new projects in recent years. We anticipate margins will tick up during the year with good execution and project.
Ken: Gross margins were 10, 7% down slightly from the prior year of 11%.
Ken: The slightly lower gross margins were a result of fewer project closeouts and the ramping up of new projects in renewables, we anticipate margins will tick up during the year with good execution and project Closeouts.
Ken Dodgen: Turning to SG&A, expenses in the first quarter were $99.5 million, an increase of $10.9 million compared to the prior year. The increase was driven by increased personnel costs to support our growth, and $3.2 million in severance pay. As a percent of revenue, SG&A was 6% compared to 6.3% in the first quarter of last year.
Ken: Turning to SG&A expenses in the first quarter were $99 5 million, an increase of $10 9 million compared to the prior year. The increase was driven by increased personnel cost to support our growth and $3 2 million in severance costs as a percentage of revenue SG&A was 6% compared to six 3% in the first quarter of last.
Ken: Year.
Ken Dodgen: We continue to expect SG&A for the full year to be approximately 6% of Net interest expense in the first quarter was $7.8 million, down around $10.2 million from the prior year. The decrease was a result of lower average debt balances and lower interest rates.
Ken: We continue to expect SG&A for the full year to be approximately 6% of revenue.
Ken: Net interest expense in the first quarter was $7 8 million down around $10 2 million from the prior year. The decrease was a result of lower average debt balances and lower interest rates.
Ken Dodgen: Our effective tax rate was 29% for the quarter, and we believe this rate will be consistent for the future.
Ken: Our effective tax rate was 29% for the quarter and we believe this rate will be consistent for the full year.
Ken Dodgen: Moving on to cash flow for Q1, we saw cash from operations of $66.2 million, an increase of nearly $95 million from the prior year, and a first quarter record for Primoris. The primary working capital drivers were the improved collection of receivables and higher operating costs.
Ken: Moving onto cash flow for Q1, we saw cash from operations of $66 2 million, an increase of nearly $95 million from the prior year and a first quarter record for <unk>.
Primary working capital drivers were the improved collection of receivables and higher operating income.
Ken Dodgen: Looking at the balance sheet, we maintain strong liquidity of $652 million, which includes approximately $352 million of cash and $300 million in available borrowing capacity on our revolver. As we mentioned on the fourth quarter call, we also paid down $100 million on our term loan. given our cash balance and favorable outlook across our business.
Ken: Looking at the balance sheet, we maintained strong liquidity of $652 million, which includes approximately $352 million of cash and 300 million in available borrowing capacity on our revolver.
Ken: As we mentioned on our fourth quarter call. We also paid down $100 million on our term loan in the first quarter.
Ken: Given our cash balance and favorable outlook across our businesses. The board of directors authorized a new share purchase program on April 30, the new plan allows for the purchase of up to $150 million in for more shares through April 32028, We believe this flexibility allows us to opportunistically invest in for Morris.
Ken Dodgen: The Board of Directors authorized a new share purchase program on April 30th. The new plan allows for the purchase of up to $150 million in Primoris shares through April 30th, 2028. We believe this flexibility allows us to opportunistically invest in Primoris while also preserving the ability to continue investing in organic growth and pursue M&A that aligns with our strategic and financial goals.
Ken: While also preserving the ability to continue investing in organic growth and pursue M&A that aligns with our strategic and financial targets.
Ken Dodgen: With respect to backlog, we ended the quarter with $11.4 billion in total backlog compared to $11.9 billion at the end of 2024. The energy segment backlog decreased $567 million prior to the timing of new solar awards, which we expected to be softer in Q1 and Q2 after a strong second half of bookings last We continue to see a broad range of opportunities across our end markets, particularly in renewables, natural gas generation, and power delivery. Based on our conversations with customers, we expect bookings to accelerate in the back half of the year, similar to last year, although we could continue to see variability quarter to quarter, depending on the timing of contracts.
Ken: With respect to backlog, we ended the quarter with $11 4 billion in total backlog compared to $11 9 billion at the end of 2024.
Ken: The energy segment backlog decreased $567 million, primarily due to the timing of new Solar awards, which we expected to be softer in Q1 and Q2. After a strong second half of bookings last year we.
Ken: We continue to see a broad range of opportunities across our end markets, particularly in renewables natural gas generation and power delivery.
Ken: Based on our conversations with customers, we expect bookings to accelerate in the back half of the year similar to last year, although we could continue to see variability quarter to quarter, depending on the timing of contract signings utilities backlog increased 88 million from year end, driven by MSA and fixed backlog.
Ken Dodgen: Utilities backlog increased $88 million from year-end, driven by MSA and fixed backlog.
Ken Dodgen: Wrapping up with our guidance, we are maintaining our full year EPS guidance of $370 to $390 per share, adjusted EPS guidance of $420 to $440 per share, and adjusted EBITDA guidance of $440 to $460 million for the full year 2025. We are encouraged by the first quarter results, and we are now more confident that the higher end of our ranges are achievable. We will continue to evaluate market conditions and further assess our guidance as we progress through the year.
Ken: Wrapping up with our guidance, we are maintaining our full year EPS guidance of $3 70 to $3 90 per share adjusted EPS guidance of $4 20 to $4 40 per share and adjusted EBITDA guidance of $440 to $460 million for the full year 2025, we are encouraged by their first quarter results and we are now more confident that the higher end.
Ken: Our ranges are achievable, we will continue to evaluate market conditions and further assess our guidance as we progress through the year clearly we are on track for another strong year in 2025, and with that I'll turn it back over to David.
Ken Dodgen: Clearly, we are on track for another strong year in 2025.
David King: And with that, I'll turn it back over to Dave. Thanks, Ken. Before we open up the call to your questions, I want to highlight a few key takeaways from the quarter. First, I am proud of our employees for their efforts in performing their jobs with the highest levels of safety and embracing our strategy to drive higher margins and improve cash flow. We have a lot of teams in the field and in our offices working to deliver further success in these areas, and we are seeing the results of their hard work. We had a very good start to the year and believe we have the ability to achieve our goals for the year.
Thanks, Ken before we open up the call to your questions I want to highlight a few key takeaways from the quarter.
Ken: First I'm proud of our employees for their efforts in performing their jobs with the highest levels of safety and embracing our strategy to drive higher margins and improved cash flow we.
