Primoris Services Corporation

Good morning and welcome everyone to the Primoris Services Corporation third quarter 2025 earnings conference call and webcast. Today's conference is being recorded. 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 the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Blake Holcomb, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the Bermuda's third quarter 2025 earnings conference call. Joining me today with prepared comments are David King, Chairman and Interim President and Chief Executive Officer, and Ken Dodgen, Chief Financial Officer. 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. Our forward-looking statements represent our outlook only as of today, November 4th, 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 third 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 third quarter 2025 operational and financial results. For Morris had another great quarter once again delivering record revenue operating income and earnings. I am proud of our employees and their ability to execute at a high level, while providing our customers with safe reliable service and driving profitable growth. operating cash flow was also a highlight of the third quarter and further demonstrates the hard work we have put in to improve in this area. As a result of this emphasis, we've been able to make tremendous progress in delivering the balance sheet and allowing us to invest in the business to be well prepared for the surge in demand we are currently seeing across our end markets. I am particularly proud of how we have generated free cash flow and set new highs on our return on invested capital since making these metrics a priority. We are a company focused on the development of quality people and delivering quality projects for our clients. We continue to allocate our time and resources to capitalize on what we believe is a generational opportunity for our infrastructure solutions that will drive value for our shareholders. Last quarter, I discussed the significant demand on the horizon for power generation and the growing prospect of providing more services which support the development of data centers. I want to reiterate that these and other opportunities remain squarely in front of us. The ramp up in revenue combined with the delay of a couple of larger dollar value projects led to a higher than anticipated backlog burn rate in the energy segment. The timing when projects are signed and placed into backlog can hinge on a number of factors, including changes in scope and design and the shifting of supply chain schedules. We continue to direct our attention toward the things we can control during the process and providing our customers with the resources they need from us to get the projects built timely. I want to emphasize that our lower than forecasted bookings in Q3 were not a result of projects being canceled or awarded to other service providers, but are instead being impacted by other circumstances that can affect the timing of executed contracts. Because of this, we remain highly confident that we will sign several high-value energy segment projects in the coming quarters that will set us up for another successful year in 2026. I'll now turn to our performance for the quarter by segment. In the utility segment, third quarter revenue was up double digits from the prior year. We also had double digit backlog growth in utilities as demand for power, gas, and communication services continues to surge. Leading the revenue growth was gas operations, where activity and margins remain resilient. We are seeing increased customer spend on development programs in the Midwest, Southeast, and Texas that have enabled us to step up and capitalize on these trends. In regions with more variable activity, we have controlled costs to maintain solid margins. While the fourth quarter can bring unpredictable weather that can impact work schedules, our gas utility business appears to be on track for a record year in 2025. Communications revenue and margins were also up from the prior year driven by broadband expansion and an increase in major project buildouts. We believe the emergence of larger EPC network bills tied to data centers will continue to support growth in our communications business. We are targeting over $100 million of these projects over the next few quarters, which, if successful, would complement our fiber to home new build and maintenance programs. We are also monitoring how states are managing the potential for federal funds to further build out networks in underserved areas, which could be a catalyst in the communications business that we are not currently building into our plans. Power delivery had its best revenue quarter in recent years as demand is rapidly increasing in key geographies. More clients are releasing work orders from engineering at a faster pace, which is leading to increased activity and more favorable mix of work. These trends and customer conversations on upcoming plans help to drive utility segment backlog up from the prior quarter to an all-time high of nearly $6.6 billion. Margins continue to trend in the right direction for power delivery, but we're lower compared to the prior year as we did not have the benefit of storm work we had in 2024. We have more progress to make to achieve our longer term power delivery goals, but I am pleased with the accomplishments of our teams and leaders over the past two years. We're in a great position to benefit from the expansion and hardening of the electric grid in many of the regions where it is most needed. And I believe our safety culture, expertise, and ability to invest in the business will open the door for further growth across transmission, substation, and distribution. Turning to the energy segment, the renewables business had a record revenue quarter as utility scale EPC and battery storage continued to accelerate. A higher than expected revenue growth in renewables has been a main driver of the decrease in backlog at an area that has seen project signings push out a quarter or two. However, as mentioned earlier, we remain highly confident that we will sign several high-value projects in the coming quarters that will set us up for another successful year in 2026. The signing of the One Big Beautiful Build and the subsequent Treasury Department guidance has allowed our customers to have a substantial volume of projects safe harbored for the next several years. This has provided increased stability and visibility to this market. However, customers are still navigating some uncertainty on tariffs that has slowed down the process of pricing and therefore the signing of certain projects. The funnel of projects remains very healthy and is expanding with new tier one customers wanting to work with us on their high value projects. Based on our conversation with customers, we view this as a near-term adjustment to the timing of bookings and believe we will see backlog begin to build over the next few quarters. The battery storage market outlook is also beginning to improve after a couple of quarters of uncertainty. We're seeing the increased adoption of battery storage on upcoming projects, adding storage to previously constructed projects, and a growing number of standalone projects as well. This is giving us increased confidence that we can have continued success in an attractive market growth. Industrial services also saw impressive revenue growth from the prior year as natural gas generation activity has risen to a level not seen in over a decade. Morris' track record for successful execution on gas generation projects has helped us earn an excellent reputation in the market. This has put us in a position of being a leader in the construction of gas-fired power facilities where growth is driven by the further electrification of the industry and data centers. We continue to take a disciplined approach to growth in this market, but expect to have some sizable awards in the fourth quarter and into 2026 that will set us up for meaningful growth and accretive margins with good execution. The pipeline business has faced challenges this year as revenues and margins partially offset the strong results in the quarter. Despite the recent headwinds in the business, our leadership has done well in managing costs and keeping crew members active as we anticipate what appears to be an emerging upcycle. Headwinds impacting pipeline services have quickly reversed, and we're beginning to see tailwinds develop in this business line. We are seeing bids materialize for several large projects, and we anticipate the trend to shift toward the positive with awards as soon as this quarter. It would only take a few awards to see a revenue and margin benefit in the energy segment, and we are optimistic that 2026 will serve as the starting point. In summary, Primoris continues 2025 momentum with a record third quarter, and we are energized about the future opportunities we have to take advantage of the significant tailwinds across our end markets. I'll now turn it over to Ken for more on our financial results.