10-Q 1 prim-20220331x10q.htm 10-Q
http://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2021-01-31#PrepaidExpenseAndOtherAssetsCurrent0001361538--12-312022Q1falsehttp://fasb.org/us-gaap/2021-01-31#PrepaidExpenseAndOtherAssetsCurrent5330813653194585http://fasb.org/us-gaap/2021-01-31#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2021-01-31#PrepaidExpenseAndOtherAssetsCurrentP3YP3Y0.08P1YP1YP12M750000000P3Yhttp://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesCurrent00013615382022-02-2800013615382021-11-210001361538us-gaap:ShareBasedPaymentArrangementNonemployeeMemberprim:EquityIncentivePlan2013Member2022-01-012022-03-310001361538us-gaap:ShareBasedPaymentArrangementNonemployeeMemberprim:EquityIncentivePlan2013Member2021-01-012021-03-310001361538us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001361538us-gaap:CommonStockMember2022-01-012022-03-310001361538us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001361538us-gaap:CommonStockMember2021-01-012021-03-310001361538us-gaap:RetainedEarningsMember2022-03-310001361538us-gaap:AdditionalPaidInCapitalMember2022-03-310001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001361538us-gaap:RetainedEarningsMember2021-12-310001361538us-gaap:AdditionalPaidInCapitalMember2021-12-310001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001361538us-gaap:RetainedEarningsMember2021-03-310001361538us-gaap:AdditionalPaidInCapitalMember2021-03-310001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001361538us-gaap:RetainedEarningsMember2020-12-310001361538us-gaap:AdditionalPaidInCapitalMember2020-12-310001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001361538us-gaap:CommonStockMember2022-03-310001361538us-gaap:CommonStockMember2021-12-310001361538us-gaap:CommonStockMember2021-03-310001361538us-gaap:CommonStockMember2020-12-310001361538prim:EmployeesOfFutureInfrastructureHoldingsLlcMember2022-01-012022-03-3100013615382022-04-012022-03-310001361538us-gaap:FixedPriceContractMemberprim:UAndDSegmentMember2022-01-012022-03-310001361538us-gaap:FixedPriceContractMemberprim:PipelineServicesMember2022-01-012022-03-310001361538us-gaap:FixedPriceContractMemberprim:EnergyRenewablesMember2022-01-012022-03-310001361538prim:UnitPriceContractsMemberprim:UAndDSegmentMember2022-01-012022-03-310001361538prim:UnitPriceContractsMemberprim:PipelineServicesMember2022-01-012022-03-310001361538prim:UnitPriceContractsMemberprim:EnergyRenewablesMember2022-01-012022-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:UAndDSegmentMember2022-01-012022-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:PipelineServicesMember2022-01-012022-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:EnergyRenewablesMember2022-01-012022-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:UAndDSegmentMember2022-01-012022-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:PipelineServicesMember2022-01-012022-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:EnergyRenewablesMember2022-01-012022-03-310001361538prim:CostReimbursableContractsMemberprim:UAndDSegmentMember2022-01-012022-03-310001361538prim:CostReimbursableContractsMemberprim:PipelineServicesMember2022-01-012022-03-310001361538prim:CostReimbursableContractsMemberprim:EnergyRenewablesMember2022-01-012022-03-310001361538us-gaap:FixedPriceContractMember2022-01-012022-03-310001361538prim:UnitPriceContractsMember2022-01-012022-03-310001361538prim:NonMasterServiceAgreementCustomersMember2022-01-012022-03-310001361538prim:MasterServiceAgreementCustomersMember2022-01-012022-03-310001361538prim:CostReimbursableContractsMember2022-01-012022-03-310001361538us-gaap:FixedPriceContractMemberprim:UAndDSegmentMember2021-01-012021-03-310001361538us-gaap:FixedPriceContractMemberprim:PipelineServicesMember2021-01-012021-03-310001361538us-gaap:FixedPriceContractMemberprim:EnergyRenewablesMember2021-01-012021-03-310001361538prim:UnitPriceContractsMemberprim:UAndDSegmentMember2021-01-012021-03-310001361538prim:UnitPriceContractsMemberprim:PipelineServicesMember2021-01-012021-03-310001361538prim:UnitPriceContractsMemberprim:EnergyRenewablesMember2021-01-012021-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:UAndDSegmentMember2021-01-012021-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:PipelineServicesMember2021-01-012021-03-310001361538prim:NonMasterServiceAgreementCustomersMemberprim:EnergyRenewablesMember2021-01-012021-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:UAndDSegmentMember2021-01-012021-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:PipelineServicesMember2021-01-012021-03-310001361538prim:MasterServiceAgreementCustomersMemberprim:EnergyRenewablesMember2021-01-012021-03-310001361538prim:CostReimbursableContractsMemberprim:UAndDSegmentMember2021-01-012021-03-310001361538prim:CostReimbursableContractsMemberprim:PipelineServicesMember2021-01-012021-03-310001361538prim:CostReimbursableContractsMemberprim:EnergyRenewablesMember2021-01-012021-03-310001361538us-gaap:FixedPriceContractMember2021-01-012021-03-310001361538prim:UnitPriceContractsMember2021-01-012021-03-310001361538prim:NonMasterServiceAgreementCustomersMember2021-01-012021-03-310001361538prim:MasterServiceAgreementCustomersMember2021-01-012021-03-310001361538prim:CostReimbursableContractsMember2021-01-012021-03-310001361538srt:MinimumMemberus-gaap:ChangeInAccountingMethodAccountedForAsChangeInEstimateMemberprim:ConstructionEquipmentMember2022-01-012022-01-010001361538srt:MaximumMemberus-gaap:ChangeInAccountingMethodAccountedForAsChangeInEstimateMemberprim:ConstructionEquipmentMember2022-01-012022-01-010001361538srt:MinimumMemberprim:ConstructionEquipmentMember2021-12-312021-12-310001361538srt:MaximumMemberprim:ConstructionEquipmentMember2021-12-312021-12-310001361538prim:AlbertaScrewPilesLtdMember2022-03-012022-03-010001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001361538us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001361538prim:CreditFacilityWithPrivateBankBankOfWestAndIBERIABANKCorporationMember2022-03-310001361538us-gaap:LoansPayableMember2022-03-310001361538prim:CreditFacilityWithCanadianBankMember2022-03-310001361538us-gaap:RevolvingCreditFacilityMember2022-03-310001361538us-gaap:LetterOfCreditMember2022-03-310001361538prim:CanadianCreditFacilityCibcMember2022-03-310001361538prim:CreditFacilityWithCanadianBankMemberus-gaap:LetterOfCreditMember2022-03-310001361538srt:MaximumMember2022-03-310001361538us-gaap:RestrictedStockMember2022-01-012022-03-310001361538srt:DirectorMember2022-01-012022-03-310001361538prim:UAndDSegmentMember2022-03-310001361538prim:PipelineServicesMember2022-03-310001361538prim:EnergyRenewablesMember2022-03-310001361538prim:UAndDSegmentMember2021-12-310001361538prim:PipelineServicesMember2021-12-310001361538prim:EnergyRenewablesMember2021-12-310001361538prim:FutureInfrastructureHoldingsLlcMemberus-gaap:TradeNamesMember2021-01-152021-01-150001361538prim:FutureInfrastructureHoldingsLlcMemberus-gaap:CustomerRelationshipsMember2021-01-152021-01-150001361538us-gaap:TradeNamesMember2022-03-310001361538us-gaap:NoncompeteAgreementsMember2022-03-310001361538us-gaap:CustomerRelationshipsMember2022-03-310001361538us-gaap:TradeNamesMember2021-12-310001361538us-gaap:NoncompeteAgreementsMember2021-12-310001361538us-gaap:CustomerRelationshipsMember2021-12-310001361538us-gaap:RetainedEarningsMember2022-01-012022-03-310001361538us-gaap:InterestRateSwapMember2022-03-310001361538us-gaap:InterestRateSwapMember2021-12-310001361538us-gaap:InterestRateSwapMember2018-09-130001361538us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:InterestRateSwapMember2022-03-310001361538us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:InterestRateSwapMember2021-12-310001361538us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2022-01-012022-03-310001361538us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2021-01-012021-03-310001361538us-gaap:LoansPayableMember2018-09-130001361538us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001361538us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001361538us-gaap:ChangeInAccountingMethodAccountedForAsChangeInEstimateMember2022-01-012022-03-310001361538us-gaap:MortgagesMember2022-03-310001361538us-gaap:LoansPayableMember2022-03-310001361538prim:CommercialEquipmentFinancingDueJune2018ToAugust2022Member2022-03-310001361538us-gaap:MortgagesMember2021-12-310001361538us-gaap:LoansPayableMember2021-12-310001361538prim:CommercialEquipmentFinancingDueJune2018ToAugust2022Member2021-12-310001361538us-gaap:LoansPayableMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310001361538prim:TopTenCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001361538prim:SolarEnergyCustomerMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310001361538prim:SecondaryOfferingMember2021-03-3100013615382022-02-242022-02-2400013615382021-11-032021-11-0300013615382021-08-032021-08-0300013615382021-05-042021-05-0400013615382021-02-192021-02-190001361538us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001361538us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-3100013615382021-03-3100013615382020-12-310001361538prim:FutureInfrastructureHoldingsLlcMemberus-gaap:TradeNamesMember2021-01-150001361538prim:FutureInfrastructureHoldingsLlcMemberus-gaap:CustomerRelationshipsMember2021-01-150001361538prim:FutureInfrastructureHoldingsLlcMember2021-10-012021-12-310001361538prim:FutureInfrastructureHoldingsLlcMember2021-02-012021-03-310001361538prim:FutureInfrastructureHoldingsLlcMember2021-01-152021-01-310001361538prim:FutureInfrastructureHoldingsLlcMember2021-01-152021-03-310001361538prim:FutureInfrastructureHoldingsLlcMember2022-01-012022-03-310001361538prim:EmployeesOfFutureInfrastructureHoldingsLlcMember2021-01-012021-03-310001361538us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001361538prim:NonUnitedStatesMember2021-01-012021-12-3100013615382022-04-012022-01-012022-03-310001361538prim:NonUnitedStatesMember2022-01-012022-03-310001361538prim:NonUnitedStatesMember2021-01-012021-03-310001361538prim:SecondaryOfferingMember2021-03-012021-03-310001361538us-gaap:RevolvingCreditFacilityMember2022-01-012022-03-310001361538us-gaap:LoansPayableMember2022-01-012022-03-310001361538prim:FutureInfrastructureHoldingsLlcMember2021-01-152021-01-150001361538srt:MinimumMemberprim:AlbertaScrewPilesLtdMember2022-03-012022-03-010001361538srt:MaximumMemberprim:AlbertaScrewPilesLtdMember2022-03-012022-03-010001361538us-gaap:LoansPayableMember2018-09-132018-09-130001361538prim:UAndDSegmentMember2022-01-012022-03-310001361538prim:PipelineServicesMember2022-01-012022-03-310001361538prim:EnergyRenewablesMember2022-01-012022-03-310001361538prim:UAndDSegmentMember2021-01-012021-03-310001361538prim:PipelineServicesMember2021-01-012021-03-310001361538prim:EnergyRenewablesMember2021-01-012021-03-3100013615382021-01-012021-03-310001361538us-gaap:RetainedEarningsMember2021-01-012021-03-310001361538us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001361538prim:LongTermRetentionPlanMember2022-01-012022-03-310001361538prim:LongTermRetentionPlanMember2021-01-012021-03-310001361538prim:CreditFacilityWithPrivateBankBankOfWestAndIBERIABANKCorporationMember2021-01-152021-01-150001361538us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001361538prim:AlbertaScrewPilesLtdMember2022-03-310001361538prim:TopTenCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001361538prim:SolarEnergyCustomerMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001361538prim:TopTenCustomersMembersrt:MinimumMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001361538prim:TopTenCustomersMembersrt:MaximumMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310001361538prim:FutureInfrastructureHoldingsLlcMember2021-01-150001361538prim:FutureInfrastructureHoldingsLlcMember2021-01-012021-03-310001361538prim:AlbertaScrewPilesLtdMember2022-03-0100013615382022-03-3100013615382021-12-3100013615382022-05-0200013615382022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:pureprim:itemprim:customerprim:instrumentiso4217:USDxbrli:sharesiso4217:CADprim:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                    to                      .

