Good morning, and welcome, everyone, to the Primoris Services Corporation Third Quarter 2025 Earnings Conference Call and Webcast. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Blake Holcomb, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to the Primoris Third Quarter 2025 Earnings Conference Call. Joining me today with prepared comments are David King, Chairman and Interim 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, 2025. 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 2025 earnings press release, which was issued yesterday. I would now like to turn the call over to David King.

Thank you, Blake. Good morning, and thank you for joining us today to discuss our third quarter 2025 operational and financial results. Primoris had another great quarter, once again delivering record revenue, operating income and earnings. I am proud of our employees and their ability to execute at a high level, while providing our customers with safe, reliable service and driving profitable growth. Operating cash flow was also a highlight in the third quarter and further demonstrates the hard work we have put in to improve in this area. As a result of this emphasis, we have been able to make tremendous progress in delevering the balance sheet and allowing us to invest in the business to be well prepared for the surge in demand we are currently seeing across our end markets. I am particularly proud of how we have generated free cash flow and set new highs on our return on invested capital since making these metrics a priority. We are a company focused on the development of quality people and delivering quality projects for our clients. We continue to allocate our time and resources to capitalize on what we believe is a generational opportunity for our infrastructure solutions that will drive value for our shareholders. Last quarter, I discussed the significant demand on the horizon for power generation and the growing prospect of providing more services, which support the development of data centers. I want to reiterate that these and other opportunities remain squarely in front of us. The ramp-up in revenue, combined with the delay of a couple of larger dollar value projects, led to a higher-than-anticipated backlog burn rate in the Energy segment. The timing of when projects are signed and placed into backlog can [be due to] a number of factors, including changes in…

Thanks, David, and good morning, everyone. Our Q3 revenue was nearly $2.2 billion, an increase of $529 million or 32% compared to the prior year, driven by double-digit growth in both the Energy and Utility segments. The Energy segment was up $475 million or 47% from the prior year, driven by increased renewables and industrial activity. In Renewables, project progress continues to accelerate resulting in revenue outpacing our expectations by over $400 million for the quarter and by over $900 million year-to-date. We have seen significant revenue pulled forward from Q4 and from 2026 driven by strong project execution and early delivery of major materials. We now expect Renewables revenue to be closer to $3 billion for the full year 2025, up from our previous estimate of $2.6 billion. Additionally, our Industrial business was up over $100 million compared to Q3 2024, driven by strong execution on gas power generation and other industrial work. The Utility segment was up over $70 million or 10.7% from the prior year, driven by higher activity across all service lines, led by Gas Operations and Power Delivery. Gross profit for the third quarter was $235.7 million, an increase of $37.2 million or 18.7% compared to the prior year. This was attributable to increased revenue partially offset by lower margins in both segments. As a result, gross margins were 10.8% for the quarter compared to 12% in the prior year. Looking at our segment results. The Utility segment gross profit was $86 million, essentially flat compared to the prior year, resulting in gross margins decreasing to 11.7% compared to 13.1% in the prior year. The lower gross margins were mainly due to a significant decrease in higher-margin storm work in the current quarter compared to the prior year. In fact, the benefit from storm work…

Thanks, Ken. Before we open the call for questions, I'd like to recap a couple of key points of the quarter. First, Primoris is operating at an extremely high level, and we are seeing the results. We have tailored our strategy to emphasize improved margins, earnings growth, cash flow generation and the efficient allocation of capital and we are experiencing success in each of these areas. This is a direct result of our company culture and the dedication of our people in the field and those who support them. Second, the outlook for Primoris remains as good as we have seen and we have the people and our customer relationships to take advantage of the opportunities ahead of us. In all areas of our business, we will continue to work with and on behalf of our customers to develop the solutions to meet the infrastructure needs of the communities we serve. There's a lot of work to be done, and we are in a prime position to be a major contributor to the growth and modernization of the utility and energy infrastructure in North America. Lastly, I want to thank the people at Primoris for their support and efforts during my time as interim CEO. It has been a privilege to work alongside them for these past few quarters, and I'm grateful to have had the opportunity to play a role in transitioning Primoris into its next chapter led by Koti Vadlamudi. Koti is a talented and tenured executive that meets all the criteria we are looking for in the next leader of Primoris. I and the rest of the Board are pleased to have him join us, and we look forward to supporting him. It is an exciting time to be in our industry and especially to be part of the Primoris team. I have a high degree of confidence that the best years of Primoris are in front of us. I want to encourage our teams to maintain the high standard of execution they have through the first 9 months of the year and close out 2025 strong with a look to the future. We will now open up the call for your questions.

