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Primoris (PRIM) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 5, 2026

Source: earnings call transcript

Executive summary

Primoris Q2 FY26 — Record Backlog Amidst Renewables Challenges

Primoris reported record bookings and backlog in Q2 FY26, driven by strong demand in Utilities and natural gas power generation, and the successful integration of Pain Crest. However, financial results were significantly impacted by cost overruns in a limited number of renewables projects, leading to lower revenue, gross profit, and free cash flow. Management is implementing stricter risk management and expects sequential improvement in the second half of the year as these projects near completion.

Highlights

5

  • Secured over $3.9 billion in new awards, including $1.5 billion in Utilities and $2.4 billion in Energy.

  • Total backlog reached a record of just under $13.9 billion, increasing $2.2 billion sequentially.

  • Pain Crest acquisition exceeded expectations, contributing $200 million to backlog and $250 million in new bookings in the quarter.

  • Utilities segment revenue increased 2.8% year-over-year, driven by growth in gas operations and power delivery.

  • Pipeline business delivered double-digit revenue growth with substantial margin improvement.

Concerns

5

  • Q2 revenue decreased 10.7% year-over-year to $1.7 billion, primarily due to lower Energy segment activity.

  • Gross profit decreased $149.3 million year-over-year to $82.4 million, resulting in a gross margin of 4.9% (down from 12.3% in prior year).

  • Energy segment gross margins were slightly negative, a significant decline from 10.8% in the prior year, due to renewables project cost overruns.

  • Cash used in operations was $8.7 million, a decrease from $78 million provided by operations in the prior year.

  • Full-year free cash flow guidance was reduced from $350 million-$400 million to $150 million-$200 million.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 EPS
$1.30 to $1.85
high materiality
High
Full-year 2026 Adjusted EPS
$2.05 to $2.60
high materiality
High
Full-year 2026 Adjusted EBITDA
$275 million to $325 million
high materiality
High
Q3 FY26 Adjusted EBITDA
$90 million to $110 million
medium materiality
High
Q4 FY26 Adjusted EBITDA
$100 million to $120 million
medium materiality
High
Full-year 2026 Energy segment gross margins
6% to 8%
medium materiality
High
Full-year 2026 SG&A as % of revenue
a little over 6%
low materiality
High
Full-year 2026 Net interest expense
$43 million to $47 million
medium materiality
High
Full-year 2026 Effective tax rate
30% to 32%
low materiality
High
Full-year 2026 Free cash flow
$150 million to $200 million
high materiality
High
H2 2026 Renewables bookings
$1.5 billion to $2 billion
medium materiality
High
2027 Natural gas generation revenue
$800 million to $1 billion
high materiality
High
2027 Energy segment gross margins
10% to 12%
high materiality
High
Q3 FY26 Leverage ratio (net debt-to-EBITDA)
a little under 2x
medium materiality
High
FY26 Leverage ratio (net debt-to-EBITDA)
1.5x
medium materiality
High
2027 Leverage ratio (net debt-to-EBITDA)
1x
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Utilities
Driven by higher activity in gas operations and power delivery, partially offset by lower communications revenue and margins due to decreased fiber-to-the-home activity and a shift to maintenance work. Power delivery showed strong performance with improved productivity and a favorable mix of work, including substation and transmission scopes.
Gross profit change YoY: down $12.4 millionGross margin: 11.9%Gross margin change YoY: down from 14.1%
up $19.6 million2.8%—$85.1 million gross profit
Energy
Primarily due to decreased renewables activity, project cost overruns, and lower revenues in renewables. Partially offset by increased natural gas generation and pipeline activity, and contributions from Pain Crest. Pipeline delivered double-digit revenue growth with substantial margin improvement.
Gross profit change YoY: declined $136.9 millionGross margin change YoY: down from 10.8%
down $236.9 million19.2%—slightly negative gross margin

PRIM operating KPIs by quarter

PRIM operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25 Mar 2026 Q1 FY26This call 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 $13.9 billion Q2 FY26 end

up $2.2 billion sequentially

Record for Primoris.

Total fixed backlog up $1.5 billion Q2 FY26 end

from Q1

Primarily due to strong Energy segment bookings for natural gas generation, industrial, and electrical construction services from Pain Crest.

Total MSA backlog up $700 million Q2 FY26 end

from Q1

Driven primarily by increased activity in power delivery.

Renewables backlog $2 billion Q2 FY26 end
New awards (total) $3.9 billion Q2 FY26

Includes $1.5 billion in Utilities and $2.4 billion in Energy.

New awards (Energy segment) $2.4 billion Q2 FY26

Comprised of approximately $1.4 billion in natural gas power generation, $200 million from Pain Crest acquisition (as of quarter end), and the balance from electrical construction services, industrial infrastructure, and utility scale solar.

Deals & partnerships

Pain Crest Electrical Construction Services

Integrated for two months in Q2 2026. Exceeded expectations in performance. Strategic and cultural fit. Seeing positive momentum through backlog growth and robust pipeline of opportunities with existing customers.

