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Primoris (PRIM) to Buy PLH Group, Expands Utility Business

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Primoris Services Corporation PRIM inked a deal with PLH Group, Inc. to acquire its business in an all-cash transaction worth $470 million. Shares of this leading specialty contractor gained 2.29% on Jun 27 and 3.48% in the after-hours trading session.

The transaction is expected to close in third-quarter 2022 and depends on receiving regulatory approvals and other customary closing conditions.

Buyout Synergies

As a critical infrastructure services provider to the utility, renewables and other related energy markets, Primoris will enjoy almost double strength in the Power Delivery business and a rise in its Utilities segment revenue growth of more than 50% on a pro forma basis. Also, it will solidify Power Delivery presence in the five fastest-growing states to create more turnkey opportunities in the future. Moreover, the buyout will accelerate PRIM’s ongoing portfolio transition towards higher-growth, higher-margin markets and recurring Master Service Agreement ("MSA") revenue.

Primoris expects to witness double-digit earnings per share growth and material cost synergies within the next 12 months. It anticipates annual cost savings of at least $10 million in next two years post-acquisition. On a pro-forma basis, Primoris projects net debt to adjusted EBITDA of approximately 3.3x for the last 12 months with targeted de-levering to 2.0x by 2024.

President and chief executive officer of Primoris, Tom McCormick, stated, "We are the best owner for this business, and its scope complements ours both in end markets and geographic coverage, advancing us along our strategic path. We look forward to welcoming the PLH team to the Primoris family of companies."

For the year ended on May 31, 2022, PLH generated total revenue of $733 million and an adjusted EBITDA of $54 million. Approximately 80% of its total revenue was associated with Power Delivery and Gas Utility end markets in 2021. On a pro forma basis, MSA contracts will now increase to 48% from 46% of total revenue.

Share Price Performance

Primoris — a Zacks Rank #1 (Strong Buy) company — primary banks on solid project execution and buyout strategy. On Mar 1, it acquired Alberta Screw Piles, Ltd. for a cash price of approximately $4.1 million. Earlier on Jan 15, 2021, it acquired Future Infrastructure Holdings, LLC for approximately $604.7 million

Shares of this leading specialty contractor have outperformed the Zacks Building Products - Heavy Construction industry year to date. The company has been benefiting from solid performance across the two segments — Utility and Energy/Renewables. Biden’s renewable energy drive is expected to boost the company’s growth.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Top-Ranked Stocks in the Construction Sector

Sterling Construction Company, Inc. STRL — a Zacks Rank #2 (Buy) company — is benefiting from broad-based growth across the E-Infrastructure, Building and Transportation solutions segments.

The consensus mark for Sterling’s 2022 earnings has remained stable at $2.88 per share over the past 30 days. This suggests 34% year-over-year growth.

Granite Construction Inc. GVA — a Zacks Rank #2 company — is the largest diversified infrastructure companies in the United States. The company has been banking on strategic initiatives, inorganic moves and strong bidding activity.

Earnings estimates for 2022 have increased to $2.11 per share from $1.97 in the past 60 days. Earnings for the current year are expected to climb 17.2% year over year.

AECOM ACM — carrying a Zacks Rank #2 — is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets like transportation, facilities, government and environmental, energy and water businesses.

AECOM’s expected earnings growth rate for 2022 is 21.6%. The consensus mark for its 2022 earnings moved up to $3.43 per share from $3.40 in the past 60 days.


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