[Operator Instructions] We'll take our first question from Philip Shen at ROTH Capital Partners.

You guys had previously expected fiscal '25 order intake to be back-half weighted. Dave, you just shared in your prepared remarks that you expect Energy bookings to improve in the coming quarters. Can you provide some additional color on how bookings might look so far in this quarter, Q4? And then additional color on how they might trend?

Sure, Philip. Thanks for the question. Yes, we've indicated even in some of my opening remarks that some of the timing for some of the energy segment jobs were probably going to be pushed into this Q4 timeframe. And indeed, we've seen that. I'll let Ken kind of give you some rough numbers in a moment, but I would tell you that we're looking to have a very good book-to-bill in our Energy segment and possibly in other areas. Also in this Q4, we've already booked some pretty nice awards and currently doing some paperwork to continue firming up some additional awards in Q4. So just as [indiscernible] said, I'm pretty comfortable with where we're going to end up relative to Q4 bookings. So Ken?

Yes. Phil, the other thing I would add is while we definitely entered the year thinking that it would be back-half loaded, what we weren't anticipating is all the noise from tariffs and OB3 and everything else. So all that's done in this kind of as we mentioned in our opening comments, is kind of shift everything out a quarter to as much as 2 quarters in a few cases. But looking at Q4 already, just for the Energy segment alone, we've already booked over $600 million. We have another $600 million that should book within the next 30 days. And for the Energy segment, we're expecting a book-to-bill well north of 1 for Q4, maybe as high as 1.2 or 1.3, depending on how the rest of the quarter closes out.

Great. That color is very helpful. And shifting over to -- or staying with the Energy segment. Book-to-bill was 0.3x. You just talked about how that could be strong. How much of the $300 million Q3 revenue in the Energy segment was attributable to a pull forward of demand timing? And what do you think Q4 Energy revenue looks like? You talked about bookings, but let's talk about the revenue now.

Yes. The pull forward on revenue was at least $100 million. And I don't have the exact numbers in front of me right now, but I know there was comfortably $100-plus million of revenue that was pulled forward that led to the EBITDA pull forward as well. Revenue for Q4, I've got a ballpark number of about $1.2 billion for Energy in Q4.

We'll take our next question from Sangita Jain at KeyBanc Capital Markets.

So I know you have discussed a lot about the renewables bookings being pushed out. Can we talk about the gas generation bookings, maybe how the funnel of opportunities looks there? And if there were any delays in bookings in that subsegment?

Sure, Sangita. Thanks for the question again. Yes, there was a little bit that kept being pushed out. Remember, we're trying to work with our customers to get that price, that fixed price and some of the delays relative to some of the materials that needed in the project, getting firm pricing and things like that kind of pushed them a little bit to the right on us. But as Ken mentioned, we're seeing those now become bookings. And so again, I'm seeing that delay in some of those bookings getting behind us, especially in the Q4. And then we're still looking at fairly strong bookings in Q1 and Q2 also.

Got it. And then on the comment in your press release about weather impacting some of your projects in 3Q. Are those projects all done? Or should we expect more kind of like margin leakage from those into 4Q?

Yes. So Sangita, I think the -- so the short answer is not all the projects are done. It was pretty heavily focused on the pipeline part of our business and just a couple of projects there. As those projects finish in Q4 and burn-off, we may have a little bit of margin drag in Q4, but that should be it.

Next, we'll move to Lee Jagoda at CJS Securities.

I guess for starters, David, it was fun the second time around and if Koti listening, he's going to have to work on his southern accent a little bit.

I agree, Lee. I agree.

If we can start with the utility side of the business, you've had 4 straight quarters of double-digit top line organic growth. And obviously, the backlog both on a year-over-year basis and a sequential basis has improved somewhere between 10% and 20%, depending on which metrics you're looking at. If you're sitting here today, how sustainable is that double-digit organic growth on the utility side as we move, not just into Q4 but as we look out into 2026?