Risks & headwinds

Renewables project cost overruns Impacted Q2 2026, expected to diminish in H2 2026.

Caused Q2 Energy segment gross margins to be slightly negative (down from 10.8% YoY); decreased gross profit by $136.9 million YoY in Energy segment; reduced full-year FCF guidance by $150 million-$200 million.

Mitigation:Strengthening operational oversight, enhancing preconstruction planning and risk management processes, sharpening accountability, disciplined project selection, and stricter contract terms. Three projects expected to complete in Q3, final one by year-end.

Communications business slowdown Q2 2026, expected to ramp up later in 2026.

Lower revenue and margin YoY in Utilities segment.

Mitigation:Transitioning to BEAD-funded projects, tracking $300 million in BEAD funding, pursuing data center fiber and connectivity work.

Labor resource constraints Ongoing.

Stated as a 'meaningful gate to growth' for Pain Crest and a general constraint in end markets.

Mitigation:Strategically expanding workforce in key markets, investing in talent development, looking for opportunities to add talent and create teams (e.g., 8-9 gas generation teams).

Elevated effective tax rate H1 2026.

Elevated for the first 6 months of 2026.

Mitigation:Expected full-year effective tax rate to be in the 30% to 32% range.

What to watch in Q3 FY26

Renewables project completion

Q3 2026
Current 2 of 6 projects mechanically complete, 3 expected substantial completion in Q3, final one by year-end.
Target Substantial completion of 3 projects in Q3 2026.

Why it matters

Completion of these projects is key to reducing financial impact and restoring profitability in the renewables segment.

Importantly, we continue to expect that 3 projects will reach substantial completion during the third quarter of 2026.

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

Q&A highlights

Clarification on 'on average' performance of renewables projects, risk of further charges, and assumptions for weather/labor.

Koti clarified that 'on average' means some projects are performing above and some below expectations, but the six identified projects with cost overruns remain the focus. He confirmed no significant new project delays or re-bids beyond what was previously articulated.

“Yes, and that comment is correct on average. In the portfolio, there's probably over 2 dozen projects. Many of them are delivering more than as sold margin and some are not material, but a little below the rest hold margin. So we identified the 6 that were -- have the cost overruns, and those remain the 6 that we continue to be focused on.”

asked by Steven Fisher · answered by Koti Vadlamudi

2 min read 6 chapters

Detailed narrative

Renewables Project Challenges and Mitigation

Primoris' Q2 FY26 results were significantly impacted by margin pressure from a limited number of renewables projects. Of the six challenged projects, two have achieved mechanical completion, three are expected to reach substantial completion during Q3 2026, and the final project is anticipated to achieve mechanical completion in early November, followed by substantial completion by year-end. Management is implementing decisive actions to strengthen operational oversight, enhance preconstruction planning and risk management processes, and sharpen accountability to prevent future occurrences.

Record Bookings and Backlog Growth

Despite the renewables challenges, Primoris delivered record bookings and backlog in Q2 FY26, underscoring the strength and diversity of its platform. The company secured over $3.9 billion in new awards, comprising approximately $1.5 billion in the Utilities segment and $2.4 billion in the Energy segment. This led to a record total backlog of just under $13.9 billion, representing a sequential increase of approximately $2.2 billion from Q1.

Utilities Segment Performance and Outlook

The Utilities segment saw a 2.8% year-over-year revenue increase, driven by strong performance in gas operations and power delivery. Communications revenue and margin were lower as expected, due to a transition from traditional fiber-to-the-home to BEAD-funded projects. However, management is optimistic about the segment's future, with significant bidding activity in communications for late 2026 and 2027, and continued strong demand in power delivery, particularly for transmission and substation work.

Energy Segment Strength Beyond Renewables

Outside of the renewables challenges, the Energy segment demonstrated solid operational performance. The Pipeline business delivered double-digit revenue growth with substantial margin improvement, and its multi-year addressable project funnel now exceeds $7 billion. Electrical Construction Services, acquired through the Pain Crest transaction, exceeded expectations, contributing $200 million to backlog and securing an additional $250 million in new bookings during the quarter, with a robust pipeline of opportunities.

Natural Gas Power Generation Opportunities

Natural gas power generation was a significant growth driver, accounting for approximately $1.4 billion of the sequential increase in Energy segment backlog. The addressable funnel for this market now exceeds $8 billion. The company expects full-year 2026 revenue for natural gas generation to be in the $500 million to $600 million range, with comfortable growth to $800 million to $1 billion in 2027, supported by early customer procurement and disciplined project selection.

Strategic Focus and Market Leadership

Primoris remains committed to successfully completing the remaining renewables projects, maintaining disciplined preconstruction planning, and positioning the business for profitable, sustainable growth. The company sees over $16 billion in solar and battery storage opportunities across its core geographic markets and is leveraging its market leadership, operational capabilities, and customer partnerships to capitalize on significant infrastructure investment opportunities.

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