Greetings. Welcome to the Primoris Services Corporation reports 2019 First Quarter Financial Results Conference Call. All this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Kate Tholking, Vice President, Investor Relations. Ms. Tholking, you may begin..

Thank you, Jeremy. Hello, good morning, everyone, thank you for joining us today. Our speakers for the day will be David King, our Executive Chairman and Chief Executive Officer; Tom McCormick, President; and Ken Dodgen, Executive Vice President and Chief Financial Officer.

In addition to this morning's press release, we have also posted slides on our website that highlight key points we plan to discuss on this call. You can access them by going to our corporate website, www.prim.com, then selecting investors.

Once on the investors site, you'll find the slides in the events and presentations section, next to the webcast link for today's call. Before we begin, I'd like to remind everyone that statements made during today's call may contain certain forward-looking statements including with regards to the company's future performance.

Words such as estimates, believes, expects, projects, may and future or similar expressions are intended to identify forward-looking statements.

Forward-looking statements inherently involve risks and uncertainties, including, without limitation, those discussed in this morning's press release and those detailed in the Risk Factors section and other portions in our annual report on Form 10-K for the period ending December 31, 2018, and other filings with the Securities and Exchange Commission.

Primoris does not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. I'd now like to turn the call over to our Executive Chairman and CEO, David King..

Thanks, Kate. Good morning, everyone. Thank you for joining us today to review our 2019 first-quarter results. We're pleased to continue Primoris' unbroken streak of positive quarterly earnings.

Given our usual first quarter seasonality and the unusually extreme weather faced by many of our business units, our first-quarter results demonstrate the benefits of our diverse business model. We ended the quarter with the largest backlog in Primoris' history $2.94 billion, while also achieving a record Q1 revenue of over $660 million.

It's worth mentioning that our backlog growth came from both our fixed and MSA backlog increasing 6.5% over our year-end backlog. We've been talking for some time now about the funnel of opportunities we see in markets that traditionally go into our fixed backlog and we're pleased to see some of these projects moving forward.

We also continue to focus on the cost side of the business, looking to keep our SG&A at a reasonable level and I'm extremely pleased with our success on that front as our trailing 12 month SG&A as a percentage of revenues is now the lowest it's been in seven years.

At the end of the day, our first-quarter results exceeded our expectations both on revenue and earnings and that is thanks to our successful sales, quality execution and disciplined cost management. Before we get into our segment results, I want to address the change in board structure announced in this morning's press release.

On Friday, last week, Brian Pratt stepped down as chairman of the board and I became the executive chairman of the board. Brian remains a director and a valued contributor to the Board and I thank him for his leadership and dedication to Primoris. At Friday's Annual Shareholder Meeting, we also elected Carla Mashinski to her first full term.

I want to welcome her to the Primoris Board. A few years ago, we began the succession process of looking at our board and governance structure. Last year, we started the process of moving toward a declassified board and we adopted mandatory retirement age for board members.

We also recommitted our sales to seeking board members with a diversity of experience and viewpoint and Carla exemplifies that philosophy. She is a great addition to our board. And looking at our management structure for our continued growth, we also took a deeper look at our succession planning.

I want to welcome John Moreno, our new chief operating officer, to the Primoris' family of companies. John comes to us with a long background in our industry and he's jumped right into his new position. With John as COO, we have promoted Tom McCormick to president.

Tom will work closely with John and the operating -- operations leadership, but is now focusing more on big picture strategic opportunities working closely with me to help implement our strategic plan for continued growth at Primoris.

That growth, of course, will play [ph] a large part on the operations of our current business units, so let's dive into their first quarter results. I'll begin with our civil segment. I'm pleased to say that Belton area jobs are almost behind us with only the Temple project left to complete midyear.

Though you may not think of highways as a things of beauty, but let me tell you this one is. I want to thank Mark Buchanan and all the Primoris' heavy civil team that have worked tirelessly to complete these projects.

