Primoris Services Corporation (PRIM) | The Buildout — AI Infrastructure
The Verdict
Primoris is a construction and engineering contractor that builds and maintains the physical infrastructure behind power and data-center growth: electric transmission and distribution, substations, natural gas generation balance-of-plant, solar and battery storage, pipelines, and fiber. It does not sell AI hardware or operate data centers; AI demand reaches it indirectly as utilities and developers expand power supply and grid capacity. The company operates through two segments, Utilities and Energy, and is expanding from outside-the-fence work into inside-the-facility electrical through the Paynecrest acquisition.
| Market Cap | — |
| Revenue (TTM) | $7.3B |
| Revenue Growth | +5.1% |
| EBITDA Margin (TTM) | 4.4% |
| Net Debt | $893M |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data-center enabling infrastructure bookings were over $400 million in Q1 2026, compared with $800-$850 million for all of FY2025.
- The natural gas generation funnel rose to $7.1 billion from $6.0 billion in one quarter, with nearly $800 million of verbal awards described as imminent.
- Utilities revenue grew 12.3% y/y in Q1 2026 to $632.9 million, gross margin expanded to 9.8% from 9.2%, and Utilities total backlog rose $476.2 million from year-end 2025.
- BESS revenue topped $250 million in 2025 and the MWh funnel more than quadrupled y/y; management sees the business with ability to more than double.
- Paynecrest closed on May 1, 2026, adding inside-the-facility data-center electrical work with roughly 40% data-center revenue, about $112 million of that portfolio, and a key unnamed hyperscaler relationship.
What We’re Watching
- Remaining troubled renewables projects are scheduled to finish through Q4 2026: two completed in Q2, one early Q3, two later Q3, and one in Q4. Any further cost revisions would be a major negative.
- H2 2026 booking conversion is the next demand test: $1.1 billion of renewables verbal awards are expected to sign, another $2.8 billion targeted, and Energy book-to-bill is guided above 1x for full-year 2026 with the majority in H2.
- Cash reversal: Q1 operating cash flow was a use of $122.6 million, and Q2 free cash flow was negative $31.2 million; management expected payables timing to reverse in Q2/Q3.
- Securities litigation: class period is August 5, 2025 through June 22, 2026, with a lead-plaintiff deadline of September 21, 2026.
The thesis is intact on demand but weakening on execution and credibility. Utilities, data-center enabling work, gas generation, BESS, and pipeline are all showing growth or early recovery, but the Energy segment's fixed-price renewables problems have produced two guidance cuts, leadership departures, and negative net income in Q2 2026. The key open question is whether the remaining troubled projects close on the revised June schedule without further cost revisions and whether the H2 booking funnel converts into signed backlog and revenue.
Earnings Beat
Primoris reported Q2 FY2026 revenue of $1,688.2 million, down $202.5 million, or 10.7% year over year, driven by lower Energy segment revenue. Gross margin fell to 4.9%, and EBITDA was $3.9 million, a 0.2% margin. Net income was -$24.2 million, and free cash flow was -$31.2 million.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.7B | $1.6B | $1.9B | −10.7% |
| Gross margin | 4.9% | 8.6% | 12.3% | -740bps |
| EBITDA | $4M | $53M | $149M | −97.4% |
| EPS | $-0.45 | $0.32 | $1.54 | −129.1% |
| Q2 Energy segment awards | $2.0B | n/a | n/a | — |
The $110 million, it is kind of in three buckets if you think about it. We talked about the revenue pushout and the lower revenue in renewables. That is about $400 million for the year, and so at kind of our normal gross margins, that is about $45 million, give or take. Then the cost overruns on the jobs in Q1 are about $35 million to $40 million of it. And then there is about another $25 million or so that will just be lower margins as we finish out the jobs over the course of Q2, predominantly Q2 and Q3. There is one job that will linger into Q4, but that is about it.— Ken Dodgen, CFO, 2026-05-06
Management tone: No Q2 2026 earnings-call transcript is in the source material. On the Q1 2026 call, management was candid and granular, with the CFO breaking the renewables impact into three buckets. By the June 22, 2026 business update, the company disclosed additional overruns and cut FY2026 net-income guidance by roughly 70%; the Renewables president and COO had departed. The pattern shows earlier confidence did not hold.