Ken: We have a lot of teams in the field and in our offices working to deliver further success in these areas and we are seeing the results of their hard work. We had a very good start to the year and believe we have the ability to achieve our goals for the year.
David King: Second, we are closely monitoring the risk and uncertainty that we and our customers face in the current environment. We have faced challenges in the past and believe we have demonstrated the ability to quickly adapt to the changes, both positive and negative, to our end market. While we do not know what lies ahead, we remain committed to serving our customers and providing them with safe, reliable, and quality performance. Finally, we see a tremendous number of opportunities ahead for all of our infrastructure services.
Ken: We are closely monitoring the risk and uncertainties that we and our customers face in the current environment.
Ken: We have faced challenges in the past and believe we have demonstrated the ability to quickly adapt to the changes both positive and negative to our end markets.
Ken: While we do not know what lies ahead, we remain committed to serving our customers and providing them with safe reliable and quality performance.
Ken: Finally, we see a tremendous number of opportunities ahead for all of our infrastructure services, we have a strong balance sheet and continue to drive strong free cash flow that provides us with the flexibility to continue to invest in for Morris take advantage of market opportunities and navigate through potential near term disruptions to meet the long.
David King: We have a strong balance sheet and continue to drive strong free cash flow that provides us with the flexibility to continue to invest in Primoris, take advantage of market opportunities, and navigate through potential near-term disruptions to meet the long-term needs of our customers and communities.
Ken: Term needs of our customers and communities.
Operator: We will now open up the call for your questions. At this time, I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone We request that you limit yourself to one question and one follow-up. We will pause for just a moment to compile the Q&A.
Ken: We will now open up the call for your questions.
Ken: Yes.
Ken: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad, we request that you limit yourself to one question and one follow up we will pause for just a moment to compile the Q&A roster.
Pete Lukas: Our first question comes from the line of Lee Jagoda with Sages Securities, your line is open. Hi, good morning. It's Pete Lukas for Lee. Talking about your customers, you had mentioned that they're concerned about prolonged economic uncertainty, but I think you said you did expect bookings to kind of accelerate in the second half.
Speaker Change: Our first question comes from the line of Lee Jagoda with CGS Securities. Your line is open.
Speaker Change: Hi, Good morning, it's Pete Lucas for Lee.
Speaker Change: You're talking about your customers you had mentioned that they're concerned about prolonged economic uncertainty.
Speaker Change: I think you said you did expect bookings to kind of accelerate in the second half can you maybe give us a little more color about the conversations you're having with customers as it relates to the pause that we're seeing in some of the new project signings and what are the main things that have to happen in your minds for that to unfreeze a bit.
David King: Can you maybe give us a little more color about the conversations you're having with customers as it relates to the pause that we're seeing in some of the new project signings and what are the main things that have to happen in your minds for that? Yeah, Pete, look, I don't think anything's frozen by any means, so let's just clarify that. We had already anticipated a little bit of a slowdown in Q1 and maybe a little bit in Q2 simply because of everything that we pulled forward. In terms of the conversations we're having with our customers, we're just continuing to regularly talk to them, like we always do, about what their queue of projects looks like, what they're engineering right now, and in particular right now, whether or not they're feeling any impact from the tariffs and all the discussion and the uncertainty that's going on right now.
Speaker Change: Yes, Pete look I don't think anythings frozen by any means so let's just clarify that.
Speaker Change: We had until we had already anticipated a little bit of a slowdown in Q1.
Speaker Change: And maybe a little bit in Q2 simply because of everything that we pulled forward in terms of the conversations we're having with our customers. We're just we're just continuing to regularly talk to them like we always do about what their queue of projects looks like.
Speaker Change: What their engineering right now and in particular, right now whether or not they're feeling any impact from the tariffs and all the discussion and the uncertainty that's going on right. Now clearly everybody is talking about it we haven't seen any customers make any major pauses at all right now.
David King: Clearly, everybody is talking about it. We haven't seen any customers make any major pauses at all right now. Again, the backlog build and the new contract signings is just kind of normal, just the normal cadence of uncertainty from quarter to quarter that we usually see.
Speaker Change: Again, the backlog build and the new contract signings as just.
Speaker Change: Just kind of normal.
Speaker Change: Just the normal cadence of uncertainty from quarter to quarter that we usually see.
David King: Yeah, and this is David, I might add, Ken, you know, our plan for the bookings in first quarter, we exceeded those by approximately 300 million in the first quarter. So our, our plan for the bookings is actually better than we expected in first quarter. Very helpful. Thanks.
Speaker Change: Yeah, and this is David I might add Ken our plan for the bookings in first quarter, we exceeded those by approximately $300 million in the first quarter. So our our plan for the bookings is actually better than we expected in first quarter.
Speaker Change: Very helpful. Thanks, and then just one more from me in terms of interest expense. It looks like the guide implies a significant uptick in expense versus Q1 for the balance of the year can you provide a little more color around this.
Ken Dodgen: And then just one more for me in terms of interest expense. It looks like the guide implies a significant uptake in expense versus Q1 for the balance. Can you provide a little more color around? Yeah, I don't know that we expect to see any uptick in interest expense. We're monitoring that right now, too. It definitely came in below our expectations in Q1. Part of that was lower interest expense, and part of it was better interest income than we had anticipated. So we're going to monitor that in Q2. If we see this trend continuing for the full year, we'll factor that into any change in guidance.
Speaker Change: Yes, I don't know that we should expect to see any uptick in interest expense, we're monitoring that right now to it definitely came in below our expectations in Q1.
Speaker Change: Part of that was lower interest expense and part of it was better interest income than we had anticipated so.
Speaker Change: We're going to monitor that and Q2, if we see this trend continuing for the full year, we'll factor that into any change in guidance.
Pete Lukas: Great, thanks. I'll jump back in the queue. Thanks, Pete.
Speaker Change: Great. Thanks, I'll jump back in the queue.
Speaker Change: Thanks Pete.
Speaker Change: Your next question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open.
Brian Russo: Yeah, hi, good morning. It's Brian Russo on for Julian. Good morning.
Speaker Change: Yes, hi, good morning, it's Brian Russo on for Julien.
Speaker Change: Good morning.
