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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-248535

CALCULATION OF REGISTRATION FEE CHART

               
 
Title of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed
Maximum
Offering Price
Per Share

  Proposed
Maximume
Aggregatee
Offering Price

  Amount of
Registration
Fee(2)

 

Common stock, par value $0.0001 per share

  5,175,000   $35.00   $181,125,000   $19,760.74

 

(1)
Includes 675,000 shares of common stock issuable upon exercise of the underwriters' option to purchase additional shares of common stock.

(2)
Calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended.

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PROSPECTUS SUPPLEMENT
(To Prospectus dated September 1, 2020)

4,500,000 Shares

GRAPHIC

Primoris Services Corporation

Common Stock



          We are offering 4,500,000 shares of our common stock, $0.0001 par value per share. Our common stock is listed on the Nasdaq Global Market ("Nasdaq") under the symbol "PRIM." The last reported sale price of our common stock on Nasdaq on March 15, 2021, was $40.43 per share.



          Investing in our common stock involves risks. See "Risk factors" beginning on page S-11 of this prospectus supplement and in the documents incorporated by reference or deemed to be incorporated by reference into this prospectus supplement and the accompanying prospectus.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

    Per share     Total
 

Public offering price

  $ 35.00   $ 157,500,000  

Underwriting discounts and commissions(1)

  $ 1.75   $ 7,875,000  

Proceeds, before expenses, to us

  $ 33.25   $ 149,625,000  

(1)
See "Underwriting" in this prospectus supplement for additional information.

          We have granted the underwriters an option for a period of 30 days to purchase up to an additional 675,000 shares of our common stock from us at the price to the public less underwriting discounts and commissions.

          Delivery of the shares of our common stock is expected to be made on or about March 22, 2021.



Book-Running Managers

Goldman Sachs & Co. LLC   Morgan Stanley   UBS Investment Bank

Co-Managers

Capital One Securities   Regions Securities LLC   CIBC Capital Markets

CJS Securities

 

 

 

D.A. Davidson & Co.

   

Prospectus Supplement dated March 17, 2021.


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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

    Page
 

ABOUT THIS PROSPECTUS SUPPLEMENT

    S-iii  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    S-iv  

PROSPECTUS SUMMARY

    S-1  

THE OFFERING

    S-7  

SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA

    S-9  

RISK FACTORS

    S-11  

USE OF PROCEEDS

    S-28  

CAPITALIZATION

    S-29  

UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL STATEMENTS

    S-30  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    S-38  

BUSINESS

    S-64  

MANAGEMENT

    S-76  

UNDERWRITING

    S-81  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

    S-89  

LEGAL MATTERS

    S-93  

EXPERTS

    S-93  

WHERE YOU CAN FIND MORE INFORMATION

    S-93  

INDEX TO FINANCIAL STATEMENTS

    F-1  

PROSPECTUS

          We have not, and the underwriters have not, authorized anyone to provide you with any information other than the information contained in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference herein and therein, and in any free writing prospectus that we have authorized for use in connection with this offering. We take no responsibility for, and can provide no assurances as to the reliability of, any information that is in addition to or different from that contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus supplement, the accompanying prospectus, the documents incorporated by reference in this

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prospectus supplement and the accompanying prospectus and any free writing prospectus that we have authorized for use in connection with this offering is accurate only as of the date of those respective documents. Our business, financial condition, results of operations and prospects may have changed since those dates. You should read this prospectus supplement, the accompanying prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, in their entirety before making an investment decision.

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ABOUT THIS PROSPECTUS SUPPLEMENT

          This prospectus supplement and the accompanying prospectus form part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or the "SEC," using a "shelf" registration process. This document contains two parts. The first part consists of this prospectus supplement, which provides you with specific information about this offering. The second part, the accompanying prospectus, provides more general information, some of which may not apply to this offering. Generally, when we refer only to the "prospectus," we are referring to both parts combined. This prospectus supplement may add, update or change information contained in the accompanying prospectus. To the extent that any statement we make in this prospectus supplement is inconsistent with statements made in the accompanying prospectus or any documents dated prior to the date of this prospectus supplement and incorporated by reference herein or therein, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying prospectus and such documents incorporated by reference herein and therein.

          Unless the context otherwise indicates, references in this prospectus to "Primoris," the "Company," "we," "our" and "us" refer, collectively, to Primoris Services Corporation, a Delaware corporation, and its consolidated subsidiaries. References to our "common stock" refer to the common stock, par value $0.0001 per share, of Primoris Services Corporation.

          All references in this prospectus supplement to our financial statements include, unless the context indicates otherwise, the related notes.

          The industry and market data and other statistical information contained in this prospectus supplement, the accompanying prospectus and the documents we incorporate by reference herein and therein are based on management's own estimates, independent publications, government publications, reports by market research firms or other published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these sources are reliable, we have not independently verified the information.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus supplement and the accompanying prospectus contain or incorporate by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934, as amended, or the "Exchange Act," and we intend that such forward-looking statements be subject to the safe harbors contained in the Private Securities Litigation Reform Act of 1995. 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; 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; 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; developments in 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; cyber-security breaches; failure to maintain safe worksites; risks or uncertainties associated with events outside of our control, including severe weather conditions, public health crises and pandemics (such as COVID-19), political crises or other catastrophic events; client delays or defaults in making payments; the 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; possible information technology interruptions or inability to protect intellectual property; 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 legal 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; asset impairments; and risks arising from the inability to successfully integrate acquired businesses. Given these uncertainties, you should not place undue reliance on forward-looking statements.

          See the section titled "Risk Factors" in this prospectus supplement and the risk factors included in our periodic reports filed with the SEC under the Exchange Act for a further discussion

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regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. We do 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. We assume no obligation to update forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available.

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PROSPECTUS SUMMARY

          The following summary of our business highlights certain of the information contained elsewhere in or incorporated by reference into this prospectus supplement and the accompanying prospectus. Because this is only a summary, however, it does not contain all of the information that may be important to you. You should carefully read this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference, which are described under "Where You Can Find More Information" in this prospectus supplement and "Incorporation by Reference" in the accompanying prospectus. You should also carefully consider the matters discussed in the sections in this prospectus supplement titled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in the periodic reports incorporated herein by reference.

Primoris Services Corporation

          We are one of the leading providers of specialty contracting services operating mainly in the United States and Canada. We provide a wide range of specialty maintenance, replacement, construction, fabrication, and engineering services to a diversified base of customers through our five segments: Utilities and Distribution ("Utilities"), Transmission and Distribution ("Transmission"), Power, Industrial, and Engineering ("Power"), Pipeline and Underground ("Pipeline"), and Civil. The structure of our reportable segments is generally focused on broad end-user markets for our services.

          We have longstanding customer relationships with major engineering, utility, refining, petrochemical, power, and midstream companies, as well as state departments of transportation. We provide our services to a diversified base of customers, under a range of contracting options. A substantial 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.

Competitive Strengths

Leading Provider of Critical Infrastructure Services

          At Primoris, our mission is to provide our clients with unmatched value, our employees with a safe work environment and entrepreneurial culture, our shareholders with results, and the communities we serve with innovation and excellence. Our differentiated operational scale, deep expertise across a broad range of non-discretionary services, and track record of safety and on-time completion make Primoris a provider of choice for critical infrastructure design, engineering, construction, maintenance and services across North America. With a footprint of more than 250 locations and 10,000+ dedicated employees, Primoris generated $3.5 billion in 2020 revenue across five primary segments: (1) Utilities, (2) Transmission, (3) Power, (4) Civil and (5) Pipeline.

          Beginning with the first quarter of 2021, Primoris has realigned its business into three go-forward segments: Utilities (encompassing the former Utilities and Transmission segments), Energy (encompassing the former Power and Civil segments) and Pipeline Services (appropriately rebranding the Pipeline segment).

          The Utilities and Transmission segments (which has become the new Primoris Utilities segment) together represent the largest piece of Primoris' portfolio, accounting for 26% and 13% of 2020 revenue, respectively, and conduct the installation and ongoing maintenance of new and existing utility distribution systems. The new Utilities segment is comprised primarily of three end markets — Regulated Electric (electric utility transmission, substation and distribution systems), Regulated Natural Gas (gas utility distribution systems and pipeline integrity services) and, with the

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recent acquisition of Future Infrastructure, a meaningful presence in Telecommunications (telecom and fiber optic infrastructure).

          The Power and Civil segment (which has become the new Primoris Energy segment), representing 23% and 12% of 2020 revenue, respectively, provide engineering, construction and maintenance services for renewable energy, power, petrochemical and industrial end markets. This includes power generation services, industrial engineering and construction, construction of critical infrastructure such as highways, bridges and airports, as well as design, construction and maintenance of renewable energy production facilities.

          The Pipeline segment (which has become the new Pipeline Services segment), representing 26% of 2020 revenue, is engaged in pipeline and pipeline facility design, engineering, construction, maintenance and integrity services as well as the installation of compressor stations, pump stations, terminals and metering facilities. We serve both large diameter and small diameter gathering systems, as well as the water and drainage industries with services spanning from fabrication to maintenance to specialty boring.

Multiple Secular Tailwinds Supporting Growth

          In recent years we have made a concerted, intentional investment of time and capital designed to focus our business and position Primoris for growth. As a result of these efforts, the Primoris portfolio is designed to capitalize on a number of independent secular industry trends positively impacting the end markets we serve and expected to drive outsized growth well into the future. Some examples of these tailwinds include:

    Electric transmission, distribution and substation — potentially $70 billion of market opportunity related to grid enhancement and maintenance requirements as well as system hardening and weather preparedness upgrades according to S&P's Utility Capital Expenditure Update.

    Regulated natural gas and other pipeline services — approximately 50% of all pipeline infrastructure was installed prior to 1980, and the industry is in the early stages of a large, government-mandated repair / replacement cycle expected to equal approximately $28 billion in spending on gas according to S&P's Utility Capital Expenditure Update.

    Telecommunications — estimated $140 billion of investment will be required in the United States over the next 5 to 7 years to keep pace with 5G, spectrum and fiber rollouts in order to meet exploding demand for mobile and other connected device activity according to Deloitte's Communication Infrastructure Upgrade.

    Renewable energy — estimated $225 billion in anticipated renewable asset investment in 2020 due to an evolving regulatory backdrop supporting carbon neutral emissions, an improving cost basis supportive of profitability and an increase in solar capacity to ~525GW by 2040 according to IHS Markit's North American Renewable Power Market Outlook. We believe Primoris is well- positioned with connections to solar plants throughout our areas of operations, with the opportunity to expand into wind as well.

Diversified and Well-Tenured Blue Chip Client Base

          Primoris boasts a broad range of long-standing customer relationships across all of its operating segments. Key customers include Atmos, Chesapeake, PG&E and Verizon in the new Utilities segment, Chevron, Kinder Morgan and Marathon in Energy and Exxon, Sempra and Southern Company in the new Pipeline Services segment. Notably, a number of our customers who are more diversified in their operations utilize Primoris' services in more than one of our segments, such as Enel, who is a customer in both the new Utilities and Energy segments. We have

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longstanding relationships with the customers we serve, as evidenced by average customer tenure exceeding 20 years, and limited customer concentration (for the year ended 2020, approximately 47% of revenue was generated from our top 10 customers and no customer accounted for more than 9% of total revenue).

Business Model Designed to Limit Risk and Drive Predictability

          Primoris has intentionally focused its portfolio on driving MSA revenue, which comprised 39% of revenue for the year ended 2020 (up from 29% in 2015). This MSA focus provides a number of benefits for Primoris, namely:

    Improved economics, by reducing sales and marketing expenses and supporting investments in scale / network density

    Enhanced business resiliency, via increased revenue stability and visibility

    Lower risk, smoothing earnings volatility and improving unit pricing

    Deepening of relationships, with customers increasingly viewing us as partners over extended periods of time, introducing many cross-selling opportunities

          In addition to an emphasis on MSA-oriented services, we seek to further de-risk our business model via the contract structures we employ and the size of projects we execute. As of December 31, 2020, approximately 78% of our projects were under some sort of reimbursable contract structure (e.g. unit price, time and materials ("T&M"), cost plus), leaving less than a quarter of our projects governed by fixed price contracts. Additionally, of the 6,218 total projects for Primoris in 2020, more than 5,000 of those were under $1 million (84% of the total contracts), resulting in an average project size of just $2.2 million on a revenue base of $3.5 billion.

Differentiated Employee Base and Skilled Labor Advantage

          The Primoris family consists of more than 10,000 highly-dedicated employees who we believe are the rival of the industry. Our business model emphasizes self-performance for a significant portion (approximately 85%) of our work, which means that in each of our segments we maintain a stable workforce of skilled, experienced craft professionals. Many of these employees are cross-trained to work on projects across segments, such as pipeline and facility construction, refinery maintenance, gas and electrical distribution, and piping systems).

          At Primoris, we are focused on providing employees with the foundational skills necessary to support strong project execution, as well as continuous skills training and advancement opportunities (through both on-site programs and off-site training, including several locations where we train apprentices to become journeymen). As an example of our commitment to skill development and career progression, we have implemented a Leadership Development Program — a year-long initiative aimed at furthering participants' leadership skills. As a result of initiatives like these and others, we are viewed as an employer of choice in the industry, have a very good safety culture in our operations, and maintain low employee turnover year over year.