Commission file number 001-34145

Primoris Services Corporation

(Exact name of registrant as specified in its charter)

Delaware

    

20-4743916

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

2300 N. Field Street, Suite 1900

Dallas, Texas

75201

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (214740-5600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

PRIM

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer  

    

Accelerated filer  

Non-accelerated filer  

Smaller reporting company  

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No 

At May 2, 2022, 53,330,497 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

PRIMORIS SERVICES CORPORATION

INDEX

    

Page No.

Part I. Financial Information

Item 1. Financial Statements:

—Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021 (Unaudited)

3

—Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited)

4

—Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2022 and 2021 (Unaudited)

5

—Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021 (Unaudited)

6

—Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (Unaudited)

7

—Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

36

Item 4. Controls and Procedures

37

Part II. Other Information

Item 1. Legal Proceedings

37

Item 6. Exhibits

38

Signatures

39

2

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

(Unaudited)

March 31,

December 31,

    

2022

    

2021

ASSETS

Current assets:

Cash and cash equivalents

$

173,505

$

200,512

Accounts receivable, net

 

450,405

 

471,656

Contract assets

 

469,918

 

423,659

Prepaid expenses and other current assets

 

120,329

 

86,263

Total current assets

 

1,214,157

 

1,182,090

Property and equipment, net

 

458,616

 

433,279

Operating lease assets

145,023

158,609

Deferred tax assets

1,341

1,307

Intangible assets, net

 

167,710

 

171,320

Goodwill

 

583,534

 

581,664

Other long-term assets

 

27,058

 

15,058

Total assets

$

2,597,439

$

2,543,327

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

289,563

$

273,463

Contract liabilities

 

292,421

 

240,412

Accrued liabilities

 

193,070

 

174,821

Dividends payable

 

3,198

 

3,192

Current portion of long-term debt

 

65,972

 

67,230

Total current liabilities

 

844,224

 

759,118

Long-term debt, net of current portion

 

599,290

 

594,232

Noncurrent operating lease liabilities, net of current portion

86,467

98,059

Deferred tax liabilities

 

38,521

 

38,510

Other long-term liabilities

 

41,173

 

63,353

Total liabilities

 

1,609,675

 

1,553,272

Commitments and contingencies (See Note 14)

Stockholders’ equity

Common stock—$.0001 par value; 90,000,000 shares authorized; 53,308,136 and 53,194,585 issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

6

 

6

Additional paid-in capital

 

263,486

 

261,918

Retained earnings

 

