Primoris Services Corporation
PART I
ITEM 1. BUSINESS
Business Overview
Primoris Services Corporation (“Primoris”, the “Company”, “we”, “us”, or “our”) is a leading provider of critical infrastructure services operating mainly in the United States and Canada. We provide a wide range of construction, maintenance, replacement, and engineering services to a diversified base of customers through our two segments: Utilities and Energy. The structure of our reportable segments is generally focused on broad end-user markets for our services.
We have longstanding customer relationships with solar facility developers, power producers, gas and electric utilities, refining, petrochemical, communications, midstream, downstream, and engineering companies, as well as transportation agencies across our core markets. We provide our services to a diversified base of customers, under a range of contracting options. A portion of our services are provided under Master Service Agreements (“MSA”), which are generally multi-year agreements. The remainder of our services are generated from contracts for specific construction or installation projects.
Reportable Segments
Our current reportable segments are the Utilities segment and the Energy segment.
The Utilities segment operates throughout the United States and specializes in a range of services, including the construction and maintenance of new and existing natural gas and electric utility distribution and transmission systems, and communications systems.
The Energy segment operates throughout the United States and Canada and specializes in a range of services that include engineering, procurement, construction, and maintenance services for entities in the energy, renewable energy and energy storage, renewable fuels, and petroleum and petrochemical industries, as well as state departments of transportation.
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Strategy
Our strategy has remained consistent from year to year and continues to emphasize the following key elements:
| ● | Growth Through Controlled Expansion. We continue to grow our Company by expanding our scope of services, leveraging our existing customer base to expand into new geographic markets, and adding new customers. In addition, we evaluate acquisitions that offer growth opportunities and the ability to leverage our resources as a leading service provider to the utilities and energy industries, specifically focusing on attractive markets, like renewable energy, electric transmission and distribution, gas distribution, and power generation. |
| ● | Emphasis on MSA Revenue Growth, Retention of Existing Customers and Expansion of Project Work in our Core Competencies. In order to fully leverage our relationships with our existing customer base, we believe it is important to maintain strong customer relationships in order to drive more revenue from them. We are focused on an intentional mix of recurring work from MSAs, which are generally multi-year agreements that provide visible, recurring revenue, and project work in areas of our core competencies. |
| ● | Ownership or Long-Term Leasing of Equipment. Many of our services are equipment intensive. The cost of construction equipment, and in some cases the availability of construction equipment, provides a significant barrier to entry into several of our businesses. We believe that our ownership or long-term leasing of a large and varied construction fleet and our maintenance facilities enhances our access to reliable equipment at a favorable cost. |
| ● | Stable Work Force. Our business model emphasizes self-performance of a significant portion of our work. In both of our segments, we maintain a stable work force of skilled, experienced craft professionals, many of whom are cross-trained on projects such as pipeline and facility construction, refinery maintenance, gas and electrical distribution, and piping systems. |
| ● | Selective Bidding. We selectively bid projects that we believe offer an opportunity to meet our profitability objectives and that may offer the opportunity to enter promising new markets. In addition, we review our bidding opportunities to attempt to minimize concentration of work with any one customer, in any one industry, or in stressed labor markets. We also strive to reduce risk in our project selection process. We believe that by carefully positioning ourselves in market segments that have meaningful barriers of entry, we can continue to be competitive. |
| ● | Maintain a strong balance sheet and a conservative capital structure. We have maintained a capital structure that provides access to debt financing as needed while relying on strong operating cash flows to provide the primary support for our operations. We believe this structure provides our customers, our lenders, and our bonding companies assurance of our financial capabilities. We maintain a revolving credit facility to provide letter of credit capability and, if needed, to augment our liquidity needs. |
Backlog
Backlog is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K, which is incorporated herein by reference.
Customers
We have longstanding customer relationships with solar facility developers, power producers, gas and electric utilities, refining, petrochemical, communications, midstream, downstream, and engineering companies, as well as transportation agencies across our core markets. We have completed major underground and industrial projects for large natural gas transmission and petrochemical companies in the United States and major electrical and gas projects for large utility companies in the United States. Although we have not been dependent upon any one customer in any year, a small number of customers may constitute a substantial portion of our total revenue in any given year.
