Infrastructure construction company Primoris (NYSE:PRIM) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 16.7% year on year to $1.65 billion. Its non-GAAP profit of $0.98 per share was 49.2% above analysts’ consensus estimates.
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Primoris (PRIM) Q1 CY2025 Highlights:
- Revenue: $1.65 billion vs analyst estimates of $1.49 billion (16.7% year-on-year growth, 10.6% beat)
- Adjusted EPS: $0.98 vs analyst estimates of $0.66 (49.2% beat)
- Adjusted EBITDA: $99.41 million vs analyst estimates of $75.55 million (6% margin, 31.6% beat)
- Management reiterated its full-year Adjusted EPS guidance of $4.30 at the midpoint
- EBITDA guidance for the full year is $450 million at the midpoint, above analyst estimates of $445.4 million
- Operating Margin: 4.3%, up from 3.1% in the same quarter last year
- Free Cash Flow was $25.58 million, up from -$38.9 million in the same quarter last year
- Backlog: $11.4 billion at quarter end, up 148% year on year
- Market Capitalization: $4.08 billion
StockStory’s Take
Primoris’ first quarter results reflected gains across both Utilities and Energy segments, with management attributing the revenue increase to expanded project activity, particularly in renewables and power delivery services. Interim CEO David King noted that quicker-than-expected project releases by utility clients, increased fiber network work, and the ramp-up of utility-scale solar projects underpinned the operational performance. CFO Ken Dodgen highlighted margin improvements, especially in the Utilities business, driven by contract renegotiations and execution efficiency.
Looking ahead, management reiterated its full-year guidance, emphasizing resilient demand in core markets for power, industrial, and energy infrastructure. King explained that while macroeconomic and regulatory uncertainties remain—including potential tariff changes—current customer conversations indicate stable project pipelines for 2025. He cautioned that extended uncertainty might affect bookings beyond this year but maintained that Primoris is on track to reach or potentially exceed its operational targets.
Key Insights from Management’s Remarks
Primoris’ leadership discussed the main factors behind the quarter’s results and the operational trends shaping the business in 2025. The segment-level performance was influenced by project timing, margin initiatives, and customer demand for critical infrastructure services.
- Utilities Segment Expansion: The Utilities segment achieved higher revenue and margins due to early project releases in power delivery and increased gas operations activity, particularly on the West Coast. Communication services also benefited from rising fiber-to-the-home and fiber loop network builds.
- Strong Renewables Activity: The Energy segment’s revenue growth was led by utility-scale solar project starts and progress on battery storage and operations & maintenance contracts. Management noted that customer readiness and inventory of solar panels reduced exposure to near-term tariff risks.
- Margin Improvement Initiatives: Utilities gross margins increased year-over-year, attributed to contract renegotiations, improved execution, and a greater mix of higher-margin gas operations and communications work. CFO Ken Dodgen pointed to ongoing efforts to negotiate better rates and optimize service areas.
- Backlog Dynamics: The overall backlog remained elevated, supporting visibility for future revenue. Energy segment backlog dipped due to timing of new solar awards, but Utilities backlog increased, driven by master service agreements and fixed contracts.
- Share Repurchase Flexibility: The Board authorized a new $150 million share buyback program, giving Primoris the ability to invest opportunistically while maintaining capacity for organic growth and disciplined M&A.
Drivers of Future Performance
Management expects stable demand for infrastructure services, underpinned by long-term investments in North American power and industrial assets, but acknowledges that policy shifts and project timing could introduce volatility.
- End Market Demand: Ongoing investments in grid resiliency, transmission, and renewable energy generation are expected to drive bookings and revenue growth, particularly as utility clients continue to advance major capital programs.
- Tariff and Regulatory Risks: Management identified uncertainty around U.S. trade policy and tariffs as a potential headwind, though most current contracts allow for cost pass-through and customers have sufficient material inventories for 2025 projects.
- Project Mix and Execution: Primoris’ ability to selectively bid on attractive projects and move resources across end markets is expected to support margin stability, with upside tied to successful project closeouts and incremental opportunities in data center-related industrial work.
Top Analyst Questions
- Pete Lukas (CJS Securities): Asked about the impact of economic uncertainty on customer project decisions. Management responded that bookings exceeded expectations in Q1 and have not seen any project pauses.
- Brian Russo (Jefferies): Inquired about confidence in multi-year financial targets and renewable revenue cadence. CFO Ken Dodgen stated they are on track or ahead, with a substantial portion of 2026 already booked.
- Brent Thielman (DA Davidson): Sought clarity on Utilities margin outlook and variables that could drive further improvement. Management cited ongoing storm-related work and supply chain adjustments as potential factors.
- Alex Dwyer (KeyBanc): Questioned upside and downside drivers for Energy segment margins in 2025. Management pointed to project closeouts as a source of upside and weather as a primary risk.
- Drew Chamberlain (JPMorgan): Asked about tariff risks for solar and battery storage projects. Executives indicated that the impact is limited for 2025 due to current inventories and contractual protections.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of new project bookings, especially in renewables and data center-related industrial work; (2) the ability of Primoris to maintain or expand margins through contract discipline and execution efficiency; and (3) developments in U.S. trade and tariff policy that could affect material costs or project timing. Any acceleration in backlog growth or clarity on the permanent CEO search may also serve as important signposts.
Primoris currently trades at a forward P/E ratio of 16.8×. Should you load up, cash out, or stay put? Find out in our free research report.
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