Primoris (PRIM) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, Feb. 24, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Cody Vadlamudi
• Chief Financial Officer — Kenneth M. Dodgen

TAKEAWAYS

• Revenue -- Full-year revenue reached almost $7.6 billion, up $1.2 billion, primarily due to double-digit growth in both Utility and Energy segments.
• Q4 Revenue -- Fourth-quarter revenue was nearly $1.9 billion, an increase of $116.4 million, or almost 7%, compared to the previous year, driven by both segments.
• Backlog -- Total backlog exceeded $11.9 billion, with nearly $3 billion in new bookings secured in Q4, including $1.6 billion in renewables.
• Gross profit -- Full-year gross profit rose by $110 million, or 16%, primarily on higher revenue and margin improvement in Utilities.
• Gross margins -- Overall gross margin in Q4 measured 9.4%, down from 10.6% a year earlier; Utility segment Q4 gross margin was 10.5%, down from 12.1%, mainly due to lower storm work.
• SG&A expenses -- Full-year SG&A was 5.3% of revenue, falling from 6% in 2024, reflecting “progress…in 2025”; targeted to remain in the mid to high 5% range for 2026.
• Operating cash flow -- Full-year operating cash flow exceeded $470 million, with $143 million generated in Q4, benefiting from over $100 million in accelerated cash collections from Q1 2026.
• Utilities segment performance -- Utilities revenue rose over $253 million, or just above 10%, with gross profit up $51 million, or almost 20%, on “improved gross margins, particularly in power delivery.”
• Gas operations milestone -- Gas operations revenue surpassed $1 billion for the first time, propelled by market share gains and capital program expansions in the Midwest and Southeast.
• Communications growth -- Communications posted double-digit revenue growth, aided by “large-scale network long-haul builds tied to data center development.”
• Energy segment growth -- Energy segment revenue advanced close to $1 billion, or around 25%, driven by renewables and natural gas generation, offset by lower pipeline and industrial activity.
• Renewables revenue surge -- Renewables revenue grew over 50%, with over $500 million of revenue advanced from 2026 to 2025 due to project resequencing and accelerated execution.
• Natural gas generation -- Natural gas generation contributed $480 million in revenue and Primoris Services Corporation is currently bidding on $1.5 billion-$2 billion of additional awards in the first half of 2026.
• Battery storage (“BESS”) -- Battery storage revenue surpassed $250 million in 2025; management expects its doubling is “within line of sight” over the next two years.
• Pipeline services outlook -- Pipeline opportunity funnel expanded to over $3 billion, about triple the value seen in recent years, with “meaningful improvement” expected in 2026 and 2027.
• CapEx plans -- Full-year capital expenditures totaled about $130 million and are targeted at $120 million-$140 million in 2026, with $90 million-$110 million for equipment.
• Balance sheet -- Year-end cash was $536 million; total long-term debt was $470 million, establishing a net cash positive position.
• 2026 guidance -- Earnings per diluted share are projected at $5.35-$5.55; adjusted EPS at $5.80-$6.00; and adjusted EBITDA is forecasted at $560 million-$580 million.
• Utility segment margin targets -- Management expects full-year Utility segment gross margins in the 10%-12% range, with Q1 ranging from 7%-9% due to seasonality.
• Divestiture -- A non-core industrial business was divested in Q4 2024, resulting in a $75 million revenue headwind in 2025.

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RISKS

• Gross profit for Q4 declined by $9 million, or 5%, “due to lower gross margins in both segments,” impacted by storm work reductions and project-specific cost overruns.
• Energy segment Q4 gross margins fell to 8.5% from 9.5%, primarily from renewables project cost overruns caused by “unanticipated rock and soil conditions.”
• Management stated, “we are not expecting a similar growth rate in 2026 due to several large projects not expected to recur.”
• “over $100 million of cash collections pulled forward from Q1 2026 into Q4.” may moderate future period cash conversion as timing normalizes.

SUMMARY

Primoris Services Corporation (NYSE:PRIM) delivered record annual revenue, backlog, and operating cash flow, supported by double-digit growth across key business lines. Management emphasized rapidly growing end-market demand, particularly in power delivery, renewables, gas operations, and data center-related communications services, while highlighting significant capacity investments for continued expansion. Financial discipline was reflected in reduced net interest expense, a lower SG&A ratio, and a year-end net cash position, positioning the company for both organic and acquisitive growth opportunities. The leadership team reaffirmed margin targets and 2026 guidance, noting backlog coverage strength but calling out the need for new pipeline bookings to fully meet projections.

• Cody Vadlamudi signaled that power demand could grow by 50% over the next decade, citing increasing investments from utilities and hyperscalers in energy infrastructure.
• Primoris Services Corporation increased its labor force by more than 2,800 employees in 2025 and remains confident in meeting hiring targets across all major segments.
• Leadership plans additional capital deployment towards facility and manufacturing capacity expansions, particularly in the Premier PV (eBOS) business line.
• Management described the renewables opportunity as expanding, with average project size increasing and customer engagement intensifying, supported by favorable Treasury guidance on project safe-harboring.
• Sustained project execution and backlog visibility in natural gas generation and pipeline remain essential for capturing projected EBITDA and margin improvements in 2026.

INDUSTRY GLOSSARY

• MSA: Master Service Agreement—a long-term, broadly scoped contract with customers for recurring construction and maintenance services, often forming the base of segment backlog.
• BESS: Battery Energy Storage System—a grid-scale solution for storing electricity generated from renewables or other sources, integrated into power delivery projects.
• eBOS: Electrical Balance of System—a suite of electrical components used in solar plants, outside of the photovoltaic modules themselves.
• Book-to-Bill: A ratio comparing new contract awards ("bookings") within a period to revenues ("billings") recognized, guiding backlog trend analysis.

Full Conference Call Transcript

Cody Vadlamudi: Thank you, Blake. Good morning, and thank you for joining us today to discuss our fourth quarter and full year 2025 results and our initial outlook for 2026. Prior to reviewing our 2025 performance, I want to begin by providing a few thoughts and impressions from my first several months as CEO. To start, Primoris Services Corporation is a great company because it has great people that embody a great culture. I have spent much of my time learning from and engaging with our employees, whose efforts are essential to our past and future success. There is a culture of safety and caring that promotes the health and well-being of our fellow employees.