722,561

 

727,433

Accumulated other comprehensive income

1,711

698

Total stockholders’ equity

 

987,764

 

990,055

Total liabilities and stockholders’ equity

$

2,597,439

$

2,543,327

See Accompanying Notes to Condensed Consolidated Financial Statements

3

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

March 31, 

2022

    

2021

Revenue

$

784,384

$

818,329

Cost of revenue

 

727,898

 

738,148

Gross profit

 

56,486

 

80,181

Selling, general and administrative expenses

 

55,455

 

53,432

Transaction and related costs

323

13,896

Operating income

 

708

 

12,853

Other income (expense):

Foreign exchange (loss) gain, net

(116)

23

Other expense, net

 

(9)

 

(5)

Interest expense, net

 

(2,876)

 

(4,636)

(Loss) income before benefit (provision) for income taxes

 

(2,293)

 

8,235

Benefit (provision) for income taxes

 

619

 

(2,387)

Net (loss) income

(1,674)

5,848

Dividends per common share

$

0.06

$

0.06

(Loss) earnings per share:

Basic

$

(0.03)

$

0.12

Diluted

$

(0.03)

$

0.12

Weighted average common shares outstanding:

Basic

 

53,240

 

49,503

Diluted

 

53,240

 

50,026

See Accompanying Notes to Condensed Consolidated Financial Statements

4

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In Thousands)

(Unaudited)

Three Months Ended

March 31, 

2022

    

2021

Net (loss) income

$

(1,674)

$

5,848

Other comprehensive income, net of tax:

Foreign currency translation adjustments

1,013

461

Comprehensive (loss) income

$

(661)

6,309

See Accompanying Notes to Condensed Consolidated Financial Statements

5

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Capital

    

Earnings

0

Income

0

Equity

Balance, December 31, 2021

 

53,194,585

$

6

$

261,918

$

727,433

$

698

$

990,055

Net loss

 

 

 

 

(1,674)

 

 

(1,674)

Foreign currency translation adjustments, net of tax

1,013

1,013

Issuance of shares

 

33,430

 

 

861

 

 

 

861

Conversion of Restricted Stock Units, net of shares withheld for taxes

80,121

(846)

(846)

Stock-based compensation

1,553

1,553

Dividends declared ($0.06 per share)

 

 

 

 

(3,198)

 

 

(3,198)

Balance, March 31, 2022

 

53,308,136

$

6

$

263,486

$

722,561

$

1,711

$

987,764

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Capital

    

Earnings

0

Income

0

Equity

Balance, December 31, 2020

 

48,110,442

$

5

$

89,098

$

624,731

$

958

$

714,792

Net income

 

 

 

 

5,848

 

 

5,848

Foreign currency translation adjustments, net of tax

461

461

Issuance of shares, net of issuance costs

 

5,573,782

 

1

 

177,932

 

 

 

177,933

Conversion of Restricted Stock Units, net of shares withheld for taxes

39,764

(599)

(599)

Stock-based compensation

6,152

6,152

Dividend equivalent Units accrued - Restricted Stock Units

1

(1)

Dividends declared ($0.06 per share)

 

 

 

 

(3,223)

 

 

(3,223)

Balance, March 31, 2021

 

53,723,988

$

6

$

272,584

$

627,355

$

1,419

$

901,364

See Accompanying Notes to Condensed Consolidated Financial Statements

6

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2022

    

2021

Cash flows from operating activities:

Net (loss) income

$

(1,674)

$

5,848

Adjustments to reconcile net (loss) income to net cash provided by operating activities (net of effect of acquisitions):

Depreciation and amortization

 

20,172

 

24,852

Stock-based compensation expense

 

1,553

 

6,152

Gain on sale of property and equipment

 

(4,538)

 

(2,743)

Unrealized gain on interest rate swap

(2,896)

(1,283)

Other non-cash items

345

151

Changes in assets and liabilities:

Accounts receivable

 

25,691

 

10,321

Contract assets

 

(45,972)

 

(7,546)

Other current assets

 

(32,570)

 

(14,216)

Other long-term assets

(12,826)

(153)

Accounts payable

12,114

186

Contract liabilities

 

51,969

 

(13,625)

Operating lease assets and liabilities, net

 

(255)

 

(1,343)

Accrued liabilities

 

(4,524)

 

2,406

Other long-term liabilities

 

(12)

 

(1,034)

Net cash provided by operating activities

 

6,577

 

7,973

Cash flows from investing activities:

Purchase of property and equipment

 

(33,165)

 

(19,078)

Proceeds from sale of assets

 

4,354

 

2,091

Cash paid for acquisitions, net of cash acquired

(4,063)

(613,224)

Net cash used in investing activities

 

(32,874)

 

(630,211)

Cash flows from financing activities:

Borrowings under revolving line of credit

100,000

Payments on revolving line of credit

 

 

(100,000)

Proceeds from issuance of long-term debt

 

30,000

 

400,000

Payments on long-term debt

 

(26,462)

 

(59,353)

