Building America's Infrastructure

Transcription

1 Investor Presentation September 2017 Building America's Infrastructure

2 Disclosure Regarding Forward-Looking Statements This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including with regard to the Company s future performance. Words such as "estimated," "believes," "expects," "projects," and "future" or similar expressions are intended to identify forward-looking statements. Forward-looking statements inherently involve risks, uncertainties, and assumptions that are difficult to predict or are beyond Primoris control. Prior to making an investment decision, please refer to the Risk Factors section and other portions of our annual Form 10- K and other filings with the Securities and Exchange Commission for additional information concerning some of the risks, uncertainties and assumptions that could affect our forward-looking statements. Forward-looking statements are based on management s current expectations at the time of this presentation. Primoris does not have any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. 2

3 Primoris : An Established Infrastructure Company Why We re Unique: A Entrepreneurial Spirit Paired with a Conservative Culture How We Are Growing: Best in Class Within Diverse End Markets 3

4 Primoris Overview Diversified Company Building infrastructure across diverse end markets Growing company with regional presence 8,000+ employees Publicly Traded on NASDAQ Market Cap ~$1.2 Billion (August 2017) Average liquidity >$4.5 Million per day $0.055 per share quarterly dividend Strong Financial Foundation Backlog ~$2.8 Billion (June 30, 2017) On going MSA work approximately 30% of revenue Cash balance $112 Million (June 30, 2017) 4

5 Performance from Start to Finish Engineering, Procurement & Startup Energy West Construction Services East Construction Services Fabrication Construction Maintenance Mid sized LNG facilities Renewable energy production facilities (biofuel and waste toenergy) Hydrocarbon reforming (including hydrogen, ammonia, and methanol) Direct fired furnaces Solar projects Mid sized EPC projects High energy/pressure piping, boilers, and vessels Skid mounted pre piped and wired process skids Pipe fabrication Pipeline installation for transmission, distribution cable & conduit, and horizontal directional drilling Power plants, both traditional and nontraditional fuel sources Refineries, petrochemical facilities, and process plants LNG facilities Heavy civil bridges, highways, rail, marine, parking structures, water & waste water facilities Process and manufacture equipment Pipeline Solid waste facilities Gypsum storage impoundments Turnarounds and outages General plant maintenance Material handling 5

6 Operating Segments Power, Industrial, & Engineering Pipeline & Underground Utilities & Distribution Civil ARB Industrial ARB Structures Rockford Primoris Industrial Constructors Primoris Power Primoris Fabrication Primoris Renewable Energy OnQuest Vadnais Trenchless Pipe Jacking Primoris Field Services Primoris Pipeline Primoris Coastal Field Services ARB Underground Q3C Primoris AV Primoris Distribution Services Primoris Heavy Civil Primoris I&M BW Primoris PD&C 6

7 Revenue Breakdown by Segment Civil 21% Power, Industrial & Engineering 22% Utilities & Distribution 31% Pipeline & Underground 26% 7 [1] Values are for LTM ending 6/30/2017

8 Historical Segment Revenue $800 $700 $600 LTM 6/30/ LTM 6/30/ $ LTM 6/30/ LTM 6/30/17 $ $ $200 $100 $ PI&E Pipeline Utilities Civil 8

9 Segment Backlog Total Backlog ($MM) Fixed MSA TOTAL PI&E $449 $42 $491 Pipeline $848 $79 $927 Utilities $94 $570 $664 Civil $665 $3 $668 $2,056 $694 $2,750 Civil 24% Utilities 24% PI&E 18% Pipeline 34% 9 [1] As of 6/30/2017

10 Primoris Q2 Update Record Q2 revenue of $631.2 million, a 38% increase over Q Net income of $21.5 million, a 326% increase over Q Cash flow from operations of $67.2 million, a 64% increase over Q YTD cash flow from operations of $116 million, a 2015% increase over YTD Backlog remained at nearly $2.8 billion, which includes $680 million for Atlantic Coast Pipeline Invested almost $66 million on acquisitions of Florida Gas Contractors, Coastal Field Services, and expanded capabilities for Primoris Design & Construction. Raised top and bottom line guidance by 5, expect earnings over the next four quarters to be between $1.05 and $1.25 per share. 10

11 MSA Work Provides Revenue Base $700 $600 $500 $400 $300 $200 $100 $ MSA Revenue (in millions) Primarily gas utility customers Work tends to be higher margin than Company average Agreements span several years Approximately 30% of total Primoris revenue 11 [1] 2017 values are for LTM ending 6/30/2017

12 Reliable and Profitable Growth Since going public in 2008, Primoris has Grown revenues by 16% CAGR Been profitable every quarter Increased dividends four times 12

13 Capital Allocation $140 $120 $100 $80 $60 $40 Disciplined approach to acquisitions Dedicated to investing internally for growth $20 $ Cash Dividends Net Cap Ex Acquisitions D&A $12 $0.25 Consistently grown dividends per share Cash Dividends ($MMs) $10 $8 $6 $4 $2 $ $0.20 $0.15 $0.10 $0.05 $0.00 Dividends per share 13 Cash Dividends Dividends per share [1] 2017 values are for LTM ending 6/30/2017