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We enter into a large number of contracts each year, and the projects can vary in length from daily work orders to as long as 36 months, and occasionally longer, for completion on larger projects. We often provide services under long term MSAs, which are generally multi-year agreements for specific types of work. Work performed under these contracts is typically generated through project specific work orders, ranging from repairs and new installations to maintenance and upgrade services. These MSAs have various terms, depending on the nature of the services provided, and our customers are generally not contractually obligated to purchase an amount of services from us under the MSAs, although we do have MSAs that include minimum spend requirements or targeted spend amounts. For the years ended December 31, 2025, 2024 and 2023, revenue derived from projects performed under MSAs was 32.0%, 36.8%, and 36.7% of total revenue, respectively.
Our customers include many of the leading energy and utility companies in the United States, such as; Xcel Energy, Pacific Gas & Electric, Southern California Gas, Oncor Electric, Duke Energy, Sempra Energy, Williams, Hecate Energy, Consumers Energy, Dominion, Valero, D.E. Shaw Renewable Investments, Entergy, Florida Power and Light, Intersect Power, Avantus, ExxonMobil, and Enterprise Pipeline as well as the Texas Department of Transportation and the Louisiana Department of Transportation and Development.
Our top ten customers vary from year to year due to the nature of our business. A large construction project for a customer may result in significant revenue in one year, with significantly less revenue in subsequent years after project completion. For the years ended December 31, 2025, 2024 and 2023, 53.1%, 41.3% and 41.1%, respectively, of total revenue was generated from our top ten customers in each year. In each of the years, a different group of customers comprised the top ten customers by revenue.
Management in each of our segments and business units is responsible for developing and maintaining successful long-term relationships with customers. Our segment and business unit management teams work with our business development group to foster existing customer relationships and better understand their needs in order to secure additional projects and increase revenue from our current customer base. Segment and business unit managers are also responsible for working with our business development group in pursuing growth opportunities with prospective new customers.
We believe that developing and fostering strategic relationships with customers will result in increased future opportunities. Some of our strategic relationships are in the form of long-term MSAs. However, we realize that future opportunities also require cost effective, high value bids, as pricing is a key element for most construction projects and service agreements.
Seasonality, Cyclicality and Variability
Our results of operations are subject to quarterly variations. Some of the variation is the result of weather, particularly rain, ice, snow, and named storms, which can impact our ability to perform construction and infrastructure services. These seasonal impacts can affect revenue and profitability in all of our businesses. Any quarter can be affected either negatively or positively by atypical weather patterns in any part of the country. In addition, demand for new projects in our Utilities segment tends to be lower during the early part of the calendar year due to clients’ internal budget cycles. As a result, we usually experience higher revenue and earnings in the second, third and fourth quarters of the year as compared to the first quarter.
Our project values range in size from several hundred dollars to several hundred million dollars. The bulk of our work is comprised of project sizes that average less than $3.0 million. We also perform construction projects which tend not to be seasonal, but can fluctuate from year to year based on customer timing, project duration, weather, and general economic conditions. Our business may be affected by declines, or delays in new projects, or by client project schedules. Because of the cyclical nature of some of our business, the financial results for any period may fluctuate from prior periods, and our financial condition and operating results may vary from quarter to quarter. Results from one quarter may not be indicative of our financial condition, or operating results for any other quarter, or for an entire year.
Competition
We face competition on large construction projects from both regional and national contractors, including competition from larger companies that have financial and other resources in excess of those available to us. Competitors
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on small construction projects range from large construction companies to a variety of smaller contractors. We compete with many local and regional firms for construction services and with a number of large firms on select projects. Each business unit faces varied competition depending on the type of project, project location, and services offered.
We compete with different companies in different end markets. For example, competitors in our utilities markets include Quanta Services, Inc., Dycom Industries, MYR Group, and MasTec, Inc.; competitors in our industrial markets include PCL, Kiewit, Performance Contractors, and Boh Brothers; competitors in the renewables market include Blattner Energy and Mortenson; and competitors in our highway services markets include Sterling Construction Company and Zachry Construction Company. In each market we may also compete with local, private companies.
