Primoris Services Corporation (PRIM) Q3 2026 earnings review
Primoris beats third-quarter profit targets, but cuts full-year earnings again
Primoris, a builder of utility grids and power plants, beat its third-quarter profit target as solar project overruns eased, while its fourth-quarter outlook stepped down. Sales fell 10% from a year ago on slower solar starts, but completing five of its six troubled solar jobs lifted EBITDA excluding one-offs to $134 million, above what the company's own plan pointed to. Even after that beat, chief executive Koti Vadlamudi kept the full-year EBITDA midpoint unchanged, so by our math the plan cuts fourth-quarter EBITDA to about $94 million.
| Revenue | $1,952.4M -10.4% from a year ago |
|---|---|
| EBITDA, excluding one-offs | $134.4M beat $90–110M outlook; -20.3% from a year ago |
| Total backlog | $14.1B +27.2% from a year ago (+23.3% excluding PayneCrest) |
| Full-year profit per share outlook, excluding one-offs | Cut $0.15 middle of the range: $2.18 (-61% from 2025) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the third-quarter margin recovery was offset by a weaker fourth-quarter plan and a third cut to full-year earnings per share. Finishing five of the six troubled solar jobs eased the immediate overrun risk, and multi-year utility maintenance agreements lifted total backlog to $14.1 billion. The bad news: slower starts on new solar projects left crews and equipment under-used, and by our math fixed-price backlog excluding the PayneCrest acquisition has not grown this year.
The question now is whether the record backlog turns into 2027 profit growth or stalls on slow solar project starts. One view is that electric grid work and gas power plants will drive a rebound once the last troubled solar job finishes this year; the other is that non-binding utility estimates mask flat fixed-price contracts and idle solar capacity. Fourth-quarter fixed backlog additions and the initial 2027 outlook will settle it.
🐂 Bull Case
Energy Margins Rebounded as Solar Overruns Wound Down
Primoris builds solar farms, gas power plants and pipelines in its Energy division. Cost overruns on six solar contracts pushed the division into a loss last quarter. Chief executive Koti Vadlamudi said five of the six troubled jobs are now done: "As the last of our six previously discussed challenged projects moves closer to completion, we are increasingly confident that these impacts are soon to be behind us."
The cleanup lifted third-quarter results well above the targets management set in August. Energy gross margin — profit after direct construction costs, as a share of sales — reached 8.5%, beating the 6% to 8% target and reversing last quarter's negative 0.3%. Company-wide EBITDA excluding one-offs (earnings before interest, taxes, depreciation and amortization) hit $134.4 million, topping the $90 million to $110 million target.
The rebound shows that the worst of the solar charges has passed, because cost of revenue in Energy fell from 100.3% of sales last quarter to 91.5%. One troubled job still remains open until year-end, so the risk of final close-out costs is fading rather than gone.
What to watch: fourth-quarter Energy gross margin when Primoris reports full-year results. A reading in the 8% to 10% band management previously discussed would confirm the last troubled solar project closed without fresh cost overruns.
Utilities Margin Hit a High on Power Delivery
The Utilities division maintains electric grids, gas lines and fiber networks under multi-year contracts. Earlier this year, lower storm-repair work weighed on its profitability. In the third quarter, the division grew revenue 4.5% from a year ago to $770.9 million on "increased activity in our gas operations and power delivery businesses, partially offset by decreased activity in our communications business", the company said.
Better execution in power delivery cut direct construction costs from 88.3% of segment sales a year ago to 87.0%. That lifted Utilities gross margin by 1.3 percentage points to 13.0%, the highest level in two years, and drove segment operating profit up 27.2% to $70.1 million. What to watch: fourth-quarter Utilities gross margin, where staying near the top of the 10% to 12% full-year target would prove electric grid upgrades can sustain higher margins without storm work.
Utilities MSA Backlog Drove Another Record Order Book
Primoris tracks future work in two buckets: fixed backlog (signed contracts with a set price) and master service agreement (MSA) backlog, which estimates the next four quarters of routine maintenance work under multi-year utility contracts. Total backlog reached a record $14.1 billion, up 27.2% from a year ago, or 23.3% by our math after stripping out the $432.2 million acquired at the close of the PayneCrest electrical contractor deal.