Demonstrated Track Record of Growth and Execution

          Primoris has demonstrated a consistent track record of successful execution, both operationally on a project by project basis and through driving growth at the Company level. In aggregate, all of our segments' projects either made or exceeded as sold margins in 2020 (achieved project margins outperformed budgeted margins), a testament to the hard work of our employees and the disciplined way in which we run our business. For Primoris as a whole, our focus on leveraging core capabilities alongside disciplined risk management and thoughtful

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expansion has allowed us to grow both revenue and backlog at a compound annual growth rate (CAGR) of 13% and 6%, respectively, since 2015 while growing operating income at a CAGR of 19% and earnings per share at a CAGR of 25% over that same time period.

Highly Experienced Management Team

          Primoris' success is underpinned by our employees and enabled by a dedicated management team with significant experience both in the industry and at our Company. Current management has been the catalyst behind our recent transformational acquisitions (including Future Infrastructure) and the driving force in our shift towards a higher margin, higher growth portfolio. Importantly, while delivering success for Primoris, they have demonstrated an equal commitment to establishing a culture of safety and investing in the success of our employees.

Business Strategies

No Business Objective Pursued at the Sacrifice of Safety

          Safety is a critical component of everything we do at Primoris. Our customers demand it, our management team emphasizes it and our employees deserve it. At Primoris, we believe that no business objective is more important than safety — a tenet of our strategy which is key to our success, and which allowed us to achieve a Total Recordable Incident Rate (TRIR) of 0.53 for the year ended 2020 (well below the industry average).

Solutions and Services Tailored to Meet Customer Demands

          Given our long-term customer relationships, we know our customer base extremely well, and are focused on tailoring the services we provide to fit their specific needs. Our turnkey solutions are designed to deliver on a number of criteria, including:

    Safety — Our commitment to safety results in enhanced employee relations, increased employee retention and improved productivity. Accidents count against customer safety records and result in higher insurance costs and increased scrutiny.

    Efficiency — Sustainability of existing infrastructure is critical to operations, financial results and all stakeholders. Maintenance and repairs are essential for maximizing utilization, asset life and return on assets. Longer down time and excess coordination results in significant opportunity costs. Primoris provides customers with turnkey solutions that enhance efficiency through self- performance and rapid mobilization.

    Value — We are a single-source supplier with tenured, local management. Outsourcing of strategic maintenance services is often seen as a necessary expense. Vendor consolidation / coordination efforts drive enhanced efficiency and cost reductions.

    Reliability — We maintain a skilled workforce with low employee turnover. Customers have complex infrastructures that need to be in consistent operation, and they want a strategic partner for their capital programs that maintains a continuous presence through cycles.

Single-Source Supplier with Dedicated, Company-Owned Fleet

          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 the businesses in which we operate. We believe that our ownership of a large and varied construction fleet and our dedicated maintenance facilities enhances our access to reliable equipment at a favorable cost. This allows customers to view Primoris as a single-source provider

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on-site, and allows us the added benefit of a significant competitive advantage that doubles as a cost advantage and margin driver.

Expansion in Growing Markets to Further Diversify the Business

          We are intent on expanding our "targeted market" or addressable market by focusing particularly on selected high growth markets, such as telecommunications (as evidenced by our Future Infrastructure acquisition) as well as solar / renewable energy, broader utilities and pipeline integrity. Significant opportunity exists for Primoris to both expand geographically with our current services portfolio as well as augment the scope of services we provide (organically and inorganically). As our business becomes further diversified in mix and geography, we anticipate significant cross-selling opportunities as an added benefit of our scale and portfolio breadth and depth.

Emphasis on MSA Revenue Growth and Improving Services Mix

          Expanding the prevalence of MSA revenue and improving the mix of services in our portfolio are critical elements in driving profit growth and minimizing risk. This strategy has already shown significant benefit for Primoris, as we have expanded our revenue base to be over 39% in our prior Utilities and Transmission segments in 2020 and grown operating margin by over 120 basis points in the last five years, with MSA-oriented revenue expanding from 29% to 39% of total revenue over that same period. This well-advanced but still ongoing shift represents a number of benefits for us — higher margin, higher growth, lower risk and better recurring revenue.

Targeted M&A Strategy Focused on High-Grading the Portfolio

          We have acquired a number of relatively smaller businesses over the last several decades, along with some larger companies, as we continually seek opportunities to deepen our market presence, broaden our geographic reach and expand our services offerings. We believe we have a well-defined set of acquisition criteria centered around identifying strong management teams with market-leading capabilities in growing end markets.

          The recent acquisition of Future Infrastructure represents a logical next step in the evolution of our acquisition strategy at Primoris. Future Infrastructure is a differentiated leader in an identified target market for Primoris, with an established brand and reputation that allows us to expand our utilities services presence and enhance our portfolio and margin mix. Going forward, we expect to build on the acquisition of Future Infrastructure as we continue to identify and execute acquisition opportunities at scale in line with our stated criteria.

Disciplined Approach to Capital Structure to Maintain a Strong Balance Sheet

          We seek to maintain a capital structure that provides strong operating cash flows along with access to external financing as needed 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 and operational capabilities. We maintain a revolving credit facility to provide letter of credit capability and, if needed, to augment our liquidity needs.

          Our approach to capital structure and capital deployment is consistently informed by, and considered alongside of, other aspects of our strategy, including executing on acquisition opportunities. We are focused on long-term sustainability and maintaining a strong financial profile by targeting high single-digit revenue growth, consistent gross margin performance, sustainable cash flow generation, disciplined capital deployment and a strong balance sheet with a commitment to maintaining modest leverage over time.

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Recent Developments

Acquisition of Future Infrastructure Holdings, LLC

          In January 15, 2021, we acquired Future Infrastructure Holdings, LLC ("FIH") in an all-cash transaction valued at approximately $621.7 million (the "Merger"). FIH is a provider of non-discretionary maintenance, repair, upgrade, and installation services to the telecommunication, regulated gas utility, and infrastructure markets. FIH furthers our strategic plan to expand our service lines, enter new markets, and grow our MSA revenue base. The transaction directly aligns with our strategy to grow in large, higher growth, higher margin markets, and expands our utility services capabilities.

Second Amended and Restated Credit Agreement

          On January 15, 2021, we entered into the Second Amended and Restated Credit Agreement (the "Amended Credit Agreement") with CIBC Bank USA, as administrative agent (the "Administrative Agent") and co-lead arranger, and the financial parties thereto (collectively, the "Lenders"), to increase the Term Loan by $400.0 million to an aggregate principal amount of $592.5 million (the "New Term Loan") and to extend the maturity date from July 9, 2023 to January 15, 2026. The proceeds from the New Term Loan were used to finance the acquisition of FIH and for general corporate purposes.

          We intend to use the net proceeds from this offering for general corporate purposes, including to repay a portion of the borrowings outstanding under the Amended Credit Agreement. See "Use of Proceeds." For more information regarding the Amended Credit Agreement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" included elsewhere in this prospectus supplement.

Corporate Information

          Our principal executive offices are located at 2300 N. Field Street, Suite 1900 Dallas, Texas 75201 and our telephone number is (214) 740-5600, and our website address is www.primoriscorp.com. Information on or connected to our website is not a part of or incorporated by reference into this prospectus supplement.

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THE OFFERING

Issuer

  Primoris Services Corporation

Common stock offered by us

 

4,500,000 shares (or 5,175,000 shares, if the underwriters exercise in full their option to purchase additional shares as described below).

Option to purchase additional shares

 

We have granted the underwriters an option to purchase up to an additional 675,000 shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus supplement. See "Underwriting."

Common stock outstanding after giving effect to this offering

 

53,723,422 shares (or 54,398,422 shares, if the underwriters exercise in full their option to purchase additional shares).

Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $149.1 million (or approximately $171.6 million if the underwriters exercise in full their option to purchase additional shares) after deducting underwriting discounts and commissions and estimated offering expenses. We intend to use the net proceeds from this offering for general corporate purposes, including to repay a portion of the borrowings outstanding under the Amended Credit Agreement. See "Use of Proceeds."

Trading symbol for our common stock

 

Our common stock is listed on the Nasdaq Global Market under the symbol "PRIM."

Dividend policy

 

In 2020, we paid a cash dividend of $0.06 per share quarterly ($0.24 in total) to stockholders. On February 19, 2021, we declared a cash dividend of $0.06 per share payable on April 15, 2021 to holders of record on March 31, 2021. Because the closing date of this offering will occur prior to March 31, 2021, purchasers of common stock in this offering will (to the extent they are still the record holder on the record date) receive such dividend.

United States federal income tax considerations

 

For a discussion of material United States federal income tax consequences of holding and disposing of shares of our common stock, see "Material U.S. Federal Income Tax Considerations For Non-U.S. Holders of Common Stock."

Risk factors

 

You should carefully consider the information set forth in the section of this prospectus supplement entitled "Risk Factors" as well as the other information included in or incorporated by reference into this prospectus supplement and the accompanying prospectus before deciding whether to invest in the shares.

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          The number of shares of our common stock to be outstanding immediately after the closing of this offering is based on 49,223,422 shares of common stock outstanding as of March 12, 2021 and excludes 571,579 outstanding equity awards issuable upon vesting.

          Except as otherwise noted, all information in this prospectus supplement assumes no exercise of the underwriters' option to purchase additional shares.

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SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA

          The following table shows summary historical consolidated financial data and summary unaudited pro forma condensed combined financial data for the periods ended and as of the dates indicated. The summary historical consolidated financial data as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018, are derived from our audited consolidated financial statements, which are included elsewhere in this prospectus supplement and in our Annual Report on Form 10-K for the year ended December 31, 2020 (our "Annual Report on Form 10-K"), which is incorporated by reference in this prospectus supplement. The summary historical unaudited pro forma consolidated combined financial data as of and for the year ended December 31, 2020 are presented to illustrate the effect of the Merger on our historical financial position and results of operations and are derived from our unaudited pro forma consolidated combined financial statements included elsewhere in this prospectus supplement and as an exhibit to our Current Report on Form 8-K/A filed on March 9, 2021, which is incorporated by reference in this prospectus supplement. The following table should be read in conjunction with, and is qualified in its entirety by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited historical consolidated financial statements and unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this prospectus supplement.

          Historical results are not necessarily indicative of results that may be expected for any future period. The summary unaudited pro forma condensed combined financial data are provided for illustrative purposes only and are not intended to represent or be indicative of our results of operations or financial position of that would have been recorded had the Merger been completed as of the dates presented and should not be taken as representative of our future results of operations or financial position.

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    Pro Forma     Historical
 

    Year ended
December 31,
    Year ended December 31,
 

    2020     2020     2019     2018
 

    (in millions, except per share data)  

Statement of Operations Data:

                         

Revenue

  $ 3,822   $ 3,491   $ 3,106   $ 2,940  

Cost of revenue

    3,384     3,121     2,775     2,614  

Gross profit

    438     370     331     326  

Selling, general and administrative expense

    245     203     190     182  

Management fees

    2              

Transaction and related costs

    26     3         13  

Operating income

    166     164     141     131  

Other income (expense)

    (30 )   (18 )   (23 )   (17 )

Income before provision for income taxes

    136     146     118     114  

Income tax provision

    (38 )   (41 )   (34 )   (26 )

Net income

  $ 98   $ 105   $ 84   $ 88  

Less net income attributable to noncontrolling interests

            (2 )   (10 )

Net income attributable to Primoris

  $ 98   $ 105   $ 82   $ 78  

Dividends per common share

  $ 0.240   $ 0.240   $ 0.240   $ 0.240  

Earnings per share attributable to Primoris:

                         

Basic

  $ 1.99   $ 2.17   $ 1.62   $ 1.51  

Diluted

  $ 1.97   $ 2.16   $ 1.61   $ 1.50  

Weighted average common shares outstanding:

                         

Basic

    49.3     48.3     50.8     51.4  

Diluted

    49.8     48.6     51.1     51.7  

 

    Pro Forma     Historical
 

    As of
December 31,
    As of December 31,
 

    2020     2020     2019
 

    (in millions)  

Balance Sheet Data:

                   

Cash and cash equivalents

  $ 213   $ 327   $ 120  

Accounts receivable, net

    497     432     405  

Total assets

    2,518     1,970     1,830  

Total current liabilities

    818     764     670  

Long-term debt, net of current portion

    759     269     296  

Stockholders' equity

    708     715     630  

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RISK FACTORS

          In addition to the risks described below, you should also carefully read all of the other information included in this prospectus supplement, the accompanying prospectus and the documents we have incorporated by reference into this prospectus supplement in evaluating an investment in our common stock. See "Where You Can Find More Information." If any of the described risks actually were to occur, our business, financial condition, results of operations and cash flows could be materially adversely affected. In that event, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.

          The risks described below and incorporated by reference herein are not the only ones facing the Company. Additional risks not presently known to us or that we currently deem immaterial individually or in the aggregate may also impair our business operations.

          This prospectus supplement and documents incorporated by reference herein also contain forward-looking statements that involve risks and uncertainties, some of which are described in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks and uncertainties faced by us described below or incorporated by reference in this prospectus supplement and the accompanying prospectus. See "Special Note Regarding Forward-Looking Statements."

Risks Related to this Offering and Ownership of our Common Stock

We will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds that we receive effectively.

          Although we intend to use the proceeds from this offering for general corporate purposes, including to repay a portion of the borrowings outstanding under the Amended Credit Agreement as described in the section entitled "Use of Proceeds," we will retain broad discretion as to the application of the net proceeds and could use them for purposes other than those contemplated at the time of this offering. Our stockholders may not agree with the manner in which we choose to allocate and spend the net proceeds. Moreover, we may use the net proceeds for corporate purposes that may not increase our profitability or our market value.