As we look forward, we will focus more on design build awards and we have won three of the last four design build awards we bid in Louisiana, including the $70 million award we announced last week.

We are now seeing the core of engineers start to release funds for larger projects to address hurricane repair and mitigation from all the hurricanes that have hit the Gulf Coast region in recent years.

After wrapping up the Lake Charles ethane cracker in 2017, Primoris I&M had a softer 2018 than we would have liked and I'm pleased to say they've now turned the corner.

Their revenues was up in the first quarter and we feel confident that Jonas Beatty's team will win their share of the next wave of mega petrochemical and LNG projects along the Gulf Coast, many of which have made substantial progress toward FID in the past few months.

Our power, industrial & engineering segment also benefits from the opportunities in the Gulf Coast. Primoris industrial Constructors, led by Rusty DeBarge, has continued to win work at a new hydrogen plant with their most recent award being for the balance of plant of mechanical work.

Along with Primoris I&M, they're pushing work in multibillion-dollar chemical projects that - pursuing work, sorry, in multibillion dollar chemical projects that we believe should hit backlog in the second half of this year. We also see plenty of opportunity in the LNG export market.

In addition to the terminals, they already have FERC -- that already have FERC approval, their applications currently pending with FERC for an additional 20.3 billion cubic feet per day of LNG export capacity. Primoris is well positioned to take advantage of these opportunities.

Our industrial team is also working closely with our Primoris design & construction, engineering group, pursuing work on refinery projects. We expect continued growth from our engineering groups, Primoris design & construction and OnQuest as the funnel of prospects continue to grow for these under $200 million capital projects.

On the West Coast, ARB industrial continues to perform well on their MSA for maintenance work with a major energy customer. Tim Healy's sales teams are working hard to secure their next big project with strong prospects in the power compressor station and battery storage markets.

They're also working closely with our Primoris Renewables team as we are seeing more solar projects being coupled with battery storage capacity. We're extremely proud of our recent award of 495-megawatt solar farm and our crew of 150 in West Texas has doubled since quarter end.

The market for the utility-scale solar project continues to grow and we're becoming known for our ability to provide complete turnkey solutions to this market. Within the renewable market, we're also looking at opportunities not just for construction, but for servicing existing facilities similar to ARB's industrial MSA that I mentioned earlier.

We're approaching the one-year anniversary of our entry into the electrical transmission and distribution market and Jeff Prim's team is meeting or exceeding our expectations. We have several MSAs with major utilities that are our bread and butter, as utilities continue to spend more money on distribution than transmission.

While Texas remains our largest distribution market, we are seeing growth along the Gulf Coast and up the East Coast. This past quarter, they mobilized into a new market region with a new customer, while at the same time faced severe wet weather challenges that had some of their crews on stand-by.

We have also continued to terminate older equipment leases and begun replacing them with a new more modern, fit-for-purpose fleet. Our natural gas utilities MSA revenue also continues to grow. The utilities & distribution segment always faces a seasonal slowdown in the first quarter, but this quarter the challenges presented by weather were extreme.

Scott Summers and ARB underground faced heavy rain across California, but this does not impact our outlook for the entire year. At the same time, it can be said of Q3C across the Midwest, although their weather challenge was snow and freezing temperatures.

There are areas in Missouri that were shut down for a solid 20 days because of the Artic weather condition. Doug Reeves and the Q3C team used the time to focus on expanding their geographic presence and with recent awards in Iowa, we now work throughout the entire state.

We are also pleased with our expansion in Maryland and the client has asked us to grow our presence there. Our open shop gas utility work continues to grow also. Our presence now expands out of Florida up to East Coast and West to Texas, where we have great relationships with major customers.

Across the U&D segment, we are seeing utility customers moving toward more and more outsourcing of the services to third-party contractors.

Replacement programs for cast iron and steel distribution networks continue to grow as many networks are well past their useful life and it'll take 20 to 30 years to address this aging infrastructure problem in the United States.

