Primoris Services Corporation

Hello everyone. Thank you for joining us and welcome to the Primoris 3rd Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Blake Holcomb, Senior Vice President of Investor Relations. Please go ahead.

Good morning and welcome to the Remora's third quarter 2026 earnings conference call. Joining me today with prepared comments are Koti Vadlamudi, 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 4, 2026. 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 2026 earnings press release, which was issued yesterday. I would now like to turn the call over to Koti Vadlamudi.

Thank you, Blake. Good morning and thank you for joining us today to discuss our third quarter 2026 financial and operational results. Primoris delivered a solid third quarter, generating sequential improvements in margins, earnings, and cash flow, while ending the quarter with record backlog for the second consecutive quarter. Although our results year-to-date have been impacted by a small number of challenged renewable projects, the underlying fundamentals of the business remain strong, and we are seeing meaningful improvement in our operating trajectory. As we disclosed in September, five of the six projects that experienced significant cost overruns have now been completed, and the final project is expected to be completed in the coming weeks. As these legacy challenges are resolved, we expect the strength of our backlog, combined with awarded and prospective opportunities, to support improved operational and financial performance going forward. In addition to the execution challenges, the renewables market experienced a volatile regulatory environment throughout the year, which contributed to lower than expected revenue from new project awards and starts. As a result, certain projects were delayed while others were not awarded or intentionally not pursued because they did not meet our risk profile, project management availability schedule, or targeted margin thresholds. Collectively, these factors reduced our anticipated renewables revenue and gross profit contribution for 2026. The impact of these dynamics resulted in a steeper than expected decline in revenue from the prior year and approximately $450 million of revenue being deferred beyond 2026. As a result, we now expect full-year 2026 renewables revenue to be approximately $1.7 billion, revised from our previous expectation of $2.0 billion at mid-year. Despite the challenges we faced in renewables during 2026, I remain very optimistic about the future of the business. The long-term fundamentals supporting utility-scale solar development remain firmly in place, and we are laying the foundation for a return to profitable growth in 2027. We have taken decisive actions to strengthen the organization, including adding experienced leadership that will enhance our culture, improve execution, and further strengthen our customer relationships. We have also invested in our project execution and support capabilities to ensure we continue delivering high quality projects while maintaining disciplined risk management and margin expectations. As these initiatives progress and we capitalize on the strong booking opportunities ahead, We believe we are well positioned to return to our target margin profile in 2027. Similar to other areas of our business where market demand remains exceptionally strong, we will continue to attract, train, and develop the talent needed to support growth. Given the opportunities we see in front of us and the bookings we expect to secure over the coming quarters, we anticipate our available execution teams will be fully utilized during 2027. This gives us confidence in our ability to drive profitable growth next year while maintaining the disciplined execution and customer focus that are critical to our success. I'll now provide some commentary on the segment performance during the quarter. The utility segment delivered revenue and backlog growth during the quarter, driven by resilient demand in our gas operations business and accelerating activity in power delivery. which more than offset continued softness in the communications market. In communications, market conditions remain challenging due primarily to delays in bead-related funding and customer consolidation which have tempered spending across certain end markets. While opportunities in data center splicing and long-haul fiber continue to generate attractive margins, they have not yet fully offset the decline in fiber-to-the-home activity this year. Although we are encouraged by signs that market conditions could improve in 2027, we currently expect communications revenue to again be softer in the fourth quarter. The gas operations business continues to benefit from increasing utility capital expenditures and growing demand for design-build programs across the Midwest and southern United States, supporting a strong pipeline of opportunities for the remainder of 2026 and into 2027. In addition, we are seeing improved operational performance in the West Coast region. Despite lower volumes of fixed price work compared to the prior year, the business is delivering solid margins while continuing to drive revenue growth. In power delivery, we continue to see rapid growth across several key markets, where we have established strong customer relationships, particularly in Texas and the Southeast. Activity on our MSA work continues to ramp and we are seeing an expanding set of EPC and design build opportunities for both substation and transmission projects. I also want to recognize our power delivery teams for the outstanding work they have done to strengthen project execution and work order management. Those operational improvements, combined with a favorable mix of work, drove a doubling of gross profit compared to the prior year, despite minimal storm restoration activity during the quarter. Given the strength of customer demand, expanding opportunity set, and continued focus on execution, we believe the power delivery business is well positioned for continued growth and strong financial performance moving forward. In the energy segment, aside from the previously discussed challenges in renewables, we delivered revenue growth across our end markets and achieved significant margin improvement in both our pipeline and industrial businesses. Our pipeline business delivered strong revenue growth and improved profitability compared to the third quarter of last year. During the quarter, we were awarded a $250 million project that is expected to begin construction in late 2027 or early 2028. We also anticipate securing an additional $150 million pipeline job in the fourth quarter that is expected to begin mobilization in the coming weeks, further supporting our growth outlook for 2027. Just as importantly, our sales funnel reached a record level of more than $8 billion at quarter end, reflecting robust customer demand and increasing confidence that market activity over the coming years could approach historical peak levels. Paynecrest also delivered an outstanding quarter. Thank you for joining us today. Based on its strong performance year-to-date, we now expect Paincrest to exceed $300 million of revenue during its first eight months as part of Primorus, surpassing the high end of the range we anticipated when the acquisition was closed. Given its growing backlog, expanding opportunity pipeline, and strong end-market fundamentals, we are extremely excited about Paincrest's growth potential in 2027 and beyond. Turning to industrial, the ramp-up of several natural gas generation projects drove strong revenue growth and margin improvement during the quarter. We now expect natural gas generation revenue to exceed $650 million in 2026, an increase of more than 30% compared to 2025. Looking ahead, the market opportunity remains compelling. We currently have approximately 900 million of verbal awards that could book in the fourth quarter, and we are tracking an opportunity pipeline in excess of 7 billion. Based on the strength of customer demand and our competitive positioning, we believe natural gas generation revenue has the potential to reach 1 billion in 2027. As encouraged as we are about the growth opportunity, we remain committed to disciplined execution. We are selective in the customers we serve, the geographies in which we operate, and the contract structures we accept. Our focus is not simply on growth but on profitable growth that delivers attractive returns while maintaining an appropriate balance of risk and reward. By continuing to invest in our people, project controls, and execution capabilities, We believe we are well positioned to capitalize on this opportunity while continuing to deliver strong outcomes for both our customers and shareholders. In summary, I am encouraged by our third quarter performance and the strength of our diversified portfolio. While the challenges we have faced in renewables this year have been a meaningful headwind, their impact continues to diminish as we move toward completing the remaining project and executing on the actions we have taken to strengthen the business. We continue to see elevated demand across our end markets for the critical utility and energy infrastructure needed to support growing communities, expanding power requirements, and the broader economy. That momentum we are seeing, combined with our record backlog and robust opportunity funnel, gives us confidence in our ability to drive profitable growth. I'll now turn it over to Ken for more on our financial results.