Primoris Services Corporation

to the Primoris Services Corporation first quarter 2026 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 by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Blake Holcomb, Vice President of Investor Relations. Please go ahead.

Good morning. Welcome to the Morris First Quarter 2026 Earnings Conference Call. Joining me today with prepared comments are Cody Badlamuti, 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, May 6, 2026. We disclaim any obligation to update these statements except as may be required by law. In addition, during this conference call, we'll make reference to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures are available on the investor section of our website and in our first quarter 2026 earnings press release, which was issued yesterday. I would now like to turn the call over to Cody Vadlamuti.

Thank you, Blake. Good morning, and thank you for joining us today to discuss our first quarter 2026 financial and operational results. Our first quarter results reflected the impact of a small number of solar projects that experienced cost pressures, resulting in lower reported gross profit and margins for the period. These impacts were driven by execution-related factors, including specific labor issues, project redesigns, adjustments to sequencing, and weather-related disruptions. The majority of the impacted projects were subsequent to the project discussed in our Q4 earnings call. which experienced cost overruns driven by unforeseen underground conditions. Through our review, we identified two primary drivers behind these challenges, pre-construction planning and the complexity associated with new geographic labor markets. The rapid pace of growth in the solar market placed increased demands on our organization, and in a limited number of cases, this resulted in gaps during the early planning, estimating, and construction phases. Importantly, since these contracts were executed in the second half of 2024, we have taken decisive actions to address these areas. We made targeted leadership changes and added experienced talent to strengthen our pre-construction, estimating, and project management functions. In addition, we have adjusted our market expansion approach and have not pursued new work in the geographies where first-time entry contributed to these outcomes. We are confident these actions position as well to mitigate similar risks on projects booked in 2025 and beyond. All of the impacted projects are progressing toward completion and are expected to be substantially complete in 2026, with several concluding within the next month and the final project scheduled for completion in the fourth quarter of 2026. In addition to the margin impacts associated with these projects, We have also seen the timing of new project bookings and starts shift to the right. As a result, we now expect certain bookings originally anticipated in the second quarter to move into the third quarter, and revenue from projects booked late in 2025 to be recognized later than previously forecasted. Based on these timing dynamics, we now expect renewables revenue to be approximately $2.3 billion for 2026. Despite the challenges associated with this limited number of projects and the timing shift in new project starts, we remain very optimistic about the solar market outlook. We continue to see meaningful opportunities ahead this year and beyond to build backlog, and we are confident in our ability to put these issues behind us and return to our strong, consistent track record of delivering profitable projects supported by our industry-leading safety and quality performance. I'll now provide additional comments on our segment performance for the quarter. Starting with the utility segment, we had a strong year-over-year top-line growth and solid operational performance leading to improved margins in the quarter. The first quarter is typically a seasonal low point in utilities, so we would expect to see further revenue and margin expansion as activity accelerates in the second quarter. In gas operations, Revenue was up several digits, supported by new awards in the Southeast and higher design build volumes in the Midwest. Gross profit was also up, while margins were slightly lowered due to a difference in project mix in the first quarter of 2026 compared to last year. In communications, revenues were mostly flat compared to the prior year, but profitability meaningfully improved, driven by improved productivity and a reduction in indirect labor costs. Communications continues to see increased opportunities in fiber associated with data center build-out, and we are exploring new opportunities for splicing and fiber work within the facilities, which would further expand our addressable market. We do anticipate lower volumes in fiber to the home programs beginning in the second quarter as we transition from legacy programs toward bead-related build-outs in certain markets. Power delivery continued its strong execution on increased activity with revenue and margins growing double digits. We are seeing meaningful volume increases in Texas and the southeast, particularly in the transmission and substation work, which is generally accreted to margins in the business. To support this growth, we remain focused on attracting, developing, and retaining the skilled talent we need while maintaining the highest standards of safety and quality. The labor market is competitive, but our strong market position, culture, and robust backlog continue to be an asset in attracting and retaining talent. Turning to the energy segment, despite the challenges outlined in renewables, the rest of the segment delivered solid performance with increased gross profit year over year. Industrial margins improved meaningfully, driven by higher natural gas generation activity. Looking ahead, we expect a significant increase in project awards across both natural gas generation and solar in the coming quarters. Most of these projects are in limited notice to precede status, and we anticipate final awards beginning in the second quarter and accelerating further in Q3. The funnel of opportunities continues to expand, and these upcoming awards will help soften the impact of the trouble projects in 2026, and set us up for strong growth in 2027. Pipeline services also had a solid start to the year with revenue and gross profit up more than 20%, indicating that we are on track to emerge from the cyclical trough we experienced in 2025. We are still expecting growth this year with new awards beginning to materialize in the coming quarters. That said, And as we have previously alluded, a more substantial revenue and margin growth opportunity is likely to come in 2027 and 2028 as the market strengthens and our backlog conversion ramps up. We successfully completed the acquisition of Paincrest on May 1st in line with our expectations. As previously announced, Paincrest is a St. Louis-based union electrical contractor that provides design, construction, and service solutions to a blue-chip customer base. Their customers span a diverse set of end markets, including data centers, industrial, power, and renewables, and commercial. Approximately 40% of revenue is generated from data centers, with another 40-plus percent tied to industrial, power, and renewables infrastructure. We believe this well-balanced mix of end markets and customers enhances opportunities for cross-selling across our platform and expands the breadth of services Primorus can deliver in these growing markets. While the majority of Fancreft's work is performed within a 500-mile radius of St. Louis headquarters, the company has successfully executed projects in more than 25 states, providing flexibility to expand geographically as opportunities arise. With the transaction closing within our anticipated timeframe, our expectations for revenue and earnings contribution remain unchanged. That said, we see meaningful upside potential should additional scope with a large hyperscaler customer be finalized in the coming months. We are excited to welcome the PainPress team to Primaris and see significant long-term growth potential for this business as part of our organization. In summary, we remain optimistic about the opportunities ahead, despite the unexpected renewables execution challenges that impacted our first quarter results. I want to emphasize that the majority of our portfolio remains very healthy, and we believe the underlying fundamentals of our business are strong. As projects continue to ramp and near-term rewards are finalized, we would expect to see improvement across revenue, margins, and backlog as we progress through 2026. Now I'll turn it over to Ken to discuss our financial results.