This has consistently placed Primoris Services Corporation well below the industry average in terms of recordable incidents even while working more than 40 million hours in 2025. There is always more work to be done to achieve zero incidents, but those who fit in best at Primoris Services Corporation place their priority on visualizing and assessing risks to prevent injuring themselves or others. There is also the recently launched Primoris Promise, a nonprofit charity to support our people, communities, and the causes that matter, which is funded by voluntary employee contributions, company donations, and public support. These aspects of our culture help build morale, attract and retain talent, execute consistently, and uphold trust with our customers.

I have also witnessed a culture of innovation and an entrepreneurial spirit that keeps us nimble to adapt to our dynamic end markets, promote growth, drive productivity, and provide solutions to customers as a valued partner. This manifests itself in providing existing service to a nontraditional customer, such as building a major substation for a chip manufacturer, or developing a new service for existing customers in need of a solution in the case of Premier PV. This culture is also exhibited in the utilization of digital tools and technologies.

Our teams are using and developing tools that can assist our teams in managing project risk and contracts, improving cost estimates and scheduling, and increasing our productivity and predictability to the benefit of Primoris Services Corporation and our clients. Engaging with our customers has been another focus for me, and I am impressed with the collaboration and client partnerships that have been nurtured to achieve ambitious plans in the coming years. The scope and scale of projects, specifically in solar, natural gas generation, and power delivery, continue to increase, and the need for trusted, experienced, and quality contractors is only becoming more critical.

Primoris Services Corporation is in a prime position to be a provider of solutions to these customers and to form partnerships with new customers we may not have historically served. In summary, I am excited and privileged to be in a position to lead Primoris Services Corporation in this next chapter of growth and value creation. I want to thank the Primoris Services Corporation board of directors for entrusting me with this responsibility and thank our Chairman, David L. King, for stepping in during that transitional period last year.

With that, I will move on to the highlights of our 2025 performance and the state of our end markets. Primoris Services Corporation delivered another strong year of operational and financial performance in 2025, achieving record revenue, earnings, and backlog. We also generated strong cash flow that improved our liquidity and bolstered our balance sheet. This positions us to continue deploying capital to organically grow and expand our capabilities through acquisitions. We finished the year with over $11,900,000,000 in total backlog, including booking nearly $3,000,000,000 of new work in the final quarter of the year. This is a testament to the tireless efforts of our employees, our valued client partnerships, and the strength of our end markets.

For most of the previous two decades, power demand had remained relatively flat. We are now seeing projections that suggest power demand could grow by 50% over the next decade and potentially double over the next 15 years. There are several reasons driving these higher estimates, including data centers, increased electrification, and onshoring of critical parts of the supply chain. While the rate of growth could ebb and flow based on energy efficiency gains or other factors, there is certainly evidence that our utility customers and hyperscalers are making investments in energy infrastructure to support a significant increase in load demand.

The average increase in CapEx by our largest utility customers suggests around a 50% increase in spending over the next five years compared to the previous five years. Replacing infrastructure that is past its intended lifespan, hardening the grid to be more resilient to weather events, and building or upgrading power infrastructure to support growing demand are all high priorities for these customers. The hyperscalers’ project plans for cloud computing and artificial intelligence are expected to result in trillions of dollars in investment and a substantial amount of power. We believe that the power generation needed to support the expected demand growth will require an all-of-the-above energy source solution, including solar, natural gas, nuclear, and others.

Primoris Services Corporation is well positioned to assist our clients in generating power to satiate the growing demand and also provide the transmission and distribution solutions needed to deliver energy where it is needed.

Given the trends we are seeing, Primoris Services Corporation has been and will continue to be focused on attracting, retaining, training, and developing our people to help meet the ambitious goals of our clients and community shareholders. Our employees are essential to our success and our most valuable asset. To help support our growth, we increased our labor force by more than 2,800 people in 2025 and remain committed to attracting and retaining the brightest and best in the industry. While some industry labor markets are tighter than others, such as certified journeyman alignment, we have been successful in attracting qualified craft and field labor to meet our clients’ needs.

We have also focused on bringing in experienced project managers and developing new project leadership in anticipation of increased demand for projects not yet in our backlog. There is growing interest in the labor market to join organizations like Primoris Services Corporation that have strong secular tailwinds and are doing important work that improves the lives of our communities and supports economic growth in North America. We believe our ability to self-perform the vast majority of our work will continue to be an advantage for Primoris Services Corporation, and we are confident that we will have a fungible labor force to continue to grow and service our customers safely, timely, and with the highest quality.

Now let us look at the operating segment performance in more detail. In the Utility segment, revenue and backlog both increased double digits for the year. The revenue growth was driven by better-than-anticipated activity in gas operations and continued strength in power delivery and communications. Power delivery contract renewals and rising demand led to MSA backlog growth as we continue to see market activity accelerate to upgrade, expand, and maintain the electric grid. Margins in the Utility segment also rose for the second consecutive year, despite a decrease in storm response work in 2025, which is particularly accretive to power delivery margins.

We continue to focus on our growing mix of project work and increasing productivity, specifically in power delivery, to improve our margins. In 2025, we made progress in both, with non-MSA revenues increasing almost 30% in the segment and with increased efficiency and utilization in several key geographies. We still have work to do in getting our margins in Power Delivery where we aspire to be in certain areas, but I want to credit our leadership and employees who have taken ownership in achieving this goal. We have made and continue to make investments in people and equipment to prepare for what we are expecting to be a significant increase in transmission and substation opportunities in the coming years.

In gas operations, we exceeded our growth expectations, reaching $1,000,000,000 in revenue for the first time. Market share gains and capital program expansions, particularly in the Midwest and Southeast, drove our record revenues, as did more favorable weather conditions for much of the year. Although we are not expecting a similar growth rate in 2026 due to several large projects not expected to recur, the business is in a solid position and operating at a high level. Communications had a year of double-digit growth through market share gains and further success in winning and executing large-scale network long-haul builds tied to data center development.

