Inve US ▾
PRPRIM

Primoris Services (PRIM) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· May 6, 2026

Source: earnings call transcript

Executive summary

Primoris Services Corporation Q1 FY26 — Renewables Challenges Offset by Strong Utility Performance and Strategic Acquisition

Primoris Services Corporation faced headwinds in Q1 FY26 due to cost overruns and timing shifts in a limited number of solar projects, leading to reduced gross profit and a lowered full-year outlook. However, the Utility segment delivered strong top-line growth and improved margins, while the strategic acquisition of PayneCrest expanded capabilities in high-growth end markets like data centers. Management is confident in addressing the renewables issues and leveraging strong demand across other segments for a stronger second half of 2026 and beyond.

Highlights

5

  • Utility segment revenue up 12.3% year-over-year, driven by Power Delivery and Gas Operations.

  • Utility segment gross margins increased to 9.8% from 9.2% in the prior year.

  • Pipeline Services revenue and gross profit up more than 20%, indicating emergence from cyclical trough.

  • PayneCrest acquisition closed, adding accretive revenue and margin growth, with 40% of revenue from data centers.

  • Strong liquidity of $676.5 million at quarter-end, with net debt-to-EBITDA ratio expected to remain just under 1.5x.

Concerns

5

  • Gross profit down 21.1% year-over-year to $134.7 million due to renewables project cost pressures.

  • Gross margins declined to 8.6% from 10.4% in the prior year.

  • Renewables revenue expected to be approximately $2.3 billion for FY26, a reduction from prior expectations.

  • Energy segment gross profit decreased $46.4 million year-over-year, with margins at 7.6% compared to 10.7% prior year.

  • Full-year adjusted EPS guidance lowered to $4.80-$5.00, reflecting a $110 million EBITDA reduction at the midpoint versus prior guidance.

Guidance & targets

CategoryTargetConfidence
Full-year Diluted EPS
$4.05-$4.25
high materiality
High
Full-year Adjusted EPS
$4.80-$5.00
high materiality
High
Full-year Adjusted EBITDA
$480M-$500M
high materiality
High
Full-year Renewables Revenue
approximately $2.3B
high materiality
High
Full-year Net Interest Expense
$35M-$38M
medium materiality
High
Q2 Effective Tax Rate
approximately 29%
low materiality
High
Full-year Effective Tax Rate
around 28%-29%
low materiality
High
Full-year SG&A as % of Revenue
mid- to high 5% range
medium materiality
High
Energy Segment Gross Margins
high 9% to low 10% range
medium materiality
High
Utility Segment Gross Margins
10%-12% range
medium materiality
High
Energy Segment Book-to-Bill
exceed 1x
medium materiality
High
Operating and Free Cash Flow
holding firm on our expectation
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Utility
Strong year-over-year top line growth and solid operational performance. Improvement driven by higher revenue in power delivery and new service program awards for gas utilities. Margins increased from 9.2% in prior year. Expects margins to increase in Q2 and Q3 due to normal seasonality and trend towards 10%-12% full-year target.
Gross profit: $62MGross margin YoY change: +0.6 percentage points
$630.9M12.3%—9.8%
Utility - Gas Operations
Supported by new awards in the Southeast and higher design build volumes in the Midwest. Margins slightly lower due to project mix.
Gross profit: up
—double digits—slightly lower
Utility - Communications
Profitability driven by improved productivity and reduced direct labor costs. Seeing increased opportunities in fiber associated with data center build-outs. Anticipates lower volumes in fiber-to-the-home programs starting Q2 as they transition to BEAD-related build-outs.
mostly flat——meaningfully improved
Utility - Power Delivery
Strong execution on increased activity. Seeing meaningful volume increases in Texas and the Southeast, particularly in transmission and substation work, which is generally accretive to margins.
double digits——double digits
Energy
Primarily driven by lower revenue and gross profit in renewables due to cost overruns and delays. Partially offset by improved performance in industrial and pipeline services. Expects margins to begin improving in Q2, supported by new project starts and PayneCrest contribution, targeting high 9% to low 10% for the full year.
Gross profit: $72.7MGross profit YoY change: -$46.4MGross margin YoY change: -3.1 percentage points
$978.1M-13.8%—7.6%
Energy - Industrial
Driven by higher natural gas generation activity.
———improved meaningfully
Energy - Pipeline Services
On track to emerge from the cyclical trough experienced in 2025. Expecting growth this year with new awards materializing in coming quarters, with more substantial growth in 2027 and 2028.
up more than 20%——up more than 20%