14 Primoris Today: An Established Infrastructure Company Why We re Unique: A Entrepreneurial Spirit Paired with a Conservative Culture How We Are Growing: Best in Class Within Diverse End Markets 14

15 Assess Risk Throughout Entire Project Life Cycle The Four Cs of Risk Management: Customer, Contract, Cost, & Cash Customer Selection Customer Grading System Financial capabilities Primoris experience with client Capital spending plan Proposal Cost Estimate Review Schedule Analysis Cost Estimate Review Cash Flow Analysis Contract Review Terms & Conditions Margin Analysis Project Execution Monthly and Quarterly WIP Project Review Safety Statistics Quality Statistics Schedule Analysis Project Staffing Contingency Drawdown Project Cash Flow Customer Feedback Program 15

16 Strong Financial Foundation June 30, 2016 June 30, 2017 Cash & Equivalents $97MM $112MM Debt to Equity 51.3% 46.8% LTM Cash Flow from Operations $71MM $173MM 16

17 Diverse Mix of Contract Type PI&E Cost Plus 41% Unit Price 1% Pipeline Fixed Price 21% Fixed Price 58% Unit Price 75% Cost Plus 4% Utilities Unit Price 47% Fixed Price 43% Civil Fixed Price 9% Cost Plus 14% Cost Plus 10% Unit Price 77% 17 [1] Revenue for LTM Ended 6/30/17

18 Equipped for Growth 6,462 Construction Equipment Units $90 $80 $70 $60 $50 $40 $30 $20 $10 $ D&A and Net Cap Ex D&A Net Cap Ex [1] 3,251 Vehicles 18 [1] 2017 values are for LTM ending 6/30/2017

19 Our Employees Drive Our Revenue 8 BOD Our Executives have an average 37 years of industry experience Executives Management and Project Managers Seven Executive Entrepreneurs 750+ Admin, HR, IT, Safety, Project Support, Estimators & Schedulers 1,000+ General Foreman and Superintendents 5,200+ Trades: Welders, Carpenters, Pipefitters, Millwrights, Ironworkers, Boilermakers, Mechanics, Electricians, Equipment Operators, Etc. 19

20 Employees Aligned with Shareholders 220+ Employees in 2015 Long-Term Equity Incentive Plan 24% PRIM shares outstanding held by insiders 20

21 Targeted Acquisition Growth 3 transformative acquisitions since going public 18 acquisitions since going public for a total investment of $454 million Current targets range in size from several million to several hundred million revenue Among our primary areas of focus at this time are: Expanded utility distribution geographies Power related services Additional self-perform capabilities 21

22 Recent Primoris Acquisitions Acquired Florida Gas Contractors, a pipeline utility contractor, for $33 million. The re named Primoris Distribution Services ( PDS ) expands the reach of our U&D segment into Florida and the Southeast markets. Expanded the Tyler, Texas PD&C office in conjunction with PD&C s first official front end engineering design awards. Acquired Coastal Field Services, a pipeline construction and maintenance company in Texas, for $27.5 million. Primoris Coastal Field Services ( PCFS ) provides Primoris with the opportunity for growth in the Gulf Coast energy market. 22

23 Primoris Today: An Established Infrastructure Company Why We re Unique: A Entrepreneurial Spirit Paired with a Conservative Culture How We Are Growing: Best in Class Within Diverse End Markets 23

24 Power, Industrial, & Engineering YTD 2017 Revenue $466 $479 $289 Gross Profit $54 $50 $34 Backlog $512 $491 Current Outlook Low-cost natural gas as feedstock continues to support chemical processing expansion and gas conversion power projects. Continue to see opportunities in industrial gas production, liquids terminals, oil refining, and air separation units. Power work in California is being driven by replacement and repowering projects impelled by Once Through Cooling regulation, municipality gas conversions, and upgrades to emissions standards. $40 $35 $30 $25 $20 $15 $10 $5 $ U.S. Chemical Processing Spending Forecast [1] 24 [1] Industrial Info Resources North America Forecast, 07/04/17, $ in billions

25 Pipeline & Underground YTD 2017 Revenue $299 $402 $318 Gross Profit $25 $68 $67 Backlog $1,053 $927 Current Outlook Our natural gas pipeline market looks poised for a strong , even taking into account the decline in energy prices. $313B of estimated natural gas midstream infrastructure investment through [1] Oil midstream opportunities are picking up. $30.0 $25.0 $20.0 $15.0 $10.0 U.S. Oil & Gas Pipelines Spending Forecast [2] $5.0 $ 25 [1] INGAA North American Midstream Infrastructure Through 2035, [2] Industrial Info Resources North America Forecast, 07/04/17, $ in billions

26 Utilities & Distribution YTD 2017 Revenue $587 $637 $330 Gross Profit $96 $100 $41 Backlog $606 $664 Current Outlook Maintenance and replacement work continues, as utilities must spend amounts approved in rate cases in order to earn allowed rate of return Pipeline integrity testing will provide long-term growth opportunities. Focused on expansion into high growth geographies with multi-year construction programs. 26

