U.S. markets closed
  • S&P 500

    3,841.94
    +73.47 (+1.95%)
     
  • Dow 30

    31,496.30
    +572.16 (+1.85%)
     
  • Nasdaq

    12,920.15
    +196.68 (+1.55%)
     
  • Russell 2000

    2,192.21
    +45.29 (+2.11%)
     
  • Crude Oil

    66.28
    +2.45 (+3.84%)
     
  • Gold

    1,698.20
    -2.50 (-0.15%)
     
  • Silver

    25.30
    -0.17 (-0.65%)
     
  • EUR/USD

    1.1916
    -0.0063 (-0.52%)
     
  • 10-Yr Bond

    1.5540
    +0.0040 (+0.26%)
     
  • GBP/USD

    1.3834
    -0.0060 (-0.43%)
     
  • USD/JPY

    108.3600
    +0.3840 (+0.36%)
     
  • BTC-USD

    50,600.03
    +3,150.49 (+6.64%)
     
  • CMC Crypto 200

    982.93
    +39.75 (+4.21%)
     
  • FTSE 100

    6,630.52
    -20.36 (-0.31%)
     
  • Nikkei 225

    28,864.32
    -65.78 (-0.23%)
     

Edited Transcript of PRIM.OQ earnings conference call or presentation 23-Feb-21 3:00pm GMT

·47 min read

Q4 2020 Primoris Services Corp Earnings Call DALLAS Feb 27, 2021 (Thomson StreetEvents) -- Edited Transcript of Primoris Services Corp earnings conference call or presentation Tuesday, February 23, 2021 at 3:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Brook Wootton Primoris Services Corporation - VP of IR * Kenneth M. Dodgen Primoris Services Corporation - Executive VP & CFO * Thomas E. McCormick Primoris Services Corporation - CEO, President & Director ================================================================================ Conference Call Participants ================================================================================ * Adam Robert Thalhimer Thompson, Davis & Company, Inc., Research Division - Director of Research * Brent Edward Thielman D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst * Julio Alberto Romero Sidoti & Company, LLC - Equity Analyst * Lee M. Jagoda CJS Securities, Inc. - Director * Sean D. Eastman KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primoris 2020 Fourth Quarter and Year-end Earnings Conference Call. (Operator Instructions) It is now my pleasure to introduce your host, Brook Wootton, Vice President of Investor Relations. Please go ahead. -------------------------------------------------------------------------------- Brook Wootton, Primoris Services Corporation - VP of IR [2] -------------------------------------------------------------------------------- Thank you, Amy. Good morning, and welcome to Primoris' conference call. Joining me today are Tom McCormick, Chief Executive Officer; and Ken Dodgen, Chief Financial Officer. 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. Actual results may differ materially from our projections and expectations. These risks and uncertainties are discussed in our reports filed with the SEC. Our forward-looking statements represent our outlook only as of today. We disclaim any obligation to update these statements, except as may be required by law. I would now like to turn the call over to our CEO, Tom McCormick. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [3] -------------------------------------------------------------------------------- Thank you, Brook. Good morning, and thank you for joining us today to discuss our 2020 fourth quarter and full year results. We had an incredible year despite social unrest, the pandemic, a significant reduction in the price of oil as well as the presidential election. Good weather in the fourth quarter allowed some of our business units that typically shut down after Thanksgiving to work all the way through to the end of the year. This was a nice boost and a great way to close out 2020. The numbers paint a clear picture of the success of our strategy, even in a difficult market, as we announced record revenue of $3.5 billion for the full year, up 12% compared to last year. Our earnings per share for 2020 came in at $2.16 per diluted -- fully diluted share, another record for the company. Reflecting on our strong overall performance and the cooperative weather in December, our fourth quarter revenue was up 13.6% over the prior year at $897.3 million. Our Pipeline, Power, Utilities and Transmission segments generated especially strong revenues in the fourth quarter. I want to send a special thank you to all of our employees whose hard work and commitment to work safely enabled the company to have the success that we all experienced this year. Now let's look at our segments. Our Pipeline & Underground segment had exceptional top line growth for the full year 2020, coming in at almost $900 million, up 77.6% compared to full year 2019. This was mostly due to pipeline projects in Texas that began in the first quarter of 2020 partially offset by the cancellation of a pipeline project in the Mid-Atlantic and the substantial completion of a pipeline project in 2019. Our field services were able to produce strong results for the year despite the challenges encountered with the drop in the price of oil as well as the pandemic and hurricanes that stroke the Gulf Coast last year. Turning to our Power, Industrial & Engineering segment. Revenue increased by 9.1% from $729.3 million in 2019 to $795.4 million in 2020. This growth was driven by solar energy projects and progress on an industrial project for a customer in California. The renewable solar market continues to grow. We began work on a new 380-megawatt solar project in the late -- in the fourth quarter in Nevada. Also during the quarter, we were selected as the EPC contractor for 2 large solar projects in Texas totaling 885 megawatts that will begin this quarter. During Q4 2020, we completed phase 4 engineering services on a green diesel project located on the Gulf Coast, and we continue to make progress on the previously mentioned renewable project in California. We experienced higher costs associated with an LNG project in the Northeast in 2020 that has impacted our margins. We expect the project will complete by late Q2 and commission in early Q3, and this will then -- this issue will then be behind us. It's worth noting that all of the projects being executed within this segment are performing to plan or better. In our Utilities & Distribution segment, increased productivity and activity with our customers resulted in revenue growing from $886.5 million in 2019 to $900.6 million (sic) [$906.6 million] in 2020. This segment operated at full capacity. The weather was good. Our crews worked safely and productively. And our major customers spent their budgets with few interruptions. We also completed mobilization on a new MSA contract in the western region of the U.S. and believe this will be a long-standing relationship with numerous growth opportunities. Our Transmission & Distribution segment recorded revenue of $459 million in 2020 compared to $497.3 million the previous year. We have been more selective in the type of work we perform, and we also benefited from an increase in storm work during the year. We completed our restructuring of this segment in Q1 of 2020, which has resulted in improved performance, better contract pricing and management reorganization and reduction of indirect costs. We expect this momentum to carry us forward into 2021 and beyond. Storm remediation work performed by our crews provided positive margins during the fourth quarter as we responded to storms that occurred in the Midwest, Gulf and Mid-Atlantic regions. Margins also benefited from improved project performance on our transmission projects. Our Civil segment's revenue for 2020 was $433.5 million, down 11.2% from $488 million in 2019. The decline was primarily due to lower textile order volumes and the substantial completion of a project with a major refining customer and an ethylene project in 2019. Despite the modest decline, our management team remains focused on project execution and the results are showing. We continue to be very selective in the civil work that we bid, and as a result, the segment performed within our target margin range. Our civil projects in Louisiana performed well, too, although the same active storm season that brought storm work to our T&D group negatively impacted the Louisiana projects to some degree, especially Hurricanes Delta and Zeta. As I look across all of our segments, I'm extremely proud of not only their financial results but also their safety results. I want to thank our management teams and employees for their focus on workplace safety during the year. Our teams worked over 27 million work hours, and our total recordable incident rate for 2020 was one of the best in the company's history at 0.53, well below the industry average. During the year, we received numerous safety awards. ARB was named the overall winner of the California Plumbing and Mechanical Contractors Association Safety Star Award and winner of the Safety Star Award. ARB Underground was awarded the Arthur T. Everham Safety Award by the Distribution Contractors Association in the 2-million-and-over work hour category. I&M earned the Division I Greater Baton Rouge Industry Alliance Award. And Primoris Canada won an Excellence Award during the 2020 Canada's Safest Employer Award ceremony. As happy as I am to put 2020 in our rearview mirror, I'm excited to talk about where we are headed in 2021. To take advantage of the opportunities we see and create a stronger platform for our growth, we reviewed the organizational structure of our operations, and in January, announced that we are streamlining it to function more efficiently as well as to facilitate collaboration and cross-selling. With that, we have reduced our number of segments from 5 to 