You may experience dilution as a result of this offering.

          This offering may have a dilutive effect on our earnings per share after giving effect to the issuance of our common shares in this offering and the receipt of the expected net proceeds. The actual amount of dilution from this offering or from any future offering of our common shares will be based on numerous factors, particularly the number of our common shares issued, the use of proceeds and the return generated by any investments made with the net proceeds, and cannot be determined at this time.

          In addition, as part of our acquisition strategy, we have issued shares of common stock and used shares of common stock as a part of contingent earn-out consideration, which have resulted in dilution to our stockholders. Our Certificate of Incorporation permits us to issue up to 90.0 million shares of common stock of which approximately 48.1 million were outstanding at December 31, 2020. We are also permitted under our Certificate of Incorporation to issue shares of preferred stock which could cause further dilution to our common stockholders, resulting in reduced net income and cash flow available to common stockholders.

          In 2013, our stockholders adopted our 2013 Equity Incentive Plan ("Equity Plan"). The Equity Plan replaced a previous plan. The Equity Plan authorized the Board of Directors to issue equity awards totaling 2,526,275 shares of our common stock. Our current director compensation plan,

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our bonus incentive plan, and our management long-term incentive plan and any additional equity awards made will have the effect of diluting our earnings per share and stockholders' percentage of ownership.

Cash available for distribution may not be sufficient to maintain dividends to our shareholders at current levels, or at all.

          Holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors. The payment of dividends is contingent upon our revenue and earnings, capital requirements, and general financial condition, as well as contractual restrictions and other considerations deemed to be relevant by our board of directors. While our board of directors has declared quarterly cash dividends for each of the years ended December 31, 2020, 2019 and 2018, the board may eliminate or otherwise reduce the amount of such dividend. No assurance can be given that we will be able to continue making quarterly distributions at the current rate or at all.

Delaware law and our charter documents may impede or discourage a takeover or change in control.

          As a Delaware corporation, anti-takeover provisions may impose an impediment to the ability of others to acquire control of us, even if a change of control would be of benefit to our stockholders. In addition, certain provisions of our Certificate of Incorporation and Bylaws also may impose an impediment, or discourage others from a takeover. These provisions include:

    Stockholders may not act by written consent;

    There are restrictions on the ability of a stockholder to call a special meeting, or nominate a director for election; and

    Our Board of Directors can authorize the issuance of preferred shares.

          These types of provisions may limit the ability of stockholders to obtain a premium for their shares.

Risks Related Primarily to Operating our Business

Our financial and operating results may vary significantly from quarter-to-quarter and year-to-year.

          Our business is subject to seasonal and annual fluctuations. Some of the quarterly variation is the result of weather, particularly rain, ice, snow, and named storms, which create difficult operating conditions. Similarly, demand for routine repair and maintenance services for gas utilities is lower during their peak customer needs in the winter, and demand for routine repair and maintenance services for electric utilities is lower during their peak customer needs in the summer. Some of the annual variation is the result of construction projects which fluctuate based on customer timing, project duration, weather, and general economic conditions. Annual and quarterly results may also be adversely affected by:

    Changes in our mix of customers, projects, contracts and business;

    Regional or national and/or general economic conditions and demand for our services;

    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;

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    The budgetary spending patterns of customers;

    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;

    Costs we incur to support growth, whether organic or through acquisitions;

    The timing and volume of work under contract; and

    Losses experienced in our operations.

          As a result, our operating results in any particular quarter may not be indicative of the operating results expected for any other quarter, or for an entire year.

Demand for our services may decrease during economic recessions or volatile economic cycles, and a reduction in demand in end markets may adversely affect our business.

          A substantial portion of our revenue and profit is generated from construction projects, the awarding of which we do not directly control. The engineering and construction industry historically has experienced cyclical fluctuations in financial results due to economic recessions, downturns in business cycles of our customers, material shortages, price increases by subcontractors, interest rate fluctuations and other economic factors beyond our control. When the general level of economic activity deteriorates, our customers may delay, or cancel upgrades, expansions, and/or maintenance and repairs to their systems. Many factors, including the financial condition of the industry, could adversely affect our customers and their willingness to fund capital expenditures in the future.

          Economic, regulatory and market conditions affecting our specific end markets may adversely impact the demand for our services, resulting in the delay, reduction or cancellation of certain projects and these conditions may continue to adversely affect us in the future. For example, much of the work that we perform in the highway markets involves funding by federal, state and local governments. This funding is subject to fluctuation based on the budgets and operating priorities of the various government agencies.

          We are also dependent on the amount of work our customers outsource. In a slower economy, our customers may decide to outsource less infrastructure services, reducing demand for our services. In addition, consolidation, competition or capital constraints in the industries we serve may result in reduced spending by our customers.

Industry trends and government regulations could reduce demand for our pipeline construction services.

          The demand for our pipeline construction services is dependent on the level of operating and capital project spending by midstream companies in the oil and gas industry. This level of spending is subject to large fluctuations depending primarily on the current price, volatility, and expectations of future prices of oil, natural gas, and natural gas liquids. The price is a function of many factors, including levels of supply and demand, government policies and regulations, oil industry refining capacity and the potential development of alternative fuels.

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          Specific government decisions could affect demand for our construction services. For example, a limitation on the use of "fracking" technology, or creation of significant regulatory issues for the construction of underground pipelines, could significantly reduce our underground work.

          Conversely, government regulations may increase the demand for our pipeline services. The anticipation by utilities that coal-fueled power plants may become uneconomical to operate because of potential environmental regulations or low natural gas prices could increase demand for gas pipeline construction for utility customers.

Many of our customers are regulated by federal and state government agencies and the addition of new regulations or changes to existing regulations may adversely impact demand for our services and the profitability of those services.

          Many of our energy customers are regulated by the Federal Energy Regulatory Commission ("FERC"), and our utility customers are regulated by state public utility commissions. These agencies could change the way in which they interpret current regulations and may impose additional regulations. These changes could have an adverse effect on our customers and the profitability of the services they provide, which could reduce demand for our services or delay our ability to complete projects.

Our business may be materially adversely impacted by regional, national and/or global requirements related to climate change and the impact of greenhouse gas emissions in the future.

          Greenhouse gases that result from human activities, including burning of fossil fuels, are the focus of increased scientific and political scrutiny and may be subject to changing legal requirements. International agreements, federal laws, state laws and various regulatory schemes limit or otherwise regulate emissions of greenhouse gases, and additional restrictions are under consideration by different governmental entities. We derive a significant amount of revenue and contract profit from engineering and construction services to clients that own and/or operate a wide range of process plants and own and/or operate electric power generating plants that generate electricity from burning natural gas or various types of solid fuels. These plants may emit greenhouse gases as part of the process to generate electricity or other products. Compliance with existing greenhouse gas regulation may prove costly or difficult. It is possible that owners and operators of existing or future process plants and electric generating plants could be subject to new or changed environmental regulations that result in significantly limiting, or reducing the amounts of greenhouse gas emissions, increasing the cost of emitting such gases or requiring emissions allowances. The costs of controlling such emissions or obtaining required emissions allowances could be significant. It also is possible that necessary controls or allowances may not be available. Such regulations could negatively impact client investments in capital projects in our markets, which could negatively impact the market for our products and/or services. This could materially adversely affect our business.

          The establishment of additional rules limiting greenhouse gas emissions could also impact our ability to perform construction services, or to perform these services with current levels of profitability. New regulations may require us to acquire different equipment or change processes. The new equipment may not be available, or it may not be purchased or rented in a cost effective manner. Project deferrals, delays or cancellations resulting from the potential regulations could adversely impact our business.

          In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations and also could be subject to a revocation of our licenses or permits. Our contracts with our customers may also impose liabilities on us regarding

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environmental issues that arise through the performance of our services. From time to time, we may incur costs and obligations for correcting environmental noncompliance matters and for remediation at or relating to certain of our job sites or properties. We believe that we are in substantial compliance with our environmental obligations.

          The potential physical impact of climate change on our operations is highly uncertain. Climate change may result in, among other things, changes in rainfall patterns, storm patterns and intensities and temperature levels. Our operating results are significantly influenced by weather, and major changes in historical weather patterns could significantly impact our future operating results. For example, if climate change results in significantly more adverse weather conditions in a given period, we could experience reduced productivity, which could negatively impact our revenue and gross margins.

          Climate change could also affect our customers and the types of projects that they award. Demand for power projects, underground pipelines or highway projects could be affected by significant changes in weather, or climate conditions, or by regulatory changes relating to climate change, which could in turn reduce demand for our services.

Our results could be adversely affected by natural disasters, public health crises, political crises, or other catastrophic events.

          Natural disasters, such as hurricanes, tornadoes, floods, earthquakes, and other adverse weather and climate conditions; unforeseen public health crises, such as pandemics and epidemics; political crises, such as terrorist attacks, war, labor unrest, and other political instability; or other catastrophic events could disrupt our operations, or the operations of one or more of our vendors or customers, and could adversely affect our financial results. In particular, these types of events could impact our product supply chain from or to the impacted region and could cause our customers to delay or cancel projects, which could impact our ability to operate. In addition, these types of events could lead to general inefficiencies from having to start and stop work, re-sequencing work, requiring on-site health screenings before entering a job site, and following proper social distancing practices.

          In December 2019, a novel strain of coronavirus 2019 ("COVID-19") emerged and has since extensively impacted global health and the economic environment. In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various measures, including orders to close all businesses not deemed "essential", isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. While our services have generally been deemed to be essential services, we have experienced project interruptions and restrictions that have delayed project timelines from those originally planned. In some cases, we have experienced temporary work stoppages, which has led to general inefficiencies from having to start and stop work, re-sequence work, require on-site health screenings before entering a job site, and follow proper social distancing practices. We have also been restricted from completing work or have been prevented from starting work on certain projects. There are no comparable recent events that can provide guidance as to the effect of the COVID-19 global pandemic, and, as a result, the ultimate impact of COVID-19 or a similar health pandemic or epidemic is highly uncertain. We will continue to actively monitor the situation and may take further actions to alter our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. We will also continue to monitor our customers and their industries to assess the effect that changes in economic, market and regulatory conditions may have on them. Due to uncertainties regarding the duration and impact of the current COVID-19 pandemic, we are unable to predict the extent to which the COVID-19 pandemic may have a material adverse effect on our business, financial condition or results of operations.

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Changes to renewable portfolio standards and decreased demand for renewable energy projects could negatively impact our future results of operations, cash flows and liquidity.

          A significant portion of our future business may be focused on providing construction and/or installation services to owners and operators of solar power and other renewable energy facilities. Currently, the development of solar and other renewable energy facilities is dependent on the existence of renewable portfolio standards and other state incentives and requirements. Renewable portfolio standards are state-specific statutory provisions requiring that electric utilities generate a certain amount of electricity from renewable energy sources. These standards have initiated significant growth in the renewable energy industry and a potential demand for renewable energy infrastructure construction services. Elimination of, or changes to, existing renewable portfolio standards, tax credits or similar environmental policies may negatively affect future demand for our services.

We may lose business to competitors through the competitive bidding processes.

          We are engaged in highly competitive businesses in which most customer contracts are awarded through bidding processes based on price and the acceptance of certain risks. We compete with other general and specialty contractors, both regional and national, as well as small local contractors. The strong competition in our markets requires maintaining skilled personnel and investing in technology, and also puts pressure on profit margins. We do not obtain contracts from all of our bids and our inability to win bids at acceptable profit margins would adversely affect our business.

We may be unsuccessful at generating internal growth which may affect our ability to expand our operations, or grow our business.

          Our ability to generate internal growth may be affected by, among other factors, our ability to:

    Attract new customers;

    Increase the number of projects performed for existing customers;

    Hire and retain qualified personnel;

    Secure appropriate levels of construction equipment;

    Successfully bid for new projects; and

    Adapt the range of services we offer to address our customers' evolving construction needs.

          In addition, our customers may reduce the number or size of projects available to us due to their inability to obtain capital. Our customers may also reduce projects in response to economic conditions.

          Many of the factors affecting our ability to generate internal growth may be beyond our control, and we cannot be certain that our strategies will be successful or that we will be able to generate cash flow sufficient to fund our operations and to support internal growth. If we are unsuccessful, we may not be able to achieve internal growth, expand our operations or grow our business.

The timing of new contracts may result in unpredictable fluctuations in our business.

          Substantial portions of our revenue are derived from project-based work that is awarded through a competitive bid process. The portion of revenue generated from the competitive bid process for 2020, 2019 and 2018 was approximately 51.7%, 44.3%, and 48.6%, respectively. It is generally very difficult to predict the timing and geographic distribution of the projects that we will

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be awarded. The selection of, timing of or failure to obtain projects, delays in award of projects, the re-bidding or termination of projects due to budget overruns, cancellations of projects or delays in completion of contracts could result in the under-utilization of our assets and reduce our cash flows. Even if we are awarded contracts, we face additional risks that could affect whether, or when work will begin. For example, some of our contracts are subject to financing, permitting and other contingencies that may delay or result in termination of projects. We may have difficulty in matching workforce size and equipment location with contract needs. In some cases, we may be required to bear the cost of a ready workforce and equipment that is larger than necessary, resulting in unpredictability in our cash flow, expenses and profitability. If any expected contract award, or the related work release is delayed or not received, we could incur substantial costs without receipt of any corresponding revenue. Finally, the winding down or completion of work on significant projects will reduce our revenue and earnings if these projects have not been replaced.

