Q2 2025 Primoris Services Corp Earnings Call
Thank you for standing by.
My name is Kathleen and I will be your conference operator today.
At this time, I would like to welcome everyone to the primary Services Corporation, second quarter, 2025 earnings conference call and webcast.
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After the speakers remarks, there will be a question and answer session.
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Thank you. I would like to turn the call over to Blake Hawk, vice president, of investor relations. Please go ahead.
Good morning and welcome to the pora. Second quarter 2025 earnings conference call.
Join me today with prepare comments or David King, chairman and interim, president, and chief executive officer, and Kim dodging, Chief Financial Officer.
Before we begin, I'd 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 therefore subject to various risks and uncertainties actual results May differ materially from our projections and expectations.
These risks and uncertainties are discussed, and our reports filed with the SEC.
Our forward-looking statements represent our Outlook as of today. Only August 5th, 2025.
We disclaim any obligation to update these statements except as may be required by law.
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 second quarter 2025 earnings press release which was issued yesterday.
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 second quarter, 2025 financial and operational results.
For Morris, had a record second quarter, achieving new highs in the revenue, operating income and earnings.
Our results exhibit. The effectiveness of our financial and operational strategy to grow profitably through disciplined Capital, allocation even amid an unpredictable tariff and Regulatory environment, our portfolio of essential infrastructure Solutions continues to thrive.
This is a testament to our hard-working teams across the United States and Canada.
Their commitment to Safe, productive and quality execution, as well as a customer-centric approach serve as a foundation of our success.
We see the opportunity to build on this success in the years ahead as per Morris plays, a key role, in providing solutions to the infrastructure needs in North America.
We have highlighted in the past, the growing need for power generation and the means to deliver that power to the end user. We have the capability to do both and execute very well.
In addition to increased industrial and residential power, demand emerging Technologies and data center development are driving the growth and power generation and consumption.
While less than 10% of our Revenue. Today is directly tied to Data Centers. We see significant opportunities on the horizon to increase our exposure.
We are currently evaluating nearly 1.7 billion dollars of work related to Data Centers, estimated to be contracted by year end, and we are optimistic that we will win our fair share of this work.
For Morris offers a variety of services to these projects, including early stage site, preparation power generation, utility infrastructure and fiber Network Construction.
Essentially, we are a premier partner for comprehensive solutions outside the walls of the data center, in a market experiencing very tight supply for these services.
Beyond work directly tied to Data Centers. The power generation and electric utility needs are even more substantial. We are trusted providers to our nation's utilities with extensive plans to build, transmission lines and substations in the coming years.
We believe this will be a multi-year opportunity. That could last for a decade or longer, there is an enormous amount of upcoming work that fits very well with our capabilities without having to expose ourselves to unnecessary risk on large lump. Sum projects with potentially less attractive, margins.
On the power generation side, we are preparing and submitting bids for more than 2.5 billion dollars in natural gas, generation projects planned in the coming years.
There's also between 20 and 30 billion dollars of solar projects, planned through 2028 that are on our sales radar.
As a top tier provider for both types of generation, we are optimistic about our future and power generation to drive organic growth and margin expansion.
I'll now turn to our performance for the quarter by segment.
The utility segment revenues were up, double digits from the prior year, the gas operations business, which experienced slower activity. Last year due to pending rate case, discussions saw significant Improvement in revenue and improved margins several new projects on the west coast at increased MSA work. In the midwest have led to better than expected productivity and activity during the quarter and year to date.
There are rate cases still being determined in certain markets and some dual utility clients are allocating more resources to higher priority, power delivery services.
However, the outlook for gas operations is trending more favorably than anticipated.
We are seeing more utilities opting to use, third-party service providers and scheduling extensive buildout in the Midwest, and Southeast that will support revenue and margin growth.
Communications revenue and margins were also up. Double digits from the prior year on continued growth. And fiber to the home, programs, and network bills, supporting data centers.
We received substantial investment in fiber and our outstanding execution has resulted in customers. Requesting us to enter new geographies,
There is also a growing opportunity for high margin, EPC Long, Haul and middle mile Network, projects, driven by data centers.