This work will largely be done under MSAs and we believe it will continue to provide Primoris with a solid base level of revenue. And finally, we move to our pipeline in underground segment.

The snow that hit the Rockies in the Midwest turned into rain in West Texas, which had a significant impact on the progress and productivity for Primoris pipeline. Patrick McRae's team made it through the quarter and we're extremely optimistic about their opportunities for the remainder of the year.

Josh Ramsey and Rockford had a solid quarter despite the stop-work order on Atlantic Coast pipeline. We recently announced two new projects for Rockford that will help bridge the gap and have several opportunities following these awards.

There is a significant funnel of large projects for thousands of miles of medium and large diameter pipelines that are expected to begin construction next year and both Rockford and Primoris pipeline are well positioned for these opportunities. And last but certainly not least, our Primoris field services once again had an outstanding quarter.

Under the leadership of Jeff Bridges, this business unit has seen profitable revenue growth. They are largely focused on Texas, where they continue to see good opportunities along the Gulf Coast and in the Permian Basin. Overall, our outlook for this segment remains extremely positive both for this year, next as well as beyond.

2019 for us marks the completion of our last strategic planning cycle and the beginning of our newest strategic plan. The last cycle focused on expanding our geographic footprint, growing our MSA revenue, entering the T&D market, all of which culminated in last year's major acquisition.

We recently held the first round of our current strategic planning session, gathering a group of Primoris employees that represent a cross-section of our end markets. When looking at what direction Primoris should grow, several key themes emerged. Our MSA-based revenue continues to be a focus for us, both in the U&D and T&D markets.

As I have mentioned previously, expanding our renewables presence into the services market provides an interesting opportunity to play both sides of the market. And the fiber build-out and the emergence of 5G technologies are making the telecom market more attractive.

Before I turn it over to Ken for a more detailed dive in the numbers, I want to thank all of our Primoris employees. Not only are they dedicated to the work, they understand the importance of doing that work safely and of the highest quality. Our goal is for every Primoris employee to return home safely to their families every night.

We look at how we can continue to improve our safety culture and we work to make it absolutely clear that management isn't just paying lip service to safety, but values it as the No.1 priority on the job side. With that, I'll turn it over to Ken..

Thank you, David, and good morning, everyone. I'll review our first-quarter results, our balance sheet and cash flows and our 2019 guidance before we move on to your questions. Our 2019 first-quarter revenue was over $661 million compared to $504 million in the first quarter of 2018, an increase of 31%.

The electric T&D segment which accounted for $118 million and the pipeline segment which accounted for $77 million were the main contributors to this increase. These increases were partially offset by lower revenue in our power segment as we closed out the Carlsbad power project and the utility segment due to weather.

Our largest customers in the first quarter were a large utility that accounted for 9% of our revenue and a large pipeline operator that accounted for 6.3% of revenue.

Our gross profit for the first quarter was $52 million compared to $44 million in the prior year, an improvement of $8 million or 18%, which was directly attributable to our revenue growth in the quarter. Gross margin was 7.9% for the quarter compared to 8.8% in the prior year.

This decline was due to strong performance in the Carlsbad power project in the prior year along with the weather and other challenges this year that David already discussed. I'll add that our first-quarter electric T&D margins of 5.6% are not out of line with our first-quarter expectations.

And we expect the full year to be significantly improved similar to the seasonal progression we see in our utility segment. SG&A expenses were almost $43 million for the quarter, which was an increase of $6 million or 16%.

However, SG&A expenses were only 6.5% of revenue this quarter when compared to 7.3% of revenue in the first quarter of 2018 as we continued to reduce cost in certain areas and control cost increases as we continue to grow revenue.

Interest expense increased in the first quarter of 2019 due to higher debt from the Willbros acquisition last year as well as a non-cash $1.4 million unrealized loss on the change in the fair value of our interest rate swap. Effective tax rate on income attributable to Primoris was 29% in the first quarter.