Well, let me start out, and then I'll let Ken add some more color as he sees fit. We did increase our range for those utilities between that 10% and 12% for the year, as you know, we mentioned that last time. I do think those are sustainable going in. The demand, as you've seen, Lee, has been pretty strong in our Utility segment. We're still seeing good build-outs on the communication side and the utilities, good build-outs on the gas side -- gas utility side of it. So I would say that I'm still feeling pretty comfortable that we can maintain those.

Well, that's just on the margin side, that 10% to 12%. I'm more talking on the revenue side. You've done 10% plus the last 4 quarters in a row -- no, no, no, topline growth.

Okay. On the top line. Yes, the revenue growth has been strongly aided by the gas and communication strength that we're seeing. And again, we're still seeing just on the revenue side, a tremendous demand out there for our services, continuing to build teams, continuing to train personnel. So I still see that as a pretty strong market for us to continue to grow in.

And then one more, and I'll hop back in the queue here. So Ken, I think you mentioned $1 million of pull forward year-to-date in Energy. And as we continue to pull forward, some of that's got to come from the future beyond 2025. So despite all these large bookings, and I guess, under the framework, we had been expecting $300-ish million of revenue improvement from Energy each of the next couple of years, how does that set up for revenue growth within the Energy segment and Renewables specifically in 2026?

Yes. Look, the vast majority of that is in the Renewables business. So as we started talking about last quarter, I think our revenue growth is going to be much less for Renewables going into '26, probably a couple of hundred million or something like that is my best guess right now. We're still firming up our '26 numbers. Where we see the revenue growth opportunity still remaining strong, though, going into '26 is in our Industrial part of our business, predominantly the gas generation that we've been talking about and in Pipeline. Despite some of the margin issues we experienced this quarter, Pipeline -- the pipeline opportunities for revenue growth are pretty significant right now. So we could see $100 million to $200 million of revenue growth just in Pipeline alone going into next year.

Yes. And Lee, I would add one more thing on Ken's comments. The kind of pipeline projects we're looking at now are really down the fairway for us through the larger diameter pipeline projects. So I feel like we'll perform better on those in the future than what we've been struggling with on some of the work that we've seen over this last year or so.

We'll take our next question from Julien Dumoulin-Smith at Jefferies.

Koti, welcome to the crew and it's been a pleasure otherwise. Look, let me -- if I can come back to what you were saying just there a second ago. I mean, what's like the rate of growth there on the Pipeline side of the business? I mean, it seems like what you just said a moment ago implies a pretty steep ramp versus where you're starting. And then also maybe to go back to another comment from earlier. Given some of the delay in just booking some of these Renewable projects, for instance, what does that say about the cadence of revenue growth here over the next few years on Renewables? Is it more back-end weighted to '27, '28 versus '26? Or how would you set expectations? I know you guys used to have those long-term Renewable revenue growth targets.

Yes. So I'll go in reverse order. On the -- on the Renewable side, look, I think the cadence is actually coming down for '26, as I mentioned. And then we're looking for kind of a return to normal going into '27 and '28. The softness in '26 is pretty heavily driven by the delay in bookings for renewals tied to all the noise that we've had this year. The good news is, as we've been talking about is, that funnel is as strong as ever, and our customer base is -- has a lot of projects they want us to build. Just switching back to your first question on Pipeline. Pipeline is right now in '25, a $300 million to $350 million revenue business for us. All it takes is one or two of those projects that David is talking about for it to jump $100 million to $150 million going into '26.

And then just given the size of those businesses there, what does that do for operating for margins here in operating margins in terms of as you think about scaling up on that front, especially -- well, I'll leave it there.

Yes. I mean nothing really on the renewable side since it's already a fairly scaled business. On the Pipeline side, that's where there's some margin accretion opportunity going into '26 as we get that business back up to scale.

And Julien, my comment also add, and I've added it each time is on the pipeline side of the business, those book and burn very quickly. So they'll -- usually what you book in 1 quarter, you're going to burn over the next 3 to 4 quarters. So it burns very quickly.