We are seeing this trend continue in Q4 and year-to-date, receiving $100,000,000 in new awards that we referenced in our third quarter call. The favorable trend in this market appears to be accelerating as we are seeing more opportunities to bid over the last few months than we had seen in previous years. Our ability to sustain success in this market and perform to our standard will help support revenue and margins in this segment.

Moving over to the Energy segment, revenue grew almost 25% primarily driven by renewables, partially offset by another challenging year in pipeline services. We are optimistic that 2025 will represent a trough in the cycle for pipeline, as our funnel of opportunities has increased dramatically over the past year to over $3,000,000,000. In recent years, we have seen our funnel trend around one-third of this value. However, with the rising need for natural gas to fuel power generation, increasing LNG production, and a more favorable regulatory environment, we believe that our pipeline activity is poised to accelerate. This is specifically true for large-diameter pipeline construction where we typically excel from an execution and margin standpoint.

Contrary to many other projects in the Energy segment, pipeline projects tend to mobilize to the construction phase more quickly upon contract signing and can often be completed within the calendar year depending on the scope. This leads us to be optimistic that pipeline could see meaningful improvement in 2026 and heading into 2027.

Industrial construction had a solid year of performance, highlighted by natural gas generation, which contributed $480,000,000 in revenue. This helped to keep revenues mostly flat at just over $1,000,000,000 despite lower activity in Canada and the divestiture of a non-core business in Q4 2024 that created a $75,000,000 revenue headwind in 2025. As I alluded to earlier and in previous comments, Primoris Services Corporation is excited about our potential growth in natural gas generation in the coming years. We are actively engaged in discussions or bidding on $1,500,000,000 to $2,000,000,000 of awards in the first half of this year, and our conversations with clients suggest the list of opportunities will continue to grow.

We are prepared with the project managers and skilled labor necessary to take on more work, and we are confident that our expertise and relationships will result in a strong bookings year for natural gas generation in 2026. We remain disciplined in the types of projects we are pursuing and the terms we are willing to accept to balance risk more equitably between contractor and client, and ensure the jobs are completed successfully and on schedule.

Heavy Civil continued its high performance in 2025, contributing solid margins and cash flow. While not a primary driver of top-line growth, the team has delivered consistent execution and is directing their efforts on projects that align with their expertise in delivering margins above their historical average.

Finishing the Energy segment with renewables, it was another year of record revenue and operating income, despite having to navigate an uncertain trade and regulatory environment for much of the year. These conditions led to several delays, project specification changes, and redesigns, but in the end, our teams were able to respond to our customers’ needs and closed out the year by booking over $1,600,000,000 in new projects during the fourth quarter, a huge accomplishment by our sales and support teams to get these contracts signed and over the finish line to help our clients move these projects forward.

We also helped our clients accelerate project timelines and break ground on projects ahead of schedule during the year to meet their needs, a testament to the valued partnerships we have with our clients and vendors and our team’s willingness to deliver our best when called upon. Of course, we did face some operational challenges during the year as well that led to higher-than-expected costs on certain projects that contributed to lower margins during the fourth quarter. One project required additional equipment and materials to overcome challenging underground conditions that were drastically different from the conditions on an adjacent project we had previously constructed. These situations can happen when you work on as many projects as we do.

We believe we have worked past most of the excess costs on these projects and would expect to see margins improve in 2026 and return to the norms that we expect. We have also continued to add quality people and management oversight to the upfront engineering, design, and estimating work that will help mitigate excursions in the future. Ultimately, the demand for our solar solutions remains high, and our customers have an extensive volume of projects safe-harbored in accordance with the Treasury guidance. We are seeing our average project size increase, and new customers continue to engage with us to build their projects.

We saw tremendous growth in our battery storage business in 2025 to over $250,000,000 and believe the market is poised to continue being a growth driver in renewables. Solar, and specifically solar with battery storage, remains one of the lowest-cost and fastest-to-market sources of power generation, which in our view makes it a crucial part of helping to meet the energy demands of the future. We also recently commissioned our remote operations control center that adds asset management capacity for our O&M business. It also opens the door for deeper engagement with our clients should remediation be needed at facilities damaged by weather events or replacement of outdated components.

Our eBOS business, Premier PV, built on its success in 2025, supplying components to the projects we construct and to the market. We plan to invest in a new facility for this business line in 2026 that will increase our capacity to service the market and add additional products to our portfolio to align with customer demand and preferences.

Overall, Primoris Services Corporation had an exceptional 2025 and is set up for a successful year in 2026. The demand backdrop for our services is as good as we have seen as a company, and we are focused on the people, equipment, and expertise to help our customers succeed. I will now turn the call over to Kenneth M. Dodgen for the financial results. Cody, and good morning, everyone.

Kenneth M. Dodgen: Our fourth quarter revenue was almost $1,900,000,000, an increase of $116,400,000, or almost 7%, compared to the prior year. The increase was driven by growth in both the Energy and Utility segments. Gross profit for the fourth quarter declined by $9,000,000, or approximately 5%, to $175,000,000 due to lower gross margins in both segments. Overall, margins in the fourth quarter were 9.4%, compared to 10.6% in the prior year. Looking at our results by segment, the Utility segment revenue was up nearly $34,000,000 compared to the prior year. Growth was across all business lines, led by increased gas operations in the Midwest and power delivery and communications activity in Texas and the Southeast.

Gross profit decreased approximately $7,000,000, or about 8%, compared to the prior year due to lower gross margins. Gross margins were 10.5%, down from 12.1% in the prior year. The lower gross margins were due to a decrease in storm work in the power delivery business, partially offset by higher margins in communications. Excluding storm work, Utility margins were comparable to Q4 of the prior year.

Energy segment revenue increased $88,000,000 compared to the prior year, primarily due to growth in our renewables business, partially offset by lower industrial and pipeline revenue. Gross profit decreased $2,800,000 compared to the prior year as lower gross margins offset the higher revenue. Gross margins fell to 8.5% compared to 9.5% in the prior year. The lower gross margins were primarily related to certain renewables projects that experienced cost overruns due to unanticipated rock and soil conditions, which required additional labor and equipment. We believe that we have accounted for all of these increased costs and expect renewables margins to improve as we progress into 2026.

Partially offsetting these declines was strong performance in our natural gas generation, industrial, and heavy civil businesses.