We believe that the primary factors influencing competition in our industry are price, reputation for quality, safety, schedule certainty, relevant experience, availability of field supervision and skilled labor, machinery and equipment, financial strength, as well as knowledge of local markets and conditions. We believe that we have the ability to compete favorably in all of these factors.
Contract Provisions and Subcontracting
We typically structure contracts as unit-price, time and material, fixed-price or cost reimbursable plus fixed fee. A portion of our revenue is derived from MSAs, which provide a menu of available services that are utilized on an as-needed basis and are typically priced using a unit-price or on a time and material basis. The remainder of our services are generated from contracts for specific construction projects, which are subject to multiple pricing options, including unit-price, time and material, fixed-price, or cost reimbursable plus fixed fee. Under a fixed-price contract, we provide labor, equipment and services required by a project for a competitively bid or negotiated fixed price. Under a unit-price contract, we are committed to providing materials or services required by a project at a fixed price per unit of work. While the unit-price contract shifts the risk of estimating the quantity of units required for a particular project to the customer, any increase in our unit cost over the unit price bid, whether due to inflation, inefficiency, faulty estimates or other factors, is borne by us. Significant materials required under a fixed-price or unit-price contract, such as pipe, solar panels, turbines, boilers and vessels, are typically supplied by the customer.
Substantially all of our gas and electric distribution and communication services are provided pursuant to renewable MSAs on a “unit-price” basis. Fees on unit-price contracts are negotiated and earned based on units completed. Historically, substantially all of the gas and electric distribution and communications customers have renewed their MSAs with us. Facility maintenance services, such as regularly scheduled and emergency repair work, are provided on an ongoing basis at predetermined rates, or on a time and material basis.
Construction contracts are primarily obtained through competitive bidding or through negotiations with customers. We are typically invited to bid on projects undertaken by customers who maintain pre-qualified contractor lists. Contractors are selected for the pre-approved contractor lists by virtue of their prior performance for such customers, as well as their experience, reputation for quality, safety record, financial strength, competitiveness, and bonding capacity.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (“Second Quarter 2026 Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, growth opportunities, the effects of regulation and the economy, generally. Forward-looking statements include all statements that are not historical facts and usually can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of regulation and the economy, generally. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results may differ materially as a result of a number of factors, including, among other things, customer timing, project duration, weather, and general economic conditions; changes in our mix of customers, projects, contracts and business; regional or national and/or general economic conditions and demand for our services; price, volatility, and expectations of future prices of oil, natural gas, and natural gas liquids; variations and changes in the margins of projects performed during any particular quarter; increases in the costs to perform services caused by changing conditions; the termination, or expiration of existing agreements or contracts; the budgetary spending patterns of customers; inflation, tariffs and other increases in construction costs that we may be unable to pass through to our customers; cost or schedule overruns on fixed-price contracts; availability of qualified labor for specific projects; changes in bonding requirements and bonding availability for existing and new agreements; the need and availability of letters of credit; increases in interest rates and slowing economic growth or recession; the instability in the banking system; costs we incur to support growth, whether organic or through acquisitions; the timing and volume of work under contract; losses experienced in our operations; the results of the review of prior period accounting on certain projects and the impact of adjustments to accounting estimates; governmental investigations and/or inquiries; intense competition in the industries in which we operate; failure to obtain favorable results in existing or future litigation or regulatory proceedings, dispute resolution proceedings or claims, including claims for additional costs; failure of our partners, suppliers or subcontractors to perform their obligations; failure to maintain safe worksites; risks or uncertainties associated with events outside of our control, including conflicts in the Middle East, war between Russia and Ukraine, and tension between China and Taiwan and other geopolitical tensions, severe weather conditions, public health crises and pandemics, political crises or other catastrophic events; client delays or defaults in making payments; the cost and availability of credit and restrictions imposed by credit facilities; failure to implement strategic and operational initiatives; risks or uncertainties associated with acquisitions, dispositions and investments, including risks arising from the inability to successfully integrate acquired businesses; possible information technology interruptions, cybersecurity breaches and threats, and inability to protect intellectual property; disruptions related to artificial intelligence; the Company’s failure, or the failure of our agents or partners, to comply with laws; the Company's ability to secure appropriate insurance; new or changing political conditions and legal and regulatory requirements, including those relating to environmental, health and safety matters; the loss of one or a few clients that account for a significant portion of the Company's revenues; and asset impairments.