David King: Hey, I was wondering if you could just talk about the 24 to 26 financial targets from the Analyst Day. I see that the slide you had in the fourth quarter presentation was not included this quarter. I just wanted to get, you know, your confidence level in those targets, you know, given the macro environment, and then also the very strong. first quarter results, are you on track or ahead, or what are the pros and cons there? Yeah, Brian, good question. No, we are absolutely on track. We had a great year last year, of course. We're starting to see the margin improvement in the utility side of the business that we were expecting to see.
Speaker Change: Hey, I was wondering if you could just.
Speaker Change: Talk about the.
Speaker Change: 24 to 26 financial targets from the analyst day achieved that.
Slide you had in the fourth quarter presentation.
Speaker Change: It was not included this quarter just wanted to get.
Speaker Change: Your confidence level in those.
Speaker Change: Those targets given the macro environment and then also the very strong <unk>.
Speaker Change: First quarter results are you on track or ahead or in order to proceed comps there.
Speaker Change: Yes, Brian Good question no. We are absolutely on track, we had a great year last year of course, we're starting to see the margin improvement in the utility side of the business that we were expecting to see actually was expecting that later this year and into next year and so that's actually accelerated and more.
David King: I actually was expecting that later this year and into next year. And so, that's actually accelerated and more ahead of where I'd originally expected. And then, obviously, building on last year's strength in free cash flow, we are feeling very good about that as well. So, in general, I would say we are either on track or ahead of schedule in all of the metrics that we laid out.
Speaker Change: Head of where I had originally expected and then obviously building on.
Speaker Change: Last year's strength and free cash flow, we are feeling very good about that as well so.
Speaker Change: In General I would say we are either on track or ahead of schedule and all of the metrics that we laid out.
Brian Russo: Okay, great.
Speaker Change: Okay, Great and can you maybe talk a little bit more detail on.
David King: And can you maybe talk in a little bit more detail on the renewable revenue targets for a full year 25? I think it was previously $200 million, you know, to do the $250 million pull forward into 24. And then there's a $300 to $400 million annual runway post-2025. Given your comments and maybe some conservatism or, you know, macro, you know, concerns with customers, just wondering, post-2025, how you're viewing that run rate? Yeah, post-hook 2025, we are still expecting to be right back on track for our normal $300 to $400 million growth cadence. We've already got about 40 to 50% of 2026 booked and in backlog.
Speaker Change: The revenue.
Speaker Change: The renewable revenue targets for full year 'twenty five I think it was.
Speaker Change: Previously $200 million due to the.
Speaker Change: Forward into 'twenty four and then this is a $3 million to $400 million annual run rate post 2025, given your.
Speaker Change: And maybe some conservatism or.
Speaker Change: Macro.
Speaker Change: Concerns with customers just wondering post 2025.
Speaker Change: Viewing that that run rate for renewables.
Speaker Change: Yes post 2025, we are still expecting to be right back on track for a normal $300 million to $400 million growth cadence.
Speaker Change: We've already got.
Speaker Change: 40% to 50% of 2026, six booked and in backlog.
David King: And right now we're working with customers on projects that we should be booking over the next three quarters. So by the time we get to the end of the year, we'll have all of 2026 booked and part of 2027 booked. So feeling very good about that.
Speaker Change: Right now, we're working with customers on projects that we should be booking over the next three quarters. So that by the time, we get to the end of the year, we'll have all of 2026 book and part of 2027 book, So feeling very good about that.
Speaker Change: Okay.
David King: And then also, any update on the permanent CEO search? Is there is there a timeline or, you know, any specific criteria you're looking for or things that we should anticipate as we move through the year? Sure, the board's prioritizing finding the right candidate for the role rather than really setting a timeline.
Speaker Change: And then also.
Speaker Change: Any update on the permanent CEO search is there is there a timeline.
Speaker Change: Any specific criteria.
Speaker Change: Youre looking for or things that we should anticipate as we move through.
Speaker Change: For the year.
Speaker Change: Sure that the board's prioritizing finding the right candidate for the role rather than just really setting a timeline and the process is underway and is probably lastly to span a few quarters now.
David King: The process is underway and is probably likely to span a few quarters. I plan to continue to execute on our strategy to invest in our high-growth markets, including renewables, power delivery, natural gas generation, while continuing strong results in our other businesses through consistent execution. This strategy was developed by our executive team with the support of the board, and we believe it's the right strategy. A couple of attributes that I would say we sought after in candidates would be public company executive experience and experience with acquiring and integrating businesses.
Speaker Change: We plan to continue to execute on our strategy to invest in our high growth markets, including renewables power delivery of natural gas generation, while continuing strong results in our other businesses through consistent execution.
Speaker Change: This strategy was developed by our executive team with the support of the board and we believe it's the right strategy.
Speaker Change: The attributes that I would say we saw it after it and candidates would be public company executive experience and experience with acquiring and integrating businesses.
Operator: Again, before going to the next question, please limit yourselves to one question and one follow-up.
Speaker Change: Again before going to the next question. Please limit yourself to one question and one follow up. Your next question comes from the line of Brent Thielman with D. A Davidson your line is open.
Brent Thielman: Your next question comes from the line of Brent Thielman with DA Davidson. Your line is open. Hey, thanks. Good morning. I just had a question on the utility segment and really strong margin performance to start the year.
Brent Thielman: Hey, Thanks, good morning.
Brent Thielman: Just had a question on the utility segment, I mean really strong margin performance to start the year and Ken I just wanted to get a sense from you what are the variables you need to see through the rest of the year that might push you above those that three utilities margin target range.
Ken Dodgen: And Ken, I just wanted to get a sense from you what are the variables you need to see through the rest might push you above. for a Utilities Margin. Sure, we're expecting modest growth in the utilities primarily due to the strong storm year we had in 2024 and an expected slower year for gas operations. But that being said, gas operations did have a better than expected Q1. We certainly see growth pick up if the supply chain continues to show improvement, although most of our customers have adjusted to the longer lead times. Project work still remains the focus, and we do plan to book more projects this year, but it's not really required to see those continued progress in our margins.
Brent Thielman: Sure.
Brent Thielman: <unk> modest growth in the utilities, primarily due to a strong storm year, we had in 2024.
Brent Thielman: And an expected slower year for gas operations, but that being said gas operations, we did have a better than expected Q1.