We derive a significant portion of our revenue from a few customers, and the loss of one or more of these customers could have significant effects on our revenue, resulting in adverse effects on our financial condition, results of operations and cash flows.

          Our customer base is reasonably concentrated, with our top ten customers accounting for approximately 47.0% of our revenue in 2020, 47.2% of our revenue in 2019 and 52.2% of our revenue in 2018. However, the customers included in our top ten customer list generally vary from year to year. Our revenue is dependent both on performance of larger construction projects and relatively smaller projects under MSAs. For the large construction projects, the completion of the project does not necessarily represent the permanent loss of a customer; however, the future revenue generated from work for that customer may fluctuate significantly.

          We also generate ongoing revenue from our MSA customers, which are generally comprised of regulated gas and electric utilities. If we were to lose one of these customers, our revenue could significantly decline. Reduced demand for our services by larger construction customers or a loss of a significant MSA customer could have an adverse effect on our business.

Our international operations expose us to legal, political and economic risks in different countries as well as currency exchange rate fluctuations that could harm our business and financial results. We could be adversely affected by our failure to comply with laws applicable to our foreign activities, such as the U.S. Foreign Corrupt Practices Act.

          During 2020, 2019 and 2018, revenue attributable to our services outside of the United States, principally in Canada, was 3.5%, 5.8% and 2.9% of our total revenue, respectively. There are risks inherent in doing business internationally, including:

    Imposition of governmental controls and changes in laws, regulations, policies, practices, tariffs and taxes;

    Political and economic instability;

    Changes in United States and other national government trade policies affecting the market for our services;

    Potential non-compliance with a wide variety of laws and regulations, including the United States Foreign Corrupt Practices Act ("FCPA") and similar non-United States laws and regulations;

    Currency exchange rate fluctuations, devaluations and other conversion restrictions;

    Restrictions on repatriating foreign profit back to the United States; and

    Difficulties in staffing and managing international operations.

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          The FCPA and similar anti-bribery laws in other jurisdictions prohibit U.S.-based companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We pursue opportunities in certain parts of the world that experience government corruption, and in certain circumstances, compliance with anti-bribery laws may conflict with local customs and practices. Our internal policies mandate compliance with all applicable anti-bribery laws. We require our partners, subcontractors, agents and others who work for us or on our behalf to comply with the FCPA and other anti-bribery laws. There is no assurance that our policies or procedures will protect us against liability under the FCPA or other laws for actions taken by our agents, employees and intermediaries. If we are found to be liable for FCPA violations (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we could suffer from severe criminal or civil penalties or other sanctions, which could have a material adverse effect on our reputation and business. In addition, detecting, investigating and resolving actual or alleged FCPA violations is expensive and could consume significant time and attention of our senior management.

Backlog may not be realized or may not result in revenue or profit.

          Backlog is measured and defined differently by companies within our industry. We refer to "backlog" as our anticipated revenue from the uncompleted portions of existing contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value, and the estimated revenue on MSA work for the next four quarters. Backlog is not a comprehensive indicator of future revenue. Most contracts may be terminated by our customers on short notice. Reductions in backlog due to cancellation by a customer, or for other reasons, could significantly reduce the revenue that we actually receive from contracts in backlog. In the event of a project cancellation, we are typically reimbursed for all of our costs through a specific date, as well as all reasonable costs associated with demobilizing from the jobsite, but we typically have no contractual right to the total revenue reflected in our backlog. Projects may remain in backlog for extended periods of time. While backlog includes estimated MSA revenue, customers are not contractually obligated to purchase a certain amount of services under the MSA.

          Given these factors, our backlog at any point in time may not accurately represent the revenue that we expect to realize during any period, and our backlog as of the end of a fiscal year may not be indicative of the revenue we expect to earn in the following fiscal year. Inability to realize revenue from our backlog could have an adverse effect on our business.

          While backlog may not be indicative of the revenue we expect to earn the following fiscal year, it is a potential indicator of future revenue; however, recognition of revenue from backlog does not necessarily ensure that the projects will be profitable. Poor project execution could impact profit from contracts included in backlog. For projects for which a loss is expected, future revenue will be recorded with no margin, which may reduce the overall margin percentage for work performed.

Our actual cost may be greater than expected in performing our contracts where scope is adequately defined, causing us to realize significantly lower profit or losses on our projects.

          We currently generate, and expect to continue to generate, a portion of our revenue and profit under contracts where scope is adequately defined. The approximate portion of revenue generated in 2020 from contracts where scope is adequately defined was 66.8%. In general, we must estimate the costs of completing a specific project to bid these types of contracts. The actual cost of labor and materials may vary from the costs we originally estimated, and we may not be successful in recouping additional costs from our customers. These variations may cause gross profit for a

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project to differ from those we originally estimated. Reduced profitability or losses on projects could occur due to changes in a variety of factors such as:

    Failure to properly estimate costs of engineering, materials, equipment or labor;

    Unanticipated technical problems with the structures, materials or services being supplied by us, which may require that we spend our own money to remedy the problem;

    Project modifications not reimbursed by the client creating unanticipated costs;

    Changes in the costs of equipment, materials, labor or subcontractors;

    Our suppliers or subcontractors failure to perform;

    Changes in local laws and regulations, and;

    Delays caused by weather conditions.

          As projects grow in size and complexity, multiple factors may contribute to reduced profit or losses, and depending on the size of the particular project, variations from the estimated contract costs could have a material adverse effect on our business.

Weather can significantly affect our revenue and profitability.

          Our ability to perform work and meet customer schedules can be affected by weather conditions such as snow, ice, rain, and named storms. Weather may affect our ability to work efficiently and can cause project delays and additional costs. Our ability to negotiate change orders for the impact of weather on a project could impact our profitability. In addition, the impact of weather can cause significant variability in our quarterly revenue and profitability.

We require subcontractors and suppliers to assist us in providing certain services, and we may be unable to retain the necessary subcontractors or obtain supplies to complete certain projects adversely affecting our business.

          We use subcontractors to perform portions of our contracts and to manage workflow, particularly for design, engineering, procurement and some foundation work. While we are not dependent on any single subcontractor, general market conditions may limit the availability of subcontractors to perform portions of our contracts causing delays and increases in our costs.

          Although significant materials are often supplied by the customer, we use suppliers to provide some materials and equipment used for projects. If a supplier fails to provide supplies and equipment at the estimated price, fails to provide adequate amounts of supplies and equipment, fails to provide supplies or equipment that meet the project requirements, or fails to provide supplies when scheduled, we may be required to source the supplies or equipment at a higher price or may be required to delay performance of the project. The additional cost or project delays could negatively impact project profitability.

          Failure of a subcontractor or supplier to comply with laws, rules or regulations could negatively affect our reputation and our business.

We periodically enter into joint ventures which require satisfactory performance by our venture partners of their obligations. The failure of our joint venture partners to perform their joint venture obligations could impose additional financial and performance obligations on us that could result in reduced profit or losses for us with respect to the joint venture.

          We periodically enter into various joint ventures and teaming arrangements where control may be shared with unaffiliated third parties. At times, we also participate in joint ventures where we are

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not a controlling party. In such instances, we may have limited control over joint venture decisions and actions, including internal controls and financial reporting which may have an impact on our business. If our joint venture partners fail to satisfactorily perform their joint venture obligations, the joint venture may be unable to adequately perform or deliver its contracted services. Under these circumstances, we may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of the contracted services. These additional obligations could result in reduced profit and may impact our reputation in the industry.

We may experience delays and defaults in client payments and we may pay our suppliers and subcontractors before receiving payment from our customers for the related services, which could result in an adverse effect on our financial condition, results of operations and cash flows.

          We use subcontractors and material suppliers for portions of certain work, and our customers pay us for those related services. If we pay our suppliers and subcontractors for materials purchased and work performed for customers who fail to pay us, or such customers delay paying us for the related work or materials, we could experience a material adverse effect on our business. In addition, if customers fail to pay us for work we perform, we could experience a material adverse effect on our business.

Our inability to recover on contract modifications against project owners or subcontractors for payment or performance could negatively affect our business.

          We occasionally present contract modifications to our clients and subcontractors for changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which we seek, or will seek, to collect from customers, or others, for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as rain or other weather delays. In some cases, settlement of contract modifications may not occur until after completion of work under the contract. A failure to promptly document and negotiate a recovery for contract modifications could have a negative impact on our cash flows, and an overall ability to recover contract modifications could have a negative impact on our financial condition, results of operations and cash flows.

For some projects we may guarantee a timely completion or provide a performance guarantee which could result in additional costs, such as liquidated damages, to cover our obligations.

          In our fixed-price and unit-price contracts we may provide a project completion date, and in some of our projects we may commit that the project will achieve specific performance standards. Failure to complete the project as scheduled or at the contracted performance standards could result in additional costs or penalties, including liquidated damages, and such amounts could exceed expected project profit.

A significant portion of our business depends on our ability to provide surety bonds, and we may be unable to compete for or work on certain projects if we are not able to obtain the necessary surety bonds.

          Our contracts frequently require that we provide payment and performance bonds to our customers. Under standard terms in the surety market, sureties issue or continue bonds on a project-by-project basis and can decline to issue bonds at any time, or require the posting of additional collateral as a condition to issuing, or renewing bonds.

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          Current or future market conditions, as well as changes in our surety providers' assessments of our operating and financial risk, could cause our surety providers to decline to issue or renew, or to substantially reduce, the availability of bonds for our work and could increase our bonding costs. These actions could be taken on short notice. If our surety providers were to limit or eliminate our access to bonding, our alternatives would include seeking bonding capacity from other sureties, finding more business that does not require bonds and posting other forms of collateral for project performance, such as letters of credit or cash. We may be unable to secure these alternatives in a timely manner, on acceptable terms, or at all. Accordingly, if we were to experience an interruption or reduction in the availability of bonding capacity, we may be unable to compete for, or work on certain projects.

Our bonding requirements may limit our ability to incur indebtedness, which would limit our ability to refinance our existing credit facilities or to execute our business plan.

          Our ability to obtain surety bonds depends upon various factors including our capitalization, working capital, tangible net worth and amount of our indebtedness. In order to obtain required bonds, we may be limited in our ability to incur additional indebtedness that may be needed to refinance our existing credit facilities upon maturity, to complete acquisitions, and to otherwise execute our business plans.

We may be unable to win some new contracts if we cannot provide clients with letters of credit.

          For many of our clients surety bonds provide an adequate form of security, but for some clients additional security in the form of a letter of credit may be required. While we have capacity for letters of credit under our credit facility, the amount required by a client may be in excess of our credit limit. Any such amount would be issued at the sole discretion of our lenders. Failure to provide a letter of credit when required by a client may result in our inability to compete for, win, or retain a project.

During the ordinary course of our business, we may become subject to material lawsuits or indemnity claims.

          We have in the past been, and may in the future be, named as a defendant in lawsuits, claims and other legal proceedings during the ordinary course of our business. These actions may seek, among other things, compensation for alleged personal injury, workers' compensation, employment discrimination, breach of contract, property damage, punitive damages, and civil penalties, or other losses or injunctive or declaratory relief. In addition, we generally indemnify our customers for claims related to the services we provide and actions we take under our contracts with them, and, in some instances, we may be allocated risk through our contract terms for actions by our customers, or other third parties. Because our services in certain instances may be integral to the operation and performance of our customers' infrastructure, we may become subject to lawsuits or claims for any failure of the systems on which we work, even if our services are not the cause of such failures, and we could be subject to civil and criminal liabilities to the extent that our services contributed to any property damage, personal injury or system failure. The outcome of any of these lawsuits, claims or legal proceedings could result in significant costs and diversion of management's attention from the business. Payments of significant amounts, even if reserved, could adversely affect our reputation, our cash flows, and our business.

We are self-insured against potential liabilities.

          Although we maintain insurance policies with respect to employer's liability, general liability, auto and workers compensation claims, those policies are subject to deductibles or self-insured

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retention amounts of up to $500,000 per occurrence. We are primarily self-insured for all claims that do not exceed the amount of the applicable deductible/self-insured retention. In addition, for our employees not part of a collective bargaining agreement, we provide employee health care benefit plans. Our primary health insurance plan is subject to a deductible of $400,000 per individual claim per year.

          Our insurance policies include various coverage requirements, including the requirement to give appropriate notice. If we fail to comply with these requirements, our coverage could be denied.

          Losses under our insurance programs are accrued based upon our estimates of the ultimate liability for claims reported and an estimate of claims incurred but not reported, with assistance from third-party actuaries. Insurance liabilities are difficult to assess and estimate due to unknown factors, including the severity of an injury, the extent of damage, the determination of our liability in proportion to other parties and the number of incidents not reported. The accruals are based upon known facts and historical trends.

Our business is labor intensive. If we are unable to attract and retain qualified managers and skilled employees, our operating costs may increase.