This rate is slightly higher than the 28% I mentioned in our February earnings call as a result of higher amounts of non-deductible per diem expenses and due to the mix of states in which we work.

Net income attributable to Primoris in the first quarter was $1.9 million, a $1.2 million increase over the first quarter of 2018 and our earnings per share at $0.04 exceeded the prior-year first quarter by $0.03 per share. Excluding our cash in joint ventures, we ended the quarter with $65 million in cash on the balance sheet.

And during the quarter, our operations used $72 million of cash, which we expected but don't see as permanent. Where we normally see a decrease in accounts receivable during the first quarter, we saw an increase of almost $25 million.

This is due to the timing of certain milestone payments from customers and roughly $33 million delay in payments from a utility customer that is going through bankruptcy. As we commented on our last earnings call, we expect to collect all that is owed to us, but in the interim, it will affect our cash.

This customer is current on all post-petition work, but prepetition receivables still have to go through the bankruptcy process. We spent roughly $14 million on capital expenditures during the quarter mainly on operating equipment and real estate and we expect to spend between $70 million and $75 million for the remainder of the year.

On January 1, 2019, we adopted the FASB's new accounting standard for leases. There was no material impact in net income during the quarter, but you'll notice two new line items on our balance sheet, operating lease assets and the noncurrent operating lease liabilities.

The current portion of our operating lease liabilities is included in the accrued liabilities line item in current liabilities. Our total backlog as of March 31 was $2.94 billion, as David mentioned, the highest backlog in Primoris' history.

Fixed backlog was $1.6 billion or 53% of total backlog and MSA backlog was $1.4 billion or 47% of total backlog. Our guidance for fiscal year 2019 remains at $1.60 to $1.80 per share.

Our assumptions underlying our guidance have not changed in the two months since we initiated this guidance, mainly we still believe work on the Atlantic Coast pipeline project will resume sometime late in the third quarter or early fourth quarter, and though we are pleased with our first-quarter results, we continue to expect 2019 to be very back-end loaded in most of our operating segments.

With that, we can now turn to your questions.

Jeremy?.

At this time we will be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Tahira Afzal from KeyBanc. Please proceed with your question..

Hi, team..

Good morning, Tahira..

Good morning, Tahira..

Good morning. So I guess as the first question, would love to get a sense of how you see the margins picking up progressively through the year? You know, you said they're back and loaded.

Does back and loaded mean really third and fourth quarter? Or do we start to see some signs of light even into the second quarter? And then really adding to that, you had mentioned in your prepared commentary and also in the release, really, that there were two utility clients that were little behind in terms of the spending levels.

Is that all work - is that all weather-related in California? Or should we be worried about be it GNE or someone else, really getting distracted at this point from spending?.

Tahira, I'll start with the margins. Yeah, we expect margins to trend up into Q2 and Q3 the same way revenue does, it's not unlike how you saw our business last year. So 7.9% for the quarter is probably our low point for the year.

And so it would be kind of a hyperbolic curve as we move through the balance of the year with margins trending back up in aggregate across the company toward that 10% to 11% range that we normally try to operate in for a full-year basis..

Got it. Okay.

And then second question, just on all the bookings commentary, David, would you say you're a little more excited than the fourth quarter or you just holding Temple? And I think there were some signs of maybe petchem bookings coming in the second quarter, but it seems now you're suggesting both that and LNG as more sort of a second half story?.

Yeah, Tahira, let me address some of it and then I'll ask Tom McCormick to address some of the opportunities we're seeing.

First of all, yes, I am more excited now than I was at the end of the fourth quarter because as I mentioned in my comments, we're beginning to see some of the smaller projects begin to break and obviously some of those projects move on through to FID and I'll certainly let Tom kind of tell you where we're at in the stage on some of them in a moment.

So yes, I'm more excited about it. Your other question on the couple of utilities that we saw the spending a little bit slower. One of them is kind of distracted in California going through their process, although I will tell you even the post-petition work we're getting out of them is continuing to ramp up as we go forward throughout the year.