Yes. Absolutely. I hear you. Excellent. Actually, just to clarify your earlier comment, do you think it's the top of the cycle of '28? Are you seeing incremental interest in '29 and '30 given the safe harbor comments you made there? Does it stay at that '28 level or even compound?

I don't know if it compounds, but yes, we expect strong bookings and revenue kind of through the end of the safe harbor period.

Okay. Excellent. I appreciate the forward-looking view.

Next, we'll move to Joseph Osha at Guggenheim Partners.

First, David, congratulations on your interim stewardship here. It's been great working with you. Two questions. Just following up a bit on Julien's question. Are you guys any -- or do you think you're going to see any attempt to surge solar completions in '27 as people try and get in under this place in service deadline? Or is there enough safe harbor that, that just doesn't matter? And then I have a follow-up.

Yes, Joe. On the safe harbor side, no, we've got -- all of our customers are telling us they've got enough safe harbor that they don't see any issues with that.

All right. So no kind of '27 surge that you see, everybody is just plowing ahead because they've got enough safe harbor.

Correct.

Correct.

And then you guys have talked a little bit about some of the single cycle gas business you've got in particular behind defense. I think you said Stargate, I'm just wondering, as you think about your single-cycle gas business going forward, how does that break down between kind of traditional front of the meter peak or and some of these opportunities sitting next to data centers inside defense? And how big could that get?

Well, we're currently working on about four projects, not all of them in data centers, but we all -- we obviously are working on Stargate. We've been awarded and it's been announced also that we're starting to do the Power Gen side on the FERMI project, the one went up there in the Amarillo, Texas area. And so that market for us on the simple cycle can continue to grow. In fact, we've built out several teams getting ready for that surge, and we see a tremendous funnel of opportunities in front of us. I'll let Ken kind of mention a number in a moment because we've looked at potentially how big we think that revenue could get in that market for us next year.

Yes. Joe, I think next year, we grow top line $100 million to $150 million easily, maybe with a little upside to that. And just to kind of firm up what David was saying, there's a lot of moving pieces right now, but I -- going forward, I think it's probably going to be about a third behind the meter. That's a ballpark number and two-thirds stand-alone more brownfield sites that are just either merchant or contracted.

Okay. And guys, can I ask one very quick follow-up. I'm really sorry. As you look at turbine supply, are you finding you have to kind of go to sort of Cat or Atlas Copco or something? Or are you able to -- are your customers able to get turbines from the Big 3?

They're getting in from the Big 3 and from Cat and others. So it depends on the type of turbines and size of turbines they're getting and where they are in the stack.

And next, we'll go to Brent Thielman at D.A. Davidson.

I had a question on the Utility backlog growth has been pretty notable. It looks like Power Delivery a decent part of that this year. And I guess my question, Ken, is, as we think about that becoming potentially a bigger piece of the segment as you convert that business, why wouldn't it be accretive to the margin profile as we look out 12, 24-plus months?

Yes. It will be accretive to the margin profile, especially as we continue to build out our project capabilities that we've talked about. A big chunk of the backlog growth we've seen thus far has been really on the distribution side, which tends to be a little bit lower margin for us. But the project work is coming and it is growing. Some of it's going to be done within the MSAs and some of it's going to be done outside the MSAs.

Got it. And David, since I think you commented on it, that the relationship with FERMI, is a portion of that already in the backlog? Is there more to come? If you could just expand on that, that would great.

No, it wasn't in the backlog. We were awarded on LNTP. It will be in Q4 backlog. So that was part of the projects I was mentioning that we just got awarded in Q4.

We'll go next to Sean Milligan at Needham.

Two questions. The first one real quick on the gas power side and margin expectations there. As you grow that business, do we think about margins being accretive to energy margins on the gross side?

They will be accretive. They're running upper end of that 10% to 12% range.

Okay. Great. And then on the data center piece, I know last quarter, you kind of outlined some of the pipeline there and the bids you had outstanding. And you commented that, I guess, it's mostly outside the box work. Curious about as you transition '26, '27, are you looking at getting inside the box? Can you do that organically by maybe repositioning teams? Or do you need to do that inorganically?