PRIM operating KPIs by quarter

PRIM operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25This call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Backlog
$11.9B+ We finished the year with over $11.9 billion in total backlog, including booking nearly $3 billion of new work in the final quarter of the year. Source: earnings call transcript
$11.6B With respect to backlog, we ended the quarter with $11.6 billion in total backlog compared to $11.9 billion at the end of 2025. Source: earnings call transcript
<$13.9B Total backlog at the end of Q2 was just under $13.9 billion, an increase of approximately $2.2 billion sequentially from Q1 and a record for Primoris. Source: earnings call transcript
—
Orders
<$3B We finished the year with over $11.9 billion in total backlog, including booking nearly $3 billion of new work in the final quarter of the year. Source: earnings call transcript
—
$3.9B+ During the quarter, we secured more than $3.9 billion of new awards, including approximately $1.5 billion in the Utilities segment and $2.4 billion in the Energy segment. Source: earnings call transcript
—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Backlog $11.6B Q1 FY26 end

vs $11.9B at 2025 end

Energy Segment Backlog decreased $780M Q1 FY26 end

Primarily due to timing of new natural gas generation, pipeline, and solar awards, which were expected to be softer in Q1 after a strong Q4.

Utilities Backlog increased $476M Q1 FY26 end

from year-end

Driven by continued growth in MSA work, rising customer demand, particularly in power delivery as utilities accelerate capital programs.

Energy Segment Book-to-Bill exceed 1x FY26

Anticipated for the full year 2026, with the majority of bookings occurring in the second half of the year.

Deals & partnerships

PayneCrest Acquisition of a St. Louis-based Union electrical contractor providing design, construction, and service solutions.

Closed on May 1, 2026, in line with expectations. Enhances opportunities for cross-selling and expands service breadth. Has flexibility to expand geographically. Potential for meaningful upside should additional scope with a large hyperscaler customer be finalized.

Risks & headwinds

Renewables project cost pressures and execution challenges Q1 FY26, with lingering effects into Q2 and Q3, one project into Q4 FY26

Impacted Q1 gross profit and margins; $35M-$40M in Q1 cost overruns, plus $25M in lower margins to finish jobs.

Mitigation:Targeted leadership changes, added experienced talent to preconstruction, estimating, and project management. Adjusted market expansion approach to avoid new work in problematic geographies. No new contracts in these geographies since H2 2024. Risk-assessed portfolio.

Timing shifts in new project bookings and revenue recognition Q2-Q3 FY26

Certain bookings originally anticipated in Q2 moved to Q3; revenue from projects booked late 2025 recognized later. Renewables revenue expected to be ~$2.3B for FY26 (down from prior expectations).

Mitigation:Strong funnel of opportunities and verbal awards in Energy segment expected to convert to bookings in H2 2026. LNTP status allows for early work and equipment ordering.

Complexity associated with new geographic labor markets H2 2024 projects, impacting Q1 FY26 results

Contributed to cost overruns and execution issues on renewables projects.

Mitigation:Adjusted market expansion approach; not pursuing new work in geographies where first-time entry contributed to issues. Will use better discrimination going forward.

Uncertainty around tax credits and project re-engineering in renewables Ongoing, impacting 2026 bookings and revenue recognition

Caused delays in project starts and bookings.

Mitigation:Working with customers on cost estimates and preconstruction planning. Maturing design solutions for better predictability in cost and schedule.

What to watch in Q2 FY26

Renewables project completion

Q2 FY26
Current 6 projects in margin compression scenario, 3 completing in next few weeks, 1 in next quarter, 1 in Q4 FY26
Target Substantial completion of projects as scheduled

Why it matters

Successful completion of these projects is key to mitigating further margin impacts and demonstrating the effectiveness of new risk management strategies.