Utilities MSA signings carried the quarter, adding $432.6 million since June to reach $8.01 billion. The company also cited "an increase in power generation projects compared to 2025" and electrical work from PayneCrest, which grew its own backlog to $593.6 million. What to watch: fourth-quarter fixed backlog additions in the Energy division, which will show whether gas power plant and data-center electrical awards can accelerate total revenue growth in 2027.
🐻 Bear Case
Full-Year Profit Cut Again Despite the Quarter Beat
Vadlamudi said third-quarter results showed progress in putting the solar problems behind the infrastructure builder. Yet after beating its own third-quarter EBITDA target by $34.4 million at the middle of the range, Primoris did not raise its full-year EBITDA midpoint and cut its full-year earnings per share outlook for a third straight quarter.
- Q4 EBITDA excluding one-offs: $93.8 million implied by the full-year outlook, below the $100 million to $120 million management forecast in August
- Full-year profit per share excluding one-offs: cut by $0.15 at the middle of the range, to $2.10–$2.25
- Intangible amortization (non-cash write-downs of acquired customer lists): full-year estimate raised from $16.0 million to $41.5 million after finalizing PayneCrest accounting
- Full-year effective tax rate: raised from 30%–32% to about 33%
Leaving the full-year EBITDA midpoint at $300 million after a $34 million beat means the fourth quarter got worse by the same amount. By our math, fourth-quarter EBITDA excluding one-offs will fall 13.3% from a year ago, and profit per share excluding one-offs will drop 38.4% to $0.67.
What to watch: the initial 2027 profit outlook next quarter. A forecast below 2025's $531.1 million of EBITDA excluding one-offs would show that lower solar volumes and higher overhead outweigh the margin recovery.
Solar Project Delays Left Crew and Equipment Idle
Utility-scale solar and battery storage made up more than $3 billion of Primoris's revenue last year, and management expected $1.5 billion to $2.0 billion of new solar signings in the second half of 2026. Instead, Energy division sales fell 17.6% from a year ago to $1,223.8 million on a "slower than anticipated start of new projects and release of new work".
Those delays hurt profitability beyond the six troubled contracts. Lower construction volume left Primoris with "higher relative carrying costs for equipment and personnel", while segment overhead rose 1.6 percentage points to 4.4% of sales. By our math, company-wide fixed backlog decreased by $135.2 million in the quarter and is down $10.4 million since year-end once PayneCrest's $593.6 million is excluded.
What to watch: fourth-quarter Energy fixed backlog. If new solar contracts do not lift fixed backlog by year-end, under-used crews and equipment will keep weighing on Energy margins into early 2027.
Debt and Buybacks Grew While Year-to-Date Cash Burned
Primoris generated $140.2 million of operating cash flow and $98.1 million of free cash flow in the third quarter by our math, reversing two quarters of cash drain. Even so, operating cash flow for the first nine months was just $8.9 million against $327.5 million a year ago, leaving year-to-date free cash flow at negative $83.5 million.
Rather than conserving cash after borrowing $411.8 million for PayneCrest, management spent $100.0 million in the quarter to buy back 1.33 million shares at $75.15 each, finishing its $150 million plan, and the board approved a new $250 million authorization. Net debt (total debt minus unrestricted cash) reached $580.8 million, compared with $65.6 million of net cash at year-end, doubling quarterly net interest expense to $14.3 million. What to watch: fourth-quarter free cash flow, which must exceed $233 million by our math to hit the low end of management's $150 million full-year target.
Risks this quarter didn't answer
Four standing items from prior quarters cannot be read from the earnings release and await the conference call or quarterly filing.
- Natural gas generation funnel and revenue: management previously cited an $8.7 billion opportunity funnel and $500 million to $600 million of 2026 revenue; the release gave no figures.
- Unapproved change orders and accounts receivable sales: the quarterly filing will show how much revenue rests on unapproved customer claims and receivables sold under the securitization facility (where Primoris sells customer bills for early cash, after repaying $62.5 million year to date).
- Chief operating officer search: former operations chief Jeremy Kinch left in June and Vadlamudi took over his duties; the release named no replacement.
- Securities lawsuit: the quarterly filing's legal note will update the status of the shareholder suit filed in July following the solar cost overruns.
💲 Other KPIs
Uncollected customer bills rose 11.4% from June and 29.3% from year-end 2025, even though third-quarter sales fell 10.4% from a year ago. Higher receivables tied up $116.5 million of operating cash in the first nine months and drove higher borrowings on the company's credit lines.