For the full year 2025, revenue was up $1,200,000,000 to almost $7,600,000,000, primarily driven by double-digit growth in both segments. Gross profit increased by $110,000,000, or approximately 16%, primarily due to higher revenue in both segments and improved margins in our Utility segment. Turning to performance by segment for the year, Utilities revenue was up $253,000,000, or a little over 10%, from the prior year, driven by growth across all business lines. Gross profit increased $51,000,000, or almost 20%, due to the improved gross margins, particularly in power delivery. The improvement in power delivery margins came even though gross profit from storm work declined by $18,000,000 in 2025 compared to the prior year.

Revenue growth and improved margins in our gas operations and communications businesses also benefited overall segment margins. Energy revenue grew by almost $1,000,000,000, or around 25%, this year, primarily driven by growth in our renewables and natural gas generation businesses, partially offset by a decline in pipeline revenue and the wind down or divestiture of non-core industrial businesses. Renewables grew over 50% in 2025 as we had over $500,000,000 of revenue pulled forward into 2025 from 2026 due to project resequencing at the request of a customer and accelerated project execution.

Gross profit increased by $59,000,000, or 13%, compared to the prior year, primarily due to higher revenue, partially offset by a decline in gross margins to 10.1% versus 11% in the prior year. The gross margin decline was mainly due to lower margins on certain renewables projects, partially offset by strong performance in our natural gas generation, industrial, and heavy civil businesses.

SG&A expense in the fourth quarter was just over $97,000,000, essentially flat compared to the prior year. For the full year, SG&A was 5.3% of revenue, down from 6% in the prior year. We have prioritized leveraging our SG&A cost base to improve operating margins and we are pleased with the progress we made in 2025. We plan to invest with discipline in our information technology and personnel to support growth while continuing to drive efficiencies across the organization. For 2026, we expect that our SG&A will be in the mid to high 5% range.

Net interest expense in the fourth quarter was $6,400,000 compared to $12,000,000 in the prior year, and full year net interest expense was down almost $37,000,000 from the prior year to under $29,000,000. These decreases were due to lower debt balances and lower interest rates along with higher interest income. Given our current debt level, we expect interest expense for 2026 to be between $23,000,000 and $26,000,000. Our effective tax rate in 2025 was 28.4%, and we expect it to be 29% for 2026, but it may vary depending on the mix of tax jurisdictions in which we operate.

Operating cash flows in the fourth quarter were approximately $143,000,000 and over $470,000,000 for the full year, demonstrating another solid year of working capital management and cash conversion, along with a little over $100,000,000 of cash collections pulled forward from Q1 2026 into Q4. We have exceeded our operating cash flow margin goal of 4% to 5% the past two years, a combination of improved billing and collections and upfront payments on new awards. Although we expect some continued progress in these areas, we anticipate cash flow from operations as a percentage of revenue is likely to trend more toward our target range of 4% to 5% in 2026.

Continuing with CapEx, we invested $21,800,000 in the fourth quarter and about $130,000,000 for the full year. Consistent with 2025, we expect 2026 CapEx to be between $120,000,000 to $140,000,000, with equipment accounting for $90,000,000 to $110,000,000 and the balance spent on facilities and IT upgrades.

Moving over to the balance sheet and liquidity, we ended the year with cash of $536,000,000, up from $456,000,000 at the end of 2024. Total long-term debt was $470,000,000 at year end, giving us a net cash positive position to begin 2026. Our strong balance sheet has us well positioned to meet our working capital needs, deploy capital to our higher growth, higher margin businesses, and pursue acquisitions that align with our strategic and financial goals. These include targets that augment our power delivery capabilities and enhance our service offering on industrial, power generation, and data center projects.

Transitioning to backlog, we closed the year with a very strong fourth quarter of bookings, like we expected, that brought total backlog to over $11,900,000,000. Total MSA backlog was up over 20% compared to the prior year, driven by contract renewals and anticipated spend by customers in the Utility segment, specifically in power delivery. We see exciting potential for further backlog growth in the coming quarters across natural gas generation, renewables, and pipeline construction that will drive growth in 2026 and set us up for further growth in 2027.

I will conclude with our earnings guidance for 2026. We expect earnings per fully diluted share to be between $5.35 and $5.55 and our adjusted EPS to be between $5.80 and $6.00 per share. Our adjusted EBITDA guidance is $560,000,000 to $580,000,000 for 2026. I want to point out that this guidance does not include potential benefits from storm work, which contributed around $12,000,000 of adjusted EBITDA in 2025. Additionally, 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.

As a result, we expect our Utility segment margins to be in the 10% to 12% range for the full year with Q1 in the 7% to 9% range. And for our 10% to 12% range for the full year. And with that, I will turn it back over to Cody.

Cody Vadlamudi: Before we open up the call to your questions, I would like to reiterate some of our key takeaways from prepared comments today. First, I am proud to be part of Primoris Services Corporation and help support our leadership team build on our successful foundation. I look forward to fostering our culture and expanding our horizons of who we can be and who we can serve as an organization. I believe we are doing work that matters to grow the economies of North America and better the lives of the communities we serve.

I also look forward to engaging with our analysts and investors and sharing with them our vision for the future of Primoris Services Corporation in the years to come. Second, we are energized to tackle the tremendous opportunities ahead of us across our end markets. The energy infrastructure needed to not only support innovative technologies, but to sustain, upgrade, or replace aging and outdated infrastructure is enormous. We believe Primoris Services Corporation will have an integral and vitally important role to play in supporting this demand. Finally, in pursuit of these objectives, we remain committed to improving margins, generating cash flow, and being the best allocators of capital in our industry.

We are exceeding the goals we laid out in 2024 and are looking forward to establishing new targets and strategic initiatives as we approach the latter part of the decade. It is our view that success in these areas and remaining nimble and adaptable to changes in our markets are the best ways to create long-term value for our employees, our customers, and our shareholders.

Kenneth M. Dodgen: And with that,

Cody Vadlamudi: I will now open it up for questions.

Operator: Thank you. And ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, simply press the star one on your telephone keypad to raise your hand and join the queue. Simply press the star one again. And as a reminder, please limit yourself to one question and one follow-up. With that, your first question comes from the line of Philip Shen with Roth Capital. Please go ahead.