          Our business is labor intensive and our ability to maintain our productivity and profitability may be limited by our ability to employ, train and retain skilled personnel necessary to meet our requirements. We may not be able to maintain an adequately skilled labor force necessary to operate efficiently and to support our growth strategy. We have from time-to-time experienced, and may in the future experience, shortages of certain types of qualified personnel. For example, periodically there are shortages of engineers, project managers, field supervisors, and other skilled workers capable of working on and supervising the construction of underground, heavy civil and industrial facilities, as well as providing engineering services. The supply of experienced engineers, project managers, field supervisors and other skilled workers may not be sufficient to meet current or expected demand. The beginning of new, large-scale infrastructure projects, or increased competition for workers currently available to us, could affect our business, even if we are not awarded such projects. Labor shortages, or increased labor costs could impair our ability to maintain our business or grow our revenue. If we are unable to hire employees with the requisite skills, we may also be forced to incur significant training expenses.

Our unionized workforce may commence work stoppages or impact our ability to complete certain acquisitions, which could adversely affect our operations.

          As of December 31, 2020, approximately 31.6% of our hourly employees, primarily consisting of field laborers, were covered by collective bargaining agreements. Of the 81 collective bargaining agreements to which we are a party, 30 expire during 2021 and require renegotiation. Although the majority of these agreements prohibit strikes and work stoppages, we cannot be certain that strikes or work stoppages will not occur in the future. Strikes or work stoppages would adversely impact our relationships with our customers and could have an adverse effect on our business.

          Our ability to complete future acquisitions could be adversely affected because of our union status for a variety of reasons. For instance, in certain geographic areas, our union agreements may be incompatible with the union agreements of a business we want to acquire and some businesses may not want to become affiliated with a union company.

Withdrawal from multiemployer pension plans associated with our unionized workforce could adversely affect our financial condition and results of operations.

          Our collective bargaining agreements generally require that we participate with other companies in multiemployer pension plans. To the extent those plans are underfunded, the

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Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MEPA"), may subject us to substantial liabilities under those plans if we withdraw from them, or if they are terminated. In addition, the Pension Protection Act of 2006 added new funding rules for multiemployer plans that are classified as endangered, seriously endangered or critical status. For a plan in critical status, additional required contributions and benefit reductions may apply if a plan is determined to be underfunded, which could adversely affect our financial condition or results of operations. For plans in critical status, we may be required to make additional contributions, generally in the form of surcharges on contributions otherwise required. Participation in those plans with high funding levels could adversely affect our results of operations, financial condition or cash flows if we are not able to adequately mitigate these costs.

          The amount of the withdrawal liability legislated by ERISA and MEPA varies for every pension plan to which we contribute. For each plan, our liability is the total unfunded vested benefits of the plan multiplied by a fraction: the numerator of the fraction is the sum of our contributions to the plan for the past ten years and the denominator is the sum of all contributions made by all employers for the past ten years. For some pension plans to which we contribute, the total unfunded vested benefits are in the billions of dollars. If we cannot reduce the liability through exemptions or negotiations, the withdrawal from a plan could have a material adverse impact on our business.

We depend on key personnel and we may not be able to operate and grow our business effectively if we lose the services of any of our key persons or are unable to attract qualified and skilled personnel in the future.

          We are dependent upon the efforts of our key personnel, and our ability to retain them and hire other qualified employees. The loss of our executive officers, or other key personnel could affect our ability to run our business effectively. Competition for senior management is intense, and we may not be able to retain our personnel. The loss of any key person requires the remaining key personnel to divert immediate and substantial attention to seeking a replacement, as well as to performing the departed person's responsibilities until a replacement is found. In addition, as some of our key persons approach retirement age, we need to provide for smooth transitions. If we fail to find a suitable replacement for any departing executive or senior officer on a timely basis, such departure could adversely affect our ability to operate and grow our business.

If we fail to integrate acquisitions successfully, we may experience operational challenges and risks which may have an adverse effect on our business.

          As part of our growth strategy, we intend to acquire companies that expand, complement or diversify our business. Acquisitions may expose us to operational challenges and risks, including, among others:

    The diversion of management's attention from the day-to-day operations of the combined company;

    Managing a significantly larger company than before completion of an acquisition;

    The assimilation of new employees and the integration of business cultures;

    Training and facilitating our internal control processes within the acquired organization;

    Retaining key personnel;

    The integration of information, accounting, finance, sales, billing, payroll and regulatory compliance systems;

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    Challenges in keeping existing customers and obtaining new customers;

    Challenges in combining service offerings and sales and marketing activities;

    The assumption of unknown liabilities of the acquired business for which there are inadequate reserves;

    The potential impairment of acquired goodwill and intangible assets; and

    The inability to enforce covenants not to compete.

          Failure to effectively manage the integration process could adversely impact our business, financial condition, results of operations, and cash flows.

We may incur higher costs to lease, acquire and maintain equipment necessary for our operations.

          A significant portion of our contracts is built utilizing our own construction equipment rather than leased or rented equipment. To the extent that we are unable to buy or build equipment necessary for a project, either due to a lack of available funding, or equipment shortages in the marketplace, we may be forced to rent equipment on a short-term basis, or to find alternative ways to perform the work without the benefit of equipment ideally suited for the job, which could increase the costs of completing the project. We often bid for work knowing that we will have to rent equipment on a short-term basis, and we include the equipment rental rates in our bid. If market rates for rental equipment increase between the time of bid submission and project execution, our margins for the project may be reduced. In addition, our equipment requires continuous maintenance, which we generally provide through our own repair facilities. If we are unable to continue to maintain the equipment in our fleet, we may be forced to obtain additional third-party repair services at a higher cost or be unable to bid on contracts.

Our business may be affected by difficult work sites and environments which may adversely affect our ability to procure materials and labor.

          We perform our work under a variety of conditions, including, but not limited to, difficult and hard to reach terrain, difficult site conditions, and busy urban centers, where delivery of materials and availability of labor may be impacted. Performing work under these conditions can slow our progress, potentially causing us to incur contractual liability to our customers. These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers.

We may incur liabilities or suffer negative financial or reputational impacts relating to health and safety matters.

          Our operations are subject to extensive laws and regulations relating to the maintenance of safe conditions in the workplace. While we have invested, and will continue to invest, substantial resources in our environmental, health and safety programs, our industry involves a high degree of operational risk and there can be no assurance that we will avoid significant liability exposure. Although we have taken what we believe are appropriate precautions, we have suffered fatalities in the past and may suffer additional fatalities in the future. Serious accidents, including fatalities, may subject us to substantial penalties, civil litigation or criminal prosecution. Claims for damages to persons, including claims for bodily injury or loss of life, could result in substantial costs and liabilities, which could materially and adversely affect our financial condition, results of operations or cash flows. In addition, if our safety record were to substantially deteriorate over time or we were to suffer substantial penalties or criminal prosecution for violation of health and safety regulations, our customers could cancel our contracts and not award us future business.

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Interruptions in our operational systems or successful cyber security attacks on any of our systems could adversely impact our operations, our ability to report financial results and our business.

          We rely on computer, information and communication technology and related systems to operate our business and to protect sensitive company information. Any cyber security attack that affects our facilities, our systems, our customers or any of our financial data could have a material adverse effect on our business. Our computer and communications systems, and consequently our operations, could be damaged or interrupted by cyber-attacks and physical security risks, such as natural disasters, loss of power, telecommunications failures, acts of war, acts of terrorism, computer viruses, physical or electronic break-ins and actions by hackers and cyber-terrorists. Any of these, or similar, events could cause system disruptions, delays and loss of critical information, delays in processing transactions and delays in the reporting of financial information.

          We have experienced cyber security threats, such as viruses and attacks targeting our systems, and expect the frequency and sophistication of such incidents to continue to grow. Such prior events have not had a material impact on our financial condition, results of operations or liquidity. However, future threats or existing threats of which we are not yet aware could cause harm to our business and our reputation, disrupt our operations, expose us to potential liability, regulatory actions and loss of business, and impact our results of operations materially. Our insurance coverage may not be adequate to cover all the costs related to cyber security attacks or disruptions resulting from such events.

          While we have taken steps to mitigate persistent and continuously evolving cyber security threats by implementing network security and internal control measures, implementing policies and procedures for managing risk to our information systems, periodically testing our information technology systems, and conducting employee training on cyber security, there can be no assurance that a system or network failure or data security breach would not adversely affect our business. Furthermore, the continuing and evolving threat of cyber-attacks has resulted in increased regulatory focus on prevention. To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements.

We may need additional capital in the future for working capital, capital expenditures or acquisitions, and we may not be able to access capital on favorable terms, or at all, which would impair our ability to operate our business or achieve our growth objectives.

          Our ability to generate cash is essential for the funding of our operations and the servicing of our debt. If existing cash balances together with the borrowing capacity under our credit facilities were not sufficient to make future investments, make acquisitions or provide needed working capital, we may require financing from other sources. Our ability to obtain such additional financing in the future will depend on a number of factors including prevailing capital market conditions, conditions in our industry, and our operating results. These factors may affect our ability to arrange additional financing on terms that are acceptable to us. If additional funds were not available on acceptable terms, we may not be able to make future investments, take advantage of acquisitions or pursue other opportunities.

Risks Related Primarily to the Financial Accounting of our Business

Our financial results are based upon estimates and assumptions that may differ from actual results.

          In preparing our consolidated annual and quarterly financial statements in conformity with generally accepted accounting principles, many estimates and assumptions are used in determining the reported revenue, costs and expenses recognized during the periods presented, and

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disclosures of contingent assets and liabilities known to exist as of the date of the financial statements. 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 times, these estimates are particularly difficult to determine, and we must exercise significant judgment. Estimates may be used in our assessments of the allowance for doubtful accounts, useful lives of property and equipment, fair value assumptions in analyzing goodwill and long-lived asset impairments, self-insured claims liabilities, accounting for revenue recognized over time, and provisions for income taxes. Actual results could differ materially from the estimates and assumptions that we used.

Our accounting for revenue recognized over time could result in a reduction or elimination of previously reported revenue and profit.

          For contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value, we recognize revenue 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). Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenue and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation, politics and any prevailing impacts from the COVID-19 pandemic may affect the progress of a project's completion, and thus the timing of revenue recognition. Actual results could differ from estimated amounts and could result in a reduction or elimination of previously recognized earnings. In certain circumstances, it is possible that such adjustments could be significant and could have an adverse effect on our business.

Our reported results of operations could be adversely affected as a result of impairments of goodwill, other identifiable intangible assets or investments.

          When we acquire a business, we record an asset called "goodwill" for the excess amount we pay for the business over the net fair value of the tangible and identifiable intangible assets of the business we acquire. At December 31, 2020, our balance sheet included goodwill of $215.1 million and intangible assets of $61.0 million resulting from previous acquisitions, and we expect these amounts to increase based on the FIH acquisition that was completed in January 2021. Fair value is determined using a combination of the discounted cash flow, market multiple and market capitalization valuation approaches. Under current accounting rules, goodwill and other identifiable intangible assets that have indefinite useful lives cannot be amortized, but instead must be tested at least annually for impairment, while identifiable intangible assets that have finite useful lives are amortized over their useful lives. Significant judgment is required in completing these tests, as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Goodwill and Indefinite — Lived Intangible Assets" included elsewhere in this prospectus supplement. Any impairment of the goodwill, or identifiable intangible assets recorded in connection with the various acquisitions, or for any future acquisitions, would negatively impact our results of operations.

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          In addition, we may enter into various types of investment arrangements, such as an equity interest we hold in a business entity. Our equity method investments are carried at original cost and are included in other assets in our Consolidated Balance Sheet and are adjusted for our proportionate share of the investees' income, losses and distributions. Equity investments are reviewed for impairment by assessing whether any decline in the fair value of the investment below its carrying value is other than temporary. In making this determination, factors such as the ability to recover the carrying amount of the investment and the inability of the investee to sustain future earnings capacity are evaluated in determining whether an impairment should be recognized.

Compliance with and changes in tax laws could adversely affect our performance.

          We are subject to extensive tax liabilities imposed by multiple jurisdictions, including federal, state, local and international jurisdictions. The Tax Cuts and Jobs Act (the "Tax Act") that was signed into law on December 22, 2017 made significant changes to the U.S. Internal Revenue Code and requires complex computations not previously provided in U.S. tax law. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed, and could result in a different tax rate on our earnings, which could have a material impact on our earnings and cash flow from operations. In addition, significant judgment is required in determining our provision for income taxes, as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Income Taxes" included elsewhere in this prospectus supplement. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly subject to audits by tax authorities, and our tax estimates and tax positions could be materially affected by many factors including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, our mix of earnings, the realizability of deferred tax assets and changes in uncertain tax positions. A significant increase in our tax rate could have a material adverse effect on our profitability and liquidity.

We may not be successful in continuing to meet the internal control requirements of the Sarbanes-Oxley Act of 2002.

          The Sarbanes-Oxley Act of 2002 has many requirements applicable to us regarding corporate governance and financial reporting, including the requirements for management to report on internal controls over financial reporting and for our independent registered public accounting firm to express an opinion over the operating effectiveness of our internal control over financial reporting. At December 31, 2020, our internal control over financial reporting was effective using the internal control framework issued by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission: Internal control — Integrated Framework (2013).

          There can be no assurance that our internal control over financial reporting will be effective in future years. Failure to maintain effective internal controls, or the identification of material internal control deficiencies in acquisitions already made, or made in the future could result in a decrease in the market value of our common stock, the reduced ability to obtain financing, the loss of customers, penalties and additional expenditures to meet the requirements in the future.

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USE OF PROCEEDS

          We estimate that the net proceeds from this offering will be approximately $149.1 million (or approximately $171.6 million if the underwriters exercise in full their option to purchase additional shares) after deducting underwriting discounts and commissions and estimated offering expenses. We intend to use the net proceeds from this offering for general corporate purposes, including to repay a portion of the borrowings outstanding under the Amended Credit Agreement. Please see "Summary — Recent Developments — Second Amended and Restated Credit Agreement."