Proceeds from issuance of common stock

422

178,863

Debt issuance costs

(4,876)

Dividends paid

 

(3,192)

 

(2,887)

Other

(1,994)

 

(3,283)

Net cash (used in) provided by financing activities

 

(1,226)

 

508,464

Effect of exchange rate changes on cash, cash equivalents and restricted cash

502

259

Net change in cash, cash equivalents and restricted cash

 

(27,021)

 

(113,515)

Cash, cash equivalents and restricted cash at beginning of the period

 

205,643

 

330,975

Cash, cash equivalents and restricted cash at end of the period

$

178,622

$

217,460

See Accompanying Notes to Condensed Consolidated Financial Statements

7

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands)

(Unaudited)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Three Months Ended March 31, 

    

2022

    

2021

Cash paid for interest

$

5,489

$

5,875

Cash paid for income taxes, net of refunds received

(347)

(1,728)

Leased assets obtained in exchange for new operating leases

3,411

4,671

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

Three Months Ended March 31, 

    

2022

    

2021

Dividends declared and not yet paid

$

3,198

$

3,223

See Accompanying Notes to Condensed Consolidated Financial Statements

8

PRIMORIS SERVICES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands, Except Share and Per Share Amounts)

(Unaudited)

Note 1—Nature of Business

Organization and operations — Primoris Services Corporation is one of the leading providers of specialty contracting services operating mainly in the United States and Canada. We provide a wide range of specialty construction services, fabrication, maintenance, replacement, and engineering services to a diversified base of customers through our three segments.

We have customer relationships with major utility, communications, refining, petrochemical, power, midstream, and engineering companies, and state departments of transportation. We provide our services to a diversified base of customers, under a range of contracting options. A substantial portion of our services are provided under Master Service Agreements (“MSA”), which are generally multi-year agreements. The remainder of our services are generated from contracts for specific construction or installation projects.

We are incorporated in the State of Delaware, and our corporate headquarters are located at 2300 N. Field Street, Suite 1900, Dallas, Texas 75201. Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries.

Reportable Segments — The current reportable segments include the Utilities segment, the Energy/Renewables segment and the Pipeline Services (“Pipeline”) segment. See Note 15 – “Reportable Segments” for a brief description of the reportable segments and their operations.

The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses, were made.

Note 2—Basis of Presentation

Interim condensed consolidated financial statements The interim condensed consolidated financial statements for the three months ended March 31, 2022 and 2021 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in our Annual Report on Form 10-K, filed on February 28, 2022, which contains our audited consolidated financial statements for the year ended December 31, 2021, have been omitted.

This Form 10-Q should be read in conjunction with our most recent Annual Report on Form 10-K. The interim financial information is unaudited.  In the opinion of management, the interim information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information. 

Reclassification — Certain previously reported amounts have been reclassified to conform to the current period presentation.

9

Restricted cash Restricted cash consists primarily of contract retention payments made by customers into escrow bank accounts and are included in prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets. Escrow cash accounts are released to us by customers as projects are completed in accordance with contract terms. The following tables provide a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals of such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

March 31,

    

2022

    

2021

Cash and cash equivalents

$

173,505

$

212,770

Restricted cash included in prepaid expense and other current assets

5,117

4,690

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows

$

178,622

$

217,460

    

    

December 31,

    

2021

    

2020

Cash and cash equivalents

$

200,512

$

326,744

Restricted cash included in prepaid expense and other current assets

5,131

4,231

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows

$

205,643

$

330,975

Depreciation Effective January 1, 2022, we changed our estimates of the useful lives of certain equipment to better reflect the estimated periods during which these assets will remain in service. The estimated useful lives of equipment that previously ranged three to seven years were increased to a range of three to ten years. The effect of this change in estimate reduced depreciation expense by $5.8 million, decreased net loss by $4.2 million, and decreased basic and diluted loss per share by $0.08 for the three months ended March 31, 2022.

Customer concentration — We operate in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets primarily throughout the United States. Typically, the top ten customers in any one calendar year generate revenue that is approximately 40% to 50% of total revenue; however, the companies that comprise the top ten vary from year to year.

For each of the three months ended March 31, 2022 and 2021, approximately 45.4% of total revenue was generated from our top ten customers. For the three months ended March 31, 2022 one solar energy customer represented approximately 10.1% of total revenue and for the three months ended March 31, 2021, no single customer accounted for more than 10% of total revenue.

Note 3—Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis.

In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.

10

The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, our financial assets and liabilities that are required to be measured at fair value at March 31, 2022 and December 31, 2021 (in thousands):

Fair Value Measurements at Reporting Date

    

    

Significant

    

Quoted Prices

Other

Significant

in Active Markets

Observable

Unobservable

for Identical Assets

Inputs

Inputs

    

(Level 1)

    

(Level 2)

    

(Level 3)

Assets as of March 31, 2022:

Cash and cash equivalents

$

173,505

 

$

 

$

Liabilities as of March 31, 2022:

Interest rate swap

1,450

Contingent consideration

2,757

Assets as of December 31, 2021:

Cash and cash equivalents

200,512

 

 

Liabilities as of December 31, 2021:

Interest rate swap

$

$

4,346

$

Other financial instruments not listed in the table consist of accounts receivable, accounts payable and certain accrued liabilities. These financial instruments generally approximate fair value based on their short-term nature. The carrying value of our long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities.