Philip Shen: Hey, guys. Thanks for taking my questions. First one is on the GasGen business. You talked about bidding activity being in the 1 and a half to $2,000,000,000. Was wondering how much of that might be converted to revenues in 2026 and 2027? Thanks.

Cody Vadlamudi: Yes. Thanks for the question, Philip. I can take that. And yes, as I said in prepared remarks, the funnel of opportunities in gas generation power are really solid. The 1 and a half to 2,000,000,000 is in the first half of the year and would have meaningful burn in 2026. In the overall funnel, it is probably a little bit more weighted to back half of the year with line of sight to nearly $6,000,000,000. So, really, really strong end market with a strong capital CapEx.

Philip Shen: Great. Thanks, Cody. And welcome to Primoris Services Corporation as well. Second question here on renewables. You guys gave us some color on the margin performance in Q4. Just was wondering if you could share a little bit more on when you guys learned about the challenges and what gives you confidence that this will not happen again? And ultimately, what changes have you made to avoid it from happening again? Thanks, guys.

Cody Vadlamudi: Yeah. I will take that one, Philip, and then Ken can add some more color. But these were projects, a project in an environment where we underappreciated the geotech and soil conditions from an estimate standpoint. And mitigation measures we took did not prove efficacious, and then that cascaded with equipment and labor escalation. Despite that, this particular program is at the midpoint of construction, so we feel like we have a really, really good understanding of what is left to complete. In terms of additional measures, as we looked at the in-detail auditing of the project and what was left to go, we put more investment in project leadership.

This was a program in a hot market where we did have some turnover in the project staff. So with that additional focus, we feel pretty confident the remedial measures we have taken that it will come in as we have forecasted.

Philip Shen: Great. Thanks. And we are looking forward to working with you. Thank you.

Operator: And your next question comes from the line of Steven Fisher with UBS Financial. Please go ahead.

Steven Fisher: Thanks. Good morning, and congrats, Cody, on taking the role. I just wanted to follow up on that last question, I mean, just more broadly about execution as you move through 2026, you know, just curious how much of a focus or a priority for you is that in your list? What are some of the things you are doing more broadly beyond that solar project? Just, you know, curious, it sounds like you have quite a bit of great prospects. I think we are just looking for more confidence in the execution as we have had a little bit of a gap in the last couple of quarters.

Cody Vadlamudi: Yeah. Thanks for the question, Steve. And so we highlighted the performance execution scrutiny in the renewables segment. There are some other areas that I would say would fit in the basket of efficiency gains in project execution, and that gets down to better project controls, better change management. These are particular levers that will help drive better gross project gross margin and ultimately better predictable execution. So it will be a focus area across the enterprise, but I would have a lot of confidence based on the length of some of these client relationships, customers that have confidence in giving us continuing ongoing work, as well as the deep confidence we have in the services we provide.

Steven Fisher: Okay. Thanks. And just as a follow-up, as it relates to your guidance, just curious for your perspectives on the coverage that you have on that in your backlog. Curious what you still think you need to book in order to hit the guidance. And then just any areas within the guidance you felt like you maybe needed to leave a little room for any particular uncertainties that you see over the course of the year.

Kenneth M. Dodgen: I will let Ken take that one. Yeah. Steve, it is a good question. Look. I mean, we feel as comfortable with our guidance this year as we probably have any other year. Strong backlog helps with that. But just like any year, we still have to book a little bit in order to make that. And just like in every other year, we always feel like we have some upside to our guidance as well. So I would not view our guidance here as any different than any other year from a pluses and minuses standpoint.

But the one area where we probably still need to focus on some bookings, to the second part of your question, is in pipeline. As you know, those tend to be pretty quick book-and-burn type projects. We do not have all that in backlog yet. We would like to get a little bit more in backlog. But in general, between the MSA and the project group, we feel like we are right where we need to be for this year.

Cody Vadlamudi: Very much.

Operator: Thank you. And your next question comes from the line of Julien Dumoulin-Smith with Jefferies. Please go ahead.

Julien Dumoulin-Smith: Hey, guys. Good morning. Thank you again for the time, Cody. Looking forward to working with you as well. Can you talk a little bit about both what is forthcoming here on the Utility side? Obviously, you have got some neighbors here in your hometown that could be announcing some big things here in the short order. Can you talk a little bit about what you would expect on the back of development in Texas? I know your prepared remarks included some commentary there. How would you expect that to shape, especially as you think about backlog, what is more importantly, what is not reflected? And then separately, you also had some comments in the prepared remarks around communications activity.

Can you comment a little bit about what you are seeing materialize there also, again, in the vein of trying to understand what is and what is not in the backlog thus far, and specifically around BEADs there.

Cody Vadlamudi: Sure. Thanks for the question. And I will first start out by saying Texas is a really fertile location for the energy markets, and we certainly see a lot of opportunity for power generation and, by derivative, attracting data center clients and hyperscalers. So, you know, with that, we have a high conviction on the relationships we have established here locally, specifically the distribution space and substation build. We see meaningful capital where we can be a partner in the delivery of those programs on an EPC basis. So we feel really strong about the backlog and the opportunity funnel.

I think we highlighted in the presentation deck the portion of our backlog of the $11,900,000,000 that is MSA related, I think that is about $7,000,000,000. The majority, I think 90%, of that is in the Utility segment. So it highlights the strength of our relationships as well as the market funnel. With respect to communications, we are seeing some really good indications at the start of this year with some new wins, a couple hundred million in bookings, and line of sight to additional opportunities in the year. So we feel pretty good about the fiber business and the communications market in general.

Julien Dumoulin-Smith: Got it. Excellent. And then just going back to the gas gen side of the equation, obviously, fairly lumpy opportunity set here. Can you comment a little bit about what you are seeing on that front? Just set expectations accordingly in what you are seeing perhaps in the near term for bookings. Obviously, there are a lot of projects that could come into your fold here, but I just want to make sure I am hearing right how you would set those expectations specifically in the coming couple quarters on those kind of lumpier awards, and when those might translate into revenue given the protracted timing on that front too?