In the multi-year guidance, we let you out in April of 2024, we projected low single-digit growth to gas, operations, and the communication markets.
However, these growth projections are likely understated as the current backdrop in these markets appear to be trending more positively and expected.
In power delivery pipeline Revenue increased from the prior year, but the real story of the quarter was margin Improvement. We are seeing the results of our multi-pronged strategy to drive higher margins, and power delivery.
Better rates on renewed, MSA contracts and an increase in transmission and substation work and improved proof. Productivity have all contributed to Growing our margins closer to where we want them to be in the business. There is still progress to be made, but we are certainly headed in the right direction.
Our power delivery clients are highly engaged with our leadership teams on resiliency plans to support the necessary power grid expansion in several key geographies.
We remain focused on attracting and retaining the talent needed to meet these needs and will continue to invest in the Recruitment and training of these Personnel to grow the business.
Turning to the energy segment. The Renewables business was the main driver of the revenue growth as we continue to exceed our plans in utility scale EPC and battery storage.
Renewables is now on track to generate close to 2.5 billion dollars compared to our Outlook at the beginning of the year of 2.2 to 2.3 billion.
I had a variable tariff and Regulatory environment, the solar Market continues to benefit from high demand for power. In its cost, competitive is with other sources of generation in many cases without Federal subsidies.
The recent legislation passed by Congress and signed into law, has offered some clarity on the sun, setting of tax incentives, that will better allow our customers to plan for the future.
While our customers still need Clarity from the treasury Department on certain language in the bill, our customers have continued with business as usual and we have not seen any projects push out.
We still expect a solid Renewables bookings environment in the second half of the year and into 2026 and we are off to a good start with several projects awarded our contracted during the first month of Q3 as we discussed last quarter we could see a deceleration of the growth in the battery storage business. Despite best tax credits extending limitations on the domestic supply of materials. Add near-term uncertainty in the gross prospects of this Market.
However, is currently represents only a small percentage of our Renewables Revenue.
Industrial Services were also up from the prior year. Driven primarily by the increase in natural gas generation activity.
As I stated earlier in my comments, there is a high demand for these services and we are working to build teams to take on more work.
We have added Talent this year which will allow us to increase the number of projects in the coming quarters and we will continue adding and training Personnel for additional project teams.
Disciplined growth with high-quality experience leaders is crucial to the success in this market.
Our pipeline business was down from the prior year, but the near-term Outlook is improving. Particularly for large diameter pipelines, for natural, gas, and Gas Liquids.
Larger diameter lines are best suited for our expertise, and we are seeing more of these types of projects received, along with final investment decisions from customers.
We are optimistic about the opportunity to add new projects to backlog late this year, or in early 26th.
And the Tailwind, we are experiencing in many of the markets. We service.
I'll now turn it over to Ken for more on our financial results.
Thanks, David and good morning everyone. Our Q2 Revenue was just under 1.9 billion and increase of 327 million, or 20.9%, from the prior year, driven by double digit growth in both the energy and utility segments.
The energy segment was up, 263.3, or 27% from the prior year, driven by increased Renewables activity. As we had over 100 million of Revenue. Pulled forward from the second half of 2025, and almost 50 million, pulled forward from 2026.
This was partly offset by lower pipeline activity.
The utility segment was up 72.22% from the prior year driven by higher activity, across all service lines gas Communications and power delivery.
Gross profit for the second quarter was 231.7 million and increase of 45 million or 24.1% compared to the prior year.
This is primarily due to increased Revenue in both segments and improved margins in the utility segment.
As a result gross margins with 12.3% for the quarter compared to 11.9% in the prior year.
Turning to our segment results, utility segment, gross profit was 97.5 million up, 33.5 million or 52.3% compared to the prior year.
This was driven by improved profitability across all service lines but particularly in power delivery where gross profit more than doubled from Q2 of the prior year.
As a result gross margins improved to 14.1% compared to 10.3% in the prior year.
We are seeing the positive results of our strategic efforts to improve margins in the utility segment.