3. The new Utilities segment combines our gas Utilities & Distribution segment and the electrical Transmission & Distribution segment as well as the telecom services acquired through the acquisition of Future Infrastructure. The new Energy segment consolidates the Power, Industrial & Engineering segment and the Civil segment. The Pipeline Services segment will be the new name for the Pipeline & Underground segment, which retains its current structure. Simplifying our structure makes so much sense. The difference between business units in each segment share a lot of the same clients -- excuse me, the different business units in each segment share a lot of the same clients, so if you can get all of them working together, we can self-perform a larger portion of the work that we have, create multiple revenue streams, which ultimately drives our margins and take advantage of the synergies throughout the various business units. So what do we see for 2021? I want to touch briefly on some segment highlights and then address 2 areas with wider implications for our prospects going forward, the recent addition of Future Infrastructure to our family of companies and the new presidential administration. For our Utilities segment, which once again includes our gas and electrical Transmission & Distribution businesses and our new telecom business, we are well positioned for continued improvement and overall business growth by building off the momentum created in 2020 as well as expanding our geographic reach and client base. Last week's utility crisis in Texas is just one more indication of the need for infrastructure work. Gas, electric and telecom are all MSA-based markets and are focusing moving forward -- and our focus moving forward is to maximize synergies and scale, continue to improve productivity and increase our market share. The telecom market continues to be strong. We have secured MSAs with 2 telecom companies in the western region and should start performing work in the first quarter of this year. For the Energy segment, which again incorporates the Power, Industrial & Engineering business and the Civil business, there's a lot to say about renewable energy under the new administration. And I'll come back to that in detail. Meanwhile, we are watching how state spending levels, especially in Texas, may affect our civil projects. TxDOT historically spends $8 billion to $9 billion a year, and this could slightly decrease due to declines in oil and tax gas revenues -- oil and gas tax revenue, excuse me. For the Pipeline Services segment, given the headwinds in the industry, we expect to see fewer new pipeline projects. The good news is our Pipeline segment already has over 40% of their 2021 plan in backlog and they continue to pursue other projects. Over half of the operating pipelines in the United States are past their design life, with some being more than 50 to 60 years old. In addition to the age of these pipelines, some have other potential challenges, such as missing or poor coating, anomalies or perhaps due to their age, being built without modern manufacturing or construction techniques. The government just issued a new Mega-Rule, expanding the requirements for verifying, monitoring and improving pipeline integrity. This new rule requires all pipelines to verify their maximum allowable operating pressure in order to be able to remain in service. If the minimum pressure is not met, the pipeline will have to be upgraded, repaired, replaced, repurposed or decommissioned. We are repositioning our pipeline segment to take advantage of our field services capabilities in order to help our customers respond to these rules and all their pipeline integrity, maintenance and construction needs. Looking more broadly, let me talk about our acquisition of Future Infrastructure last month. This is an exceptional fit with Primoris and it checks all the right boxes for the criteria we laid out when we started looking for our next major acquisition several years ago. It catapults us into telecom market. Telecom services is a high-growth market that will continue to grow well into the future, riding the tailwinds of our increasingly digital world. It further strengthens our existing utility capabilities, giving us a larger footprint within which we can leverage the value of our Primoris brand, our strong customer base and our expertise. And it moves us further away from pure engineering and construction into a business with higher-margin growth potential and recurring revenue via MSAs, which is exactly the direction we want to continue to move our portfolio. This is an extraordinary fit and a defining moment for Primoris. I'm happy to report that the integration is going extremely well. We are slightly ahead of plan. The leadership of FI is extremely energized to be part of Primoris. They have all committed to staying with the company and have even signed employment agreements. They're excited about being part of the Primoris family of companies, and we are beginning to enter new geographical areas to expand our telecom presence. We have already started to realize the synergies we identified, and we expect we will save at least $10 million. Of that, we should be able to recognize $5 million this year and the remaining $5 million and any additional upside within the following 12 to 18 months. Finally, I'd like to discuss our prospects under the new presidential administration. We've all seen that the domestic energy industry has been under pressure for the past several years. Although our pipeline segment had a record year, this will affect our pipeline construction opportunities going forward. And drilling restrictions may continue to suppress new construction even as the economy recovers and demand rises. Another concern would be the possible increase in corporate taxes. But there are also areas where we see that the new administration's priorities create significant opportunities for Primoris. First, President Biden has stated that he wants to make infrastructure rebuilding a priority. As I noted earlier, the nation's gas pipeline infrastructure is aging and in need of attention. On a broader scale, replacing other aging infrastructure such as roads and bridges also creates opportunity for Primoris in our Industrial, Engineering and Heavy Civil businesses. Second, the Biden administration is ready to pursue renewable energy on a large scale, and this dovetails with our increasing activity in the renewable energy markets. In 2018, Primoris earned $45 million in revenue from renewable energy projects, which equated to less than 2% of total company revenues. In 2019, we announced approximately $170 million in solar projects to be constructed in 2020 and 2021. And in 2020, we announced approximately $470 million in solar projects to be constructed in 2021 and 2022. We have over $430 million in backlog for 2021 in renewable projects. We have been unofficially awarded $570 million of other projects that will likely turn to backlog in 2021 and 2022. This means that during the course of 2021, we could have as much as $1 billion of backlog that will be executed just in solar projects in 2021 and 2022 alone. We are very careful as to how we select the projects we take and the clients we work with. Solar projects also creates cross-selling opportunities. A solar project requires transmission lines and substations to support it, which creates opportunities for our new Utilities segment. On a typical solar project, we have had as many as 4 Primoris business units doing some level of work on that project, including I&M to do the site preparation and Heavy Civil to build the access roads. Solar isn't our only renewable market. We are also evaluating whether to expand into wind but only for specific scopes. We're not going to make a huge investment to buy large cranes that allows us to set turbines and fan blades. However, we will perform site clearing and grading, construct roads, complete underground installations, including the foundation work and duct banks. We can also pull and terminate cables, construct the transmission lines to the facility as well as design and build the substations. There's a lot of opportunity there. We are currently working on green diesel and biofuels projects for clients in the Gulf Coast and out West. We are retrofitting our refinery for biofuels on the West Coast. This is a $200-plus million project. We have another $50 million project for another client on the Gulf Coast, where they're modifying a refinery to make green diesel. We have seen the political landscape and clients leaning more and more towards renewables. We've been actively looking at different ways we can help our clients, and we are not done yet. We want to be smart about which clients we work with, what projects we execute, how we estimate these projects and how we staff the project we're awarded. We're going to continue to grow our renewables group organically, although we may look at an acquisition as a target. If the right target were to come up, it would have to be the right fit with the right culture. Another area that's going to impact our business is a rural broadband initiative, both on a national and state level. The pandemic has exposed that existing network infrastructure has a significant shortage of bandwidth, not only in the metropolitan areas but also in smaller towns and cities. In Texas, Governor Abbott recently signed a rural broadband initiative for our state, and I believe other states will follow. We've been told that the demand for broadband is doubling approximately every 6 months. And while the pandemic has driven the urgent demand now, the longer-term picture is also promising over the next 10 to 15 years. And with that, I'll now turn it over to Ken. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [4] -------------------------------------------------------------------------------- Thanks, Tom, and good morning, everyone. I'll begin with our key financial metrics for the quarter and for the full year, and then I'll cover our balance sheet, cash flows and backlog. Then I'll wrap up with our 2021 guidance before moving on to your questions. Our fourth quarter 2020 revenue was $897.3 million, an increase of $107.6 million or 13.6% compared to the fourth quarter of prior year. The increase was largely due to higher Pipeline segment revenue since we had a number of pipeline jobs in process during the quarter. We also had higher revenue in our Power and Transmission segments but this was slightly offset by lower revenue in our Civil and Utilities segments, mostly due to the timing of jobs. Gross profit in the fourth quarter of 2020 was $97.8 million compared to $89.5 million in the prior year. The increase in gross profit was largely due to higher Pipeline segment revenue and improved margins in the Transmission segment. This was partially offset by lower margins in the Civil and power segments. For the full year 2020, gross profit increased by almost $40 million to $370.2 million compared to 2019 due to increased revenue. Looking at each segment. Our Transmission segment gross profit increased $22.3 million to a record $44.9 million primarily due to higher gross margins on slightly lower revenue. Gross margins were 9.8% in 2020 compared to 4.5% in the prior year due to higher costs in the prior year, higher-margin work in the current year and a little more storm work this year. Our Utilities segment continued to perform well, with gross profit increasing by $16.3 million to $133 million due to slightly higher revenues and higher gross margins. Gross margins were 14.7% compared to 13.2% in the prior year primarily due to better weather conditions in 2020 and better margins on projects in the Southeastern part of the U.S. Our Power segment experienced a $22.6 million decrease in gross profits as slightly higher revenues were offset by lower gross margins during the year. This was mostly due to the higher costs associated with the LNG project in the Northeast that Tom mentioned. The Pipeline segment increased gross profits by almost $36 million primarily due to higher revenue partially offset by slightly lower margins in 2020. At 10.9%, they were down from 12.2% in the prior year primarily due to higher costs on pipeline projects in Virginia and Texas this year. The Civil segment gross profit was down $12.6 million this year primarily due to lower revenue due to timing of projects as well as slightly lower gross margins. 2019 gross margins benefited from the resolution of a large portion of our Belton claims with TxDOT. And in 2020, we resolved the remaining 2 Belton claims with TxDOT, but they only had a small impact on gross margins. But even without the claims benefit in 2020, the segment had solid gross margins driven by good project execution and a few project closeouts. SG&A expense in the fourth quarter was $50.2 million, up from $48.6 million in the prior year. The slight increase was primarily due to incentive compensation and IT expenses as we continue to upgrade some of our IT infrastructure, partially offset by lower travel expenses as a result of pandemic. Our 2020 SG&A expenses were $202.8 million compared to $190.1 million in the prior year, primarily for the same reasons as our Q4 increase. For the full year, SG&A expense was 5.8% of revenue compared to 6.1% in 2019. We expect our SG&A expenses will be in the low 5 -- excuse me, high 5% to low 6% range for 2021 as well. We also incurred $3.4 million of transaction cost in Q4 2020 primarily related to our acquisition of Future Infrastructure. Interest expense in the fourth quarter was $2.8 million compared to $2.6 million in the prior year, which was in line with expectations. And for the full year, interest expense was $20.3 million, essentially flat with 2019. With the additional debt raised to fund the acquisition of Future Infrastructure, I expect 2021 interest expense to be approximately $7 million per quarter. The effective tax rate on income attributable to Primoris was approximately 28% for the year, slightly lower than we anticipated due to higher pretax profit and lower state income tax. We expect that our effective tax rate to be approximately 29% for 2021, but that rate may vary slightly depending on the mix of states we work in this year. Fourth quarter net income attributable to Primoris was $31.8 million or $0.66 per fully diluted share compared with $26.9 million or $0.53 per fully diluted share in the prior year. For the full year, we recorded a record $2.16, which surpasses the $1.61 per share we did set in 2019. Operating cash flows in the fourth quarter were $120.4 million. And for the full year, our operating activities generated almost $312 million of cash flows compared to almost $118 million in 2019. This considerable increase in operating cash flows was due to higher net income and a continued focus on working capital and negotiating good contract terms. In the fourth quarter, we invested approximately $10 million in property and equipment. And for the full year, we invested $64.4 million, of which about $42 million was for construction equipment. We expect our 2021 capital spending to be in the $60 million to $80 million range, with almost all of that spent on construction equipment this year. Our balance sheet at year-end was strong as we ended the year with $326.7 million of cash. Borrowing capacity under our revolvers -- under our revolver was $148.5 million, providing a total available liquidity of $475.2 million at year-end. Total debt was down to $316 million. And our weighted average interest rate was down to 3.7% compared to 4% in the prior year. With the acquisition of Future last month, we borrowed $100 million under our revolving credit facility and increased our term loan by $400 million. Over the next 12 months, we expect to use our cash flow to support the continued organic growth of our company and reduce debt, and we continue to look for acquisitions that complement our growth strategy. Fixed backlog at the end of the year was $1.64 billion, and our MSA backlog was $1.14 billion, for a total backlog of $2.78 billion. While this is down compared to 2019, when you exclude the impact of the ACP project, our backlog is essentially flat compared to the prior year. That's something we're proud of given the amount of revenue we burned this year. Compared to the end of 2019, our MSA backlog is down $280 million. This is due to us terminating some unprofitable contracts during the year, reduced spending by a couple of our utility customers and reduced spend by some of our Industrial and Pipeline customers. We expect our MSA backlog will increase in 2021 as we add new utility customers and layer in the acquisition of the Future's backlog. And concluding with our 2021 earnings guidance. We expect that earnings per fully diluted share will be in the $2.40 to $2.60 range. This includes the operating results of Future Infrastructure partially offset by about $6 million to $8 million of incremental intangible amortization expense and approximately $12 million to $13 million of incremental interest expense. Our early estimate is that Future should contribute between $0.30 to $0.40 in EPS in 2021. And with that, we can turn it over to your questions. Amy? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question today from the line of Lee Jagoda with CJS Securities. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [2] -------------------------------------------------------------------------------- Congrats on the results. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [3] -------------------------------------------------------------------------------- Thanks, Lee. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [4] -------------------------------------------------------------------------------- So just starting with like the current, we'll say unfortunate situation in Texas, can we speak to sort of how your company can be part of the solution, both in terms of the immediate-term solution and then longer term, looking at grid hardening and further improvements to the infrastructure down there? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [5] -------------------------------------------------------------------------------- Well, I think you've actually answered it. But short term, we have crews out now working with our clients and helping reestablish power. And I think as recently as yesterday, close to 300 full-time equivalents still out working, restoring power to clients who have lost it, repairing damage from the storm. Long term, it's exactly as you said, it's helping our clients work -- build additional capacity, help -- whether that's transmission capacity or it's power generation. It's also in grid hardening so that next time something like this happens, they're prepared and they can withstand it. They have more capacity to help withstand it. We're available to our clients. We have the crews and the capabilities to be able to do that. So -- and we're extremely close to them here -- and some of them are here in Dallas. So we're there. We've let them know we're there. And we're even working on some of this now. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [6] -------------------------------------------------------------------------------- Got it. And then if I think about Q1, historically before Future, Q1 has typically been sort of a breakeven to making-a-little-bit-of-money quarter just because your utility customers are snowed in, et cetera. I guess the first part of it is, is the work that's needed in Texas a positive or a negative for Q1 specifically? And then layering on things like Future and then the work on the solar stuff within the Power segment, it would appear that Q1 versus historical might be abnormally profitable. Is there any way you can speak to that? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [7] -------------------------------------------------------------------------------- Well, I don't know if we're there yet that we could say that. One thing I would caution you is that we literally, here in Texas, lost a week of revenue just from last week. So while we had some people working last week, but very few. So now we'll get some of that back in the work that we're doing on this recovery. But typically, the storm recovery work just replaces revenue you would generate and you would burn anyway. So I think renewables, I got to look and see how fast those projects are progressing and what the revenue burn is, but that should help offset it and Future will, too. But Future, typically, they start their -- there's clients are -- again, being utility clients, they start off a little slow in the year as well, coming back from holidays, getting the design work done and then issuing work orders. So I don't know if I could say yet that, that's going to offset it and make Q1 a profitable quarter with a little bit higher upside than we've seen in the past or not. We'll know that in the coming weeks. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [8] -------------------------------------------------------------------------------- Okay. And then one more for Ken, and I'll hop back in queue. Just on the SG&A side, it looks like you guys are doing a great job keeping costs down. Are there any specific actions you can talk to that you've done already on the SG&A side to keep these down permanently? And are there any other things you're looking at in terms of projects that could further reduce your SG&A levels, both absolutely and as a percent of sales? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [9] -------------------------------------------------------------------------------- Yes. I mean we -- most of the projects that we implemented to reduce G&A are done now and fully baked in. And so we don't have really much in the way of incremental projects. We're going to continue to monitor it though. It's something that's kind of ongoing. We'll definitely get the dilution from continued revenue growth. But then what we also have now is the additional G&A from the Future acquisition. And we're going to have to look at that a little bit further and see how it lines up with our historical G&A percentages. We may need to do a little streamlining there long term. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [10] -------------------------------------------------------------------------------- And I think there's an opportunity to do that, yes. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Your next question comes from the line of Sean Eastman with KeyBanc Capital Markets. -------------------------------------------------------------------------------- Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [12] -------------------------------------------------------------------------------- Team, congrats on closing out the year strong. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [13] -------------------------------------------------------------------------------- Thanks, Sean. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [14] -------------------------------------------------------------------------------- Thanks, Sean. -------------------------------------------------------------------------------- Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [15] -------------------------------------------------------------------------------- I just wanted to -- just to be clear on the Future contribution. So the guidance includes the incremental amortization and any transaction fees, those are not adjusted out of the guidance? Is that correct? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [16] -------------------------------------------------------------------------------- Correct. That's correct. -------------------------------------------------------------------------------- Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [17] -------------------------------------------------------------------------------- And those things should roll off into the out-years, and so that contribution should step up around that, right? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [18] -------------------------------------------------------------------------------- Yes. Yes. -------------------------------------------------------------------------------- Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [19] -------------------------------------------------------------------------------- Okay. Okay. Terrific. And I just wanted to ask on the Pipeline & Underground segment. I mean you guys are sort of appropriately measured in your outlook commentary there. But it sounds like you got a lot of the 2021 plan in backlog. Can you give us an idea of what's reflected in the guidance from Pipeline & Underground revenue? And is that over 40% of the plan in backlog as of today kind of normal at this point in the year? Or is it above normal? I'm curious about that. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [20] -------------------------------------------------------------------------------- It really depends on the year and the timing of projects. So there's years where we'll go into the year and we've got hardly anything baked in the backlog and other years where we've got quite a bit baked. It all just depends on the timing of the projects being awarded and when they're going to start. We normally don't give -- and then with respect to 2021, in general, we normally don't give revenue guidance. But we had a -- if you go back to 2018 and 2019, I consider those kind of the normal years for Pipeline for us. We had a really good year in 2020, as you can see. I'm not saying we're going to go back to 2018 and 2019, but it's going to be down in 2021. -------------------------------------------------------------------------------- Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [21] -------------------------------------------------------------------------------- Okay. Got you. And last one for me. I'm just curious with some optimism around the business cycle around a reopening of the economy, et cetera, whether you're seeing any firming in the prospect activity in the Gulf Coast industrial markets, whether it be refining or chemicals. Is there any kind of signs of life of sort of an inflection there? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [22] -------------------------------------------------------------------------------- I would say a little bit, not anything to just get you too excited right now. I mean there's activity, and we're seeing it in primarily smaller projects. I haven't seen anything just a step change yet. So no, not yet. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Your next question comes from the line of Adam Thalhimer with Thompson, Davis. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [24] -------------------------------------------------------------------------------- Can we talk a little bit about, high level, the outlook for California? Curious both on the Pipeline and the Industrial side. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [25] -------------------------------------------------------------------------------- Well, in the Industrial side, again, they got -- they've won a large biofuels project, and they'll be burning revenue on that project, I think, through this year and probably into early next. They've been able, in the past, they definitely -- that group used to do a lot of power plants. They do a power plant about every 1.5 years to every 2 years. Not seeing a lot of that. But they've been able to replace a lot of that lost revenue with smaller projects, smaller capital projects, and they've been successful doing that, and then renewables, of course. So the pipeline, and you're probably talking about more of the underground or gas utility portion of that group because that's really what they do, they may do some electrical transmission work for the utilities out in California. We haven't seen a drop-off from some of our companies, but we have seen a little bit drop off from a major client that just came out of bankruptcy. Just now has a new CEO. And so we expect that some of that will pick back up because they've got a lot of grid hardening that they're going to do. But we've got to give that CEO some time to get her organization and business structure in place and then determine what their path forward is. So we're down a little bit out there, and we were down last year out there, but we're expecting this is not going to pick up a whole lot this year, but I don't think -- it's not going away by any stretch of imagination. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [26] -------------------------------------------------------------------------------- Okay. And then, Tom, can you -- on the solar side, can you run us through -- it was kind of quick, I couldn't quite catch. I think you said something about $1 billion would be kind of what was flowing in and out of backlog. Or you might hit $1 billion in solar backlog at some point over the next 2 years. What was that comment? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [27] -------------------------------------------------------------------------------- Yes. What I said was we have about -- we have 490 -- 450 -- hang on, let me get to that part in here. We had like $470 million of projects, renewable projects in backlog, and that we've been -- typically, what happens in that business is that we're -- you go through an estimating process with your clients. And you -- then you're granted -- you're told that the project is yours. And then you get -- typically, we get a limited notice to proceed where we'll start engineering. We'll do some engineering. And so we don't ever put that into our backlog. We may put the value of the limited notice to proceed, which is $9 million or $10 million or $11 million in the backlog, but we don't put the whole project into backlog. And there's -- we've been told that there's another $500 million. So we're sitting here with about $430 million in backlog in renewable projects. We've been told, unofficially, that there's another $570 million of projects, that if they go forward, once they get financial backing and the financial support, which is -- they've already got most of that, it's just approval to start from their respective companies, then we'll finalize our contracts with those clients, and then that work will go into backlog. Those projects, that $570 million of projects are also projects that are slated to be built, designed and built in 2021 and 2022. So if that happens, we'll have over $1 billion of renewable work in backlog for projects that will be built in 2021 and 2022. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [28] -------------------------------------------------------------------------------- In backlog or in process. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [29] -------------------------------------------------------------------------------- Or backlog or in process, yes. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [30] -------------------------------------------------------------------------------- But the $570 million, those are incremental projects, it's not like the next phase of projects they've already started? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [31] -------------------------------------------------------------------------------- No, they're just -- they're incremental projects, and they're in different stages of progress, right? So every client handles them a little bit different. So some of them, they go through, get an estimate, get an agreement on what the price is, have an agreement on what the scope is. They go back to their senior management, get the project approved and funded and they move forward. Others, they go out and they sell the project to a developer or whoever. I mean they're all different, depending on who the client is. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [32] -------------------------------------------------------------------------------- And then just last one for me, and I'll turn it over. What's been your experience so far with the margins in solar? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [33] -------------------------------------------------------------------------------- Maybe into that low double-digit, 14%, 15%. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [34] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [35] -------------------------------------------------------------------------------- So pretty good, actually. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [36] -------------------------------------------------------------------------------- Yes. They're nice margins, yes. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [37] -------------------------------------------------------------------------------- Yes. Adam, when you think about them, the work is very different, but they tend to, ironically enough, kind of resemble how pipeline projects work. They're generally fixed-priced projects. They generally are bid at kind of low double-digit margins. And if we do a good job and manage our costs and are efficient, we can get some margin accretion as we push our way through and close them out. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [38] -------------------------------------------------------------------------------- Yes, and they're really -- they're not a typical -- they're atypical construction-type projects. It's like mobile manufacturing more than it is construction. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [39] -------------------------------------------------------------------------------- Yes, the work is very different than a pipeline project. Right. But in terms of how they -- financially, we end up working out. That could be similar to a pipeline project. -------------------------------------------------------------------------------- Adam Robert Thalhimer, Thompson, Davis & Company, Inc., Research Division - Director of Research [40] -------------------------------------------------------------------------------- Well, that's great. It helps offset the decline in pipeline. Okay. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [41] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- Your next question comes from the line of Julio Romero with Sidoti Company. -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [43] -------------------------------------------------------------------------------- I wanted to ask about the streamlined segments and what your margin range looks like for the 3 new segments. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [44] -------------------------------------------------------------------------------- I'm sorry, you broke up a little bit. Can you repeat that? -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [45] -------------------------------------------------------------------------------- Sure. I wanted to ask about the new segment structure. Just what normal loss or targeted margins look like for maybe Energy and utility segment. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [46] -------------------------------------------------------------------------------- For the Energy segment, it's going to be kind of 11% to 13%. And Utilities segment will probably be a little bit broader, but we've normally said that, that's generally kind of 12% to 14%. -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [47] -------------------------------------------------------------------------------- Got it. And this question was asked earlier, but nonelectric-grid modernization, just thinking longer term, in your experience, does a storm -- well, you probably haven't experienced a storm like this, but has past storms in Texas kind of increased like a sustained appetite for increased CapEx into grid reliability? Or does that sort of taper off as people's memories kind of pass over time? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [48] -------------------------------------------------------------------------------- Well, I mean there's always a storm -- the grid hardening work that comes that follows hurricanes, right? The problem with the grid hardening is, certainly when you -- I guess, that's a little bit different type of work. But when you're talking about doing grid hardening or going underground with utilities, the numbers I've heard is anywhere from 7% to 10% more expensive to put power utilities underground than it is to build overhead. When you talk about the results or what may happen as a result of this storm that hit Texas this last week, it's more creating more capacity, whether it be transmission capacity or energy generation capacity, to make sure that you have -- that you can provide the services that people need when storms like this occur. It's a little bit different. To me, it would be more power generation or we're bringing more power generation online and obviously perhaps doing some winterization on the wind farms that apparently didn't occur and they lost that power generation capability, and then having the transmission capabilities, because you're going to lose -- and then when you have storms like this, you're going to lose some transmission capabilities because you're going to have some failures. I mean it's just the nature of the beast, you get subzero temperatures, ice storms, lines freeze, power lines come down, it just happens. -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [49] -------------------------------------------------------------------------------- Got it. And just thinking about your backlog and the mix of MSA-based to non-MSA-based. If I pro forma the Future Infrastructure backlog into your backlog, I mean, does that mix look closer to 50% MSA to non-MSA? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [50] -------------------------------------------------------------------------------- Hold on. Do you have -- yes, standing a lot of pro forma in our whole backlog again. -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [51] -------------------------------------------------------------------------------- The way I thought about it is you said $350 million, I think, of estimated backlog for Future Infrastructure, right? And if I assume that all, in that case, I get kind of close to that 48%, 49% kind of range? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [52] -------------------------------------------------------------------------------- Yes. No, that's right. That's exactly right. -------------------------------------------------------------------------------- Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [53] -------------------------------------------------------------------------------- Okay. And I guess just last one for me is on the CapEx guidance. I think you mentioned $60 million to $80 million all based on buying new equipment. Is that extra $25 million or so, I think -- or that step-up, I guess, related to what you were talking about in the past for this year, is that related to the new Future Infrastructure business and buying equipment for that business? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [54] -------------------------------------------------------------------------------- So there's only a small portion of that, that's in there for Future. Actually, there's -- I mean there's a percentage of it based on their revenue, it's probably 2.5%, 2% to 2.5% of the revenue. It's just -- last year, we held CapEx down just because of the pandemic, we want to make sure we reserve cash. And it's pretty -- if you go back in past years, we've historically spent anywhere between $60 million to $90 million or $70 million to $90 million in CapEx. So just getting back more to the traditional numbers that's been consistent with how we've operated in the past. -------------------------------------------------------------------------------- Operator [55] -------------------------------------------------------------------------------- Your next question comes from the line of Brent Thielman with D.A. Davidson. -------------------------------------------------------------------------------- Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [56] -------------------------------------------------------------------------------- The -- I know it's going to get resegmented, but the Utilities & Distribution group haven't seen the same growth in '19 and '20 that gotten used to in preceding years. Now, some of that, there's some seasonal factors, things outside of you and your customers' control. But I know backlog isn't always a perfect leading indicator of the business, and I'm just wondering how you're thinking about that into 2021. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [57] -------------------------------------------------------------------------------- Yes. I mean we have been down, but part of the reason we've been down a little bit is because we chose to trade revenue for profit. We went through and did a full review of all of our contracts and said, which ones are we making money on and which ones are we not? And so -- and we talked about this in previous quarters about how we walked away from some contracts or terminated some that were just not profitable, where we couldn't negotiate good profitable -- renegotiate profitable rates for some of our customers. Other customers, we were very successful in negotiating good rates. So the reason for the slower revenue growth and decline is because we've been kind of cleaning up some of that in order to produce better margins overall and be more disciplined in that respect. Our continued growth is going to be driven by a number of different things. Geographic expansion, Tom talked about in his comments about expanding out in the West. We've got a new customer in the state of Utah. But we are going to have some ebb and flow, depending on our customer spend, where they are in the rebuild process and our geographic expansion. And that will be further complemented now by the acquisition of Future. Because I think as we mentioned before, Future is mostly telecom, but there was a nice chunk of gas utility work that they did as well down in the Southeastern part of the United States. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [58] -------------------------------------------------------------------------------- And the other part of it is when you go in to do the utility, especially gas utilities work, a lot of it's going into replacing old-aged systems in urban environments and rural environments. When you finish that buildout, then you're doing new installs. If things like the pandemic occur that stop new construction, then that type of work drops off. We'll still do work for those clients in those regions under current MSAs or existing MSAs, but then it drives us to go out and find other MSAs in other areas to work, too. And it takes a little bit of time to get those clients to allow you to come into an area, demonstrate that you can work. They will do that typically with allowing you to bring in a few crews. And it just takes time to build that relationship to the point that you can take over some of that work. It's just a process. -------------------------------------------------------------------------------- Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [59] -------------------------------------------------------------------------------- Okay. And will the addition of some of the telecom capabilities, do you think that will actually help you get some new customers on the utilities -- in the Utilities & Distribution side? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [60] -------------------------------------------------------------------------------- I'm counting on it. We're counting on it. And I think we'll help the telecom side get new customers. So because we have -- we're in geographic areas that the Future doesn't operate right now. We're already seeing them be pulled by customers that we have relationships with into those regions. So it's working both ways. -------------------------------------------------------------------------------- Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [61] -------------------------------------------------------------------------------- Great. And then you guys have a massive backlog here in the Power business, and it sounds like a good chunk of that is solar-related. Can you just talk about, I guess, the nonsolar-related stuff and bookings activity, what you're seeing outside of that within that business unit and how you see that going over the next 12 months in terms of growth opportunities? -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [62] -------------------------------------------------------------------------------- Yes. We've got -- we do a number of things that are nonsolar. You heard me talk about looking at getting into wind is one that we're going to start looking at, but a lot of it is renewable fuels, biodiesels, green diesels. We're actually doing studies for clients right now. Some of those projects will turn into construction projects for us. We're actually doing a large construction project that you heard me referenced for biofuels project out in California, that's about $200 million-plus. And another $50 million project that we're going to do some construction on here in the Gulf Coast. And some of the projects, we're dealing with clients. Some of the projects, you deal with developers. So there's a number of opportunities out there. Developer projects have a tendency to take longer to become a real project. They have to go out and get -- approve the process. Then they have to front-end engineering that supports that. Then they have to go out and get the financing in place and then get funding to move forward with the project. It just takes a little while. So we started years -- several years ago looking at those opportunities, even with methane recovery and waste treatment facilities or in landfills. So we've got our fingers in the fire in a lot of different areas working with developers and clients on those projects. It's just -- it takes a while. I don't know what we have in our plan for those outside of solar in our business plan right now. I don't -- I couldn't speak to that at this moment. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [63] -------------------------------------------------------------------------------- Yes. But if you recall, Brent, that segment has a number of different business unit. It includes our Canadian operations. It includes our industrial operations on the West Coast, our industrial operations along the Gulf Coast. So it's a broad mix of work in and around industrial facilities, refining and petchem, Canadian oil sands, Canadian midstream, et cetera. -------------------------------------------------------------------------------- Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [64] -------------------------------------------------------------------------------- Okay. And Ken, I imagine, final question, the guidance reflects some normalization in Civil margins, maybe back to the mid-high single digits. Is that fair? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [65] -------------------------------------------------------------------------------- That's correct. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [66] -------------------------------------------------------------------------------- That's correct. -------------------------------------------------------------------------------- Operator [67] -------------------------------------------------------------------------------- Your next question comes from the line of Lee Jagoda with CJS Securities. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [68] -------------------------------------------------------------------------------- Just one quick follow-up on an earlier comment. So I think earlier, you mentioned that the Energy segment target margins were in that 11% to 13% range. I assume you're speaking to the new Energy segment. Is that correct? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [69] -------------------------------------------------------------------------------- That's correct, Lee. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [70] -------------------------------------------------------------------------------- And I guess the follow-up is, I don't think you've gotten to the low end of that range since 2015, if I look at the segment together. So has something changed structurally that you should achieve that range going forward? And when do you actually expect to be within that range? -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [71] -------------------------------------------------------------------------------- I guess I was thinking about it more from the -- you know what, that's a good question. I'm glad you clarified that. I was thinking about more from the old Power and Industrial. When you layer in Heavy Civils, it -- that's a good point, it probably will not be 11% to 13%. When you layer in our Civil segment, it will probably be kind of 9% to 12%. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [72] -------------------------------------------------------------------------------- Yes, that's right. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [73] -------------------------------------------------------------------------------- Yes, because that will dollar average anyhow. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [74] -------------------------------------------------------------------------------- Heavy Civils traditionally is just a lower-margin business. -------------------------------------------------------------------------------- Lee M. Jagoda, CJS Securities, Inc. - Director [75] -------------------------------------------------------------------------------- Right. No, no, that makes sense. I just -- I was surprised that it was as high as it was, so I wanted to clarify. -------------------------------------------------------------------------------- Kenneth M. Dodgen, Primoris Services Corporation - Executive VP & CFO [76] -------------------------------------------------------------------------------- No. Great question. I appreciate you asking about that. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [77] -------------------------------------------------------------------------------- You will see -- when we finish the job in the Northeast, then you'll see margins start to triple up in that segment. Right now, they got some revenue, they got a burn that has no margin in it at all. So we got to get past that project, but renewals picks those numbers up pretty nicely. -------------------------------------------------------------------------------- Operator [78] -------------------------------------------------------------------------------- (Operator Instructions) And there are no further questions at this time. I would like to turn the call back over to Mr. Tom McCormick, Chief Executive Officer for Primoris. -------------------------------------------------------------------------------- Thomas E. McCormick, Primoris Services Corporation - CEO, President & Director [79] -------------------------------------------------------------------------------- Thank you, Amy. I'll just conclude by saying 2020 was a very successful year for the Primoris family of companies as well as for our shareholders and our customers. We're off to a strong start in 2021 and are looking forward to seeing what challenges and opportunities the year brings. Thank you all for joining us today. -------------------------------------------------------------------------------- Operator [80] -------------------------------------------------------------------------------- This concludes today's conference call. Thank you for your participation. You may now disconnect.