Brent Thielman: We certainly see growth pick up if the supply chain continues to show improvement, although most of our customers have adjusted to the longer lead times.
Brent Thielman: Work still remains a focus and we do plan to book more projects. This year, but it's not really required to see those continued progress in our margins.
Ken Dodgen: Okay.
David King: And then on energy, could you talk, you did mention you're in pursuit of some nat gas generation opportunities. Any way to size that potential for Primoris that could be reflected in bookings as we progress through the year? Yeah, I think you know we have extensive experience as a company in building various types of facilities, and we're preparing to be ready to help the customers in a lot of these build-outs. You know, we're currently looking at or vetting close to about $1 billion in natural gas projects tied to data centers throughout the U.S. in the coming years, and there's certainly other opportunities outside data center development, too, so the funnel of opportunities is very attractive to us.
Brent Thielman: Okay, and then on energy could you talk you did mention your per in pursuit of some nat gas generation opportunities any way to size that potential for Morris.
Brent Thielman: Could be reflected in bookings as we progress through the year.
Brent Thielman: Yes, I think you know we have extensive experience as a company and build in various types of facilities and we're preparing to be ready to help the customers that allow these build outs. We're currently looking at are of adding close to about $1 billion and natural gas projects to add the data centers throughout the U S. In the coming years and there are certainly other off.
Brent Thielman: Opportunities outside data center development too so the funnel of opportunities is very attractive to us.
David King: I believe, as you see, the power grid begin to be built out. You'll need to supply power to that power grid, so that also gives opportunities for our power generation segment.
Brent Thielman: Believe as you see the power grid begin to be able to be built out youll need to supply power to that power grids. So that also gives opportunities for our power generation segment.
Kevin Gainey: Your next question comes from the line of Kevin Gainey with Thompson Davis. Hey guys, great quarter. Thank you.
Speaker Change: Your next question comes from the line of Kevin <unk> with Thompson Davis Your line is open.
Brent Thielman: Yeah.
Speaker Change: Hey, guys great quarter.
Brent Thielman: Thank you.
David King: Maybe what we can do is kind of dissect a little bit more in the utility segment. Maybe you guys could talk to conversations that you're having. with your communication. Power Delivery. deal with not only the change in dynamics with tariffs, but just demand.
Brent Thielman: Maybe we can do is kind of.
Brent Thielman: Dissect a little bit more on the utility segment.
Brent Thielman: Maybe if you guys could talk to the.
Brent Thielman: The conversations that you're having with your communication customers in the power delivery customers as they kind of.
Brent Thielman: Deal with not only like the change in dynamics with tariffs, but just demand.
David King: Well, let me start with a smaller one first. On the communications side, you've seen that we've continued to gain ground and increase our revenue there each quarter. We're still being asked by customers to increase growth in certain areas for them, so you'll continue to see that. You know, relative to the power side of the business, you know, the major capitals programs that you've seen recently announced by utilities help to drive growth for us, as I briefly mentioned earlier, not only in our T&D businesses, but also these new grids will need to be repowered and supply those power needs will drive growth for us in the power generation businesses.
Brent Thielman: Well, let me start with the smaller one first on the communication side, you've seen that we've continued to gain ground and increase our revenue there each quarter.
Brent Thielman: We're still being asked by customers to increase growth in certain areas for them. So you'll continue to see that.
Brent Thielman: Relative to the power side of the business.
Brent Thielman: The major capital programs that you've seen recently announced by the utilities helped to drive growth for us as I briefly mentioned earlier not only in our T&D businesses, but also these new grads will mean to be re powered and supply those power needs will drive growth for us in the power generation businesses are class specifically.
David King: Our clients, specifically two of them, have been talking with us. They've been proposing this for several quarters, and Primoris has acted pretty proactively in looking at our training centers, developing additional resources, required equipment and things to serve those needs. So we really see that as a pretty bright future for the next several years of build out. Appreciate the color there.
Brent Thielman: Two of them have been talking with us they've been proposing this for several quarters and for Morris has acted pretty proactively and looking at our training centers developing additional resources required equipment and things to serve those needs. So we really see that as a pretty pretty bright future for the next several years a buildup.
Brent Thielman: Yes.
Brent Thielman: I appreciate the color there and then maybe we can talk about.
Ken Dodgen: And then maybe we can talk about. kind of balance sheet cash flow, there's Uptick and Payable. can maybe what's driving that and then it just seems relatively high and then maybe how we can how the outlook for cash flow is in the back.
Brent Thielman: Balance sheet cash flow.
Brent Thielman: Uptick in payables.
Speaker Change: Ken maybe what's driving that and then it just seems relatively high and then maybe how we can how the outlook for cash flow is in the back half.
Ken Dodgen: Yeah, look, AP was purely just timing of quarter end. I expect that to kind of normalize over the course of the next couple of quarters, so nothing unusual there. And then with respect to cash flow for, you know, the balance of the year, you know, we had forecasted and talked about two months ago the fact that operating cash flow would be kind of in that $2 to $225 million range. I still feel very confident about that this year, and actually with the strength of Q1, I think it may actually have an opportunity to be as much as $250 or more.
Brent Thielman: Yes.
Brent Thielman: AP was purely just timing a quarter and I expect that to kind of normalize over the course of the next couple of quarters. So nothing unusual there.
Brent Thielman: With respect to cash flow for the balance of the year.
Brent Thielman: We had forecasted.
Brent Thielman: <unk> talked about two months ago. The fact that operating cash flow would be kind of in that 2% to $225 million range I still feel very confident about that this year and actually with the strength of Q1, I think it may actually have an opportunity to be as much as $2 50 or more.
Jerry Revich: Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is... Hi, good morning.
Speaker Change: Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open.
Speaker Change: Hi, Good morning. This is Adam <unk> on for Jerry today.
Adam Bubes: This is Adam Bubes on for Jerry. The utility's growth has been pretty robust in the last couple of quarters, up double digits. I think in Investor Day, you folks outlined a 2 to 4 percent utility's revenue growth outlook. So, can you just update us on how you're thinking about puts and takes around the growth outlook in utilities in the balance of the year? And from here, you know, on one end, you know, there's rising power demand on the other. You folks are continuing to emphasize quality of contracts, so just the puts and takes around growth.