Most of the projects that had this margin compression are nearing substantial completion in the next few weeks, and 1 in the fourth quarter at the end of this calendar year.

Find out whether PRIM delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked for a breakdown of the $110 million EBITDA reduction from prior guidance and clarification on the $700 million year-over-year decline in renewables revenue, specifically regarding backlog conversion.

Ken Dodgen attributed the EBITDA reduction to $45 million from renewables revenue pushout, $35-$40 million from Q1 cost overruns, and $25 million from lower margins on project completion. Koti Vadlamudi explained the renewables revenue decline was due to a $300-$400 million pull-forward of a project into 2025 and continued ripple effects from 2025 disruptions (tax credit clarity, project re-engineering). He noted $1.1 billion in verbal awards and $2.8 billion in H2 2026 signings for renewables.

“Yes, look, $300 million to $400 million is the pull forward of that 1 project that we've talked about all last year, 1 project that was supposed to be end in '26 and got pulled forward to '25. And then the balance of it, frankly, is mostly just continued ripple effects from all the disruption last year.”

asked by Lee Jagoda · answered by Ken Dodgen

3 min read 6 chapters

Detailed narrative

Renewables Project Challenges and Mitigation

Primoris experienced cost pressures and lower gross profit in Q1 FY26 due to a small number of solar projects. These issues stemmed from execution factors like labor issues, project redesigns, sequencing adjustments, and weather disruptions, primarily on projects executed in H2 2024. Management identified preconstruction planning gaps and complexity in new geographic labor markets as key drivers. Decisive actions include leadership changes, strengthening preconstruction and project management functions, and adjusting market expansion to avoid high-risk geographies. The majority of impacted projects are expected to be substantially complete in 2026, with one lingering into Q4.

Utility Segment Outperformance

The Utility segment delivered strong year-over-year top-line growth and solid operational performance, leading to improved margins in Q1. Gas operations saw double-digit revenue growth supported by new awards and higher design-build volumes. Power Delivery continued strong execution with double-digit revenue and margin growth, driven by increased transmission and substation work in Texas and the Southeast. The segment expects further revenue and margin expansion in Q2 and Q3 due to seasonality and increased activity, targeting the midpoint of its 10%-12% full-year margin range.

Energy Segment Performance (Ex-Renewables) and Pipeline

Despite renewables challenges, the rest of the Energy segment performed solidly. Industrial margins improved meaningfully due to higher natural gas generation activity. Pipeline Services saw revenue and gross profit up over 20%, signaling emergence from a cyclical trough. The company anticipates a significant increase in project awards across natural gas generation and solar in coming quarters, with many projects in limited notice to proceed (LNTP) status. Management expects final awards to accelerate in Q3, setting up strong growth for 2027.

PayneCrest Acquisition and Strategic Rationale

Primoris successfully completed the acquisition of PayneCrest, a St. Louis-based Union electrical contractor, on May 1. PayneCrest provides design, construction, and service solutions across diverse end markets, with approximately 40% of revenue from data centers and another 40%+ from industrial, power, and renewables infrastructure. The acquisition enhances cross-selling opportunities, expands service breadth, and offers significant long-term growth potential, particularly with a large hyperscaler customer. Expectations for revenue and earnings contribution remain unchanged, with potential upside from additional scope.

Capital Allocation and Financial Flexibility

The company maintains a strong balance sheet with $676.5 million in liquidity at quarter-end. The revolver was increased to $750 million in conjunction with the PayneCrest acquisition, with the net debt-to-EBITDA ratio expected to remain just under 1.5x. This provides flexibility for organic growth investments and strategic M&A. Primoris has a $150 million share buyback authorization and remains disciplined in its leverage ratio and evaluation of inorganic opportunities that align with strategic and financial objectives.

Market Outlook and Future Growth

Despite near-term renewables challenges, Primoris remains optimistic about the solar market outlook, with a total funnel of over $15 billion. The gas power generation market is also very strong, with $800 million in verbal awards and a $7.1 billion funnel beyond 2026. The company is refreshing its 3-year strategy and plans an Investor Day to discuss targets for FY27-FY29, highlighting confidence in its ability to capitalize on secular tailwinds and deliver long-term shareholder value.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.