Primoris Services Corporation

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the Primordial Services Corporation first quarter 2025 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Blake Holcomb, Vice President, Investor Relations. Please go ahead.

Blake Holcomb, Vice President, Investor Relations. Please go ahead. Blake Holcomb, Vice President, Investor Relations. Please go ahead. Blake Holcomb, Vice President, Investor Relations. Please go ahead. Blake Holcomb, Vice President, Investor Relations. Please go ahead. 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. Forward-looking statements represent our outlook as of today, May 6, 2025. We disclaim any obligation to update these statements except as may be required by law. In addition, during this conference call, we will make reference to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures are available on the Investors section of our website and in our first quarter 2025 earnings press release, which was issued yesterday. I would now like to turn the call over to David King.

Thank you, Blake. Good morning and thank you for joining us today to discuss our first quarter 2025 financial and operational results. Promora's had a great start to the year, delivering higher revenue, margins, and cash flow compared to the prior year. I want to congratulate our employees on a well-executed first quarter. Their commitment to operating safely while focusing on our strategic initiatives to drive improved profitability, margin improvements, and cash flow continues to yield positive results. While uncertainty persists regarding global trade, tariff, and regulatory policy, the underlying fundamentals of our end markets remain intact with strong demand. As we have often commented, the outlook for ongoing investment in North American power, industrial, and energy infrastructure is very favorable, and we believe Primoris is well-positioned to capitalize on what we expect will be a multi-year endeavor. Many of the services we provide and projects we construct are essential to maintaining the existing infrastructure that supports our communities and is critical to future economic growth. Although we are still awaiting clarity on the ultimate outcome of the evolving policy landscape, we can provide insight into what we are currently seeing and hearing from our customers and suppliers. In relation to tariffs, we do not expect to see a material impact on our operations during 2025. Most of the materials and components associated with our work are supplied by the customer, many of which have the ability to source necessary components and materials domestically or have sufficient inventory of imported goods to move forward with their existing plans. For our equipment and materials we supply to our projects, we are confident in our ability to source from a diverse group of mostly domestic suppliers. In cases where we may need to procure from outside the U.S., we believe the incremental cost under the current tariff regime for these smaller components would not significantly increase the overall cost of the project. Additionally, the vast majority of our contracts include terms and conditions that allow us to pass along these incremental costs to the customer. Prolonged economic and regulatory uncertainty could, in future quarters, lead customers rethinking the economics and timing of their projects in 2026 and beyond. But as of now, we are optimistic that we will continue to book new work throughout the year in order to maintain or potentially grow our backlog given the elevated demand for critical infrastructure services. I'll now provide some comments on performance for the quarter by segment. Beginning with the utilities segment, we had a very solid operational performance and activity during a quarter where we typically see a seasonal low in revenue and margins. In Q1, each of our utilities businesses exceeded our expectations and exceeded the prior year revenue and gross profit. In gas operations, we had increased activity on the West Coast and favorable project closeouts that helped support margin improvement. While we did see our typical slow start in the Midwest due to colder weather, we were able to ramp up on a strong backlog of work in the region. In communications, we continue to see expansion in fiber to the home bills and increased system maintenance work in several new and existing geographic areas. We also had an almost 20 million increase in fiber loop network build revenue compared to prior year. We are seeing a growing list of opportunities to support customers with these network build outs in major metropolitan areas in the central and western United States. However, the biggest driver of improved performance compared to last year was in the power delivery business. We had several clients release work sooner than anticipated to begin the year, which drove revenues and productivity higher. We are also seeing increased engagement from clients regarding grid resiliency plans, and several public utility commissions are approving transmission line build-outs that we believe will lead to several opportunities in key service locations. We are pleased with the progress we have made in driving higher margins and cash flow in power delivery. Our teams have successfully taken on the challenge of upholding the priority to safety while operating with improved efficiency and productivity. This combined with an increasing mix of project work we see on the horizon, as well as further optimization of our service areas and contracts, has us optimistic about the prospect of future margin expansion in the years ahead. Moving on to the energy segment, we achieved significant top-line and operating income growth driven by record revenue in renewables. We started or made substantial progress on several utility-scale solar projects during the quarter and also had increased revenue contribution from each of the premier PV, battery storage, and O&M compared to the first quarter of last year. We recognize that the uncertainty around the solar market has been heightened in recent months, given the changing regulatory tax and tariff environment. We continue to monitor and evaluate how changes to the Inflation Reduction Act, anti-dumping, and other tariffs could impact our customers and their plans. Based on our assessment of the market conditions currently, we do not anticipate material changes to our revenue or new contract signings in 2025. Many of our customers have solar panels and materials needed to continue executing on the projects under contract, and many potential projects that are being evaluated have domestic supply. One area of our renewable business we believe could be the most impacted by future bookings would be the battery storage materials sourced from outside the United States, particularly China. The market conditions in solar in the U.S. economy remain dynamic. However, we believe that the growing need for generation capacity will continue to create opportunities for solar and other forms of power generation in the future. Looking at the other areas of the energy segment, the growth in renewables helped to offset lower industrial and pipeline revenue from the prior year. Although industrial revenue declined due to the completion of certain projects and the wind down of non-core businesses in 2024, we did see improvement in margin performance. The market demand for natural gas generation resources continues to be favorable, and we have a number of opportunities to book new projects in 2025. We have the benefit of being selective on the projects, customers, and contract terms, and we remain diligent in bidding and winning projects that we view as the most attractive and that align with our expertise. In summary, we are encouraged by our performance in the first quarter and the positive trends we see across the business despite the challenges from the macroeconomic uncertainty. We are focused on controlling what we can control and staying in close communication with our customers to ensure we have the crews and equipment to execute on their projects. Although it is early in the year and circumstances can change rapidly, we are optimistic that we have the opportunity to achieve or even exceed 2025 financial and operational goals. Now, I'll turn it over to Ken to discuss our financial results.