Speaker Change: The utilities growth has been pretty robust in the last couple of quarters up double digits I think in the Investor day, you folks outlined at 2% to 4% utilities revenue growth outlook to can you just update us on how youre thinking about puts and takes around the growth outlook and utilities in the balance of the year and from here you know on one hand.
Speaker Change: There is driving power demand on the other you folks are continuing to emphasize.
Speaker Change: Quality of contracts. So just the puts and takes around growth from here.
David King: Yeah, look, on the utility side, we were focused, as you pointed out, on more margin improvement rather than revenue growth. We are absolutely executing on the margin improvement that we talked about. The nice thing about it is, without really focusing on revenue growth, that's happening anyway because of the growth in demand. And so far, that's mostly been distribution with some transmission and substation. And what's nice... Adam, is that right now we're seeing more opportunities, and David alluded a little bit of this, we're seeing more opportunities for transmission substation projects than we'd originally anticipated for 2026.
Speaker Change: Yes look I'll bet you.
Speaker Change: Utility side.
Speaker Change: We were focused as you recall as you pointed out on more margin improvement rather than revenue growth.
Speaker Change: We are we are absolutely executing on the margin improvement that we've talked about the nice thing about it is without really focusing on revenue growth that's happening anyway because of the growth in demand.
Speaker Change: And then and so far that's mostly been distribution with some transmission and substation and whats nice.
Speaker Change: Adam is that right now, we're seeing more opportunities and David alluded a little bit of as we're seeing more opportunities for transmission substation projects than we'd originally anticipated for 2026 and a lot of that is just because.
David King: And a lot of that is just because after we did our analyst day a little over a year ago, the load growth and demand growth projections ticked up, as well as the increased need for generation. So, a few things that are working to our advantage there that should help us to exceed our goals.
Speaker Change: After we did our analyst day, a little over a year ago.
Speaker Change: The load growth and demand growth projections ticked up as well as.
Speaker Change: The increased need for generation so a.
Speaker Change: A few things that are working to our advantage there that should help us to exceed our goals.
David King: Great. And I'll also add...
Speaker Change: Okay, Great and I will also add.
David King: Go ahead. Please go ahead. I was going to say, I'll also add with Ken, as we see that demand increasing, we are still very selective on the projects we contract for, making sure that we've got good visibility into the customer's ability to procure the materials so that we don't have any scheduled slippages and continuing to be very diligent in the way that we accept contract terms, making sure the risk profile meets our risk profile.
Speaker Change: No go ahead. Please go ahead.
Speaker Change: I was going to say I'll also add with Ken as we see that demand increasing we are still very selective on the projects we contract for making sure that we've got good visibility into the customers' ability to procure the materials. So that we don't have any schedule slippage is and continuing to be very diligent in the way that we accept the contract term.
Speaker Change: <unk>, making sure the risk profile meets our risk profile.
David King: Terrific.
David King: And then it sounds like you folks aren't seeing any positives in projects and activity remains strong, but we are in a choppy economic environment. So can you just talk about to what extent you can move resources around between end markets if we see an uneven demand environment for parts of your business? Oh, sure. Absolutely. You know, we've got the ability to grow the resources, as I mentioned, and we've got the ability to move those resources around to different end markets. I think you saw as we had slowdowns in our pipeline and field services areas, we were able to move those resources over to our renewables area, as well as into some of our data center construction projects and things.
Terrific.
Speaker Change: It sounds like you folks aren't seeing any positives in projects and activity remains strong.
Speaker Change: But we are in a choppy economic environment can you just talk about to what extent you can move resources around between end markets. If we see an uneven demand environment for parts of your business.
Speaker Change: Oh sure absolutely.
Speaker Change: We've got the ability to grow the resources as I mentioned and we've got the ability to move those resources around to different end markets. I think you saw as we had slowdowns in our pipeline and field services areas, we were able to move those resources over to our renewables area as well as into some of our data center construction projects and things.
David King: So, the ability to move our resources around, and for that matter of fact, anything to do with our fleet is one of the really advantages I think Primoris has when we talk with customers in delivering their projects. We've not seen any slowdowns on any of the projects that we've booked for, and even the ones that appear to be going to be booked toward the end of this year. We're not seeing any slowdown from our customers, and we're not hearing anything at all that would concern us at this time.
Speaker Change: So the ability to move our resources around and for that matter of fact anything to do with our fleet is it's one of the really advantages I think for Morris has when we talk with customers and delivering their projects.
Speaker Change: We've not seen any slowdowns on any of the projects.
Speaker Change: We booked far and even the ones that appear to be going to be booked toward the end of this year.
Speaker Change: Not seeing any slowdown from our customers and we're not hearing anything at all that would concern us at this time.
Sangita Jain: Your next question comes from the line of Sangita Jain with KeyBank Capital Markets. Your line is... Hey, good morning. This is actually Alex on for Sangita.
Speaker Change: Your next question comes from the line of thank you gentlemen.
Speaker Change: Key Bank capital markets. Your line is open.
Speaker Change: Yeah.
Hey, Good morning. This is actually Alex on first thank you.
David King: So first question, as we think about the 10 to 12% energy segment margin outlook for this year, how do we think about upside and downside drivers here through the year, whether it's tariffs, execution or something else? And I think in that segment, it sounded like you expect solar closeouts this year. Is there any sense on how big these could be and when they could come in the year?
Speaker Change: Okay. So first question as we think about the 10% to 12%.
<unk> segment margin outlook for this year, how do we think about upside and downside drivers here through the year, whether it's tariffs execution or something else and I think in that segment. It sounded like you expect solar Closeouts this year.
Speaker Change: Is there any sense on how big this could be and when that could come in the year.
David King: Yeah, on the solar closeouts, it's still a little early, you know, a lot of projects were just started, as a matter of fact, in Q1, so it'll be later in the year before we got really a good sense to that. But then with respect to upside and downside, look, margin closeouts across the entire spectrum of projects, in particular solar and in our industrial business, in our natural gas power plant work, is really we're going to see most of the margin upside, in addition to just, you know, potential revenue growth or additional opportunities we see maybe in and around pipeline this year back in the back half of the year.
Speaker Change: Yeah on the solar Closeouts, it's still a little early.