The interest rate swap is measured at fair value using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals. See Note 9 – “Derivative Instruments” for additional information.

On a quarterly basis, we assess the estimated fair value of the contractual obligation to pay the contingent consideration and any changes in estimated fair value are recorded as a non-operating charge in our Statement of Operations. Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management’s estimate of the probability of the acquired company meeting the contractual operating performance target and the estimated discount rate (a rate that approximates our cost of capital). Significant changes in either of those inputs in isolation would result in a different fair value measurement. Generally, a change in the assumption of the probability of meeting the performance target is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption of the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability.

Upon meeting the target, we reflect the full liability on the balance sheet and record a charge to “Other income (expense), net” for the change in the fair value of the liability from the prior period.

The March 1, 2022 acquisition of Alberta Screw Piles, Ltd. (“ASP”) (as discussed in Note 4) includes an earnout of up to $3.2 million, contingent upon meeting certain performance targets over the one and two year periods ending March 1, 2023 and March 1, 2024, respectively. The estimated fair value of the contingent consideration on the acquisition date and on March 31, 2022 was $2.8 million. Under ASC 805, “Business Combinations”, we are required to estimate the fair value of contingent consideration based on facts and circumstances that existed as of the acquisition date and remeasure to fair value at each reporting date until the contingency is resolved.

Note 4—Acquisitions

Acquisition of Alberta Screw Piles, Ltd.

On March 1, 2022, we acquired ASP for a cash price of approximately $4.1 million. In addition, the sellers could receive a contingent earnout payment of up to $3.2 million based on achievement of certain operating targets over the one and two year periods ending March 1, 2023 and March 1, 2024, respectively. The estimated fair value of the contingent

11

consideration on the acquisition date was $2.8 million. The preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date consisted of $3.1 million of fixed assets, $1.9 million of working capital, and $1.9 million of goodwill. The final determination of fair value for the assets acquired and liabilities assumed is subject to further change and will be completed as soon as possible, but no later than one year from the acquisition date. The preliminary estimates that are not yet finalized relate to property, plant and equipment, identifiable intangible assets, and working capital. We incorporated the operations of ASP into our Energy/Renewables segment. Goodwill associated with the ASP acquisition principally consists of the value of the assembled workforce. Based on the current Canadian tax treatment, goodwill is expected to be deductible at a rate of 5% per year.

Acquisition of Future Infrastructure Holdings, LLC.

On January 15, 2021, we acquired Future Infrastructure Holdings, LLC (“FIH”) for approximately $604.7 million, net of cash acquired. FIH is a provider of non-discretionary maintenance, repair, upgrade, and installation services to the communication, regulated gas utility, and infrastructure markets. FIH furthers our strategic plan to expand our service lines, enter new markets, and grow our MSA revenue base. The transaction directly aligns with our strategy to grow in large, higher growth, higher margin markets, and expands our utility services capabilities. The total purchase price was funded through a combination of existing cash balances, borrowings under our term loan facility, and borrowings under our revolving credit facility.

During the fourth quarter of 2021, we finalized the estimate of fair values of the assets acquired and liabilities assumed of FIH. The tables below represent the purchase consideration and estimated fair values of the assets acquired and liabilities assumed. Significant changes since our initial estimates reported in the first quarter of 2021 primarily relate to a $6.5 million reduction in the purchase consideration for the final working capital true-up and a $4.0 million increase in the final valuation of intangible assets. As a result of these and other adjustments to the initial estimated fair values of the assets acquired and liabilities assumed, goodwill decreased by approximately $7.2 million since the first quarter of 2021. Adjustments recorded to the estimated fair values of the assets acquired and liabilities assumed are recognized in the period in which the adjustments are determined and calculated as if the accounting had been completed as of the acquisition date.

Purchase consideration (in thousands)

Total purchase consideration

$

615,249

Less cash acquired

(10,525)

Net cash paid

$

604,724

12

Identifiable assets acquired and liabilities assumed (in thousands)

Cash and cash equivalents

$

10,525

Accounts receivable

54,337

Contract assets

32,343

Prepaid expenses and other current assets

483

Property, plant and equipment

56,128

Operating lease assets

13,105

Intangible assets:

 

Customer relationships

122,000

Tradename

4,400

Other long-term assets

 

6,976

Accounts payable and accrued liabilities

(29,838)

Contract liabilities

(2,256)

Long-term debt (including current portion)

(959)

Noncurrent operating lease liabilities, net of current

(10,975)

Other long-term liabilities

(7,581)

Total identifiable net assets

248,688

Goodwill

366,561

Total purchase consideration

$

615,249

We incorporated the operations of FIH into our Utilities segment. Goodwill associated with the FIH acquisition principally consists of expected benefits from the expansion of our services into the communications market and the expansion of our geographic presence. Goodwill also includes the value of the assembled workforce. Based on the current tax treatment, goodwill is expected to be deductible for income tax purposes over a 15-year period.