Increased customer activity, a favorable mix of project work and improved productivity are all contributing to higher revenue and margins in the second.
While we are always mindful of our normal seasonal decline in Q4, are you today results? And current Outlook give us confidence that utilities margins will be in the 10 to 12% range for 2025.
In the energy segment. Gross profit was 134.2 Million for the quarter and increase of 11.5 million or 9.4% from the prior year due to higher Revenue.
Gross margins. In the segment were 10.8% down from 12.6% in the prior year.
The decrease in margin was driven by fewer project Closeouts compared to the prior year and increased costs on certain Renewables projects due to unfavorable weather conditions during the quarter.
However, we anticipate that margins in the energy, segment will tick up in the back half of the year.
Looking at sgna expenses. In the second quarter were 104.5 million and increase of only 4.4 million compared to the prior year. As a percent of Revenue, sgna declined, from the prior year to 5.5%, as we control sgna growth to produce improved, operating Leverage
we do not expect to see material increases in sgna in the second half of the year and expect sgna to be just below 6% of revenue for the full year 2025
Net, interest expense in the quarter was 7.6 million down. 9.6 million from the prior year, due to lower average debt, balances and interest rates
Based on current trends and expectations. We are updating our guidance for interest expense to be between 33, to 37 million for the full year of 2025, down from the 44 to 48 million. We anticipated at the beginning of the year.
Our effective tax rate was 29% for the quarter and we expect that this rate will be consistent for the full year, net income, increased to 84.3 million or 1.54 portfolio diluted. Share both up around 70% from the prior year. Adjusted EPS increased over 60% to a168 for fully diluted share and adjusted ibida. Was up over 30% to 154.8 million compared to the prior year.
Transitioning to cash flow. Q2 cash from operations was a little over 78 million a record for our second quarter.
Bringing our year-to-date, operating cash flow, to nearly 145 million. This represents a 157 million Improvement in operating cash flow from the first half of last year. The increase was driven by higher net income and favorable working capital Leverage
We are on Pace for another solid year of operating cash flow that we currently expect a range between 250 to 300 million.
Moving over to the balance sheet, we maintain strong liquidity of $690 million, which includes approximately $390 million of cash and a little over $300 million in available borrowing capacity on our revolver.
Our trailing 12-month net debt to ibida ratio dropped to 0.5 times ibida at the end of Q2.
Deploy Capital to invest, organically in the high growth, higher margin areas of the business.
Pay down debt and be opportunistic around M&A that meets our strategic and financial criteria.
Total backlog at the end of Q2 is just under 11.5%, $100 million sequentially from Q1.
Fixed backlog was lower by 500 million from q1. Primarily due to the timing of energy segment bookings.
As David mentioned, we have had a good start to the third quarter in Renewables and energy Awards, and believe that we will see bookings accelerate through the remainder of the year into 2026.
MSA backlog is up a little over 600 million from q1 driven, primarily by increased activity across our utility businesses, particularly power delivery.
We are encouraged by the growing funnel of opportunities across the entire company. And believe we are on track for a strong back, half of the year.
While the timing of contract signings and our progress on existing work can vary, we expect to be in a solid backlog position to start 2026.
Before turning it back over to David. I'll close with our updated guidance. We are increasing EPS, guidance to 440 to 460 portfolio diluted share.
Adjusted EPS guidance to 490 to 510 per fully diluted share and adjusted Eva. Dog. Guidance to 490 to 510 million for the full year 2025
Additionally, we are increasing the range of our gross Capital expenditures by 10 million at the midpoint to 100 to 120 million primarily for equipments for growth.
We are extremely pleased with our performance in the first half of the year and excited about the potential for continued earnings and margin expansion in the quarter ahead. I'll now turn it back over to David.
Thanks Ken before we open the call for questions. I'd like to recap a few of the key points of the quarter first. The demand backdrop for korus is the best we've experienced as a company. Our portfolio of services and strong. Customer relationships will allow for us to meet the critical infrastructure needs of North America for years to come
Everything we do in some way, help our communities, have the energy, they need and support economic growth.