Cody Vadlamudi: Sure. And I think you are correct to characterize it as lumpy because these opportunities are pretty big. The investments are, from a scale standpoint, measured in gigawatts. So they are multibillion-dollar investments. On the one hand, you have this push to define scope and get the estimate right. So we are working with the clients, sitting at the table with them, trying to nail down scope definition and the appropriate commensurate cost. That takes time. And then you have a driver the other way, which is the ultimate customer is usually a power-hungry data center that has milestones for server op readiness, and so you have that push the other way.

But as a way of saying that there is some lumpiness to this. What gives me confidence is that we have got line of sight to that $1,500,000,000 to $2,000,000,000 near term. Of course, the book-to-bill is quite influenced in the quarter by if it crosses over the milestone at the end of the quarter, that book-to-bill could be quite skewed. So we like to look at it more like a trailing twelve-month which eliminates that waviness.

Julien Dumoulin-Smith: Alright. Fair enough, guys. I will leave you there. Thank you all very much. Good luck. See you soon.

Operator: Thank you. And your next question comes from Lee Jagoda with CJS Securities. Please go ahead.

Lee Jagoda: Thank you. Just, I guess, starting with the Energy segment and building blocks there in 2026, it sounds like implicit in the guidance is pretty nice growth in natural gas power, pretty nice growth in pipeline. How should we think about the growth in renewables in 2026?

Cody Vadlamudi: Yes. The first thing I would say is we, of course, last year saw a steep incline as projects accelerated and reflected in the burn. So we enjoyed a quick ramp, and those are projects that were on the books. They just hit the field earlier, and we bought equipment and ramped up labor pretty quick. Still a really strong end market for us. As I indicated in prepared remarks, in Q4, $1,600,000,000 of the $3,000,000,000 in new bookings was renewables. So I think it underpins our conviction that this is a market that will continue to grow.

I said also in prepared remarks that it is now often a combined scope of the BESS, the battery storage, with the solar modules. So our expertise and the strength of our share in this market underpins our conviction and confidence that we will continue to grow more than our fair share in this growing space.

Lee Jagoda: Got it. And then I think you mentioned you are about midway through the project that had some of those issues in Q4, and you gave us the look at what margins should be in the Utility segment for Q1. Can you kind of give us any guidance on what the Q1 Energy margins might look like, again, getting to that 10% to 12% for the year?

Kenneth M. Dodgen: Yes. Lee, look, we think we have got most of that behind us. What we are going to see in Q1, though, is the projects running at those lower margins and burning off and getting wrapped up. Most of it should be wrapped up by the end of Q1. So I think in Q1, for the 10% to 12% range, we will definitely be in the bottom end of that range as we get that worked off. And then starting in Q2 for the rest of the year, sequentially, getting back up in that 10.5% to 11.5% range, with the opportunity to get above that where we have good project closeouts.

Lee Jagoda: And if I could just sneak one more in on margins, given that in the Energy segment, some of the mix sounds like it could be shifting a little bit more towards natural gas power, more towards pipeline. Can you just refresh us on a normalized basis what do gross margins look like in the various businesses? And if the mix does shift towards a little more natural gas power, a little more pipeline, I assume that should give us more confidence in that guidance range.

Kenneth M. Dodgen: Yeah. It should, Lee. But as you know, our bid margins are generally running that 10% to 12% range for the segment that we talk about. Where we always have the upside opportunity is in project closeouts. And so gas generation, pipeline, and renewables always have that upside opportunity. It really just depends on which quarter we wrap up the job in or reach certain milestones in, where we are on actual cost relative to bid cost. But across all three of them, we always have the opportunity to exceed or at least come to the upper end of the range or exceed the 10% to 12%.

Lee Jagoda: Got it. Thanks very much.

Operator: Thank you. And your next question comes from Sangita Jain with KeyBanc Capital Markets. Please go ahead.

Sangita Jain: Great. Thank you. Hi, Cody, Ken, Blake. If I can ask a follow-up on the gas generation question that came up earlier, can you help us understand if you are looking still at simple cycle or maybe CCGT? And what the average project size may be in that 1 and a half to $2,000,000,000 number that you gave us, would you?

Cody Vadlamudi: Yeah. Sure. Good to hear your voice again, Sangita. Yeah. On the gas generation side, we are not just looking at simple cycle. It is probably notionally a majority in that type of scope. But just anecdotally, a few weeks ago, we were looking at an estimate for a 1.6 gigawatt combined cycle plant, and it is in early phases. But we have a resume for both. But notionally, I would say the vast majority of the ones we are looking at are simple cycle. And then the second part of your question, what? I forgot. Say it again, please.

Sangita Jain: The average project size that you have that may be, yeah.

Cody Vadlamudi: I do not have, we do not keep a metric on average size. But just from a capacity standpoint, they are measured in gigawatts. In terms of services revenue that we might burn, that is probably a few hundred million.

Sangita Jain: Got it. And then on capital allocation, Cody, there was a quote from you in the press release that talked about using the balance sheet to create value, so hoping to get color from you on where you think the capital is best going to be used and what criteria you are thinking about as you make decisions for M&A?

Cody Vadlamudi: Sure. First, I will say I am really pleased to come into a position where the balance sheet is strong, and that really is a testament to the management team’s execution on prior priorities. So really strong cash flow generation, good position from a leverage standpoint. It does give us a lot of levers. We talked about in an earlier question execution efficiency. So there are opportunities to invest in ourselves to the extent that people and systems and tools, as we have grown, can be improved to deliver more predictable execution and improve gross margins.

That said, there are areas that will be catalysts for growth, either in markets where we are subscale and we think we can accelerate our growth through acquisition and position the balance sheet to the best of our advantage. That said, we will bias our lens and filter on looking for opportunities that are driven by high sustainable growth trajectory, as well as cultural fit to Primoris Services Corporation and the way we execute work in our markets.

Sangita Jain: Great. Thank you so much.

Operator: And your next question comes from Adam Robert Thalhimer with Thompson Davis. Please go ahead.

Adam Robert Thalhimer: Hey. Good morning, guys. Congrats on the Q4 beat. And Cody, welcome to the call.

Cody Vadlamudi: Thank you.

Adam Robert Thalhimer: Cody, I was hoping you could, from a high level, give us a sense for what are some of your goals for Primoris Services Corporation over the next few years?