The intangible assets acquired with the FIH acquisition consisted of Customer relationships of $122.0 million and Tradenames of $4.4 million. The Customer relationships and Tradenames are being amortized over a weighted average useful life of 19 years and one year, respectively.

For the period from January 15, 2021, the acquisition date, to March 31, 2021, FIH contributed revenue of $60.7 million and gross profit of $9.8 million.

Acquisition related costs were $13.5 million for the three months ended March 31, 2021, and are included in “Transaction and related costs” on the Condensed Consolidated Statements of Operations. Such costs primarily consisted of professional fees paid to advisors and expense associated with the purchase of Primoris common stock by certain employees of FIH at a 15 percent discount.

Supplemental Unaudited Pro Forma Information for the three months ended March 31, 2021

The following pro forma information for the three months ended March 31, 2021 presents our results of operations as if the acquisition of FIH had occurred at the beginning of 2020. The supplemental pro forma information has been adjusted to include:

the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment;

the pro forma impact of nonrecurring transaction and related costs directly attributable to the acquisition; and

the pro forma tax effect of both income before income taxes, and the pro forma adjustments, calculated using a tax rate of 29.0% for the three months ended March 31 2021.

13

The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the FIH acquisition been completed on January 1, 2020. For example, the pro forma results do not reflect any operating efficiencies and associated cost savings that we might have achieved with respect to the acquisition (in thousands, except per share amounts):

Three Months Ended March 31, 

 

2021

(unaudited)

Revenue

$

822,775

Income before provision for income taxes

15,057

Net income

10,693

Weighted average common shares outstanding:

Basic

 

49,665

Diluted

 

50,194

Earnings per share:

Basic

$

0.22

Diluted

0.21

Note 5—Revenue

We generate revenue under a range of contracting types, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts, each of which has a different risk profile. A substantial portion of our revenue is derived from contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value. For these contracts, revenue is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For certain contracts, where scope is not adequately defined and we can’t reasonably estimate total contract value, revenue is recognized either on an input basis, based on contract costs incurred as defined within the respective contracts, or an output basis based on units completed. Costs to obtain contracts are generally not significant and are expensed in the period incurred.

We evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as more than one performance obligation. ASC 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation.

As of March 31, 2022, we had $2.6 billion of remaining performance obligations. We expect to recognize approximately 64.1% of our remaining performance obligations as revenue during the next four quarters and substantially all of the remaining balance by the end of 2023.

Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenue and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation, politics and any prevailing impacts from the pandemic caused by the coronavirus may affect the progress of a

14

project’s completion, and thus the timing of revenue recognition. To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected.

The nature of our contracts gives rise to several types of variable consideration, including contract modifications (change orders and claims), liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent we believe we have an enforceable right, and it is probable that a significant reversal of cumulative revenue recognized will not occur. Our estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at this time.

Contract modifications result from changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which we seek, or will seek, to collect from customers, or others, for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as rain or other weather delays. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. In the three months ended March 31, 2022, revenue recognized related to performance obligations satisfied in previous periods was $3.4 million. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full, including the reversal of any previously recognized profit, in the period it is identified and recognized as an “accrued loss provision” which is included in “Contract liabilities” on the Condensed Consolidated Balance Sheets. For contract revenue recognized over time, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods.

At March 31, 2022, we had approximately $103.6 million of unapproved contract modifications included in the aggregate transaction prices. These contract modifications were in the process of being negotiated in the normal course of business. Approximately $94.3 million of the contract modifications had been recognized as revenue on a cumulative catch-up basis through March 31, 2022.

In all forms of contracts, we estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as the transaction price, we may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection. For example, when a cost reimbursable project exceeds the client’s expected budget amount, the client frequently requests an adjustment to the final amount. Similarly, some utility clients reserve the right to audit costs for significant periods after performance of the work.

The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. Also, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

The caption “Contract assets” in the Condensed Consolidated Balance Sheets represents the following:

15

unbilled revenue, which arises when revenue has been recorded but the amount will not be billed until a later date;

retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and

contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project.

Contract assets consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Unbilled revenue

$

317,880

$

283,767

Retention receivable

134,189

124,990

Contract materials (not yet installed)

 

17,849

 

14,902

$

469,918

$

423,659

Contract assets increased by $46.3 million compared to December 31, 2021 primarily due to higher unbilled revenue.

The caption “Contract liabilities” in the Condensed Consolidated Balance Sheets represents the following:

deferred revenue, which arises when billings are in excess of revenue recognized to date, and

the accrued loss provision

Contract liabilities consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Deferred revenue

$

281,826

$

234,352

Accrued loss provision

 

10,595

 

6,060

$

292,421

$

240,412

Contract liabilities increased by $52.0 million compared to December 31, 2021 primarily due to higher deferred revenue.

