Primoris Services Corporation (PRIM) | The Buildout — AI Infrastructure
The Verdict
Primoris is a critical infrastructure services provider operating mainly in the United States and Canada through two segments: Utilities and Energy. Its construction, maintenance, and engineering work sits in the physical path of AI-driven power demand—substations, transmission, natural gas generation balance-of-plant, solar and battery storage, fiber connectivity, and, through Paynecrest, electrical work inside data-center facilities.
| Market Cap | — |
| Revenue (TTM) | $7.5B |
| Revenue Growth | +13.4% |
| EBITDA Margin (TTM) | 6.2% |
| Net Debt | $566M |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Utilities revenue rose 12.3% y/y to $632.9M in Q1 2026, with gross margin up to 9.8% from 9.2% a year earlier.
- Q1 2026 data-center enabling infrastructure bookings were >$400M, roughly half of all FY2025 data-center bookings.
- The gas generation funnel reached $7.1B, up from $6.0B, with nearly $800M of verbal awards described as imminent.
- BESS revenue exceeded $250M in 2025, and the BESS megawatt-hour funnel more than quadrupled year over year.
- Paynecrest closed May 1, 2026, adding an electrical contractor with roughly 40% data-center revenue.
What We’re Watching
- Six troubled fixed-price solar projects, all bid in 2024, remain the swing factor; the June 22 schedule puts final substantial completion in Q4 2026.
- Energy segment book-to-bill is expected to exceed 1.0x for full-year 2026 with the majority of bookings in H2; ~$800M of gas-generation verbal awards must convert.
- FY2025 top-ten customer concentration rose to 53.1%, above the company's stated typical 40–50% range.
- Securities litigation is active; the lead-plaintiff deadline is September 21, 2026.
The demand side of the thesis strengthened—data-center enabling bookings, gas generation, BESS, and utility MSA backlog all moved higher. The execution side weakened after the renewables problem expanded from one project to six and guidance was cut again in June. The open question is whether the 2024-bid renewables issues are now fully contained and whether H2-weighted bookings convert into signed backlog.
Earnings Beat
Primoris reported Q1 2026 revenue of $1,559.9M, down 5.4% y/y, with gross margin of 8.6% compared with 10.4% a year earlier. Utilities revenue rose 12.3% to $632.9M, while Energy revenue fell 13.8% to $955.4M.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.6B | $1.9B | $1.6B | −5.4% |
| Gross margin | 8.6% | 9.4% | 10.4% | -180bps |
| EBITDA | $53M | $102M | $92M | −42.6% |
| EPS | $0.32 | $0.95 | $0.81 | −60.7% |
| Total backlog | $11,641.1M | $11,945.3M | 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.— Ken Dodgen, Chief Financial Officer, 2026-05-06
Management tone: Management shifted from a contained one-project renewables explanation on the Q4 2025 call to disclosing six impacted projects in Q1 2026, then issued a further lowering business update on June 22 with senior departures. On the Q1 call itself, management was candid and granular—the CFO gave a specific $110 million bucket breakdown—but the May confidence statement did not survive the next update.
Management Guidance
Initial FY2026 guidance set February 24, 2026 included adjusted EPS of $5.80–$6.00 and adjusted EBITDA of $560M–$580M. On May 6, 2026, management lowered adjusted EPS to $4.80–$5.00, adjusted EBITDA to $480M–$500M, and Energy gross margin to high-9% to low-10%, with renewables revenue of ~$2.3B. On June 22, 2026, the company updated again: net income $71.0–$101.0M, diluted EPS $1.30–$1.85, adjusted EPS $2.05–$2.60, adjusted EBITDA $275.0–$325.0M, and renewables revenue approximately $2.1B; the June reconciliation also assumed interest expense of $40–44M, higher than the May guide of $35–38M.
Trajectory
Reported revenue decelerated from $2,178M in Q3 FY2025 to $1,858M in Q4 FY2025 and $1,560M in Q1 FY2026; Q2 FY2026 revenue of $1,688.2M was down 10.7% y/y. Gross margin compressed from 10.4% in Q1 FY2025 to 8.6% a year later, with the split widening: Utilities margins improved while Energy fell from 10.7% to 7.6%. The next-12-month backlog slice was essentially flat at $5,268.8M versus $5,291.4M even as total backlog stayed above $11.6B.
The Model
The model projects FY+1 revenue of $7,450M and EBITDA of $276M (3.7% margin), followed by FY+2 revenue of $8,600M and EBITDA of $611M (7.1% margin). The FY+1 base sits near TTM revenue of $7,486.7M, while the FY+2 step-up depends on converting H2-weighted energy bookings and the gas-generation funnel into higher-margin work.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.6B | $7.5B | $8.6B |
| YoY Growth | — | −1.6% | +15.4% |
| EBITDA | $504M | $276M | $611M |
| EBITDA Margin | 6.7% | 3.7% | 7.1% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.2% above analyst consensus.