That's why I think I said in my comments even though it's a little slower in the first quarter, I'd kind of expect it to pick up in the second, third and fourth.

The other one was more of a weather-related issue that really some of the wet weather just caused us not to be able to ramp up as much on some of the utility spending and with that other customer. So one of them - both those I see as temporary things, but I am a little bit more excited.

Tom, why don't you kind of give a little flavor or color around some of the opportunities?.

Sure, Dave. Tahira, as David mentioned, we’re, actually, we're very excited going forward. We're talking to a number of clients in a number of our different business units and segments about opportunities we have with additional prospects that we're discussing with clients now in our renewables, the solar facility.

We're in negotiations with a client right now to an extension of an MSA agreement on a long-term extension for T&D. We have petchem opportunities and projects in the ranges that fit us perfectly in Louisiana and Texas.

Both of our pipeline groups, Rockford and Primoris pipeline are in different stages of negotiations with clients on projects that they're shortlisted on or in discussions with which means that we're still very active in those projects. And if you look at the Midwest for Q3C, we're discussing a three-year extension on an existing MSA with a client.

T&D is moving into some different areas in the Midwest, which is expanding their markets and then we have some opportunities in our ARB industrial group and our PIC, which is our non-union industrial group where they are talking to clients on projects. They're in the $20 million to $60 million range in their respective markets.

So there's a lot of opportunities out there for our different business groups. It's a mixed bag.

I&M has got a couple of large projects so they are in the running on and again, the pipeline groups are extremely active trying to replace work due to the ACP delays for Rockford, but Primoris pipeline picking up a bunch of work are in negotiations with opportunities to pick up a bunch of work.

So, lot of opportunities out there across all the business units..

And Tahira, I'll add one more thing, kind of to add to what Tom was saying that what you asked Ken earlier about the margins. And I think we said this over the last couple of years, as that work begins to break, before without that work break in, there were a lot of competitors out there and obviously, margins are a little bit depressed.

As some of that work begins to break and more of the manpower begins to get tied up, that margins will begin to creep up. So I do look for some of the margin going forward on some of that additional work, especially toward the latter half of the year actually to be even improved over margins we typically get..

Got it. Okay. Folks, thank you very much..

Thanks, Tahira..

Our next question comes from the line of Brent Thielman from D.A. Davidson. Please proceed with your question..

Hi, thanks. Good morning..

Good morning, Brent..

Brent..

Yeah, so I was hoping maybe you guys can give us a feel for how much of this large backlog in the power, industrial & engineering group would convert to revenue this year. I know there are a lot of moving pieces within it..

Yeah. I think we actually put that out in one of the press releases, Ken can find it very quickly for you. It's - I can't remember the exact number, but I want to say it was like 70% or something like that..

Brent, in which segment did you ask about, I'm sorry?.

Power & industrial..

Power & industrial..

Power & Industrial. Well in our Q, we reported that 86% in power will convert in the next four quarters..

86%. Okay, great. And then on pipeline, it sounds like some good bookings potential become – there, I know you've announced a few awards.

The stuff you're looking at, I guess, can you give - other than what you've announced, can you give us any better feel for size of some of the opportunities you're looking at out there?.

Well, I can tell you it's both the small and the large. It's across the whole gambit, it's both on the Rockford side and the Primoris pipeline.

And as you know, over the last few years, we've added additional size capabilities and spread capabilities to Primoris pipeline, so they're able to do both large and small diameter and we're actually seeing, actually working on some large diameter systems right now in Primoris pipeline and negotiating some others.

And so, I guess, the best way to answer it is it's both on large and small and it's some throughout the United States with a lot of it focused in Texas, the Permian, but we're still seeing - and you obviously see the same kind of projects talked about of TransCanada and some of the other projects that are talked about.

