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Primoris (PRIM) Wins $520M Heavy Civil Contracts, Aids Backlog

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Primoris Services Corporation (PRIM - Free Report) received two heavy civil contracts from the Louisiana Department of Transportation and Development for a combined value of $520 million.

These Gulf Coast projects will aid Energy/Renewables segment’s backlog. Per the first contract, Primoris will construct a section of highway on LA 3241 for more than $60 million. The second contract, valued at $460 million, is related to constructing a section of elevated highway on LA 1. While work on the LA 3241 is expected to commence in fourth-quarter 2021 and be completed in second-quarter 2023, the same on LA 1 is likely to begin in first-quarter 2022 and end in fourth-quarter 2027.

President and chief executive officer of Primoris, Tom McCormick, said, "These projects, which were discussed in our recent earnings call, add a steady stream of heavy civil work to our Energy/Renewables backlog all the way into 2027. Additionally, we were involved in the original construction of LA 1, so we are very familiar with the scope and complexity of this project."

Solid Energy/Renewables Segment Bodes Well

Primoris has been reaping benefits from strong project execution under the Energy/Renewables segment. Recently, it received two solar contracts for engineering, procurement, and construction of a utility-scale solar facility in Southwest and Midwest for more than $120 million.

Again, it received a contract for engineering, procurement and construction of a thermal power project worth $100 million. The segment secured this contract to offer the above-mentioned services to a 200 MW thermal power in two different locations in the Southwest.

Zacks Investment ResearchImage Source: Zacks Investment Research

Although shares of this Zacks Rank #5 (Strong Sell) company have underperformed the Zacks Building Products - Heavy Construction industry in the past three months, the company has been benefiting from solid performance across the two segments — Utility and Energy/Renewables.

During third-quarter 2021, the Utility Segment witnessed 10% revenue growth from the year-ago quarter’s levels, primarily due to the FIH acquisition. Solar projects continued to drive the Energy/Renewables segment. This segment’s revenues increased 11% and gross margin increased 150 basis points year over year owing to increased renewable energy activity.

Total backlog was $2.74 billion at the end of third-quarter 2021. The company achieved a record Master Service Agreements/MSA backlog of $1.46 billion, which comprised more than 53% of the total backlog.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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