Second. The prospects for providing services in the data center Market are vast and we are still in the initial stages of demonstrating our capabilities in this area.
We believe companies like Porous that can offer a range of services to these projects will benefit as customers look to build these facilities quickly and efficiently.
Lastly, our strategy to improve utilities, margins is showing results and the in markets are looking more favorable than a year ago across the 3 business lines in this segment.
Our customers have big plans and value the safe dependable and quality services. We can provide
We look forward to partnering with them and providing them with the solutions they need to make these plans a reality.
We are excited about our potential to grow and we will do so in a safe and efficient manner.
A focus on discipline bidding and projects execution while managing risk will enable us to expand margins and increase cash flow.
We are confident that our success in these areas will allow us to generate long-term value for our employees customers and shareholders.
We will now open up the call for your questions.
Thank you.
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And your first question comes from the line of Lee hagata of CJs Securities. Your line is now open,
Hi, good morning, it's Pete. Lucas for lie. I'm just starting on the energy side of the business. When the year started, you guys were telegraphing a back-end loaded order book in terms of new awards. As we sit today, has that expectation shifted at all? Or should we still expect to see a robust end to the year from an order perspective? And maybe if you could talk about how much of this would come from renewables versus natural gas power or other sources? Just a little color there.
Booking is already in the first month of Q3 and a lot of lnt PS beginning to sign. It kind of moves through the process to to set them up for the latter half of Q3 and into Q4. So still pretty uh feel pretty good about those bookings. And and that space
Yeah and Pete with respect to Renewables versus uh versus the rest of energy. I think the the predominance of it will be Renewables the way it's looking right now. Uh, we do expect to sign uh, some more gas generation projects in the back half, but I don't have any solid numbers on that right now. So we'll have to get back to you on that.
Great. Just one more, you guys did touch on it. Uh, but on the utility segment, it has performed well so far this year. How much of this overall demand stems from MSA customers versus the timing of spend? As we look out the next 12 to 24 months, how do you see demand levels trending for your customers?
Uh, well, a lot of it on the MSA side, obviously, on the on the Gas Utilities and the electric utilities, it's pretty much all driven by MSA work for us. Um, I I think we said we were, we had uh, some initiatives underway to improve margins. We did have some favorable close out on a couple of projects uh but uh we still see the Improvement in margins holding for us. We've got some more work to do there in uh our crew productivity is have improved and uh so still feel pretty pretty good.
Good about where we're standing in that space.
Your next question comes from the line of Julian de Molen Smith of Jeffries. Your line is now open.
Yeah. Hi. Good morning. It's Brian Russell on for Julian.
Morning, Brad.
Hey, just to follow up on the utility segment. Uh, you upped the gross margin, uh, Target for 2025 to 10 to 12 percentage. You, you previously, uh, mentioned and that, you know, we're kind of seeing a step up uh in the sustainability uh, at least 100 basis points at the midpoint for that segment, mostly power delivery.
Yes, it's exactly what we've been talking about. So you know, we expected to start seeing that benefit back half of this year and in the next year and, you know, based on the strength of this quarter. And, and a lot of initiatives driving, that it looks like we've accelerated that a little bit and that's giving us the confidence to not only be in 10 to 12% this year, but sustaining going forward.
Okay great and and um just uh obviously very strong um solar uh revenue and bookings, right? You've increased um it looks like the full year to 2 and a half billion. How much of that was was realizing the first half?
How much a Renewables was realized in the first half? Yeah. Out of the 2 and a half billion.
Oh, how much of the 2 and a half billion on the top line uh about a billion 4?
Okay? And, and so, how does that tie into the 200? 250 million Revenue Target? I think you had previously for FY, 25. Uh, and then the 3 to 400 million longer term, annual, run rate and are you seeing any pull forward from, uh, the recent, uh, obb
Yeah. So uh we are upping we're upping our our expectation for growth this year to uh to about 3 to 400 million from the original 2 to 250. Um we and there's a chance we may exceed that uh on the go forward basis. Long-term basis I think if we're still targeting that 3 to 400 million dollar range uh this year it's a pull forward from not only there's about 100 million pulled from the back half of the year in about 50 million. Pulled forward from next year.
