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| Statement |
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| This was accomplished through a significant project award in the Mid-Atlantic that was successfully executed by our union pipeline business and solid performance on projects acquired in the PLH acquisition |
| For the full year 2023 revenue was up $1.3 billion to a little over $5.7 billion and gross profit increased by $131 million or approximately 29%, primarily due to continued strength in our energy segment and contributions from the PLH and B Comm acquisitions |
| The growth was driven largely by our Energy segment, which was up 39%, primarily due to a robust utility-scale solar market, growth in our industrial business, and improvement in our pipeline business from 2022 lows |
| The Utility segment also saw strong revenue growth, up 18% from the previous year |
| This was mainly due to growth in our renewables business and improved pipeline and industrial margins |
| Our industrial construction business has also delivered a solid year of revenue and gross profit growth, while positioning the businesses to have an even better 2024 by securing several key projects in the back half of 2023 and early 2024 |
| Bottom-line, you’ll see margins improve |
| Gross profit and gross margins benefited from growth in our higher margin renewables work and improved industrial margins |
| The power delivery group, I expect to see their margins improve, not get to where we expect them to do, reach later in the year into 2025, but they should get to more of a high-single-digit margin |
| We also had a record year with respect to our safety performance in 2023 with a total recordable incident rate of 0.46, which surpassed the record we set in 2021, despite working approximately 10 million more work hours |
| Gross profit increased over 36% to $114 million and gross margins increased to 12% compared to 11.1% in the prior year |
| Our success in these and other metrics demonstrate both the tailwinds and our end markets, and our ability to capitalize on opportunities within these markets due to our safe performance, quality execution and strong customer relationships |
| Continued success in these areas will enable us to remain on a path of profitable growth and earnings expansion |
| Energy segment revenue increased $196 million compared to the prior year on the continued strength of our renewable business, an increased industrial activity in Canada and in the western United States |
| Our ability to continue performing well in these, and other strategic areas is the best way to ensure the long-term success of Primoris to the benefit of our employees, customers and shareholders |
| We accomplished these objectives and believe it has put us in great position for another successful year in 2024 |
| This is primarily due to higher revenue and better performance across all areas of the segment, renewables, industrial and pipeline |
| In closing, Primoris set out in 2023 to have safe, consistent execution on our projects, perform toward our financial goals, improved cash flow and pay down debt |
| We believe a strong cash flow and a healthy balance sheet will provide us with the most flexibility to invest in the business and be nimble when it comes to allocating capital towards the highest returns in our portfolio of services |
| In gas operations, we had solid execution performance, however, the business was impacted by a slight decline in revenues compared to the prior year |
| However, we believe that we’ve been able to remedy many of the issues that we face in 2023 and are confident that we will be able to deliver improved margins in this segment back closer to the midpoint of our 9% to 11% range |
| Turning to the Energy segment, our pipeline business delivered a strong turnaround from 2022, going from negative gross margins to the high-single-digits |
| Cash conversion is a continuously improving process for our company, but I am pleased to see our employees take ownership of this initiative |
| I’m proud of the men and women of Primoris in their 2023 achievements |
| We saw the benefits of these initiatives as our non-MSA revenue increased by more than 70% from the previous year, which included several transmission and substation projects |
| The renewables business continued its impressive track record of revenue growth and margin expansion, while also closing the year with more than $2.4 billion in backlog |
| Lastly, as Ken alluded to in his comments, we are increasing our operating cash flow and improving our leverage ratio |
| Our results are evidence of the resilience of our business model and collaborative client relationships as we were able to mitigate or work around a number of obstacles the industry faced during the year |
| We are optimistic about the future potential of renewables as our current portfolio of projects in various phases of our sales cycle is $5.8 billion |
| The primary drivers of the increased and fixed backlog were continued strength in our solar EPC bookings and heavy civil and industrial project wins |
| Statement |
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| Gross profit was down to approximately $43 million, a decrease of 39% compared to the prior year on lower gross margins |
| Gross margins declined to 10.3% from the prior year due to lower margins in the Utility segment |
| Gross margins were 7.5% for the quarter, down from 12.1% in the prior year |
| Lastly, we had a communications project experienced cost overruns that led to lower than anticipated margins compared to 2022 |
| Margins declined to 8.7% for the full year |
| Power delivery margins were adversely impacted from legacy PLH projects that experienced higher costs than were anticipated |
| We also operated for much of the year under below market rates on several of our MSAs and with some excess equipment that weighed on margins during the year |
| The lower gross profit and margins were driven by the lower margins in Q4 along with the higher costs on some legacy PLH projects noted back in Q3 |
| The decrease in gross profit and margin was driven by the mix of lower margin MSA at work during the quarter, less project work during the quarter, which generally has higher margins, and an earlier onset of winter in certain markets as compared to the prior year |
| SG&A expense in the quarter was down almost $10 million to $81 million compared to $91 million in the prior year |
| Lee Jagoda And, I think, you had guided last quarter to like a soft guide for 2024 of 20% to 40% growth in renewables in 2024 |
| Looking at segment gross profit for the year, Utilities gross profit decreased slightly due to lower gross margins partially offset by revenue growth |
| Although, we have a number of accomplishments to highlight in these areas, there were also some challenges that we faced during the year that impacted our margins in the segment |
| So I’m just wondering if anything has changed in last quarter that creates a new drag on the margin |
| In the same vein that we were expecting a little bit stronger margins in Q4, but winter kicked in a little early and impacted our margins in 2023 |
| As a reminder, our first quarter is typically our lowest quarter of the year for both revenue and net income due to seasonality, which primarily impacts our Utility segment |
| We’re just not making as good margins as we’d like to |
| And then you have those limitations that you get with inclement winter weather |
| A significant portion of the work we do for our existing customers is not competitively bid as they know our track record and appreciate the value we bring to their projects |
| Tom McCormick And you got to keep bear in mind their first quarter with respect to Utilities is typically their slowest quarter |
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