27 Civil YTD 2017 Revenue $577 $479 $256 Gross Profit $45 ($17) ($2) Backlog $627 $668 Current Outlook Sale of Texas Heavy Civil unit no longer under consideration. Business unit has new management and is pursuing higher margin airport and port projects. Low-cost natural gas as feedstock continues to support chemical processing expansion opportunities for Primoris I&M. Prop 7 Funding Flow 27

28 Near-term Potential Catalysts Atlantic Coast Pipeline Gulf Industrial projects Micro LNG projects New PD&C Engineering Firm 28

29 Focused on EPS Growth $1.25 $0.94 $1.05 2Q17 $0.42 1Q17 $0.15 4Q16 $0.28 3Q16 $0.09 Last Four Quarters EPS [1] Next Four Quarters EPS Guidance 29 [1] Results include write-downs Civil segment

30 Questions & Answers Primoris: Established Infrastructure Company Why We re Unique: Conservative Culture Paired with Entrepreneurial Spirit How We Are Growing: Best in Class Within Diverse End Markets 30

31 Appendix Capital Structure Historical Data

32 Conservative Capital Structure [1] Balance ($MMs) Interest Rate Maturity Senior Secured Notes $ %-4.60% December 2022 November 2025 Equipment Notes $ %-3.51% August 2017 October 2021 Mortgage Notes $11 4.3%-5.0% January 2031 October 2038 Total Debt $241 Weighted Average Interest Rate 2.97% Total Shareholder Equity $519 TOTAL CAPITAL $759 Available Cash Balance $112 Shelf Facility $75 Ten years from date of issue Revolving Credit Facility $125 December 2017 Canadian Credit Facility [2] $6 Outstanding Letters of Credit [2] $16 Total Available Liquidity $ [1] As of 6/30/17. [2] Canadian facility in US dollars

33 $2,000 $1,500 $1,000 $500 $0 Annual Revenue ($MMs) 33 Historical Double-Digit Revenue Growth Became a publicly traded entity Since 1983, Primoris has demonstrated consistent revenue growth Private Company Public Company 1983 to to present 17% CAGR 16% CAGR [1] 2017 value is LTM ended 6/30/17 [1]

34 Long-Standing Relationships with Blue Chip Customers 70+ years 70+ years 75+ years 70+ years 70+ years 50+ years 50+ years 50+ years 50+ years 40+ years 25+ years 25+ years 10+ years 10+ years 34

35 Acquisition History as Public Company 35 Year Company Industries Targeted Acquisition Price 2009 James Construction Group Transportation infrastructure and industrial construction $135 MM 2010 Rockford Corporation Midstream pipeline construction $83 MM 2012 Sprint Pipeline Services Midstream and utility pipeline construction $26 MM 2012 Silva Companies Transportation infrastructure and materials $14 MM 2012 Saxon Construction Inc. Power and industrial gas construction $3 MM 2012 Q3 Contracting Midstream and utility pipeline construction $59 MM 2013 FSSI Refinery and chemical plant turn-arounds $2 MM 2014 Vadnais Trenchless Services Midstream and utility pipeline construction $7 MM 2014 Surber Roustabout Upstream oil and gas field services in West Texas $4 MM 2014 Ram-Fab, LLC Piping and piping systems fabricator $4MM 2015 Aevenia Inc. Electrical construction $23MM 2015 Blaus Wasser Water development projects $4MM 2015 Adamson Electrical construction $1MM 2016 Mueller Electrical construction $1MM 2016 Pipe Jacking Midstream and utility pipeline construction $14MM 2016 Northern Energy and Power Solar, battery storage, and micro grids construction $9MM 2017 Florida Gas Connectors Midstream and utility pipeline construction $37MM 2017 Coastal Field Services Pipeline maintenance contractor $28MM

36 Primoris Historical Timeline Brian Pratt becomes President Grows ARB from $12MM revenue business in 1983 to the company s current size Acquires Harco Enters foreign markets Acquires Macco Constructors Acquires Saffel & McAdam Acquires Cardinal Contractors Primoris Services Corporation (PSC) is formed Separates from Alex-Robertson Acquires assets of Oilfield Construction Co. Acquires OFCCO Constructors Develops Steel Structures capabilities Founded OnQuest OnQuest acquires Born Canada ARB incorporates as a separate organization Becomes publicly traded company on the NASDAQ under ticker PRIM Acquires Rockford Corporation Acquires Force Specialty Services Acquires Aevenia Acquires Florida Gas Contractors Acquires Coastal Field Services Acquires James Construction Group Acquires Sprint Pipeline Acquires The Silva Companies Acquires Ram-Fab Acquires Surber Roustabout Acquires Mueller Acquires Pipe Jacking Acquires Cravens Services Inc. Acquires The Saxon Group Acquires Q3 Contracting Acquires Blaus Wasser Acquires Northern Energy & Power Acquires Vadnais Trenchless, Inc. 36