Um to the first half of the year and really none of it is due to ob3 or to tariffs, it's purely just been to good performance and timing of execution on the jobs.
Your next question comes from the line of sipa China of Key Bank, Capital markets.
Your line is now open.
Hello.
James.
Okay, this is not really hand on for Senita.
And do you have a question?
Hi. Yeah, you've mentioned closeout payments and the utility segment. 2q, can you maybe quantify that for us and their impact? They may have had on margins in the quarter. Thank you.
Yeah, the the main uh, the main Closeouts were with respect to some gas utility projects and they contributed about 6 million of incremental gross profit during the quarter.
And your next question comes from the line of Brant Salman FDA Davidson. Please go ahead.
Hey, thanks. Good morning guys. Um, great quarter. Um,
Uh you actually wanted to dive a little bit more into obviously the margins were great in utilities but the bookings um were really fantastic and wanted to piece that apart a little bit more. What were the big levers in the quarter for that segment?
Hey Brent, uh look I I don't know if there are any specifically big levers, it was really um it was all MSA driven and it was spread across predominantly power delivery and multiple customers there. Um, but also a little bit in gas and comms I think I think what surprising this is, um, what the the the main surprise there is not the growth in power delivery bookings, as much as it is, if you go back to our analyst Day last year, we expected low, single digit growth.
In Gas and Communications, we're now looking at closer to mid single-digit growth in Gas and Communications for both this year and probably next year as well. So, we are encouraged by the upside that we've seen in both of those areas.
Yeah, Brian. I'll let I'll add a little bit, you know. Uh, obviously, you know, the big spin in the tnd that everybody's talking about. But uh, you know, we're seeing some of our dual dual Service uh, utility uh, companies actually uh, put in some some very attractive spending programs on the gas side of their business. Also and I think we weren't expecting that to be quite as much of a dramatic spin program. So that's uh, that's boosting us. Also,
Okay, and so this is really absent, um, maybe some of the fixed project.
Um, fixed price power, power power, delivery projects, they know you guys are pursuing on the smaller side that that really hasn't kicked in here yet. Is that fair that? That, that is correct.
okay, and I imagine that pipeline is still
Relatively interesting. Is there any comments you can make on that? And kind of how you can see that play out over the next kind of 12 to 18 months.
Uh, no, the only thing I would say is it's still very robust out there and and we're still pretty confident in some of our bookings coming. Uh, either late Q3 or into Q4 on, some of the powergen side. Uh, and they'll be nice, bookings. Uh, and then obviously the final for us in 26, even looks, you know, pretty nice also. So I think we'll find out 25 with some good bookings in that power side. Also.
On the gas side.
Yeah.
Okay. Um, and then just on Pipeline. I mean, it sounds like we're we're nearing an inflection here in the business, just based on, um, what you guys seem to be seeing going forward. You did it. I guess part 1 is maybe, maybe there was a thought to manage this around 500 million in revenue. Does that go away and you're comfortable letting this be a larger, um, business and and 2, maybe the size and scale of some of the things that you're seeing in the pipeline, no pun intended. Coming down the coming down the way here.
Yeah, but look, the short answer is we're going to be opportunistic around pipeline. We're going to scale up; we're not going to let it get out of control, and we're going to always be disciplined in what we bid.
Uh and so yeah could I see it getting up to 500 million next year or maybe 600 million? Yeah but it's all just going to depend on the opportunities and whether we get the ones that we want,
um,
Yeah. And then Brian I'll add you know we've already picked up a really small 1 but it's it's so small. It's not worth really talking too much about but it kind of shows you that the the gates beginning to open on some of those and uh and the final relative to some of the larger ones that we see are shaping up nicely again. I think even last call we told you. I don't think we can have anything really different here that we're seeing. I think it's going to be more of a, of a 2026 play and anything. And then in the 27,
And your next question comes from the line of Joseph. OSHA of King Partners. Please go ahead.
you're going to try and stick with uh 380 KVA and and Below Market and my kind of reading your comments correctly or or might we see you get after some 765 and I have 1 other question
Sure. I I like your reading it correctly, you know, we have got some customers that are asking us to to do small portions of a 765 for the purposes of of Maintenance and other storm related work in the future. But again, we, we we've got plenty of opportunities in those lower voltage ranges. So I think you're reading that exactly correct.