Speaker Change: A lot of projects were just started as a matter of fact in Q1. So it will be later in the year before we got really a good sense of that.
Speaker Change: And then with respect to upside and downside look margin closeouts across the entire spectrum of projects.
Speaker Change: In particular solar and in our industrial business and our natural gas power plant work is really we're going to see most of the margin upside in addition suggest potential.
Speaker Change: Potential revenue growth or additional opportunities, we see maybe in and around pipeline. This year back in the back half of the year.
David King: Look, on the downside, you know, there's not a whole lot that we're really worried about right now, other than, you know, we always worry about weather every single quarter, surprises on weather, heavy rains, extended rains can obviously slow down projects and drive a little bit of increased costs. So we'll continue to monitor that from quarter to quarter as well.
Speaker Change: On the.
Speaker Change: On the downside theres not a whole lot that we're really worried about right now other than we always worry about whether every single quarter surprises on weather heavy rains extended range can obviously slow down projects and drive a little bit of increased costs. So we'll continue to monitor that from quarter to quarter as well.
David King: Yeah, and I would add, you know, when Ken talks about some of these solar project closeouts, we are still seeing a very large demand for our services. I think we're tracking currently somewhere close to $8 to $10 billion of opportunities over the next several years that we're looking to evaluate. So we really don't see that as a slowdown for us. It's more toward the back half of the year, but we certainly don't see that as a slowdown in bookings. Got it. Very helpful.
Speaker Change: Yeah, and I would add one.
Speaker Change: <unk> talks about some of these solar project Closeouts, we are still seeing.
Speaker Change: A very large demand for our services I think we're tracking currently somewhere close to $8 billion to $10 billion of opportunities over the next several years that we're looking to evaluate so we really don't see that as a slowdown parse it more toward the back half of the year, but we certainly don't see that as a slowdown in bookings.
Speaker Change: Got it very helpful and then.
David King: And then, um...
David King: Can you talk about your recent M&A discussions, if anything's changed recently, if anything's progressing there, where we could potentially see a deal this year? I think the strategy is primarily to target power delivery tokens, correct me if I'm wrong. Are there certain geographies or capabilities you're looking to fill there?
Speaker Change: Can you talk about your recent M&A discussions if anything has changed recently if anything is progressing there where we could potentially see a deal this year.
Speaker Change: I think the strategy is primarily to target power delivery tuck ins correct me, if I'm wrong or are there certain geographies or.
Speaker Change: Capabilities, you're looking to fill there just any update there. Thank you.
David King: Is there any update there? Well, I would probably tell you all of the above would be the way I would answer that question with you. Let me comment that I'm not going to speak specifically about any particular type of acquisition, but I would just say that our appetite for acquisitions has not decreased at all. And as you've seen us continue to pay down debt and position ourselves, I think we can take advantage of a potential acquisition. And so our eyes are wide open.
Speaker Change: Well I would probably tell you all of the above would be the way I would answer that question with you. Let me, let me comment that yes.
Speaker Change: Not going to speak specifically about any particular type of acquisition.
Speaker Change: But I would just say that our appetite for acquisitions is not not decreased at all and as you've seen us continue to pay down debt and position our sales I think we can take advantage of.
Speaker Change: Potential acquisition and so our eyes are wide open I don't know if you want to add anything to that Ken or not no. Other than we continue to be very disciplined about acquisitions.
Ken Dodgen: I don't know if you want to add anything to that, Ken, or not. No, other than we continue to be very disciplined about acquisitions. And we're not going to do one just for the sake of adding revenue. We're going to be disciplined. We're going to look for ones that meet our strategic hurdles as well as all of our financial hurdles. And so far, we haven't found that yet.
Speaker Change: And we're not going to do one just for the sake of adding revenue we're going to be disciplined we're going to look for ones that would meet our strategic hurdles as well as all of our financial hurdles and so far we haven't found that yet.
Drew Chamberlain: Your next question comes from the line of Drew Chamberlain with J.P. Morgan. Your line is... Yeah, good morning, guys, and thanks for taking the questions.
Jerry Chamberlain: Your next question comes from the line of Jerry Chamberlain with J P. Morgan Your line is open.
Jerry Chamberlain: Yeah, Good morning, guys and thanks for taking the questions.
Jerry Chamberlain: First one just on <unk>.
Drew Chamberlain: First one, just on the 2025 guide, I appreciate that you guys don't procure panels or battery cells, but can you talk about the risk of imports getting tariffed and how much of the projects planned for this year already have panels or cells already into the U.S. and what that could mean for a risk to this year?
Jerry Chamberlain: The 2025 guide I appreciate that you guys don't.
Speaker Change: Procure panels or battery cells, but can you just talk about the risk of.
Speaker Change: Imports getting getting tariffs and how much of the how much of the projects planned for this year already have them.
Speaker Change: Panels ourselves already into the U S and what that could be or what that could mean for a risk to this year.
David King: Sure, I'll start out. Relative to our solar, and as I think we mentioned, we're really not seeing tariffs impact our business really at all. In the battery energy storage side, sure, there's some battery that could be impacted. It's kind of interesting. I will tell you, all of our materials are currently on site for our projects, and the ones in the battery area that are not. In a recent conversation we've had with our customer, it's not a matter of whether they're going to purchase them or not. They're trying to look and purchase them at the right time, so they've actually asked us in our execution plans to look at build-arounds so that those batteries can be put in at a later date, and I think that's what you'll see a lot of the customers do.
Speaker Change: Sure I'll start out.
Speaker Change: Relative to our solar.
Speaker Change: I think we mentioned.
Speaker Change: We're really not seeing tariffs impact our business really at all in the battery energy storage side sure Theres some battery.
Speaker Change: That could be impacted.
Speaker Change: It's kind of interesting.
Speaker Change: I will tell you all of our materials are currently owns that for our projects and the ones in the battery area that are not.
In a recent conversation we've had with our customer it's not a matter of whether theyre going to purchase them or not they are trying to look and purchase them at the right time, so that actually asked us in our execution plans to look at build around so that those batteries can be put in at a later date and I think thats, what youll see a lot of the customers and that it is.
David King: And that it's really a small part of the project in the overall grand scheme of things, Drew. So I think that's the bigger issue, is that even if the batteries get delayed or the battery storage gets scaled down a little bit because of the impact of tariffs, relative to our total renewables business, it's still very, very small and should not have much of an impact. Right, right.
