Shares of Primoris Services Corporation (PRIM) experienced a dramatic decline of approximately 49% on Wednesday, following a disappointing first-quarter earnings report and a downward revision of its 2026 profit guidance. The infrastructure contractor attributed the shortfall to significant cost overruns in its renewable-energy projects, which eroded margins and rattled investor confidence.
Market Reaction and Key Metrics
By midday Central time, the stock was trading at $102.54, a drop of $100.38 from the previous session's close. The stock opened at $120 and hit an intraday low of $101.60, effectively wiping out much of the gains driven by earlier optimism around power-grid, gas-generation, and data-center construction demand. The company's first-quarter net income fell sharply to $17.4 million, or 32 cents per diluted share, compared to $44.2 million, or 81 cents per share, in the same period last year. Revenue for the quarter ended March 31 was $1.56 billion, a 5.4% decrease year-over-year.
Earnings and Guidance Shortfalls
Adjusted earnings came in at 59 cents per share, well below the 85 cents consensus estimate, according to StreetInsider. Revenue also missed expectations of $1.73 billion. Primoris now expects full-year adjusted earnings between $4.80 and $5.00 per share, significantly lower than the $5.93 analysts had anticipated. Adjusted EBITDA fell 39.1% to $60.5 million.
CEO Koti Vadlamudi noted that the first quarter experienced "cost pressures on a limited number of renewables projects." CFO Ken Dodgen elaborated on the impact, stating that pushed-out revenue cost around $45 million, cost overruns added $35 million to $40 million, and finishing projects with slimmer margins accounted for approximately $25 million, totaling roughly $110 million in headwinds.
Segment Performance and Challenges
The Energy segment bore the brunt of the downturn, with revenue sliding $152.9 million, or 13.8%, and operating income collapsing by $49.1 million, or 62.2%, due to project redesigns, sequencing issues, labor shortages, and adverse weather. In contrast, the Utilities segment saw revenue jump $69.5 million, or 12.3%, driven by stronger results in power delivery and gas.
Vadlamudi described the second quarter as "a recovery quarter" for renewables, though the company faces ongoing risks. As of March 31, backlog stood at $11.6 billion, down from $11.9 billion at year-end, with Utilities projects accounting for $6.9 billion and Energy at $4.7 billion. Master service agreement backlog was $7.5 billion.
Acquisition and Future Outlook
Primoris completed its acquisition of PayneCrest Electric on May 1 for approximately $399.5 million in cash, aiming to bolster its presence in data centers and advanced facilities. PayneCrest derives about 40% of its revenue from data centers and over 40% from industrial, power, and renewables infrastructure. However, the market's reaction was muted compared to peers like Sterling Infrastructure and Everus Construction, which posted strong results and raised guidance.
The path to recovery remains uncertain. Primoris cautioned that its backlog is not a guarantee of future revenue, as clients can cancel projects at any time. The company also flagged potential delays from weather, labor, and customer financing issues. Investors now look for proof in the second and third quarters that the troubled solar projects are winding down, with gains from Utilities, gas generation, and PayneCrest offsetting the renewable-energy drag. For now, the market appears to view this quarter as a reset rather than a temporary setback.