          The Amended Credit Agreement provides for a $592.5 million New Term Loan and a $200.0 million revolving credit facility, and the lenders agreed to make loans on a revolving basis from time to time and to issue letters of credit for up to the $200.0 million committed amount. The Amended Credit Agreement also contains an accordion feature that would allow us to increase the New Term Loan or the borrowing capacity under the revolving credit facility by up to $75.0 million. The proceeds from the New Term Loan were used to finance the acquisition of FIH and for general corporate purposes.

          At February 28, 2021, we had (i) $592.5 million borrowings outstanding under the New Term Loan, (ii) $100.0 million borrowings outstanding under the revolving credit facility and (iii) $51.2 million commercial letters of credit outstanding. The principal amount of all loans under the Amended Credit Agreement will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Amended Credit Agreement (based on our senior debt to EBITDA ratio as defined in the Amended Credit Agreement), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.5% or (b) the prime rate as announced by the Administrative Agent) plus an applicable margin as specified in the Amended Credit Agreement. Quarterly non-use fees, letter of credit fees and administrative agent fees are payable at rates specified in the Amended Credit Agreement. The Amended Credit Agreement matures on January 15, 2026.

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CAPITALIZATION

          The following table sets forth our cash and cash equivalents and our capitalization as of December 31, 2021:

    on a historical basis;

    on a pro forma basis, reflecting the effect of the Merger as if it occurred on December 31, 2020;

    on a pro forma basis, as adjusted to give effect to this offering and the application of the net proceeds of this offering as described under "Use of Proceeds."

          You should read the information below in conjunction with the sections titled "Summary Historical and Unaudited Pro Forma Financial Data," "Use of proceeds," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited historical consolidated financial statements and unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this prospectus supplement.

    As of December 31, 2020
 

    Actual     Pro Forma     Pro Forma
As Adjusted
 

    ($ in thousands)  

Cash and cash equivalents

  $ 326,744   $ 213,341   $ 213,341  

Long-Term Debt:

                   

Revolving credit facility(1)

        100,000      

Term loan(1)

    192,500     592,500     543,375  

Commercial equipment notes

    85,783     86,720     86,720  

Mortgage notes

    38,795     38,795     38,795  

Total long-term debt

  $ 317,078   $ 818,015   $ 668,890  

Stockholders' equity:

                   

Common stock — $.0001 par value; 90,000,000 shares authorized; 48,110,442 issued and outstanding at December 31, 2020 and 52,610,442 issued and outstanding at December 31, 2020, as adjusted

  $ 5   $ 5   $ 5  

Additional paid-in capital

    89,098     89,098     238,223  

Retained earnings

    624,694     617,560     617,560  

Accumulated other comprehensive income

    958     958     958  

Noncontrolling interest

    37     37     37  

Total stockholders' equity

  $ 714,792   $ 707,658   $ 856,783  

Total Capitalization (long-term debt plus stockholders' equity)

  $ 1,031,870   $ 1,525,673   $ 1,525,673  

(1)
At February 28, 2021, we had (i) $592.5 million borrowings outstanding under the New Term Loan, (ii) $100.0 million borrowings outstanding under the revolving credit facility and (iii) $51.2 million commercial letters of credit outstanding.

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UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL STATEMENTS

Introduction

          On January 15, 2021, we completed our previously announced acquisition of FIH. Pursuant to the terms of that Agreement and Plan of Merger (the "Merger Agreement") dated as of December 14, 2020 and Amendment No. 1 to the Merger Agreement (the "Amendment") dated January 11, 2021, Primoris Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Primoris ("Merger Sub"), merged with and into FIH (the "Merger"), with FIH surviving the Merger as a wholly-owned subsidiary of Primoris.

          The aggregate amount of consideration paid was approximately $611.2 million, net of cash acquired, which was funded through a combination of existing cash balances, borrowings under our term loan facility, and borrowings under our revolving credit facility.

          The foregoing descriptions of the Merger Agreement and the Amendment are qualified in their entirety by reference to the full text of the Merger Agreement and the Amendment, which are attached as Exhibit 2.2 and Exhibit 2.3, respectively, to our Annual Report on Form 10-K, which is incorporated by reference in this prospectus supplement.

          The following unaudited pro forma consolidated combined financial statements are based on the historical financial statements of Primoris and FIH after giving effect to the acquisition, and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma consolidated combined financial statements, as prescribed by the Securities and Exchange Commission guidelines. On October 30, 2020, FIH acquired Pridemore Case Holdings, Inc ("Pride"), which expanded FIH's operations. Therefore, we have included Pride's results of operations for the ten-month period ended October 30, 2020 in the unaudited pro forma consolidated combined statement of income for the year ended December 31, 2020.

          The following unaudited pro forma consolidated combined balance sheet as of December 31, 2020 is presented as if the Merger had occurred on December 31, 2020. The unaudited pro forma consolidated combined statement of income for the year ended December 31, 2020, is presented as if the Merger had occurred on January 1, 2020 with acquisition-related adjustments reflected assuming the transaction occurred at the beginning of the fiscal year presented and had a continuing impact through the period presented and described in the accompanying notes.

          The historical consolidated financial information has been adjusted in the unaudited pro forma consolidated combined financial data to illustrate the Transaction Accounting Adjustments related to the Merger.

          The following unaudited pro forma consolidated combined financial statements are prepared for illustrative purposes only and are not necessarily indicative of or intended to represent the results that would have been achieved had the acquisition been consummated as of the dates indicated or that may be achieved in the future. The unaudited pro forma consolidated combined financial statements do not reflect the realization of any expected operating efficiencies or other synergies that may result from the Merger as a result of planned initiatives with respect to the combined companies.

          The unaudited pro forma consolidated combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma consolidated combined financial statements. In addition, the unaudited pro forma consolidated combined financial statements should be read in conjunction with (i) our audited consolidated financial statements and accompanying notes included elsewhere in this prospectus supplement, and (ii) FIH's audited consolidated financial statements and accompanying notes for the year ended December 31, 2020, which are attached as Exhibit 99.1 to our Current Report on Form 8-K/A, as filed with the SEC on March 9, 2021, which is incorporated by reference in this prospectus supplement.

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PRIMORIS SERVICES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED COMBINED BALANCE SHEET
December 31, 2020
(In thousands)

                Transaction Accounting
Adjustments
                 

    Primoris     FIH     Reclassification
Adjustments
(Note 3)
        Pro Forma
Adjustments
(Notes 2 and 5)
        Pro
Forma
Combined
 

ASSETS

                                       

Current assets:

                                       

                              (a)        

Cash and cash equivalents

  $ 326,744   $ 8,346   $       $ (121,749 ) (b)   $ 213,341  

Accounts receivable, net

    432,455     69,125     (4,753 ) (A)             496,827  

Contract assets

    325,849     37,611     4,753   (A)             368,213  

Prepaid expenses and other current assets

    30,218     4,731             (1,973 ) (c)     32,976  

Total current assets

    1,115,266     119,813             (123,722 )       1,111,357  

Property and equipment, net

    356,194     61,842             2,298   (d)     420,334  

                          (6,647 ) (e)     (6,647 )

Operating lease assets

    207,320                 12,504   (f)     219,824  

Deferred tax assets

    1,909                         1,909  

Intangible assets, net

    61,012     6,503             115,897   (g)     183,412  

Goodwill

    215,103     94,588             257,942   (h)     567,633  

Other long-term assets

    12,776     282             6,647   (e)     19,705  

Total assets

  $ 1,969,580   $ 283,028   $       $ 264,919       $ 2,517,527  

LIABILITIES AND
STOCKHOLDERS' EQUITY

                                       

Current liabilities:

                                       

Accounts payable

  $ 245,906   $ 9,727   $       $       $ 255,633  

Contract liabilities

    267,227     8,324                     275,551  

Accrued liabilities

    200,673     8,066     468   (B)     (92 ) (b)     209,115  

                          2,068   (f)     2,068  

                          2,502   (e)     2,502  

                          7,134   (i)     7,134  

Dividends payable

    2,887                         2,887  

Accrued state taxes

        468     (468 ) (B)              

Current portion of long-term debt

    47,722     14,619             3,061   (b)     65,402  

                          (2,720 ) (e)     (2,720 )

Total current liabilities

    764,415     41,204             11,953         817,572  

Long-term debt, net of current portion

    268,835     169,730             320,070   (b)     758,635  

                          (3,823 ) (e)     (3,823 )

Contingent consideration

        7,500             (7,500 ) (j)      

Noncurrent operating lease liabilities, net of current portion

    137,913                 10,436   (f)     148,349  

Deferred tax liabilities

    13,548                         13,548  

Other long-term liabilities

    70,077     1,366             4,145   (e)     75,588  

Total liabilities

    1,254,788     219,800             335,281         1,809,869  

Commitments and contingencies Stockholders' equity

                                       

Members' Equity

        63,228             (63,228 ) (k)      

Common stock

    5                         5  

Additional paid-in capital

    89,098                         89,098  

Retained earnings

    624,694                 (7,134 ) (i)     617,560  

Accumulated other comprehensive loss

    958                         958  

Noncontrolling interest

    37                         37  

Total stockholders' equity

    714,792     63,228             (70,362 )       707,658  

Total liabilities and stockholders' equity

  $ 1,969,580   $ 283,028   $       $ 264,919       $ 2,517,527  

See accompanying notes to the unaudited pro forma consolidated combined financial statements

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PRIMORIS SERVICES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED COMBINED STATEMENT OF INCOME
For the year ended December 31, 2020
(In thousands, except per share amounts)

                Transaction Accounting
Adjustments
           

    Primoris     FIH     Pride
(Note 1)
    Reclassification
Adjustments
(Note 3)
        Pro Forma
Adjustments
(Notes 2 and 5)
        Pro
Forma
Combined
 

Revenue

  $ 3,491,497   $ 295,787   $ 34,884   $       $       $ 3,822,168  

                          (C)                  

Cost of revenue

    3,121,283     241,763     23,321     (2,253 ) (D)     330   (d)     3,384,444  

Gross profit

    370,214     54,024     11,563     2,253         (330 )       437,724  

                          (C)                  

Selling, general and administrative expenses

    202,835     24,198     4,812     2,253   (D)     10,574   (g)     244,672  

Amortization

        10,724                 (10,724 ) (g)      

Management fees

        1,747                         1,747  

                                    (i)        

Transaction and related costs

    3,430     3,400     5,025             13,690   (l)     25,545  

Operating income

    163,949     13,955     1,726             (13,870 )       165,760  

Other income (expense):

                                             

Foreign exchange gain, net

    379                             379  

Other income, net

    1,234     794                         2,028  

Interest income

    376                             376  

Interest expense

    (20,299 )   (9,272 )   8             (2,744 ) (m)     (32,307 )

Income before provision for income taxes

    145,639     5,477     1,734             (16,614 )       136,236  

Provision for income taxes

    (40,656 )   (153 )               2,786   (n)     (38,023 )

Net income

  $ 104,983   $ 5,324   $ 1,734   $       $ (13,828 )     $ 98,213  

Less net income attributable to noncontrolling interests

    (9 )         $                 (9 )

Net income attributable to Primoris

  $ 104,974   $ 5,324   $ 1,734   $       $ (13,828 )     $ 98,204  

Earnings per share:

                                             

Basic

  $ 2.17                                   $ 1.99  

Diluted

  $ 2.16                                   $ 1.97  

Weighted average common shares outstanding:

                                             

Basic

    48,303                           1,038   (l)     49,341  

Diluted

    48,633                           1,165   (l)     49,798  

See accompanying notes to the unaudited pro forma consolidated combined financial statements

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PRIMORIS SERVICES CORPORATION
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

          The unaudited pro forma consolidated combined balance sheet as of December 31, 2020 is presented as if the acquisition of FIH had occurred on December 31, 2020. The unaudited pro forma consolidated combined statement of income for the year ended December 31, 2020, is presented as if the acquisition of FIH had occurred on January 1, 2020. On October 30, 2020, FIH acquired Pride, which expanded FIH's operations. Therefore, we have included Pride's results of operations for the period ended October 30, 2020 in the unaudited pro forma consolidated combined statement of income for the year ended December 31, 2020.

          The unaudited pro forma consolidated combined financial statements are not necessarily indicative of what our consolidated statements of income or consolidated balance sheet would have been had the Merger been completed as of the dates indicated or will be for any future periods. The unaudited pro forma consolidated combined financial statements do not purport to project our future financial position or results of income following the Merger. The unaudited pro forma consolidated combined financial statements reflect transaction related adjustments that management believes are necessary to present fairly our pro forma consolidated combined results of income assuming the Merger had been consummated as of January 1, 2020. The transaction related adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report our financial condition and results of income as a result of the closing of the Merger. The unaudited pro forma consolidated combined financial statements do not reflect the realization of any expected operating efficiencies or other synergies that may result from the Merger as a result of planned initiatives with respect to the combined companies.

Note 2 — Conforming Accounting Policies

          The accounting policies used in the preparation of this unaudited pro forma consolidated combined financial information are those set out in our audited consolidated financial statements as of and for the year ended December 31, 2020. We have conducted a review of the accounting policies of FIH to determine if differences in accounting policies potentially required recasting to conform to our accounting policies and determined that certain adjustments are necessary to conform FIH's Pre-Merger financial statements to our accounting policies, specifically with regard to Accounting Standards Codification ("ASC") 842, Leases. Since FIH was a privately held company, they were not required to adopt ASC 842 until January 1, 2022, and we adopted ASC 842 on January 1, 2019. Therefore, the unaudited pro forma consolidated combined financial statements have been adjusted to properly reflect the adoption of ASC 842 by FIH.

Note 3 — Reclassification Adjustments

          Certain reclassification adjustments have been made to the unaudited pro forma consolidated combined financial statements to conform FIH's consolidated balance sheet as of December 31, 2020 and statement of income for the year ended December 31, 2020, to Primoris' presentation, as follows:

    (A)
    We recognize retainage amounts as a contract asset, while FIH recognized these amounts as accounts receivable. Retainage is the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until

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      we reach certain construction milestones. Therefore, we reclassified $4.8 million from Accounts receivable, net to Contract assets.

    (B)
    We recognize accrued state taxes in Accrued liabilities, while FIH recognized these amounts as a separate component of Total current liabilities. Therefore, we reclassified $0.5 million from Accrued state taxes to Accrued liabilities.

    (C)
    We recognize certain administrative costs as Selling, general, and administrative ("SG&A") expenses, while FIH recognized these amounts as Cost of revenue. Therefore, we reclassified $1.8 million from Cost of revenue to SG&A expenses.

    (D)
    We recognize gains on sale of assets as a reduction in Cost of revenue, while FIH recognized these amounts as SG&A expenses. Therefore, we reclassified gains of $0.4 million from SG&A expenses to Cost of revenue.

Note 4 — Preliminary Acquisition Accounting

          The table below represents the purchase consideration and the preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The preliminary estimated fair values have been used to prepare pro forma Transaction Accounting Adjustments in the pro forma consolidated combined financial statements. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. The final purchase consideration allocation is expected to be completed within the measurement period, as defined in ASC 805, following the close of the Merger and may differ materially from the preliminary estimates used in the pro forma adjustments described below. The primary areas of the preliminary estimates that are not yet finalized relate to property, plant and equipment, identifiable intangible assets, contract assets and liabilities, and the fair value of certain contractual obligations.

Preliminary identifiable assets acquired and liabilities assumed (in thousands)

       

Cash and cash equivalents

  $ 10,525  

Accounts receivable

    56,349  

Contract assets

    41,147  

Prepaid expenses and other current assets

    2,230  

Property and equipment

    57,493  

Operating lease assets

    12,504  

Intangible assets:

       

Customer relationships

    118,000  

Tradename

    4,400  

Other long-term assets

    6,927  

Accounts payable and accrued liabilities

    (24,654 )

Contract liabilities

    (8,013 )

Noncurrent operating lease liabilities, net of current

    (10,436 )

Other long-term liabilities

    (6,450 )

Total identifiable net assets

    260,022  

Goodwill

    361,727  

Total purchase consideration

  $ 621,749  

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Note 5 — Pro Forma Adjustments

          The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma consolidated combined financial statements:

    (a)
    To record approximately $621.7 million of cash consideration paid for the FIH acquisition.

    (b)
    The below table reflects the net increase to debt for $500.0 million of new debt incurred to finance the FIH acquisition, less the effects of extinguishing FIH's outstanding debt of $178.4 million upon consummation of the acquisition (in thousands):

Increase for borrowings under term loan facility and revolving credit facility

  $ 500,000  

Decrease for extinguishment of existing FIH debt

    (176,869 )

Pro forma adjustment to debt

  $ 323,131  

          The adjustment also reflects the reduction in accrued interest of $0.1 million due to the extinguishment of FIH debt.

    (c)
    To eliminate prepaid insurance of approximately $2.0 million.

    (d)
    To record the difference between the historical net book value of FIH's fixed assets and our preliminary estimate of fair value and the related impact to depreciation expense. On a preliminary basis, we increased the book value of FIH's fixed assets by $2.3 million. The resulting adjustment to depreciation expense, including finance lease depreciation expense, was an increase of approximately $0.3 million for the pro forma year ended December 31, 2020.

    (e)
    To eliminate FIH capital lease assets and liabilities recorded under ASC 840 of approximately $6.6 million and record the fair value of FIH finance lease assets and liabilities under ASC 842 of approximately $6.7 million. The difference of $0.1 million was due to our incremental borrowing rate used to calculate the fair value of the finance lease assets and liabilities under ASC 842.

    (f)
    To record FIH operating lease assets and liabilities under ASC 842 of approximately $12.5 million.

    (g)
    Reflects the elimination of FIH's pre-existing intangible assets and recognition of the estimated preliminary fair value of identifiable intangible assets acquired. To determine the estimated fair value of intangibles acquired, we engaged a third party valuation specialist to assist management. Our valuation estimates are preliminary and subject to

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      change. The estimated preliminary fair value of identifiable intangible assets acquired is comprised of the following (in thousands):

  Weighted
Average
Useful
Life
    Fair Value     Pro Forma
Amortization
Expense
Year Ended
December 31, 2020
 

Customer relationships

  19 years   $ 118,000   $ 6,174  

Tradenames

  1 year     4,400     4,400  

      $ 122,400     10,574  

Historical FIH amortization expense

              (10,724 )

Pro forma adjustment to amortization expense

            $ (150 )

          The customer relationships were valued utilizing the "excess earnings method" of the income approach. The estimated discounted cash flows associated with existing customers and projects were based on historical and market participant data. Such discounted cash flows were net of fair market returns on the various tangible and intangible assets that are necessary to realize the potential cash flows.

          The tradenames were valued utilizing the "relief from royalty" method. A royalty rate was selected based on consideration of several factors, including external research of third party trade name licensing agreements and their royalty rate levels, and management estimates.

    (h)
    To record goodwill as a result of the Merger. Goodwill represents the excess of the total purchase consideration over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized, but is assessed at least annually for impairment or when a change in facts and circumstances prompts an assessment. This allocation is based on preliminary estimates and the final allocation may differ materially as changes to the initial valuation of consideration transferred or net assets acquired will be allocated to goodwill.

    (i)
    To accrue approximately $7.1 million of Primoris transaction costs associated with the Merger, primarily consisting of advisor fees. In addition, the unaudited pro forma consolidated combined statement of income includes approximately $11.4 million of transaction costs that are directly related to FIH's acquisition of Pride and our subsequent acquisition of FIH. These costs are not expected to be incurred in any period beyond 12 months from the closing date of the Merger.

    (j)
    To eliminate the contingent consideration associated with the Pride acquisition as the contingent consideration liability was not assumed in the FIH acquisition.

    (k)
    To eliminate FIH historical equity balances.

    (l)
    To record approximately $6.6 million of expense associated with the grant of 1,213,032 shares of common stock (the "Inducement Grants") to certain FIH employees. The Inducement Grants consisted of the following types of equity awards: (i) stock purchase rights representing the right to purchase 1,086,752 shares of common stock within five business days following the closing date of the Merger at a 15 percent discount, subject to an 18-month holding period and (ii) restricted stock units representing the right to receive 126,280 shares of common stock, subject to time-vesting on the third anniversary of the grant date.

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    (m)
    The below table reflects the net increase to interest expense resulting from interest on the new debt to finance the acquisition of FIH and the extinguishment of FIH's existing debt (in thousands):

    Year Ended
December 31,
2020
 

Elimination of FIH interest expense

  $ (8,897 )

Interest expense on new borrowings(1)

    11,900  

Pro forma adjustment to interest expense

  $ 3,003  

(1)
Expected interest expense on our borrowings under our revolving credit facility assuming an estimated weighted average annual interest rate of 2.38%. A hypothetical 0.125% change in the weighted average annual interest rate on the term loan and revolving credit facility would increase or decrease pro forma interest expense by $0.6 million annually.

          The adjustment also reflects the reduction in interest expense of $0.3 million due to elimination of capital lease interest expense recorded under ASC 840 and recording finance lease interest expense under ASC 842.

    (n)
    To record the income tax effect as a result of the Merger, calculated using our effective tax rate of 28% for the year ended December 31, 2020.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

          You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included in Item 8 of our Annual Report on Form 10-K. This discussion includes forward-looking statements that are based on current expectations and are subject to uncertainties and unknown or changed circumstances. For a further discussion, please see "Special Note Regarding Forward-Looking Statements" at the beginning of this prospectus supplement. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those risks inherent with our business as discussed in "Risk Factors" in this prospectus supplement.

          The following discussion starts with an overview of our business and a discussion of trends, including seasonality, that affect our industry. That is followed by an overview of the critical accounting policies and estimates that we use to prepare our financial statements. Next we discuss our results of operations and liquidity and capital resources, including our off-balance sheet arrangements and contractual obligations. We conclude with a discussion of our outlook and backlog.

Introduction

          We are one of the leading providers of specialty contracting services operating mainly in the United States and Canada. We provide a wide range of specialty construction services, fabrication, maintenance, replacement, and engineering services to a diversified base of customers through our five segments: Power, Industrial and Engineering ("Power"), Pipeline and Underground ("Pipeline"), Utilities and Distribution ("Utilities"), Transmission and Distribution ("Transmission"), and Civil. The structure of our reportable segments is generally focused on broad end-user markets for our services.

          The Power segment operates throughout the United States and in Canada and specializes in a range of services that include engineering, procurement, and construction, retrofits, upgrades, repairs, outages, and maintenance services for entities in the petroleum and petrochemical industries, as well as traditional and renewable power generators.

          The Pipeline segment operates throughout the United States and specializes in a range of services, including pipeline construction and maintenance, pipeline facility and integrity services, installation of compressor and pump stations, and metering facilities for entities in the petroleum and petrochemical industries, as well as gas, water, and sewer utilities.

          The Utilities segment operates primarily in California, the Midwest, the Atlantic Coast, and the Southeast regions of the United States and specializes in a range of services, including installation and maintenance of new and existing natural gas utility distribution systems and pipeline integrity services for entities in the gas utility market.

          The Transmission segment operates primarily in the Southeastern, Midwest, Atlantic Coast, and Gulf Coast regions of the United States and specializes in a range of services, including installation and maintenance of new and existing electric utility transmission, substation, and distribution systems for entities in the electric utility market.

          The Civil segment operates primarily in the Southeastern and Gulf Coast regions of the United States and specializes in highway and bridge construction, airport runway construction, demolition, site work, soil stabilization, mass excavation, flood control, and drainage projects for entities in the petroleum and petrochemical industries, state and municipal departments of transportation, and airports.

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          We have longstanding customer relationships with major utility, refining, petrochemical, power, midstream, and engineering companies, and state departments of transportation. We have completed major underground and industrial projects for a number of large natural gas transmission and petrochemical companies in the United States, major electrical and gas projects for a number of large utility companies in the United States, as well as significant projects for our engineering customers. 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 substantial 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 primarily on an input basis, based on contract costs incurred as defined within the respective contracts. Costs to obtain contracts are generally not significant and are expensed in the period incurred.

          The classification of revenue and gross profit 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, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses were made.

          On January 15, 2021, we acquired Future Infrastructure Holdings, LLC ("FIH") in an all-cash transaction valued at approximately $621.7 million. FIH is a provider of non-discretionary maintenance, repair, upgrade, and installation services to the telecommunication, regulated gas utility, and infrastructure markets. FIH furthers our strategic plan to expand our service lines, enter new markets, and grow our MSA revenue base. The transaction directly aligns with our strategy to grow in large, higher growth, higher margin markets, and expands our utility services capabilities.

          On June 1, 2018, we acquired Willbros Group Inc. ("Willbros") for approximately $110.6 million, net of cash and restricted cash acquired. Willbros was a specialty energy infrastructure contractor serving the oil and gas and power industries through its utility transmission and distribution, oil and gas, and Canadian operations, which principally provides unit-price maintenance services in existing operating facilities and executes industrial and power projects. The utility transmission and distribution operations formed the Transmission segment, the oil and gas operations are included in the Pipeline segment, and the Canadian operations are included in the Power segment. Willbros expands our services into electric utility-focused offerings and increases our geographic presence in the United States and Canada.

          We own a 50% interest in the Carlsbad Power Constructors joint venture ("Carlsbad"), which engineered and constructed a gas-fired power generation facility located in Southern California, and its operations are included as part of the Power segment. As a result of determining that we are the primary beneficiary of the variable interest entity ("VIE"), the results of the Carlsbad joint venture are consolidated in our financial statements. The project was substantially complete as of December 31, 2018 and the warranty period expires in December 2021.

          We owned a 50% interest in the "ARB Inc. & B&M Engineering Co." joint venture ("Wilmington"), which engineered and constructed a gas-fired power generation facility in Southern

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California, and its operations were included as part of the Power segment. As a result of determining that we were the primary beneficiary of the VIE, the results of the Wilmington joint venture were consolidated in our financial statements. The project has been completed, the project warranty period expired, and dissolution of the joint venture was completed in the first quarter of 2019.

Business Environment

          We believe there are growth opportunities across the industries we serve and we continue to have a positive long-term outlook. Although not without risks and challenges, including those discussed below and in "Special Note Regarding Forward-Looking Statements" and "Risk Factors" in this prospectus supplement, we believe, with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to capitalize on opportunities and trends in our industries.