Speaker Change: Really a small part of the project in the overall Grand scheme of things. So I think that's the bigger issue is that even if the batteries get delayed or the battery storage gets scaled down a little bit because of the impact of tariffs relative.
Speaker Change: Relative to our total renewables business, it's still very very small and should not have much of an impact.
Drew Chamberlain: Okay, thank you.
Speaker Change: Right right. Okay. Thank you and then just moving onto the bookings here.
Drew Chamberlain: And then just moving on to the bookings here, kind of a multi-part question. But first, I think you mentioned, David, at the start of the Q&A, that there was maybe you exceeded your bookings expectations by $300 million or so in the quarter. Can you talk a little bit about where those wins came from, what segment of the business? And then, I think, Ken, you mentioned that you expected a similar type profile of bookings for the year. But do you think of it as like the same magnitude, where you saw an energy 1.5 booked a bill roughly in the second half of last year?
Speaker Change: A multipart question, but first I think you've mentioned David I'm going to start the Q&A. There was maybe you exceeded your bookings expectations by $300 million or so in the quarter can you talk a little bit about where where that where those wins came from what segment of the business.
Speaker Change: And then I think Ken you mentioned that you expect a similar type of profile of bookings for the year, but do you think of it as like the same magnitude.
Speaker Change: Where you saw in energy.
Speaker Change: One point to one five book to Bill roughly in the second half of last year do you think that's possible again, and maybe are our customer conversations changing for 2026 projects or maybe even into 2027 projects on.
Drew Chamberlain: Do you think that's possible again? And maybe our customer conversations changing for 2026 projects, or maybe into 2027 projects, as uncertainty in the market is looming?
Speaker Change: Uncertainty in the market as women.
David King: Let me start out and answer your question first, and then I'll ask Ken to talk to you about the book to build toward the back half and things. You know, we saw a great uptick on the industrial side in the bookings around data centers, things of that nature. We also saw increases in just about every one of our product lines, but the major majority of it was in the industrial sector. Yeah, and look, Drew, with respect to, you know, the cadence for last year, yeah, I think we're definitely looking at a Q3 and Q4 that's comfortably above one.
Speaker Change: Let me start out in answering your question first and then I'll ask Nick can talk to you about the book to bill toward the back half in <unk>.
Speaker Change: We saw a great uptake on the industrial side into bookings around data centers things of that nature.
Speaker Change: We also saw increases in just about every one of our products.
Speaker Change: But the major majority of it was in the industrial sector, yes.
Speaker Change: Yes.
Speaker Change: Drew with respect to the cadence for last year, Yes, I think it's I think we're definitely looking at a Q3 and Q4.
Speaker Change: This comfortably above one what is actually going to be its little too early to tell because again as you know.
Ken Dodgen: What it's actually going to be, it's a little too early to tell because, again, as you know, the signing of projects can vary from quarter to quarter, but we feel really strong about how the year's going to come out. And, again, despite the fact that we were below one for the quarter, we beat our expectations, as David pointed out, by $300 million. So that just shows, you know, a little bit of the uncertainty from quarter to quarter.
Speaker Change: The signing of projects can vary from quarter to quarter, but we feel really strongly about how the year is going to come out and.
Speaker Change: And despite and again despite the fact that we were below one for the quarter, we beat our expectations as David pointed out by 300 million so that just shows.
Speaker Change: A little bit of the uncertainty from quarter to quarter.
Julio Romero: Your next question comes from the line of Julio Romero with. Thedote & Co. Your line is open.
Javier Rodriguez: Your next question comes from the line of Javier Rodriguez.
Speaker Change: Sidoti and company your line is open.
Justin: Good morning, this is Justin on for Julio. Can you talk about your level of comfort of bidding for new projects, accepting new work, and just executing in the broader operating environment given trade policy and tariff uncertainty? Yes, the number of opportunities that we're continuing to see hasn't really changed in that environment. You know, might we see some in 2026 and beyond, maybe get pushed out a little bit, possibly, but right now what we're seeing is, as I mentioned earlier, really no pushing out of those projects at all. Now, relative to, you know, execution side of those projects, I think you've seen Primoris be very diligent that we make sure we don't take on work that we cannot perform, and so, as you know, we've built various teams in our solar groups to support work.
Speaker Change: Good morning, this is Justin on for Julio.
Speaker Change: Can you talk about your level of comfort of bidding for new projects accepting new work and just executing in the broader operating environment, given trade policy and tariff uncertainty.
Speaker Change: Yes.
Speaker Change: The number of opportunities that we're continuing to see it hasnt really changed in that environment.
Speaker Change: Might we see some in 2026 and beyond maybe pushed out a little bit, possibly but right now what we're seeing.
Speaker Change: As I mentioned earlier really no pushing out of those projects at all now relative to execution side of those projects I think you've seen from RSV very diligent that we make sure. We don't take on work that we cannot perform and so as you know we built various teams and our solar groups to support work we're building various.
David King: We're building various teams in our industrial side to handle the data center growth and things of that nature. So I don't really see an issue relative to the execution, and as I mentioned, we're very diligent on the types of contracts we take on relative to risk, so no, not seeing any concerns there.
Speaker Change: Teams in our industrial side to handle the data center growth and things of that nature. So I don't really see an issue relative to the execution and as I mentioned, we're very diligent on the types of contracts, we take one to two relative to risk. So.
Speaker Change: Not seeing any concerns there.
David King: Great, thanks for the caller there.
Speaker Change: Great. Thanks for the color there and then on solar can you speak to the potential timing impact of the reconciliation bill what that would mean for any existing or a tax benefits and what youre hearing from your customers.
David King: And then on solar, can you speak to the potential timing and impact of the reconciliation bill, what that would mean for any existing IRA tax benefits, and what you're hearing from your customers? Yeah, I mean, we can't even begin to guess when that's going to get done. All I can tell you is we're talking with our customers daily, weekly, and monthly about what's going on, and we're mapping out all the scenarios, and basically we feel, and our customers feel, like we're prepared for whichever outcome occurs.
Speaker Change: Yes, we can.