Cody Vadlamudi: Yeah. Great question. And first, I will double down on my earlier comments. I am really excited to come into an organization that foundationally has a great culture. And I spoke to, from the work we do in partnering with our clients, from a safety standpoint, attention to detail and quality. I have really been encouraged that this is the foundational aspect. The company also has this spirit of entrepreneurship. From segment presidents to job leaders, they are looking to do the right thing for our clients and help us grow. I think we talked about the balance sheet.

It is really exciting to me to come in with a company with such a strong foundational culture that we can now nurture with the health of the balance sheet to drive further growth. I am really excited about the end markets and where we play. I like the geographies. I think North America is our backyard to continue to drive growth in these exciting, growing end markets. So I am really excited about the prospect to take us on the journey to the next step of growth.

Adam Robert Thalhimer: Okay. And then I wanted to ask about backlog growth potential this year. From the standpoint of if you go back to 2023 and 2024, you grew backlog kind of linearly throughout the year, whereas in 2025, Q1, Q2, Q3 backlog flat, but then you had a surge in Q4. Just curious how you see 2026 playing out from that standpoint.

Cody Vadlamudi: Yeah. I think on the last quarter calls, a lot of focus on the backlog, and then we indicated in narrative that Q4 would be a pretty strong bookings quarter and notionally show that quarter-over-quarter growth. That did prove out. I will go back to my earlier comment because the size of the projects are quite large. Sometimes the investment decisions and the selection take a little bit longer, and if they cross over the quarter, they do make for a little bit of lumpiness. So you need to smooth that out, look at it more on a trailing twelve with respect to book-to-bill.

Overall backlog, we feel pretty strong on the end markets as we colored earlier, and we think it should drive solid revenue growth as we implied from our EBITDA margin growth ambitions.

Adam Robert Thalhimer: Thanks, Cody. Thank you.

Operator: And your next question comes from the line of Brent Edward Thielman with D.A. Davidson. Please go ahead.

Brent Edward Thielman: Hey. Thanks. Welcome, Cody, as well. I just wanted to ask on, I mean, you have done really well in terms of driving margins higher in the Utility segment over the last few years. So it still seems like it could be a lever for you. As you go forward, can you talk through some of the key things that need to happen in order for you to continue to drive those margins higher over time?

Cody Vadlamudi: Yeah. I think it is a good question. And Ken, you can add some color based on history. But the team has looked, the management team has specifically looked in areas where we can make improvement. Power Delivery is an area where the team has been working over the past year at how we execute in the field, from upfront planning to site logistics and execution, productivity. All of those are enhancements that we think are going to drive margin improvement in Power Delivery.

This past year, we enjoyed, on the gas operations, the Utility side, some strong growth where we have been present in that for a long time with our customers, and drove some really healthy margin which improved quality of margin in the segment. So overall, I think margin efficiency, in addition to growing the top line, will be a focus for us going forward.

Kenneth M. Dodgen: Yeah. The only thing I would add is the same thing, Brent, that we talked about in the past. It is also a mix issue, especially within Power Delivery, where we are still predominantly distribution, which is a great business. There is a ton of money being spent there. But it does not have the same margins as the project work on the substation and transmission side. So we have started adding leadership who has the ability to win that work, and as we continue to grow that over the course of the next few years, I think that is going to contribute to margin enhancement.

Brent Edward Thielman: Okay. Maybe one more just on the battery side. Recognize in the scheme of your total revenue it is not that big, but it is growing a lot. I mean, sort of thought on where that can go in 2026, 2027?

Cody Vadlamudi: Yes. I think I would call it to the comments. Nearly $250,000,000 or more this past year. We do think that is a solid mark for us. Often, it is now been combined with the solar module solution and installation. So we do see a lot of opportunities. Most of the on-premise solutions that the hyperscalers are looking at include some form of battery storage. I think over the next couple years seeing that business double in size is within line of sight.

Operator: Okay. Thank you. And your next question comes from Adam Bubes with Goldman Sachs. Please go ahead.

Adam Bubes: Hi. Good morning, and look forward to working together, Cody. One follow-up on the Utilities margins. I think you are targeting normalized 10% to 12% in 2026 versus 11.5% gross margins in 2025. How are you just thinking about the different puts and takes for Utilities margins in 2026 versus 2025 and potential to get back up to the high end of that range? What could be the tailwind from more project work? Conversely, could you see any mix headwind given the strong growth in gas in 2025?

Kenneth M. Dodgen: Yes. Good question, Adam. Look, I think it is purely going to be a mix issue in Power Delivery as we continue to work on that. But from a margin perspective, our gas business and our communications business were as strong, if not stronger, than our Power Delivery margins, and that is fairly consistent with our past. So as gas and communications grow, they tend to be just as accretive to margins, if not more so sometimes, than Power Delivery given our mix right now.

Adam Bubes: Got it. And then based on the 10-K, it looks like your hourly workforce increased 22% in 2025. We hear a lot about labor constraints. What has allowed you folks to be so flexible growing headcount, and what type of employee growth are you budgeting for in 2026?

Cody Vadlamudi: Yeah. I will take that. You know, in general, it is a tight market for labor. In my short tenure, I have been involved in estimate reviews and go/no-go’s on project decisions. And one thing I am very pleased with is the team has really good discipline in looking at the labor and understanding what we need to do to mobilize workforce when it is required. You know, looking at our past history, and I asked the team about this, we have not been, on projects we have bid, won, and executed, gated by the ability to attract the workforce. And I think that is a testament to the credibility we have in the market.

So going forward, we think while that is a challenge in a constrained market, we have the wherewithal to address that challenge. Furthermore, we are making investments in creating some bench specifically in gas generation and Power Delivery to enable, in advance of the pipeline coming to fruition, that we have the project teams that we can mobilize to support and execute.

Adam Bubes: Great. Thanks so much.

Operator: Thank you. And your next question comes from Jerry Revich with Wells Fargo Securities. Please go ahead.

Jerry Revich: Yes. Hi. Good morning, everybody. And, Cody, congratulations, and welcome. I want to ask in terms of the seat that you folks have at the table on the power side is really interesting just given the breadth of capabilities that you folks have from behind-the-meter turbines, single cycle. Just talk about the mix of work that you are looking at, the $6,000,000,000 number that you mentioned and what proportion that is behind the meter? And as you think about the projects that you are bidding on, how do you see bridge power versus island power developing for data centers with your take on what is going to be permanent within that infrastructure setup?