We discuss many of these risks in detail in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the Securities and Exchange Commission (“SEC”). You should read this Second Quarter 2026 Report, our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Second Quarter 2026 Report. We assume no obligation to update these forward-looking statements publicly, or to update the reasons actual
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results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available.
The following discussion and analysis should be read in conjunction with the unaudited financial statements and the accompanying notes included in Part 1, Item 1 of this Second Quarter 2026 Report and our Annual Report on Form 10-K for the year ended December 31, 2025.
Introduction
We are a leading provider of infrastructure services operating mainly in the United States and Canada. We provide a wide range of construction, maintenance, replacement, and engineering services to a diversified base of customers through our two segments: Utilities and Energy. The structure of our reportable segments is generally focused on broad end-user markets for our services.
The Utilities segment operates throughout the United States and specializes in a range of services, including the installation and maintenance of new and existing natural gas and electric utility distribution and transmission systems and communications systems.
The Energy segment operates throughout the United States and Canada and specializes in a range of services that include engineering, procurement, construction, and maintenance services for entities in the energy, renewable energy and energy storage, renewable fuels, data center services and petroleum and petrochemical industries, as well as state departments of transportation.
We have longstanding customer relationships with solar facility developers, power producers, gas and electric utilities, refining, petrochemical, communications, midstream, downstream, and engineering companies, as well as transportation agencies across our core markets. We have completed major underground and industrial projects for a number of large natural gas transmission and petrochemical companies in the United States and major electrical and gas projects for a number of large utility companies in the United States. We enter into a large number of contracts each year, and the projects can vary in length from daily work orders to as long as 36 months, and occasionally longer, for completion on larger projects. Although we have not been dependent upon any one customer in any year, a small number of customers tend to constitute a substantial portion of our total revenue in any given year.
We generate revenue under a range of contracting types, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts, each of which has a different risk profile. A portion of our revenue is derived from contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value. For these contracts, revenue is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For certain contracts, where scope is not adequately defined and we can’t reasonably estimate total contract value, revenue is recognized either on an input basis, based on contract costs incurred as defined within the respective contracts, or an output basis based on units completed. Costs to obtain contracts are generally not significant and are expensed in the period incurred.
The classification of revenue, gross profit, and operating income for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit and operating income, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs, selling, general, and administrative expenses (“SG&A”) and indirect operating expenses were made.
Material trends and uncertainties
We generate our revenue from construction and engineering projects, as well as from providing a variety of infrastructure services. We depend in part on spending by companies in the communications, gas and electric utilities, energy, chemical, and pipeline industries, as well as state departments of transportation. Over the past several years, each segment has benefited from demand for more efficient and more environmentally friendly energy and power facilities, more reliable gas and electric utility infrastructure, and upgraded and expanded local highway and bridge needs. However, periodically, each of these industries and government agencies is adversely affected by macroeconomic conditions and other challenging market conditions, such as those that have caused declines in the pipeline industry. Economic and other factors outside of our control may affect the amount and size of contracts we are awarded in any particular period.
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We actively monitor the impact of the macroeconomic environment, including the impact of inflation, tariffs, and volatility in the commodities markets, on all aspects of our business. We have experienced increased operating costs and anticipate that elevated levels of cost inflation could persist for the remainder of 2026. Recent geopolitical conflict involving Iran has contributed to increased volatility and upward pressure in global energy markets, which has resulted in higher fuel costs and may continue to impact operating expenses and margins depending on the duration and severity of the disruption. In an effort to mitigate the impacts of inflation on our operations, we attempt to recover increases in the cost of labor, equipment, fuel and materials through price escalation provisions that allow us to adjust billing rates for certain major contracts annually; by considering the estimated effect of such increases when bidding or pricing new work; or by entering into back-to-back contracts with suppliers and subcontractors. However, the annual adjustment provided by certain contracts is typically subject to a cap and there can be an extended period of time between the impact of inflation on our costs and when billing rates are adjusted. In some cases, our actual cost increases have exceeded the contractual caps, and therefore negatively impacted the profitability of our operations until the contracts have been renegotiated to reflect these higher costs.