Initial FY2026 guidance set February 24, 2026 included adjusted EPS of $5.80–$6.00 and adjusted EBITDA of $560M–$580M. On May 6, 2026, management lowered adjusted EPS to $4.80–$5.00, adjusted EBITDA to $480M–$500M, and Energy gross margin to high-9% to low-10%, with renewables revenue of ~$2.3B. On June 22, 2026, the company updated again: net income $71.0–$101.0M, diluted EPS $1.30–$1.85, adjusted EPS $2.05–$2.60, adjusted EBITDA $275.0–$325.0M, and renewables revenue approximately $2.1B; the June reconciliation also assumed interest expense of $40–44M, higher than the May guide of $35–38M.
What Could Go Right — and Wrong
- The six troubled renewables projects complete without further negative revisions, and 2025+ booked renewables produce margins back toward the 10–12% range.
- The gas-generation verbal awards convert into signed backlog and the $7.1B funnel continues to convert.
- The $1.1B of H2 2026 renewables verbal awards and the additional $2.8B of expected signings materialize, pushing Energy book-to-bill above 1.0x.
- Paynecrest's unnamed hyperscaler awards additional scope, increasing the inside-data-center mix from roughly 40%.
- The Fermi/Project Matador award leads to additional phases or scope.
- Additional renewables cost overruns emerge beyond the six identified projects, or 2025-and-later jobs show the same estimating problems.
- Verbal awards fail to convert into signed contracts, and H2 bookings disappoint, weakening the 2027 revenue runway.
- Utility margin growth stalls or power-delivery labor capacity constrains the otherwise strongest segment.
- Paynecrest integration underperforms or the hyperscaler relationship does not expand.
- The securities litigation becomes a larger operational or financial burden.
Looking Ahead
Over the next 12 months the story depends on execution more than demand. The company must finish the six troubled renewables projects without further revisions, show that H2 bookings convert into backlog and revenue, and demonstrate that Utilities seasonality moves margins toward the 10–12% target. Paynecrest hyperscaler scope is expected to be finalized in the coming months, and management has referenced an investor day with 2027–2029 targets later this year.
- Q2–Q3 2026Gas-generation award conversion — Final awards expected to begin in Q2 2026 and accelerate in Q3.
- H2 2026Energy book-to-bill — Majority of bookings expected; ~$1.1B renewables verbal awards to sign.
- September 21, 2026Lead-plaintiff deadline — Litigation milestone in pending securities class actions.
- Q4 2026Final troubled renewables completion — Expected substantial completion of the last of six projects.
- Late Q4 2026Premier PV/eBOS expansion online — Earlier commitment; eBOS growth was targeted for 2027.
- Later this yearInvestor day 2027–2029 targets — Management referenced a three-year strategy refresh.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.4B | $7.6B | $7.5B | +19.0% |
| Gross Margin | 11.0% | 10.7% | 10.4% | 25bps |
| EBITDA | $413M | $504M | $2.9B | +22.1% |
| EBITDA Margin | 6.5% | 6.7% | 6.2% | +17bps |
| Net Income | $181M | $275M | $248M | +52.0% |
| Free Cash Flow | $382M | $340M | $1.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)10.4%
- EBITDA Margin (TTM)6.2%
- Net Margin (TTM)3.3%
- ROIC13.0%
- FCF Conversion35.3%
- SBC / Revenue0.3%
The Company
Primoris is a construction and engineering services provider operating mainly in the United States and Canada. Its Utilities segment builds and maintains gas and electric distribution, transmission, and communications systems; its Energy segment provides engineering, procurement, construction, and maintenance for energy, renewables and energy storage, renewable fuels, petroleum and petrochemical, and state DOT work. This is the physical layer that carries power and data to load—substations, transmission, gas generation balance-of-plant, solar and battery projects, pipelines, and increasingly inside-the-facility electrical work through Paynecrest.
The company owned 44 facilities as of December 31, 2025, with the remainder leased, and its Dallas executive offices are leased. Utility work is heavily MSA-based for recurring visibility, while Energy is more project-based with fixed-price exposure concentrated there. In Q1 2026, Energy carried $615.0M of fixed-price revenue, about 64% of that segment's revenue. Top-ten customers generated 53.1% of FY2025 revenue, up from 41.3% in FY2024.
Business Segments
Competitive Landscape
Primoris competes across fragmented utilities, industrial, renewables, and highway contracting markets. The 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 highways. The source material describes strong demand but intensifying competition as rivals expand into the same data-center, transmission, pipeline, and renewables work.
- Quanta ServicesNamed in the 10-K as a utilities-market competitor; not discussed further.
- Dycom IndustriesNamed in the 10-K as a utilities-market competitor; not discussed further.
- MYR GroupNamed in the 10-K as a utilities-market competitor; not discussed further.
- MasTecNamed in the 10-K as a utilities-market competitor; not discussed further.
- MortensonNamed in the 10-K as a renewables-market competitor; not discussed further.
Supply Chain
Primoris sits between utility and energy customers and the physical equipment that carries power and data. It installs and maintains infrastructure rather than manufacturing components, with MSA relationships across major utilities and a growing data-center electrical book through Paynecrest.