Spending on property and equipment rose from $22.5 million last quarter and $34.5 million a year ago, reaching 2.2% of sales. Construction equipment accounted for $30.5 million of the third-quarter bill, bringing nine-month capital spending to $92.4 million.
Weighted average diluted shares fell 1.3% from 54.8 million a year ago. The infrastructure contractor bought back 449,287 shares in the second quarter and 1,330,627 shares in the third quarter, exhausting its $150 million repurchase program.
🔮 Guidance
Unchanged at the middle of the range. Primoris narrowed the band around the same $300.0 million midpoint, which is down 43.5% from 2025. By our math, that leaves $93.8 million for the fourth quarter, down 13.3% from a year ago and below the $100 million to $120 million fourth-quarter range management gave in August. Earlier in 2026, the company cut this midpoint twice: by $80 million in May and $190 million in June.
Cut. The middle of the range moved down $0.15 to $2.175 per share, a 61.3% drop from 2025. By our math, the plan leaves $0.665 per share for the fourth quarter, down 38.4% from $1.08 a year ago. It is the third cut in three quarters: -$1.00, -$2.575, -$0.15.
Cut. The midpoint dropped $16.8 million to $69.2 million, down 74.8% from last year, because Primoris raised its full-year estimate for non-cash intangible amortization from $16.0 million to $41.5 million after the PayneCrest purchase. By our math, that implies $24.6 million of net income in the fourth quarter. Third cut this year: -$71.0M, -$142.5M, -$16.8M.
Cut. The middle of the range fell $0.30 to $1.275 per share, down 74.6% from 2025. By our math, the outlook leaves $0.455 per share for the fourth quarter, down 52.1% from $0.95 a year ago. Third cut in three quarters: -$1.30, -$2.575, -$0.30.
Unchanged. The US contractor still targets overhead in the low 6% range of sales for the year, up from 5.3% in 2025. With nine-month overhead already at 6.2% of sales, the fourth quarter will stay near that level due to lower solar revenue and added PayneCrest administrative costs.
Unchanged. The full-year target has stayed at 10% to 12% all year. Nine-month Utilities gross margin is already 11.7% after a 13.0% third quarter, so the division is tracking near the top of the range even with a normal seasonal slowdown in the fourth quarter.
Unchanged. Management kept the 6% to 8% target it set in June after cutting it from 9%–11% in May and 10%–12% in February. Nine-month Energy gross margin sits at 5.5%, so fourth-quarter margins must exceed 7.5% for the full year to reach the 6.0% floor.
Unchanged. Full-year interest costs remain set at $45.0 million at the middle of the range, up from $28.7 million in 2025 because of the PayneCrest debt. Nine-month net interest expense is $29.4 million, leaving $13.6 million to $17.6 million for the fourth quarter by our math.
Raised. The expected tax rate moved up by 2 percentage points from the prior midpoint, and is up from the initial 29% target at the start of the year. State taxes and non-deductible worker travel expenses weigh more heavily as a share of smaller pre-tax profit.
Unchanged. In August Primoris guided to $70 million to $90 million of capital spending for the second half; after spending $42.1 million in the third quarter, the $30 million to $40 million fourth-quarter range keeps full-year spending at $122.4 million to $132.4 million, including $20 million to $30 million for equipment in the final quarter.
❓ Key Questions
Why did the fourth-quarter profit plan drop after a beat?
Third-quarter EBITDA excluding one-offs beat management's range by $34.4 million at the midpoint, yet the full-year midpoint stayed at $300 million. That lowers implied fourth-quarter EBITDA from $100–$120 million to $93.8 million. Did solar project starts slip further, or are new cost pressures emerging?
How much solar work was booked in the third quarter?
Management previously targeted $1.5 billion to $2.0 billion of solar and battery bookings in the second half of 2026. The release noted slower starts on new solar projects, and company-wide fixed backlog fell by $135.2 million in the quarter.
What are the gas power plant backlog and funnel figures?
Last quarter management cited an $8.7 billion opportunity funnel for natural gas generation and targeted $500 million to $600 million of 2026 revenue. The release mentioned higher power generation work but gave no dollar figures for awards, backlog or revenue.
Does the $150M–$200M free cash flow target still hold?
Nine-month free cash flow is negative $83.5 million, while accounts receivable rose $211.6 million since year-end to $935.0 million. Hitting the prior $150 million full-year floor requires over $233 million of free cash flow in the fourth quarter alone.