Cody Vadlamudi: Yeah. Jerry, thanks for the question. I have not analyzed the exact split between behind the meter and the rest, we could follow up on that. But on the data center piece of it, there is a meaningful demand as you would expect and as people read and talk about. From a data center perspective, last year I think we narrated what was it, $850,000,000 in work related to mainly enabling infrastructure for data centers. I would give more of an anecdotal just in the short start of this year. We are at $350,000,000 against $850,000,000, which was a full year.

So it just gives a little bit of color on the aptitude of our clients to make these investments and partner with Primoris Services Corporation to get that piece of the equation in place for data center development. And we could follow up on the split on the on-premise. It is probably notionally around 25% to 30%-ish.

Jerry Revich: Very interesting. And then can we shift gears a little bit here to talk about on the renewable side, you folks have gained significant share and have generally had a positive project closeout. So the problem project that we are talking about this quarter, is it still in a profit position? Can you just give us an update on that, Ken? And put it in perspective for us. I feel like this is the first time you called out negative variance on a project. What is the scoreboard look like in terms of positive closeouts versus negative closeouts for that line of business? Just to put today’s news into perspective?

Kenneth M. Dodgen: Yeah. Look. The vast majority of our renewables projects are very good performers and either meet as-bid margins or above as-bid margins. So in those cases, as you know, we have good project closeouts to the upside. As Cody pointed out earlier, this was an unusual situation. A couple of projects, a couple of sister projects being built right next to each other, where we literally ran into subsurface conditions, basically a lot of rock underneath, and we ran into more rock than we have ever seen on any project we have ever executed. So it is a very unusual situation. The sister projects, one is in a slight loss position. The other one is still a positive margin.

But, again, these are two sister projects out of 25 or 30 projects that we have ongoing at any point in time that are all, for the most part, executing very well. It just so happens that these had some larger dollars on the cost side than anything we have ever experienced in this type of situation. But in general, the renewables business is still a very solid business, and we expect really good execution in 2026. Thank you.

Operator: Thank you. And your next question comes from Manish Samana with Cantor. Please go ahead.

Manish Samana: Good morning, everyone. Just a couple of things for me. First, Ken, on the working capital front, where you benefited this quarter and pulled forward some working capital from Q1 2026, is that going to be a headwind for us in 2026 when we think about cash flows? And then secondly, for Cody, of course, let me add my welcome as well. Just wanted to get your thoughts around M&A versus organic growth. Obviously, you have a lot of opportunities. You talked about the opportunities that you have in front of you. How do you intend to sort of close them, especially where you feel that the company is subscale?

So maybe just give us some context around the size of acquisitions that might be on the table and how that would relate to the debt target of one and a half times that you have put out? Thank you.

Cody Vadlamudi: Yeah. Well, let me just address the strategic question around capital allocation and M&A, and then Ken can take the second half, the other part of the question, on cash flow. The first I would say is the way we look at M&A is it has to comport with our strategy. We are not doing M&A just to grow top line. As I mentioned before, we are really excited about the portfolio, and over the past few years, we have intentionally biased to end markets that we think show demonstrative sustainable growth. There are some areas where we are trying to grow organically and are subscale.

That said, we are prepared to put our capital to play organically where it makes sense and drive growth, albeit maybe at a slower cadence. There is opportunity, again with the help of the balance sheet, to look at M&A. There is no shortage of deal flow. I think it is a fertile market for opportunities for us. I think from a size and color standpoint, we have a lot of latitude given the growth we have seen organically over the past year. So our appetite is pretty wide and varied. I think it will be biased to end markets that we are either subscale or we think, with the proper investment, will catalyze or accelerate growth.

Again, this has to be done with a view that there is proper cultural fit as well as really extreme good diligence in filtering out opportunities.

Kenneth M. Dodgen: Yeah. And then on the cash side, look. We had two great years. We honestly expect to have another good solid year in 2026. I do not expect it to be down or below our target range just because we had a good strong 2025. If anything, as I said in my prepared comments, I expect it to be just another good solid year of operating cash flow kind of in that 4% to 5% of revenue range. And in general, from a free cash flow perspective, our goal is to be at least 50% of adjusted EBITDA, if not higher, based on the working capital trajectory that we have.

Manish Samana: Alrighty. Thank you so much. Good luck.

Cody Vadlamudi: Thanks, Manish.

Operator: And your next question comes from the line of Maheep Mandloi with Mizuho. Please go ahead.

Maheep Mandloi: Hey. Thanks for squeezing me in. I will just keep it a quick one. On the Premier PV or the eBOS business, can you talk about the growth there? What do you see in 2026? And then any thoughts on some of the OEMs kind of trying to get into that business and how do you see that competition over there? Thanks.

Cody Vadlamudi: Yeah. I will take the first part of it. I think we are investing in that business with increasing manufacturing capacity. So it underpins our confidence that is a sector where we can deploy the manufacture of that product for our own use as well as for our clients, and it is a profitable segment. I will let Ken maybe give a little bit of color on the growth and capacity.

Kenneth M. Dodgen: Yeah. On the growth, honestly, we ran pretty close to capacity during 2025. We expect to be at capacity during 2026. That is the reason we had previously talked about the investment that we are making in 2026 in order to expand capacity. So from 2025 to 2026 sequentially, we are going to be relatively flat. It is not going to be until 2027 that we are going to see the next phase of growth in our eBOS solution as that expansion comes online most likely in 2026.

Maheep Mandloi: Appreciate that. Thank you.

Operator: Thank you. And that concludes our question and answer session. I would like to turn it back to Cody Vadlamudi for closing remarks.

Cody Vadlamudi: Thank you, operator. I want to again congratulate our employees who contributed to an outstanding year in 2025. It is the more than 20,000 men and women of Primoris Services Corporation that enable us to do what we do. Their focus on safety, operational, and financial performance are the reasons for our success, and I look forward to their continuing contributions in 2026 and beyond. Thank you to those who joined us today. We appreciate your time and interest in Primoris Services Corporation, and we look forward to updating you on the business next quarter.

Operator: Thank you. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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