Speaker Change: And even begin to guess when that's going to get done all I can tell you is we're talking with our customers daily weekly and monthly about what's going on and we're mapping out all the scenarios and basically we feel and our customers feel like we are prepared for whichever outcome occurs.
Avi Jaroslawicz: Your next question comes from the line of Avi Jaroslawicz with UBS Financial. Your line is.
Speaker Change: Your next question comes from the line of <unk> <unk> with UBS financial your line is open.
David King: Hey, good morning. So, you noted that within power delivery, you saw some customers release work faster than you expected. wondering why you think that is? Are they trying to get ahead of some inflationary pressures they're expecting in the back half? Or should we think of this more as just an acceleration? I think what you're seeing is, as you probably notice on any power generation equipment, you've got to get in the delivery cycle on those turbines. And so what you're seeing is people that are saying, look, I've already been in the delivery cycle, so they're saying, let's move forth with this project.
Speaker Change: Hey, good morning.
Speaker Change: So you noted that within power delivery thoughts and customers release work faster than you expected. This year. Just wondering why you think that is are they trying to get ahead of some inflationary pressures are expecting in the back half or.
Speaker Change: Should we think of this more as just an acceleration.
Speaker Change: I think what Youre seeing is.
Speaker Change: You probably notice on any of power generation equipment, you've got to get in and the delivery cycle on those turbines and so what youre, saying is people that are saying look I have already been in the delivery cycles. So theyre, saying, let's move forward with this project. So I wouldn't call. It an acceleration of the project that would more permit that theyre just taking advantage of this.
David King: So I wouldn't call it an acceleration of the project. I would more term it that they're just taking advantage of the supply chain that they've been able to get into and start moving quicker with their project. And also some of them, the timing for their projects, especially around the data centers, have got key dates for them toward the end of the project. And so it's beneficial to move forth now.
Speaker Change: Apply chain that they've been able to get into and start moving quicker with their project and also some of them the timing for their projects, especially around the data centers have got key dates for them towards the end of the project and so it's beneficial to move forth now.
David King: and I'll just add briefly to what David said. We were fortunate that some of our customers had some positive results on rate cases last year and what that turned into is they immediately started engineering work that enabled us to get started a little bit earlier this year too. Okay, got it.
Speaker Change: And I'll, just add briefly to what David said.
Speaker Change: So we were fortunate to some of our customers had some positive results on rate cases last year and what that turned into is they immediately started engineering work.
Speaker Change: <unk> us to get started a little bit earlier this year too.
Speaker Change: Okay got it that makes sense.
David King: And then just in terms of your guidance, I appreciate not wanting to be too aggressive there, but I'm just kind of curious what you would need to see happen to raise the guys. I'll start out and then I'll let Ken add from a financial perspective, but, you know, we tend to... We tend to want to make sure that any of this rhetoric that we're hearing relative to tariffs and other policy issues settle down a little bit. We've certainly got good visibility into the year. I think you heard us say that we were going to be on the high side, if not better, but at the same point in time.
Speaker Change: And then just in terms of your guidance.
Speaker Change: I appreciate not wanting to be too aggressive there but.
Speaker Change: So just kind of curious what you would need to see happen to raise the guidance.
Speaker Change: I'll start out and I'll, let Ken add from a financial perspective, but.
Speaker Change: We turned up.
Speaker Change: We tend to want to make sure that any of this this rhetoric or hearing relative to tariffs and other policy issues settled down a little bit.
Speaker Change: We've certainly got good visibility end of the year I think you have heard us say that we were but not be on the high side, if not better but at the same point in time.
David King: We just need a little bit more visibility around this tariffs and everything else before we're comfortable in making that decision.
Speaker Change: Need a little bit more visibility around this tariffs and everything else.
Speaker Change: Before we're comfortable in.
Speaker Change: In making that decision.
Speaker Change: Okay.
Operator: Okay. Before going to the next question, again, if you would like to ask a question, press star 1 on your telephone.
Speaker Change: Okay. Thanks.
Speaker Change: Before going to the next question again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of business.
Bill Dezellem: Your next question comes from the line of Bill Dezellem with Titan Capital. Your line is... On some of the projects, the BESS section of it is not the major portion of the project. So, a lot of them are just waiting to make sure that the timing of when they want to actually purchase those. The decision to build has already been made. It's just a matter of, you know, what their overall economics look with the increased cost of the battery side of that project. I'm trying to remember the last half of your question. I'm sorry. Could you repeat the last half of your question?
Speaker Change: <unk> with Titan capital Your line is open.
Speaker Change: And thank you first of all you partially answered the question relative to the battery situation and ultimately what is the solution that the customers are looking at.
Is it buying higher priced or higher tariff batteries is it simply waiting for.
Speaker Change: For batteries or are you seeing some.
Speaker Change: Some utilities basically saying that they will augment with natural gas power generation.
Speaker Change: Are those dynamics working there please.
Speaker Change: On some of the projects that the SaaS section of it is not a major portion of the project. So a lot of them are dish waiting to make sure that.
Speaker Change: The timing of when they want to actually purchase those.
Speaker Change: The decision to build has already been made it's just a matter of what.
Speaker Change: Their overall economics look with the increased cost of the of the battery side of that project.
Speaker Change: I'm trying to remember the last half of your question I'm, sorry could you repeat the last half of your question.
David King: Right, David.
David King: Just if they were incorporating in natural gas powered plants instead to supplement, instead of doing the battery side. No, not really. They're still staying with their original concepts. If their concept has some natural gas generation along with battery, then they do that, but they're really not changing their overall scheme because of the battery supply.
Speaker Change: David just if they were incorporating in natural gas power plants, and instead to supplement instead of doing the batteries.
Speaker Change: No not really.
Speaker Change: There are still staying with their original concepts.
Speaker Change: If theyre concept has some natural gas generation, along with battery than they do that but they're really not changing their their overall scheme because of the battery supplier.
David King: I will turn the call back over to David King for closing remarks. Thanks again to our employees for a great first quarter and our investment community for trust in our company. We look forward to updating you next quarter.
David King: I will turn the call back over to David King for closing remarks.
David King: Thanks, again to our employees for a great first quarter and our investment community for trust in our company. We look forward to updating you next quarter have a good day.
Operator: Have a good day.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
David King: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
David King: Okay.
David King: Okay.
David King: [music].