Fluctuations in the market prices of oil, gas and other fuel sources have affected demand for our services. Volatility in the prices of oil, gas, and liquid natural gas that has occurred in recent years has created uncertainty with respect to demand for our pipeline services, both in the near term and for future projects. While the construction of gathering lines within the oil shale formations may remain at lower levels for a period, we believe that over time, the need for pipeline infrastructure for midstream and gas utility companies will result in a continuing need for our services.
The continuing changes in the regulatory environment have affected the demand for our services, either by increasing our work, delaying projects, or cancelling projects. For example, environmental laws and regulations have provided challenges to pipeline projects, resulting in delays or cancellations that impact the timing of revenue recognition. However, the regulatory environment in certain states has resulted in an increase in the construction of gas-fired power plants. In addition, increased demand for electric power is also expanding opportunities for our Energy segment, such as the need for battery storage and the construction of utility scale solar facilities, and natural gas generation facilities.
We are exposed to certain market risks related to changes in interest rates. To monitor and manage these market risks, we have established risk management policies and procedures. Our Revolving Credit Facility, New Term Loan, and Accounts Receivable Securitization Facility bear interest at a variable rate which exposes us to interest rate risk. From time to time, we may use certain derivative instruments to hedge our exposure to variable interest rates. As of June 30, 2026, none of our variable rate debt outstanding was economically hedged. Based on our variable rate debt outstanding as of June 30, 2026, a 1.0% increase or decrease in interest rates would change annual interest expense by approximately $7.8 million.
Acquisitions
We continuously evaluate the marketplace for acquisition opportunities to further our strategic growth plans. Due to our reputation, size, financial resources, geographic presence and range of services, we have numerous opportunities to acquire companies or selected portions of such companies. We evaluate an acquisition opportunity based on its ability to strengthen our leadership in the markets we serve, the services they provide and the additional new geographies and clients they bring. Acquisitions are inherently risky, and no assurance can be given that our previous or future acquisitions will be successful or will not have a material adverse effect on our financial position, results of operations or cash flows.
Acquisition of PayneCrest
On May 1, 2026, we completed the acquisition of PayneCrest Electric, Inc. (“PayneCrest”) in an all-cash transaction valued at approximately $404.7 million, net of cash acquired. PayneCrest is a leading electrical construction and services provider supporting industrial, manufacturing, and advanced facilities. The acquisition increases our exposure to the high-growth data center services market and expands opportunities for integrating our industrial and renewables businesses with complementary electrical construction capabilities. The total purchase price was funded through a combination of borrowings under our term loan facility (as amended) and cash on hand. We incorporated PayneCrest operations into our Energy segment. For more information, see Note 4 – “Acquisitions” in Item 1, Financial Statements of this Second Quarter 2026 Report.
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Seasonality, cyclicality and variability
Our results of operations are subject to quarterly variations. Some of the variation is the result of weather, particularly rain, ice, snow, and named storms, which can impact our ability to perform infrastructure services. These seasonal impacts can affect revenue and profitability in all of our businesses. Any quarter can be affected either negatively or positively, by atypical weather patterns in any part of the country. In addition, demand for new projects in our Utilities segment tends to be lower during the early part of the calendar year due to clients’ internal budget cycles. As a result, we usually experience higher revenue and earnings in the second, third and fourth quarters of the year as compared to the first quarter.
Our project values range in size from several hundred dollars to several hundred million dollars. The bulk of our work is comprised of project sizes that average less than $3.0 million. We also perform construction projects which tend not to be seasonal, but can fluctuate from year to year based on customer timing, project duration, weather, and general economic conditions. Our business may be affected by declines, or delays in new projects, or by client project schedules. Because of the cyclical nature of our business, the financial results for any period may fluctuate from prior periods, and our financial condition and operating results may vary from quarter to quarter. Results from one quarter may not be indicative of our financial condition, or operating results for any other quarter, or for an entire year.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and that affect the amounts of revenue and expenses reported for each period. These estimates and assumptions must be made because certain information that is used in the preparation of our financial statements cannot be calculated with a high degree of precision from data available, is dependent on future events, or is not capable of being readily calculated based on generally accepted methodologies. Often, these estimates are particularly difficult to determine, and we must exercise significant judgment. Estimates may be used in our accounting for revenue recognized over time, the allowance for credit losses, useful lives of property and equipment, fair value assumptions in analyzing goodwill and long-lived asset impairments, self-insured claims liabilities and deferred income taxes. Actual results could differ significantly from our estimates, and our estimates could change if they were made under different assumptions or conditions. Our critical accounting policies and estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our critical accounting policies and estimates since December 31, 2025.