Management Guidance
On June 22, 2026, Primoris updated FY2026 guidance to net income of $71-$101 million, diluted EPS of $1.30-$1.85, adjusted EPS of $2.05-$2.60, and adjusted EBITDA of $275-$325 million. The update put renewables revenue at approximately $2.1 billion for 2026, versus about $3.0 billion in 2025, and assumed net interest expense of $40-$44 million. The Q2 2026 release did not include updated full-year guidance in the supplied source digest.
Trajectory
The reported numbers show a sharp split. Utilities revenue grew 12.3% y/y in Q1 2026 to $632.9 million and gross margin expanded to 9.8% from 9.2%. Energy revenue fell 13.8% y/y to $955.4 million and gross margin dropped to 7.6% from 10.7%, driven by renewables cost overruns. Consolidated gross margin was 8.6% in Q1 2026, then 4.9% in Q2 2026; EBITDA fell to $3.9 million, a 0.2% margin. Free cash flow was -$150.4 million in Q1 and -$31.2 million in Q2. The issue is execution in fixed-price renewables, not the demand backdrop: backlog was $11.6 billion at Q1-end and data-center enabling, gas, and BESS funnels are expanding.
The Model
The model projects FY+1 revenue of $7,001 million and EBITDA of $259 million, a 3.7% EBITDA margin. For FY+2, it projects revenue of $7,800 million and EBITDA of $437 million, a 5.6% margin. The near-term year reflects the renewables revenue reset to approximately $2.1 billion for 2026 and the drag from completing the six troubled projects. The FY+2 step-up assumes the fixed-price renewables projects close, margins recover, and the H2 booking funnel converts into signed backlog and revenue.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.6B | $7.0B | $7.8B |
| YoY Growth | — | −7.6% | +11.4% |
| EBITDA | $504M | $259M | $437M |
| EBITDA Margin | 6.7% | 3.7% | 5.6% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.2% above analyst consensus.
On June 22, 2026, Primoris updated FY2026 guidance to net income of $71-$101 million, diluted EPS of $1.30-$1.85, adjusted EPS of $2.05-$2.60, and adjusted EBITDA of $275-$325 million. The update put renewables revenue at approximately $2.1 billion for 2026, versus about $3.0 billion in 2025, and assumed net interest expense of $40-$44 million. The Q2 2026 release did not include updated full-year guidance in the supplied source digest.
What Could Go Right — and Wrong
- The six troubled renewables projects complete without further cost revisions, and renewables margins move back toward the 10%-12% range management previously targeted for Q4 2026.
- The nearly $800 million of gas-generation verbal awards convert into signed backlog, and the $7.1 billion gas-generation funnel continues to convert.
- The $1.1 billion of H2 2026 renewables verbal awards and the additional $2.8 billion of expected signings materialize, lifting Energy book-to-bill above 1x.
- Paynecrest's unnamed hyperscaler finalizes additional scope, increasing inside-the-facility data-center electrical revenue.
- The Fermi / Project Matador award leads to additional phases or scope, and the potential combined-cycle top-to-top becomes a real award.
- Further cost overruns emerge on the remaining six projects or on renewables work booked in 2025 or later, implying the problem is not confined to the 2024 cohort.
- H2 2026 verbal awards fail to convert into signed backlog, and Energy book-to-bill misses the guided >1x full-year 2026.
- Utilities margin growth stalls or the power-delivery labor market constrains capacity, removing the offset to Energy weakness.
- Paynecrest integration underperforms or the hyperscaler relationship does not expand, limiting the inside-the-facility data-center contribution.
- Cash-flow reversal is slower than expected, with Q2 free cash flow still negative and interest expense running at the higher $40-$44 million level assumed in the June reconciliation.
Looking Ahead
Over the next 12 months, the critical milestones are completion of the remaining troubled renewables projects and conversion of the H2 booking funnel. Management guides Energy book-to-bill above 1x for full-year 2026 with the majority in H2, and expects gas-generation final awards to accelerate in Q3. Paynecrest integration and the unnamed hyperscaler scope are additional swing factors. The securities litigation lead-plaintiff deadline is September 21, 2026, and management has referenced an investor day with 2027-2029 targets later this year.