Yeah. And that obviously I think that the concern there had had been about getting into a really, you know, a big, a bigger high risk project and that's I'm, I'm hearing that's that's not going to happen, so that's good. Um, and then on the the
Yep. Uh just wondering it can I think of Renewables obviously it's growing but is that sub segment? Maybe uh uh perhaps a a little bit more margin dilutive uh on that side of the the business just looking at how the margin trended there in the in the revenue. Thank you.
Yeah, Joe I I I think it was a little bit diluted for the quarter just because of the weather impacts that I mentioned in my prepared comments. But in general, no not not dilutive at all.
And is there any just as a follow-up there? I mean do you guys see any kind of or, you know, potential for organic improvements in Renewables, gross, margins, going forward
Yeah, we always see opportunity there um and as you know from in the past it's usually in conjunction with project closeout. So we will we will always see better margins or almost always see better margins in Renewables in quarters where we have more project closeouts
Which is not unlike what we saw a year ago, again this time.
But but that's kind of a 1-off. I mean, just but, but but, but just more generally, I mean, is there potential for those margins to, to get better more generically, or are they kind of are what they are?
Oh, I see what you're saying. Yeah, no, they are what they are. We've always had strong margins in Renewables. We expect to continue having strong margins but I don't know that going forward, there's going to be opportunity to actually get better than what we've been experiencing
got it. Thank you very much.
Your next question comes from the line of Av Jus law weeks of hubs. Please go ahead.
Hey, good morning.
Um so I know we've already discussed the uh the margins utilities um a little bit. But just in terms of your guidance, the midpoint there seems to indicate margins down a decent bit year-over-year in the second half of this year. Um even excluding some of the benefit from Storm work last year. Uh so I was just wondering if you could you know share how you approached the guidance for the second half for the utility segment.
Yeah, look. Um, uh, sick. We we had, we had outsized margins in Q2. So while we still expect to have strong margins in Q3 uh in utilities, um, I think sequentially. They're going to be down from Q2 as a result of how good Q2 was and some of the 1-time items that have happened in there, and then, of course, sequentially, we're going to be, we're expecting to be down in Q4 Q4. As you know, is always kind of a swing quarter for us. Uh, we generally expect it to be down because of seasonality and whether, um, it it could be that it could be just that way this year, or it could be better than it, than that. Like, we saw in Q4 last year, based on whether in the timing of projects.
Okay. Um, and then, I think you also noted, uh, opportunities in fiber for data centers. Um, so just wondering, would we see those Awards come in to the fixed backlog in utilities, or, or would it be in the, uh, MSA work?
It'll be in both, it'll be in both our our Communications business is a combination of MSA and project work on the margin more MSA work than Project work and so you'll see it in both areas.
Okay, appreciate it. Thank you.
Once again, if you have
Question please.
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And your next question comes from the line of Adam Thalheimer, Assumption, Davies and Company. Please go ahead.
Hey, good morning, guys. Congrats on the strong quarter and it's good to see the stock above 100 for the first time.
Um, we would agree with both those comments. Thank you.
I was hoping to touch on your data center comments. Uh, you said you were tracking
1.7 billion dollars worth of work.
What would be the average size or your your content Within?
Those jobs just curious. Um,
Maybe incumbent on how many projects you see in that space.
Oh gosh. Okay, T, you know, typically, you know, we're seeing values of the sections that we handle, you know, 100 million in under it. Uh, now having said that we may see multiple
projects within that 1 data center. So we may have more than 100 million involved in that 1 data center, but I think we've mentioned, you know, we do a lot of different things in those data centers, uh not, you know, everything outside the box, you know, the power generation, the fiber, the interconnects, everything. So, uh, and as far as the numbers of projects, oh, gosh, you know, they're almost, you know, they're not unlimited obviously, but there's just hundreds. If not thousands of those data centers things out there for us, that we're looking at. So, uh,
I don't know if that answered your question or not. Perfect. Yeah. And then, um, I was actually going to go to the very next thing you said after that, David, which was the $2.5 billion of natural gas generation. Can you give me a historical perspective around that? I mean, what that was a year ago and six months ago, and how that backlog has, uh, or how the pipeline is filled there?