Results of Operations
Consolidated Results
The following discussion compares the results of the three and six months ended June 30, 2026, to the three and six months ended June 30, 2025.
Revenue
Revenue was $1.7 billion for the three months ended June 30, 2026, a decrease of $0.2 billion, or 10.7%, compared to the same period in 2025. The decrease was due to lower revenue in our Energy segment.
Revenue was $3.2 billion for the six months ended June 30, 2026, a decrease of $0.3 billion, or 8.2%, compared to the same period in 2025. The decrease was due to lower revenue in our Energy segment partially offset by growth in the Utilities segment.
Gross Profit
Gross profit was $82.4 million for the three months ended June 30, 2026, a decrease of $149.3 million, or 64.4% compared to the same period in 2025. The decrease was primarily due to a decrease in revenue and margin in the Energy segment and a decrease in margin in the Utilities segment. Gross profit as a percentage of revenue decreased to 4.9% for the three months ended June 30, 2026, compared to 12.3% for the same period in 2025 primarily driven by lower margins in the Energy and Utilities segments.
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Gross profit was $217.1 million for the six months ended June 30, 2026, a decrease of $185.3 million, or 46.0%, compared to the same period in 2025. The decrease was primarily due to a decrease in revenue and margin in the Energy segment. Gross profit as a percentage of revenue decreased to 6.7% for the six months ended June 30, 2026, compared to 11.4% for the same period in 2025 primarily driven by lower margins in the Energy segment.
Selling, general and administrative expenses
SG&A expenses were $106.3 million during the three months ended June 30, 2026, an increase of $1.7 million, or 1.6%, compared to 2025, due to the acquisition of PayneCrest, partially offset by lower incentive compensation costs. SG&A expenses as a percentage of revenue increased to 6.3% compared to 5.5% for the corresponding period in 2025 primarily due to lower revenue.
SG&A expenses were $212.0 million during the six months ended June 30, 2026, an increase of $7.9 million, or 3.9%, compared to 2025, primarily due to the acquisition of PayneCrest, partially offset by lower incentive compensation costs. SG&A expenses as a percentage of revenue increased to 6.5% compared to 5.8% for the corresponding period in 2025 primarily due to lower revenue.
Transaction and related costs
Transaction and related costs were $2.9 million during the three months ended June 30, 2026, compared to $0.5 million for the three months ended June 30, 2025. The increase was primarily due to professional fees paid to advisors associated with the PayneCrest acquisition.
Transaction and related costs were $7.4 million during the six months ended June 30, 2026, compared to $1.3 million for the six months ended June 30, 2025. The increase was primarily due to professional fees paid to advisors associated with the PayneCrest acquisition.
Other income and expense
Non-operating income and expense items for the three and six months ended June 30, 2026, and 2025 were as follows (in millions):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Foreign exchange gain (loss), net | | $ | 0.6 | | $ | (0.4) | | $ | 0.6 | | $ | (0.6) |
Other income, net | |
| 0.2 | |
| — | |
| 0.3 | |
| — |
Interest expense, net | |
| (10.6) | |
| (7.5) | |
| (15.2) | |
| (15.3) |
Total other expense | | $ | (9.8) | | $ | (7.9) | | $ | (14.3) | | $ | (15.9) |
Interest expense, net for the three months ended June 30, 2026, increased $3.1 million compared to the same period in 2025, due to higher average debt balances, offset by a lower average interest rate.
Interest expense, net for the six months ended June 30, 2026, decreased $0.1 million compared to the same period in 2025, due to a lower average interest rate, offset by higher average debt balances.