So there are a lot of opportunities still out there in the pipeline business with or without ACP going forward. But we actually do believe ACP, as we said, will go forward, but yes, we've got plenty of opportunities out there for the pipeline group..

Okay, great. And then I guess, question more on the U&D and transmission businesses, I think a lot of it is focused within [ph] those segments, it's still more on the kind of distribution side.

Can you talk about kind of your progress in ramping up more within the transmission, actual transmission piece within that?.

Yes. Well, I'll let Tom kind of tell you from our standpoint on the transmission side. When we bought the T&D group, that T&D group, the old Chapman Engineers, they were known for their transmission business. And so we've really began to look at how we can ramp that up.

You, know the transmission side of the business is not as quick to ramp up as the distribution side, so we felt like we get bigger bang for our buck by focusing on the distribution side first and then focusing on the transmission side.

But Tom, do you want to add to what we're doing in that area?.

Yes. One thing we're doing is we're trying to fill - as we bought the T&D group last year from Willbros, they had a lot of gaps as you walked at the map of the East Coast and we're filling those gaps. So we're expanding into new markets.

A lot of the employees that had left or were leaving when we bought Willbros have come back and we're recruiting additional employees and so we're growing in the markets. We have clients that have confidence in the company's financial stability now, so they're giving them work, that they wouldn't give them in the past.

So it's helping them pick up work in new markets. And the same thing with the transmission side as well as clients are seeing the stability in the, well, the health for the company, they've opened up new opportunities for these groups.

And as we grow that group now by adding people and adding equipment, we're able to expand into our existing markets and expand, fill the gaps, so to speak, geographically..

But also mention one thing about the transmission side that is different than the distribution side, the transmission side carries a different risk profile, a higher risk profile, so we're being very careful about how quick and how fast we build up that unit and take on more risk in that transmission side.

So you're seeing us be very selective is what I was trying to indicate..

Okay.

And that was I mean, I guess, does that become more significant component into 2020, 2021?.

Yes, definitely..

Yes okay, great. Thank you..

Yes, sir. Thank you..

[Operator instructions] Our next question comes from the line of Lee Jagoda from CJS Securities. Please proceed with your question..

Hi, good morning..

Good morning, Lee..

Hi, Lee..

So, just starting on the power side, looks like the gross margins held up really well despite some lower revenue and the lack of a large power job.

How sustainable are those margins? And what's the positive in the mix that are making them as good as they are?.

Yes, Lee, so the margins in power, couple of different things there. Part of it is work mix, but part of it is also the Carlsbad power project and the closeout in the first quarter. So down a little bit compared to Q1 of last year, but still strong. And over the balance of the year, we're expecting those margins to remain fairly strong.

Combination of mix of work and the opportunities that we're looking at right now should help us in that regard..

Yes. Lee, I'll add on some there on the going forward margin side of it. Two dynamics and you've heard us talk about them in the past but you know, when we kept mentioning for the last couple of years about that SB-54 in California, well that has driven a lot of the union activity work in the industrial side for T&D lease group out there.

And so that has and will drive some good margins for us and then we've been talking about what will happen on the Gulf Coast as you begin to break loose on some of that work down there, we see a migration of the margins improving.

That's why I'm indicating - I believe you'll see the margin improvement as we go out - go continuous throughout this year..

Okay. Great. And then just looking at SG&A, looks like you did a great job controlling it in Q1.

How should we think about SG&A as a percent of sales for the full year in light of the significant revenue ramp over the next couple of quarters?.

Well, I'll let Ken address - I want to say a global comment, then I'll let Ken kind of address it because everybody that works with me knows how much I focus on SG&A costs because I tend to think corporate works for the people in the field, people in the fields who make money, so the rest of us are just overhead.

So my comment to them is, guys let's watch making sure that our SG&A costs don't creep up. So we've done a lot of things to keep it down and that, and I've always felt we could have a target range of that 6%.