Yeah, let me let Ken on the backlog part. Uh, you know, we have been increasingly because most of the, on the powerg inside, not all of them have been data center related. I want to make sure you realize that I think we talked last quarter that we're working on something like 5 of them. And I think 1 of them was only data center related at that time and we are seeing more of the data center. But historically, can I don't know if you have any comments there in, you know, sorry, Adam. I don't know, I don't know what that backlog was a year ago, so it's hard to to give you specifics. I can tell you, it is definitely grown over the course of the past 12 months. Um
And as David said, we're seeing opportunities around, you know, both in and outside of data centers.
Uh, great. I'll turn it over. Thank you.
Thank you.
Your next question comes from the line of Drew Chamberlain of JP Morgan. Please go ahead.
Yeah. Good morning guys, thanks for taking the questions. Uh, first 1 just kind of want to follow up on the the data center Trend here. Uh you guys try to put in the respective, a little bit of like that 1.7 billion or you know. So I guess on that 1.7 billion, you know what you think is achievable for you to book this year? And then how should we think about that Revenue volume? Is that all incremental till like, you your base plan here or is that, you know, work that maybe 2 years ago, you would have thought would have been used for a different application is now transitioning to data center or is that just all on top
Well, let me start out talking about the 1.7 billion, you know, obviously, we're not going to get all of the 1.7 billion. Uh, we have submitted bids and been shortlisted and selected on a good portion of that. Uh, you know, I would tell you, you know, of that portion that we've been shortlisted on. It's somewhere in the 4 to 500 million. That doesn't mean that we're not going after the rest of it. It it's kind of in a staged approach, uh, so, you know, feel good about that work. You know, that work is expected to be contracted by, you know, year end. So it would expect the funnel to continue to grow in the quarters ahead.
I think that should give you enough. I drew, but if not, ask another question there and I'll see if I can answer it.
Yes. All right, then, just the other part being, the, you know, is that incremental to what you're kind of based plan assumed or, is this going to repurpose in teams for for data center work?
No, most of its incremental to what we'd originally, you know, put in our plan last year at our analyst day. Um, so it it's it's been great to see that materialize and as we've talked about before it touches a number of different parts of our business, those opportunities around data, centers are both in transmission and substation and fiber and in generation.
And Drew your comment on repurposing. Your comment on repurposing. I I'll make this comment. I think we've said before, you know, the type of works that we're doing in those data center areas especially on the power side. You know, our our Workforce and our industrial segment is very sponge therein, so it's the same types of work. So certainly not seeing any shortage of the ability to handle those projects.
Right, right? That's that's why I asked. Um, all right, just just 1 more for me. Uh, you know, tasks coming in keep, uh, keeps out pasting ca cash going out. So I'm just wondering if there's any, you know, any thoughts on on latest Capital, allocation priorities and maybe just, you know, thoughts on what's changed in the last 3 months, in, in your mind, on on how you wanted to deploy cash.
At all, where can we're continuing to focus on working capital Improvement? We're, you know, continuing to, you know, build cash and pay down debt. Um, and then obviously m&a, uh, positioning the balance sheet for m&a is the next priority. And then, of course, return of capital. So we continue to look for m&a opportunities. We continue to focus on paying down debt and growing the business.
Great. Thanks guys.
And that concludes our Q&A session. I will not turn into conference back over to David King for closing remarks.
Thank you for your questions and interests. And for more of us we are pleased with our first half results and look forward to hearing this momentum, the remainder of the year and in the 2026. Thank you. And we look forward to updating you next quarter.
ladies and gentlemen, that concludes today's call, thank you everyone for joining, you may now disconnect