Revenue recognized for the three months ended March 31, 2022, that was included in the contract liability balance at December 31, 2021, was approximately $172.3 million.

The following tables present our revenue disaggregated into various categories.

MSA and Non-MSA revenue was as follows (in thousands):

For the three months ended March 31, 2022

Segment

    

MSA

    

Non-MSA

    

Total

Utilities

$

290,366

$

68,362

$

358,728

Energy/Renewables

45,234

313,816

359,050

Pipeline

 

13,695

52,911

66,606

Total

$

349,295

 

$

435,089

 

$

784,384

For the three months ended March 31, 2021

Segment

MSA

    

Non-MSA

    

Total

Utilities

$

277,967

 

$

57,045

 

 

335,012

Energy/Renewables

42,586

310,278

352,864

Pipeline

 

17,710

 

 

112,743

 

130,453

Total

$

338,263

 

$

480,066

 

$

818,329

16

Revenue by contract type was as follows (in thousands):

For the three months ended March 31, 2022

Segment

Fixed-price

Unit-price

Cost reimbursable (1)

Total

Utilities

$

31,517

$

242,309

$

84,902

$

358,728

Energy/Renewables

219,021

82,572

57,457

359,050

Pipeline

 

55,152

665

10,789

66,606

Total

$

305,690

 

$

325,546

 

$

153,148

 

$

784,384

(1)Includes time and material and cost reimbursable plus fee contracts.

For the three months ended March 31, 2021

Segment

Fixed-price

    

Unit-price

    

Cost reimbursable (1)

    

Total

Utilities

$

27,516

 

$

229,743

 

$

77,753

 

$

335,012

Energy/Renewables

188,234

78,743

85,887

352,864

Pipeline

 

113,157

 

 

665

 

 

16,631

 

 

130,453

Total

$

328,907

 

$

309,151

 

$

180,271

 

$

818,329

(1)Includes time and material and cost reimbursable plus fee contracts.

Each of these contract types has a different risk profile. Typically, we assume more risk with fixed-price contracts. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular fixed-price contract. However, these types of contracts offer additional profits when we complete the work for less cost than originally estimated. Unit-price and cost reimbursable contracts generally subject us to lower risk. Accordingly, the associated fees are usually lower than fees earned on fixed-price contracts. Under these contracts, our profit may vary if actual costs vary significantly from the negotiated rates.

Note 6—Goodwill and Intangible Assets

The change in goodwill by segment for the three months ended March 31, 2022 was as follows (in thousands):

    

Utilities

    

Energy/Renewables

Pipeline

    

Total

Balance at December 31, 2021

$

462,905

$

66,344

$

52,415

$

581,664

Goodwill acquired during the period

 

 

1,870

 

 

1,870

Balance at March 31, 2022

$

462,905

$

68,214

$

52,415

$

583,534

The table below summarizes the intangible asset categories and amounts, which are amortized on a straight-line basis (in thousands):

March 31, 2022

December 31, 2021

Gross Carrying
Amount

    

Accumulated
Amortization

    

Intangible assets, net

    

Gross Carrying
Amount

    

Accumulated
Amortization

    

Intangible assets, net

Tradename

$

20,440

(20,024)

416

$

20,440

$

(19,675)

$

765

Customer relationships

 

215,227

(47,960)

167,267

 

215,227

 

(44,727)

 

170,500

Non-compete agreements

 

1,900

(1,873)

27

 

1,900

 

(1,845)

 

55

Total

$

237,567

$

(69,857)

$

167,710

$

237,567

$

(66,247)

$

171,320

17

Amortization expense of intangible assets was $3.6 million and $4.2 million for the three months ended March 31, 2022 and 2021, respectively. Estimated future amortization expense for intangible assets is as follows (in thousands):

Estimated

Intangible

Amortization

For the Years Ending December 31, 

    

Expense

2022 (remaining nine months)

$

9,817

2023

12,409

2024

 

11,690

2025

 

10,968

2026

 

10,518

Thereafter

 

112,308

$

167,710

Note 7—Accounts Payable and Accrued Liabilities

At March 31, 2022 and December 31, 2021, accounts payable included retention amounts of approximately $17.4 million and $15.2 million, respectively. These amounts owed to subcontractors have been retained pending contract completion and customer acceptance of jobs.

The following is a summary of accrued liabilities (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Payroll and related employee benefits

$

96,693

$

77,887

Current operating lease liability

59,342

61,587

Casualty insurance reserves

 

8,082

 

7,107

Corporate income taxes and other taxes

 

6,726

 

7,967

Other

 

22,227

 

20,273

$

193,070

$

174,821

Note 8 — Debt

Long-term debt and credit facilities consists of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Term loan

$

512,875

$

520,281

Commercial equipment notes

123,254

107,934

Mortgage notes

 

33,068

 

37,445

Total debt

669,197

665,660

Unamortized debt issuance costs

(3,935)

(4,198)

Total debt, net

$

665,262

$

661,462

Less: current portion

 

(65,972)