I remember I guess, it was a couple of years ago when somebody on the call ask us, you guys will never be able to get down in that 6.5% range and at that time, of course, Pete Moerbeek was here with us as well as Ken and I said don't say too much, but I think we'll get to that 6% range. And so for me, it's a target range of 6% if not lower.

But Ken, do you want to mention anything?.

Yes. So at 6.5%, it was a good quarter for us. We're going to continue to control costs. But in absolute dollars, you'll see them ramp up a little bit over the course of Q2, Q3 and Q4. But on a percentage basis, I would still expect to see them in that low to mid-6% range between 6% and 6.5% for the balance of the year..

Okay. That's very helpful. Thanks a lot..

Our next question comes from the line of Adam Thalhimer from Thompson, Davis. Please proceed with your question..

Hey, good morning. Congrats on a good Q1..

Hey, Adam..

Thanks, Adam..

Thanks, Adam..

Okay.

First question, can you guys hit the low end of guidance if ACP doesn't start back up?.

I'm sorry, did you say can we hit it?.

Can you hit the low end, $1.60..

Yeah, I'm not - that guidance, I - we gave you that guidance earlier and we reaffirmed it. Yes, I'm not - we told you on ACP, there's not much in our guidance on ACP.

And the reason that I'm a little cautious or we're a little cautious about increasing our guidance at this time is because we're just now seeing some of those projects begin to break, they haven't broken yet. And so I think you're going to see or will get more visibility in the second quarter, obviously.

I feel our ranges - I'm comfortable with where our range is at, right now, Adam, let me put it that way..

Great.

And then just trying to get a sense for how you guys see EPS shaping up this year? Is the expectation that EPS is up year-over-year in Q2 and then kind of flattish in the back half?.

No. I would - Ken, if you....

Yes. Yes, I think we're going to be flat to slightly up in Q2, would be my best guess right now. Q3 and Q4 will probably be about the same, flat to up year-over-year. And that's how we kind of graduate from the $1.50 of last year to $1.60 to $1.80 this year..

Okay. Got you.

And then you guys have talked about this a few times already, but is the pipeline bidding, trying to get a sense for how the pricing is within that?.

Up until probably the last, I'd say, six to nine months the bidding was robust, but the competition was still out there. As some of these projects are getting awarded, some of the crews and shreds are getting taken, so the competition will begin to do just like we will do.

It will ease those margins up higher because of the availability of the crews and the equipment. So I guess, what I'll say right now is we're seeing that begin to ease a little bit..

So pricing is kind of beginning to get better?.

Yes, yes..

Yes..

On the pipeline bidding.

And then when you talked about, I think that was Texas that you said, David, good outlook for '19, '20 and even '21, is that Texas pipeline?.

Yeah.

What I was talking about there specifically was our Primoris Field Services Group, but I'll also talk about Primoris pipeline, but let me - what I said was relative to Jeff Bridges' group, our Primoris Field Services and if you remember when we acquired Sprint a number of years ago, Sprint pipeline, there were two parts of it and we renamed it Primoris pipeline and Primoris field services.

And then we made another field services acquisition of Coastal Field Services approximately a year and a half year ago and combined those two and we have really been taken off in the field services area, which is more of the lateral lands and other station work and things around the pipelines not per se the cross-country pipeline at sale [ph].

And then Primoris pipeline have seen obviously their opportunities go up in West Texas, they are our open shop. But what we also did with Willbros pipeline, we added the ability to do large diameter pipeline as well as the small diameter. So we increased the breadth of their capabilities and things.

So I would tell you, we actually see good opportunities for not only the field services well beyond but also Primoris pipeline over this next two to three years..

Okay. Awesome. Thanks for the color..

Yes, sir..

Our next question comes from the line of Brent Thielman from D.A. Davidson. Please proceed with your question..

Hi, thank you. I apologize if you addressed this, but on the civil business, I think you said one of the challenge projects was rolling off, I know you're still working through another one.

Should that translate into a faster recovery in margins through the year? And then also I guess, any update on the claims processes with those?.