To answer your question, yes, we are looking at getting inside the box. That was one of the strategic initiatives that we put underway that might be a nice type of an acquisition. But from an organic standpoint, we could limitedly get into that. That's probably not the most optimum route for us to get inside that box. And so that's why we're -- we've got that as a strategic from an acquisition perspective.

We'll move next to Adam Thalhimer at Thompson Davis.

Heck of a beat in Q3, congrats. I wanted to ask what you are seeing in the pipeline bidding market and what the potential for Primoris could be there in 2026?

Wow. Well, let me mention this way. I was looking at a sales information the other day, some marketing data and where we might have been seeing -- and I mentioned this on my call, where we might have been seeing $200 million type of opportunities for us for several quarters. If that thing has now went to well over $1 billion to $2 billion plus of types of opportunities in our funnel for the Pipeline side. We are optimistic that we might be able to close some pipeline projects as early as this Q4 and then also some additional ones coming in that Q1, Q2. So as I mentioned in the comments, what was a headwind has rapidly turned to a tailwind and we're being selective on which ones we actually want to go after to obviously produce the best margin performance we can.

Sounds great. And then in the prepared comments, you also mentioned, I think it was a couple of hundred million of projects for the next couple of quarters, broadband expansion, major network build-outs. So I was hoping you could expand on that also.

Yes. We are seeing more of that. There's a lot of -- in the data center side, there's a lot of fiber in the data center and getting it to the fiber networks. The fiber-to-home is going to slow down a little bit, but we are seeing a tremendous ramp up in the other types of fiber network build outs. So that's looking positive for us to grow that business again next year.

Yes, Adam, that's the fiber loop we've been talking about, the day loops and then also the middle mile stuff that we started doing.

Okay. And the last one for me was just like your traditional civil business. What kind of trends you're seeing there, demand trends?

I love that question because our groups have done a tremendous job in making that unit a very profitable business unit for us. We kept the revenue top line in that -- Ken, do you want to mention it?

Yes, Adam, the revenues have been just kind of gradually growing like $30 million a year. We'll do $550 million to $575 million this year. Next year, we'll probably do $600 million to $625 million or something like that. As we talked about, it's just a good solid cash cow for us. It's generating very good margins, and we just kind of let it run its thing.

The teams that we've got right now, Adam, are performing extremely well in the markets they're in. And like I say, we'll grow the top line a little bit each year and just making sure that, that teams can continue to handle and build out as necessary to keep those margins where we want them. So it's really controlling the margin level more than it is the top line.

[Operator Instructions] Next, we'll go to Avi Jaroslawicz at UBS.

So just in terms of the timing delays of signing awards in Energy, was that pretty even across the verticals? Or was there noise that led to more delays for renewables or pipelines? Is it just around the tariff cost uncertainty? Or were there other factors?

I'll start out and then anything Ken can add as he needs to. But I would tell you, it's more on the Renewables side. As we were looking -- as you know, all that noise that we were getting out there on the One Big Beautiful Bill and the tariffs, it was causing some of our customers to look at a lot of different supply chains, which meant that we had to redo some engineering and look at -- before we could really firm up our cost to them. And so it wasn't a matter, I think I said on my earnings call, that we lost any projects or any projects were delayed or not delayed, but any projects were canceled, it was a matter of we needed that extra timing and so did our customers to get the right supply chain in, so we could firm up the price and get ready to sign those projects. And then indeed, that's what we're talking about happening in Q4 and then also in Q1.

Okay. Got it. And then, Ken, I think you noted that good weather in Q4 could allow you to hit the upper end of guidance. Is there anything that could push you above the upper end? How are you thinking about that? And also, do you have any storm restoration work in Q4 embedded in the guidance?

Yes. We never put storm restoration in any of our forecasts. So there's none in there. And then look, to the upside, it's going to be a weather issue. It's going to be project closeouts, other things like that, that will drive us to the upper end.

And that concludes our Q&A session. I will now turn the conference back over to David King for closing remarks.

Thank you for your questions and interest in Primoris. We are pleased with our third quarter and year-to-date results and look forward to carrying this momentum in the remainder of the year and into 2026. Thank you, and we look forward to updating you next quarter.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.