Provision for income taxes
We are subject to tax liabilities imposed by multiple jurisdictions. We determine our best estimate of the annual effective tax rate at each interim period using expected annual pre-tax earnings, statutory tax rates and available tax planning opportunities. Certain significant or unusual items are separately recognized in the quarter in which they occur, which can cause variability in the effective tax rate from quarter to quarter. We recognize interest and penalties related to uncertain tax positions, if any, as income tax expense.
The effective tax rate for the six month period ended June 30, 2026, of 59.5%, differs from the U.S. federal statutory rate of 21.0%, primarily due to discrete tax benefits for equity compensation paid in the first six months, partially offset by state income tax expense and nondeductible components of per diem expenses. The effective tax rate for the six
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month period ended June 30, 2025, of 29.0% differs from the U.S. federal statutory rate of 21.0% primarily due to state income tax expense and nondeductible components of per diem expenses.
We recorded an income tax benefit for the six months ended June 30, 2026, of $9.9 million compared to an income tax expense of $52.5 million for the six months ended June 30, 2025. The $62.4 million change is primarily driven by a $197.7 million decrease in pretax income and an increase in the effective tax rate.
Segment results
Operating performance by segment for the three months ended June 30, 2026 and 2025 was as follows (in millions):
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| | For the three months ended June 30, 2026 | ||||||||||||||||
| | Utilities | | % of Segment Revenue | | Energy | | % of Segment Revenue | | Corporate and non-allocated costs | | Consolidated | a | % of Consolidated Revenue | ||||
Revenue | | $ | 712.6 | | — | | $ | 999.9 | | — | | $ | (24.3) | (1) | $ | 1,688.2 | | — |
Cost of revenue | | | 627.5 | | 88.1% | | | 1,002.6 | | 100.3% | | | (24.3) | (1) | | 1,605.8 | | 95.1% |
Gross profit (loss) | | | 85.1 | | 11.9% | | | (2.7) | | (0.3)% | | | — | | | 82.4 | | 4.9% |
Selling, general, and administrative expenses | | | 30.6 | | 4.3% | | | 53.7 | | 5.4% | | | 22.0 | | | 106.3 | | 6.3% |
Transaction and related costs | | | — | | | | | — | | | | | 2.9 | | | 2.9 | | |
Operating income (loss) | | $ | 54.5 | | 7.6% | | $ | (56.4) | | (5.6)% | | $ | (24.9) | | $ | (26.8) | | (1.6)% |
| (1) | Represents intersegment revenue and cost of revenue of $24.2 million in the Utilities segment and $0.1 million in the Energy Segment eliminated in our Condensed Consolidated Statements of Operations. |
| | | | | | | | | | | | | | | | | | |
| | For the three months ended June 30, 2025 | ||||||||||||||||
| | Utilities | | % of Segment Revenue | | Energy | | % of Segment Revenue | | Corporate and non-allocated costs | | Consolidated | a | % of Consolidated Revenue | ||||
Revenue | | $ | 693.0 | | — | | $ | 1,236.8 | | — | | $ | (39.1) | (1) | $ | 1,890.7 | | — |
Cost of revenue | | | 595.5 | | 85.9% | | | 1,102.6 | | 89.2% | | | (39.1) | (1) | | 1,659.0 | | 87.7% |
Gross profit | | | 97.5 | | 14.1% | | | 134.2 | | 10.8% | | | — | | | 231.7 | | 12.3% |
Selling, general, and administrative expenses | | | 32.0 | | 4.6% | | | 41.6 | | 3.4% | | | 31.0 | | | 104.6 | | 5.5% |
Transaction and related costs | | | — | | | | | — | | | | | 0.5 | | | 0.5 | | |
Operating income | | $ | 65.5 | | 9.5% | | $ | 92.6 | | 7.5% | | $ | (31.5) | | $ | 126.6 | | 6.7% |
| (1) | Represents intersegment revenue and cost of revenue of $39.1 million in the Utilities segment eliminated in our Condensed Consolidated Statements of Operations. |
Utilities Segment
Revenue increased by $19.6 million, or 2.8%, for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to increased activity in our gas operations and power delivery businesses, partially offset by decreased activity in our communications business.
