Primoris Wins Two New Contracts

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Primoris Services Corporation (PRIM) has recently won two major contracts worth over $393 million. The contracts were awarded to Primoris subsidiaries - ARB and James Construction Group - and comprise major utility alliance project for pipeline integrity work in California and a large highway infrastructure project in Mississippi.

The ARB Underground group falls under Primoris’ West Construction Services segment. It has secured a three-year contract, with two one-year options from Pacific Gas and Electric to support their Pipeline Safety Enhancement Plan program. The contract encompasses all forms of system integrity upgrades including hydrotesting, valve automation or replacement, and in line inspection/replacement. The scope of work encompasses the Bay Area of Calif, which includes the San Francisco, San Jose, and Oakland regions. Work is to begin immediately and is initially valued at roughly $100 million annually for a total of $300 million over the course of the contract.

James Construction Group, which comes under Primoris’ East Construction Services segment, secured the contract worth $93.5 million from the Mississippi Department of Transportation. The project for rehabilitation and improvements to Interstate 55 south of Jackson, Mississippi, is scheduled to start in the second quarter of 2013 and is expected to be completed in the first quarter of 2016. The work scope includes roughly 850,000 cubic yards of excavation, requiring 350,000 tons of asphalt, 95,000 linear feet of cast-in-place barrier rail and includes two bridges.

Earlier in January, Primoris received contracts worth $253.3 million in addition to previously announced individual projects. The new contracts and work authorizations included power, pipeline, gas utility, water/wastewater, highway infrastructure and parking infrastructure projects throughout United States.

In March, Primoris reported fourth quarter earnings per share of 33 cents per share, up 38% from 24 cents in the year ago quarter. In fact, fourth quarter net income of $17 million was the best in Primoris’ history. Revenues increased 29% to a record $480.9 million from $373.1 million in the fourth quarter of 2011, driven by increased pipeline work in the West Construction Services segment and increased industrial work in the East Construction Services segment, as well as the impact of Primoris’ 2012 acquisitions of Sprint, Saxon, and Q3 Contracting.

Primoris ended 2012 with a record backlog of $1.35 billion compared with $1.16 billion at the end of 2011. Primoris expects approximately 57% of total backlog 2012 end will be recognized as revenue in 2013, with $435 million expected for the East Construction Services segment, $320 million for the West Construction Services segment and $14 million for the Engineering segment. Contract wins in the first quarter on top of a record backlog bodes well for Primoris’ future performance.

Dallas, Texas-based Primoris Services Corporation is a specialty contractor and infrastructure company providing a range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services in the United States and internationally. Primoris currently holds a Zacks Rank #3 (Hold). Other stocks in the same industry with a favorable Zacks Rank are Orion Marine Group, Inc (ORN) with a Zacks Rank #1 (Strong Buy) and AECOM Technology Corporation (ACM), Chicago Bridge & Iron Company N.V. (CBI) with a Zacks Rank #2 (Buy).

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