- September 21, 2026Securities lead-plaintiff deadline — Deadline in class action covering August 5, 2025-June 22, 2026.
- Q3 2026Renewables project completions — One project early Q3, two later Q3; tests June cost estimates.
- Q3 2026Gas awards conversion — Final gas awards expected to accelerate; tests ~$800M verbal awards.
- H2 2026Renewables verbal signings — $1.1B expected to sign; another $2.8B targeted for signing.
- Q4 2026Last troubled project completes — Final solar project scheduled for substantial completion in Q4.
- Later this yearInvestor day targets — Management referenced 2027-2029 targets with strategy refresh.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.4B | $7.6B | $7.3B | +19.0% |
| Gross Margin | 11.0% | 10.7% | 8.6% | 25bps |
| EBITDA | $413M | $504M | $320M | +22.1% |
| EBITDA Margin | 6.5% | 6.7% | 4.4% | +17bps |
| Net Income | $181M | $275M | $140M | +52.0% |
| Free Cash Flow | $382M | $340M | $88M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)8.6%
- EBITDA Margin (TTM)4.4%
- Net Margin (TTM)1.9%
- ROIC6.9%
- FCF Conversion27.5%
- SBC / Revenue0.2%
The Company
Primoris provides critical infrastructure services, mainly in the United States and Canada, through two segments: Utilities and Energy. Utilities builds and maintains natural gas and electric utility distribution and transmission systems and communications systems. Energy provides engineering, procurement, construction, and maintenance for energy, renewable energy and energy storage, renewable fuels, petroleum and petrochemical industries, and state departments of transportation. The work matters to AI infrastructure because data centers need power, transmission, substations, gas generation, batteries, pipelines, and fiber.
Executive offices are in Dallas, Texas, and Primoris owned 44 facilities as of December 31, 2025, with the rest leased. Utility work is heavily MSA-based, giving recurring visibility; Energy work is more project-based and exposed to fixed-price construction economics. The company is integrating Paynecrest, a St. Louis-based union electrical contractor that closed on May 1, 2026. Paynecrest adds inside-the-facility electrical design, construction, and service work, with approximately 40% data-center revenue, about $112 million of its portfolio, and a key unnamed hyperscaler relationship.
Business Segments
Competitive Landscape
Primoris competes in utility, industrial, renewables, and highway construction markets. The FY2025 10-K names Quanta Services, Dycom Industries, MYR Group, and MasTec in utilities; PCL, Kiewit, Performance Contractors, and Boh Brothers in industrial; Blattner Energy and Mortenson in renewables; and Sterling Construction and Zachry Construction in highway services. Neighbor read-throughs show rivals expanding in data-center electrical, transmission, pipeline, and renewables at the same time Primoris is integrating Paynecrest. No rival or customer specifically named Primoris on the supplied transcripts.
- Quanta ServicesNamed in 10-K as a Utilities-market competitor; not discussed in supplied transcripts.
- MasTecNamed in 10-K as a Utilities-market competitor. Neighbor read-through: record $20.3B backlog, 1.4x book-to-bill, pipeline revenue up 92% y/y, expanding turnkey data-center construction.
- MYR GroupNamed in 10-K as a Utilities-market competitor. Neighbor read-through: Q1 revenue up 20%, record $2.84B backlog, raised 2026 margin targets.
- Dycom IndustriesNamed in 10-K as a Utilities-market competitor. Neighbor read-through: record $11.9B backlog, 2.2x book-to-bill, acquiring NTI for data-center electrical and low-voltage work.
- Blattner EnergyNamed in 10-K as a renewables-market competitor; not discussed in supplied transcripts.
Supply Chain
Primoris sits between equipment and materials suppliers and large utility, energy, and state DOT customers. It is an EPC and maintenance contractor, not a manufacturer. The 10-K does not provide a detailed supplier list, and most supplier names in the source are generated/spider-sourced, not confirmed.