Operating income for the three months ended June 30, 2026, decreased $11.0 million, or 16.8% compared to the same period in 2025 due to lower gross margins, partially offset by revenue growth. Gross profit as a percentage of revenue during the three months ended June 30, 2026, decreased to 11.9% compared to 14.1% in the same period in 2025 primarily due to the impact of favorable project closeouts in our gas operations business in 2025, and a decrease in higher margin storm restoration work in 2026.
31
Energy Segment
Revenue decreased by $236.9 million, or 19.2%, for the three months ended June 30, 2026, compared to the same period in 2025, primarily attributable to decreased renewable energy activity, due to slower than anticipated start of new projects, release of new work, and slower than expected financial close associated with certain projects. The decrease was partially offset by the incremental impact from the acquisition of PayneCrest.
Operating income for the three months ended June 30, 2026, decreased by $149.0 million compared to the same period in 2025, due to decreased revenue and lower gross margins. Gross loss as a percentage of revenue was (0.3%) during the three months ended June 30, 2026, compared to gross profit as a percentage of revenue of 10.8% in the same period in 2025 primarily due to cost overruns in 2026 associated with six renewable energy projects. These higher costs were driven in part by project redesign efforts, changes in project sequencing, labor productivity challenges, sub-surface issues, and unfavorable weather conditions. Two of the six projects were substantially complete in the second quarter of 2026, three are expected to be substantially complete in the third quarter of 2026, and the remaining project is expected to be substantially complete in the fourth quarter of 2026. In addition, we have had lower than anticipated volumes in 2026, which led to higher relative carrying costs for equipment and personnel.
Operating performance by segment for the six months ended June 30, 2026 and 2025 was as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | |
| | For the six months ended June 30, 2026 | |||||||||||||||||||
| | Utilities | | % of Segment Revenue | | Energy | | % of Segment Revenue | | Corporate and non-allocated costs | | Consolidated | | % of Consolidated Revenue | |||||||
Revenue | | $ | 1,345.5 | | | — | | $ | 1,955.3 | | | — | | $ | (52.7) | (1) | $ | 3,248.1 | | | — |
Cost of revenue | | | 1,198.4 | | | 89.1% | | | 1,885.3 | | | 96.4% | | | (52.7) | (1) | | 3,031.0 | | | 93.3% |
Gross profit | | | 147.1 | | | 10.9% | | | 70.0 | | | 3.6% | | | — | | | 217.1 | | | 6.7% |
Selling, general, and administrative expenses | | | 62.1 | | | 4.6% | | | 96.6 | | | 4.9% | | | 53.3 | | | 212.0 | | | 6.5% |
Transaction and related costs | | | — | | | | | | — | | | | | | 7.4 | | | 7.4 | | | |
Operating income (loss) | | $ | 85.0 | | | 6.3% | | $ | (26.6) | | | (1.4)% | | $ | (60.7) | | $ | ||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-07-15 | MCCALLISTER TERRY D | Director | Buy | +20 | $86.66 | $1,690 |
| 2026-05-28 | Perisich John M. | CHIEF LEGAL AND ADMIN OFFICER | Sell | -29,707 ×6 | $127.86 | -$3,798,225 |
| 2026-05-27 | Vadlamudi Koti | PRESIDENT & CEO | Buy | +7,815 | $127.96 | $1,000,004 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-03 10-Q expected by 2026-11-07 (in 70 days)
- ~2027-02-23 10-K expected by 2027-02-25 (in 182 days)
- ~2027-05-05 10-Q expected by 2027-05-09 (in 253 days)
- ~2027-08-04 10-Q expected by 2027-08-08 (in 344 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-06 8-K/A Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-08-05 8-K/A Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-08-05 10-Q Quarterly Report
- 2026-08-04 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-06-22 8-K Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-06 10-Q Quarterly Report
- 2026-05-05 8-K Earnings Release; Officer/Director Change; Shareholder Vote Results; Other Events; Financial Statements and Exhibits
- 2026-03-17 8-K Officer/Director Change
- 2026-02-24 10-K Annual Report
- 2026-02-23 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2025-11-04 10-Q Quarterly Report
- 2025-11-03 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2025-10-07 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-08-05 10-Q Quarterly Report
- 2025-08-04 8-K Earnings Release; Other Events; Financial Statements and Exhibits