Sure. I'll let Tom talk about in a moment, some of the - I'll kind of address some of the claims stuff real quick and I'll let Tom address some of the types of projects we're beginning to see with, I think, some margin improvement therein.

We are seeing some activity, I think we even put in our comments that we did get some money coming in on that I-35 at least a couple of projects. We have finished basically four of the five jobs, the only one left for us to finish is Temple and it will roll off at midyear.

So that will allow us to go ahead and put all of our claims in and process all of our claims. All indications are we will be okay on the claims, I'm not worried about any of that, it's just a matter of going through the claims process, the timing of it and things like that.

Relative to the opportunities we're seeing out there in and on - for margin improvement.

Tom?.

So relative to the performance and then the opportunities we see for margin improvement, we're being much more selective about the work that we're bidding. We're bidding in Louisiana and now in Texas. A number of design build projects, you have less competition, you can get higher margins on those.

We won three of the four that we pursued in Louisiana, and those jobs are going well. So we expect to see some margin improvement over the course of the year. Of course, it's like turning an aircraft carrier, it takes some time, but it is turning. So we'll get this legacy projects behind us, get the claims behind us and the projects.

Going forward, the performance is better than it has been in the past for sure and the margins are higher..

Yes. Brent, let me mention one other thing since you asked that question on the civil side.

We've been tracking the infrastructure bill like a lot of contractors have and things and that's going to spur, of course, in Texas, Louisiana, we already knew from the hurricane relief funding and then Prop 7 from a number of years ago, we got plenty of opportunities out there.

The infrastructure bill, the national infrastructure bill, there's a lot of civil work out of that that we can probably get some benefit. The infrastructure bill for us, I'm really watching more of the electrical grid side of the equation in our T&D group and then obviously any broadband that might pop its head up.

I do concern, I do worry about where they're going to get the funding for the infrastructure bill, but I do think that's going to be a benefit to Primoris if that does get passed..

Okay. Well, maybe and then I guess on that topic, you talked about strategic plan and some of the things that you're looking at. You mentioned fiber build-out telecom market might be something of interest.

Care to expand on that and maybe what you're doing internally to work with that market?.

Yes. I'll put it in very intentionally secretive terms because we don't really signal everybody on what we're doing from a strategic standpoint, but the reason we brought it up, we already do a small portion that customers ask us to do because it's a natural skill set that our T&D group has.

We haven't really focused on trying to expand it or grow it, but now as I'm beginning to see or we're beginning to see that market continued to expand and customers wanting us to get into it more, it's obviously an area that came up in our strategic planning of what we should do in that area..

Okay. One more if I could, sorry, right back on civil. Just given the fact that you've got some good work ramping up, I&M seems to be ramping up this year.

Do you think you could exit the year at sort of a mid-single digit run rate, like you've been wanting to get back to?.

I don't think we will by the end of the year, I think we're going to continue to hold it fairly flat.

We made that decision a few years ago that you know, and I know you all probably are tired of me saying this comment, but it's like a big battleship that we needed to upright and get it headed in the right direction and we've got it uprighted and we've got it headed in the right direction, but before I really let the Toms and the Johns and the rest of the team start pouring the coal to that engine, I want to make sure that that sucker is headed in exactly the direction we want it to go.

So we've got a tad bit more shoring up of some superintendent level and management levels. And I then I think once we do that, we'll have it pretty close by the end of the year. So, my comment is, I don't think you'll see it by the end of the year, but I think you'll begin to see us wrap it up the following year..

Yes. Got it. Okay. Thank you for taking the questions..

Yes, sir..

We have reached the end of the question-and-answer session, and I'll now turn the call over to David King for closing remarks..

Well, thanks, everyone for joining us this morning. I've often said that our main goal is to provide a consistent, dependable and reliable result for our clients, our employees and our investment community. We continue and plan to continue that dedication to that goal. So thank you for joining us this morning. Goodbye..

This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation..