PRIM Investor Presentation January 2018

Transcription

1 PRIM Investor Presentation January 2018

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 Historical Revenue and Gross Profit $2,500 $1,929 $1,997 $2,403 Revenue $2,000 $1,500 $1,000 $500 $ % $ LTM 9/30/17 $300 $250 $200 $150 $100 $50 $ $279 $220 $ % 11.4% 10.1% $ % LTM 9/30/17 Gross Profit +41.8% 3 * Revenue and gross profit values are in $ millions. Increase is YoY through 9/30/17

4 Operating Segments Primoris Services Corporation LTM 9/30/2017 Revenue: $2.4B Power, Industrial, & Engineering Pipeline & Underground Utilities & Distribution Civil $555MM $587MM $766MM $495MM 4

5 Power, Industrial, & Engineering What We Build Traditional gas fired power plants Non traditional (solar) power projects Refineries and Terminal stations Compressor stations Petrochemical facilities Processing facilities YTD 2017 Revenue $466 $479 $443 Gross Profit $54 $50 $52 Backlog $593 $512 $459 Market Drivers Low cost natural gas as feedstock continues to support chemical processing expansion and gas conversion power projects. Environmental concerns driving renewables opportunities. 11% 13% Typical Gross Profit 5

6 Pipeline & Underground What We Build Oil pipelines Gas pipelines Product pipelines Water pipelines Large and small diameter pipelines Gathering and long haul systems YTD 2017 Revenue $299 $402 $402 Gross Profit $25 $68 $80 Backlog $281 $1,053 $851 Market Drivers Increased used of low cost natural gas at petrochemical facilities and power plants driving demand to transport gas from shale regions Midstream oil markets picking up 10% 14% Typical Gross Profit 6

7 What We Build Utilities & Distribution Natural gas distributions systems Water distribution systems Sewer collection systems Electrical T&D YTD 2017 Revenue $587 $637 $576 Gross Profit $96 $100 $77 Backlog $511 $606 $623 Market Drivers Integrity work continues to provide longterm growth opportunities Maintenance and replacement projects continue to provide a steady base of work Residential & commercial development driving new installations 13% 16% Typical Gross Profit 7

8 What We Build Highways and Bridges Airports Ports Mining facilities Sitework YTD 2017 Civil Revenue $577 $479 $379 Gross Profit $45 ($17) $1 Backlog $703 $627 $683 Market Drivers State and federal transportation spending driving heavy civil growth in targeted markets New and expanded petrochemical and LNG facilities provide sitework opportunities 5% 8% Typical Gross Profit 8

9 $200 $175 $150 $125 $100 $75 $50 $25 $0 9 Profitable Through Operating Cycle Earnings Per Share LTM Operating Cash Flow MAR '15 JUN '15 SEP '15 DEC '15 MAR '16 JUN '16 SEP '16 DEC '16 MAR '17 JUN '17 SEP '17 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $ $0.03 $0.07 $0.37 $0.42 $0.40 $0.24 $0.28 $0.15 $0.10 $0.09 $0.05 Debt to Equity 9/30/ % 9/30/ % Q Q Q Q Q Q Q Q Q Q Q Low Weighted Average Interest Rate 3.0%

10 Steadily Growing MSA Revenue $2,500 $2,000 Non MSA Revenue 9.6% CAGR $1,500 $1,000 $500 $ 27% 24% 24% 29% 29% 27% $412 $463 $502 $565 $576 $ LTM 2017 MSA Revenue 10.2% CAGR MSA Revenue Non MSA 10 *Values in $ millions.

11 The Four Cs of Risk Management Customer CHOOSE THE RIGHT CUSTOMER Choose the right job Customer grading system Customer feedback system Contract FOCUS ON TERMS AND CONDITIONS All contracts reviewed by legal department ~60% of Primoris contracts are costplus or unit price Cash CASH FLOW ANALYSIS PRE BID Manage cash throughout contracting process Focus on project cash flow during project execution Cost KNOW YOUR COST Cost estimates are reviewed before bid submission Project costs are tracked and managed on a continuous basis 11

12 Historical Segment Backlog $1,200 $1,000 12/16 Total Backlog at 12/31/15: $2.1B Total Backlog at 9/30/17: $2.6B 9/17 $800 $600 12/15 12/16 9/17 12/15 12/16 9/17 12/15 12/16 9/17 $400 12/15 $200 $ PI&E Pipeline Utilities Civil 12 * Backlog values are in $ millions

13 Shift Towards Higher Margin Segments 2015 Revenue $1.9B LTM 2017 Revenue $2.4B Civil 30% PI&E 24% Civil 21% PI&E 23% Utilities 30% Pipeline 16% Utilities 32% Pipeline 24% 13

14 Strategic Plan Continue to Grow Recurring Revenue Base MSA awards, both utility and non utility Solar investment Build/Own/Operate investments Increase Capabilities through M&A Expanded utility distribution geographies Additional self perform capabilities, targeting mid cap projects Add a fifth dimension Enhance Internal Processes Increase visibility into client projects and programs Hone bidding discipline and contract management 14

15 Low-Cost Natural Gas Driving Growth The continued low cost of natural gas is driving investment across Primoris operating segments. Henry Hub Natural Gas $/MMBtu $16 $14 $12 $10 $8 $6 $4 $2 $ Power, Industrial, & Engineering Pipeline & Underground Utilities & Distribution Civil Lower cost and environmentally friendly for power plants Feedstock for petrochemical plants LNG exports Natural gas pipelines for new utility customers Disconnect between where natural gas is produced and where it is processed Continued work on existing distribution systems New natural gas distribution systems Sitework for petrochemical and LNG facilities 15

16 Growing Need for Improved Infrastructure All of Primoris operating segments are involved in upgrading America s aging infrastructure system. Power, Industrial, & Engineering Pipeline & Underground Utilities & Distribution Civil Aging power plants Phasing out fossil fuels Pipeline integrity Need for infrastructure to connect new fuel sources to new users Pipeline integrity Need for new distribution systems as natural gas usage grows Deteriorating bridges and highways Airports and ports in need of upgrades 16

17 Priorities for Capital Allocation Growth Through Acquisitions Three transformative acquisitions 19 acquisitions for a total investment of $457 million Investment in Internal Growth Strategic investment in new equipment and facilities Expect to spend ~$50 $60MM in net capex in 2018 Consistently grown Dividend dividends per share Growth One of a few E&Cs to pay a dividend Increased dividend five times since going public 17 [1] 2017 values are for LTM ending 9/30/2017

18 Primoris Investment Summary Low Cost Natural Gas & Demand for Infrastructure Investment Driving Market Demand Focus on Growing Higher Margin Markets Balanced Portfolio of Diverse End Markets Conservative Balance Sheet, Strong Operating Cash 18

19 Appendix

20 Diverse Mix of Contract Type PI&E Cost Plus 32% Unit Price 0% Fixed Price 68% Pipeline Unit Price 72% Fixed Price 23% Cost Plus 5% Utilities Unit Price 46% Fixed Price 46% Civil Fixed Price 5% Cost Plus 16% 20 Cost Plus 8% [1] Revenue for YTD 9/30/17 Unit Price 79%

21 Conservative Capital Structure [1] Balance ($MMs) Interest Rate Maturity Senior Secured Notes $ %-4.60% December 2022 November 2025 Equipment Notes $ %-3.51% June 2018 August 2022 Mortgage Notes $11 4.3%-5.0% January 2031 October 2038 Total Debt $255 Weighted Average Interest Rate 3.0% Total Shareholder Equity $537 TOTAL CAPITAL $791 Available Cash Balance $143 Shelf Facility $50 Ten years from date of issue Revolving Credit Facility $200 September 2022 Canadian Credit Facility [2] $6 Outstanding Letters of Credit [2] $20 Total Available Liquidity $ [1] As of 9/30/17. [2] Canadian facility in US dollars

22 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. 22

23 Power, Industrial, & Engineering 23

24 Pipeline & Underground 24

25 Utilities & Distribution 25

26 Civil 26

27 Investor Contact: Kate Tholking Director of Investor Relations Corporate Contact: 2100 McKinney Ave, Suite 1500 Dallas, TX