          We have seen and continue to anticipate potential changes to the already stringent regulatory and environmental requirements for many of our clients' infrastructure projects, which may improve the timing and certainty of the projects. While fluctuating oil prices create uncertainty as to the timing of some of our opportunities, we continue to see preliminary bidding activity for numerous gas, oil and derivatives projects. We believe that we have the financial and operational strength to meet either short-term delays, or the impact of significant increases in work. We continue to be optimistic about both short and longer-term opportunities. Our current view of the outlook for our major end markets is as follows:

    Construction of petroleum, natural gas, natural gas liquid, and other liquid pipelines — We expect that the volatility in the price of oil could reduce activities in most, if not all of the shale basins until a higher oil price is sustained. In addition, the ability of our customers to obtain permits for projects could impact the demand for our services, especially for larger interstate pipelines. However, if production from the shale formations continues to increase in the near term, the current capacity limitations between production and processing locations would provide opportunities for our Pipeline segment.

    Inspection, maintenance and replacement of gas utility infrastructure — We expect that ongoing safety enhancements to gas pipeline systems and the gas utility infrastructure will provide continuing opportunities for our Utilities segment, in California, the Midwest, and the Atlantic coast. We also expect that ongoing gas utility repair and maintenance opportunities will continue.

    Inspection, maintenance and replacement of electric utility infrastructure — We expect the demand for electricity in the U.S. to grow over the long term and believe enhancements to the electric utility infrastructure are needed to efficiently serve the power needs of the future. Renewables will require substations and transmission lines to connect the new generation sources to customers. In addition, current federal legislation also requires the power industry to meet federal reliability standards for its transmission and distribution systems. We expect these opportunities, as well as ongoing electric utility repair and maintenance opportunities to benefit our Transmission segment.

    Construction of natural gas-fired power plants and industrial plants — We expect continued construction opportunities for both base-load and peak shaving power plants; however, we are aware that environmental concerns in California over gas fired power plants may impact the timing and location of near-term construction opportunities in that state. We believe that based on continuing population growth, the intermittency of renewable power resources, and the environmental requirements limiting using ocean water for cooling, power plants will be needed in spite of vocal opposition to "non-green" sources. In addition, the current low

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      price of natural gas could result in the replacement of coal-fired power plants and the conversion and expansion at chemical plants and industrial facilities in other parts of the United States. These opportunities would benefit our Power segment.

    Construction of alternative energy facilities, renewable natural gas facilities, solar power facilities, wind farms, battery storage — We anticipate continued engineering and construction opportunities as state governments, investors and utilities remain committed to renewable power standards, primarily benefitting our Power segment.

    Transportation infrastructure construction opportunities — We believe that the passing of longer-term highway funding by the federal government in 2015 and voter approval of highway funding proposition 7 in Texas, will continue to provide opportunity for our heavy civil group, especially in the state of Texas. We expect that opportunities in the Louisiana market may improve, but will remain at lower levels than in Texas, except for specific programs. This market solely impacts the operations of our Civil segment.

    Liquefied Natural Gas Facilities ("LNG") — We believe the LNG opportunities for rail, barge, and other transportation needs will continue to grow, although such growth may be at a slow pace. This market will primarily impact our Civil and Power segments. We further believe the existing large-scale LNG export facilities currently being planned will require services that will benefit our field services business within the Pipeline segment.

Material trends and uncertainties

          We generate our revenue from construction and engineering projects, as well as from providing a variety of specialty construction services. We depend in part on spending by companies in the gas and electric utility industries, the energy, chemical, and oil and gas industries, as well as state departments of transportation and municipal water and wastewater customers. 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, local highway and bridge needs, and from the activity level in the oil and gas industry. However, periodically, each of these industries and government agencies is adversely affected by macroeconomic conditions. Economic and other factors outside of our control may affect the amount and size of contracts we are awarded in any particular period.

          In March 2020, the COVID-19 outbreak was declared a National Public Health Emergency which continues to spread throughout the world and has adversely impacted global activity and contributed to significant volatility in financial markets. In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, including orders to close all businesses not deemed "essential", isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. While our services have generally been deemed to be essential services, all segments have reported various levels of project interruptions and restrictions that have delayed project timelines from those originally planned. In some cases, we have experienced temporary work stoppages. This led to general inefficiencies from having to start and stop work, re-sequencing work, requiring on-site health screenings before entering a job site, and following proper social distancing practices. We have also been restricted from completing work or have been prevented from starting work on certain projects. However, despite these impacts, our work has generally been deemed essential, our business model appears to be resilient, and we have adapted accordingly, including making salary or headcount reductions where appropriate.

          We anticipate that the COVID-19 pandemic could have a continued adverse impact on economic and market conditions and we could see an extended period of global economic slowdown. When COVID-19 is demonstrably contained, we anticipate a rebound in economic

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activity, depending on the rate, pace, and effectiveness of vaccinations and the containment efforts deployed by various national, state, and local governments.

          To date, the inefficiencies experienced have had an unquantifiable impact on our business. We will continue to actively monitor the situation and may take further actions to alter our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business or on our financial results for the foreseeable future.

          We also monitor our customers and their industries to assess the effect that changes in economic, market, and regulatory conditions may have on them. We have experienced reduced spending, project delays, and project cancellations by some of our customers over the last several months, which we attribute to negative economic and market conditions, and we anticipate that these negative conditions and the impact of COVID-19 may continue to affect demand for our services in the near-term.

          Fluctuations in market prices of oil, gas and other fuel sources have affected demand for our services. The volatility in the prices of oil, gas, and liquid natural gas that has occurred in the past few years could create uncertainty with respect to demand for our oil and gas pipeline services, specifically in our oil field services and Canadian operations. Last year's significant reduction in the price of oil could create uncertainty with respect to demand for our oil and gas pipeline services in the near term, with additional uncertainty resulting over the length of time that prices remain depressed. When the current oversupply eases and with a return to increasing global demand for oil, we expect oil prices to recover from the current levels. While the construction of gathering lines within the oil shale formations may remain at lower levels for an extended period, we believe that over time, the need for pipeline infrastructure for mid-stream and gas utility companies will result in a continuing need for our services. However, a prolonged period of depressed oil prices could delay midstream pipeline opportunities.

          The continuing changes in the regulatory environment may affect the demand for our services, either by increasing our work, delaying projects, or cancelling projects. For example, environmental laws and regulation can provide challenges to major pipeline projects, resulting in delays or cancellations that impact the timing of revenue recognition. In addition, the regulatory environment in California may result in delays for the construction of gas-fired power plants, while regulators continue to search for significant renewable resources. Renewable resources are also creating a demand for our construction and specialty services, such as the need for battery storage and the construction of solar power production facilities.

          On January 29, 2019, one of our California utility customers filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. For the year ended December 31, 2019, the customer accounted for approximately 7.2% of our total revenue. In the third quarter of 2019, we entered into an agreement with a financial institution to sell, on a non-recourse basis, except in limited circumstances, substantially all of our pre-petition bankruptcy receivables with the customer. We received approximately $48.3 million upon the closing of this transaction in October 2019. During the year ended December 31, 2019, we recorded a loss of approximately $2.9 million in "Other income (expense), net" on the Consolidated Statements of Income related to the sale agreement. During summer 2020, the customer emerged from bankruptcy. We are continuing to perform services for the customer and the amounts billed for these services continue to be collected in the ordinary course of the customer's business.

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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 construction and specialty services. These seasonal impacts can affect revenue and profitability in all of our businesses since utilities defer routine replacement and repair during their period of peak demand. 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 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 third and fourth quarters of the year as compared to the first two quarters.

          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 $5.0 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

          General — 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 also 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, 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 doubtful accounts, 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 from those that result from using the estimates under different assumptions or conditions.

          An accounting policy is deemed to be critical if it requires an accounting estimate to be based on assumptions about matters that are highly uncertain at the time the estimate is made, and different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements.

          The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management's estimates are based on the relevant information available at the end of each period. We periodically review these accounting policies with the Audit Committee of the Board of Directors.

          Revenue recognition — 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 substantial 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

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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 primarily on an input basis, based on contract costs incurred as defined within the respective contracts. Costs to obtain contracts are generally not significant and are expensed in the period incurred.

          We evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as more than one performance obligation. ASC 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation.

          Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenue and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation, politics and any prevailing impacts from the pandemic caused by the coronavirus may affect the progress of a project's completion, and thus the timing of revenue recognition. To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected.

          The nature of our contracts gives rise to several types of variable consideration, including contract modifications (change orders and claims), liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent we believe we have an enforceable right, and it is probable that a significant reversal of cumulative revenue recognized will not occur. Our estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at this time.

          Contract modifications result from changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which we seek, or will seek, to collect from customers, or others, for customer-caused changes in contract

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specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as rain or other weather delays. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract.

          As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full, including any previously recognized profit, in the period it is identified and recognized as an "accrued loss provision" which is included in "Contract liabilities" on the Consolidated Balance Sheets. For contract revenue recognized over time, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods.

          At December 31, 2020, we had approximately $63.6 million of unapproved contract modifications included in the aggregate transaction prices. These unapproved contract modifications were in the process of being negotiated in the normal course of business. Approximately $57.5 million of the unapproved contract modifications had been recognized as revenue on a cumulative catch-up basis through December 31, 2020.

          In all forms of contracts, we estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as the transaction price, we may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection. For example, when a cost reimbursable project exceeds the client's expected budget amount, the client frequently requests an adjustment to the final amount. Similarly, some utility clients reserve the right to audit costs for significant periods after performance of the work.

          The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

          The caption "Contract assets" in the Consolidated Balance Sheets represents the following:

    unbilled revenue, which arise when revenue has been recorded, but the amount will not be billed until a later date;

    retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and

    contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project.

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          The caption "Contract liabilities" in the Consolidated Balance Sheets represents deferred revenue on billings in excess of contract revenue recognized to date, and the accrued loss provision.

          Business combinations — We use the fair value of the consideration paid and the fair value of the assets acquired and liabilities assumed to account for the purchase price of businesses we acquire. The determination of fair value requires estimates and judgments of future cash flow expectations for the assignment of the fair values to the identifiable tangible and intangible assets.

          Identifiable Tangible Assets.    Significant identifiable tangible assets acquired would include accounts receivable, contract assets, inventory and fixed assets (generally consisting of construction equipment). We determine the fair value of these assets as of the acquisition date. For current assets and current liabilities of an acquisition, we will evaluate whether the book value is equivalent to fair value due to their short term nature. We estimate the fair value of fixed assets using a market approach, based on comparable market values for similar equipment of similar condition and age.

          Identifiable Intangible Assets.    When necessary, we use the assistance of an independent third party valuation specialist to determine the fair value of the intangible assets acquired.

          A liability for contingent consideration based on future earnings is estimated at its fair value at the date of acquisition, with subsequent changes in fair value recorded in earnings as a gain or loss. Fair value is estimated as of the acquisition date based on management's best estimate of estimated earnout payments.

          Accounting principles generally accepted in the United States provide a "measurement period" of up to one year in which to finalize all fair value estimates associated with the acquisition of a business. Most estimates are preliminary until the end of the measurement period. During the measurement period, adjustments to initial valuations and estimates that reflect newly discovered information that existed at the acquisition date are recorded. After the measurement date, any adjustments would be recorded as a current period gain or loss.

          Goodwill and Indefinite-Lived Intangible Assets — Goodwill and certain intangible assets acquired in a business combination and determined to have indefinite useful lives are not amortized but are assessed for impairment annually and more frequently if triggering events occur. In performing these assessments, management relies on various factors, including operating results, business plans, economic projections, anticipated future cash flows, comparable transactions and other market data. There are inherent uncertainties related to these factors and judgment in applying them to the analysis of goodwill for impairment. Since judgment is involved in performing fair value measurements used in goodwill impairment analyses, there is risk that the carrying values of our goodwill may not be properly stated.

          We account for goodwill, including evaluation of any goodwill impairment under ASC 350, "Intangibles — Goodwill and Other", performed at the reporting unit level for those units with recorded goodwill as of October 1 of each year, unless there are indications requiring a more frequent impairment test.

          Under ASC 350, we can assess qualitative factors to determine if a quantitative impairment test of intangible assets is necessary. For the majority of our reporting units, we perform a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying value, including goodwill. Factors used in our qualitative assessment include, but are not limited to, macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and Company and reporting unit specific events. For all other reporting units, we use the quantitative impairment test outlined in ASC 350, which compares the fair value of a reporting unit with its carrying amount.

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Fair value for the goodwill impairment test is determined utilizing a discounted cash flow analysis based on our financial plan discounted using our weighted average cost of capital and market indicators of terminal year cash flows. Other valuation methods may be used to corroborate the discounted cash flow method. If the carrying amount of a reporting unit is in excess of its fair value, goodwill is considered impaired and an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill of the reporting unit.

          There were no impairments of goodwill for the years ended December 31, 2020, 2019 and 2018.

          Disruptions to our business, such as end market conditions, protracted economic weakness, unexpected significant declines in operating results of reporting units and the divestiture of a significant component of a reporting unit, may result in our having to perform a goodwill impairment analysis for some or all of our reporting units prior to the required annual assessment. These types of events and the resulting analysis could result in goodwill impairment charges in future periods.

          Income taxes — We account for income taxes under the asset and liability method as set forth in ASC 740, "Income Taxes", which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting bases and tax bases of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of changes in tax rates on net deferred tax assets or liabilities is recognized as an increase or decrease in net income in the period the tax change is enacted.

          Deferred tax assets may be reduced by a valuation allowance if, in the judgment of management, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making such determination, we consider all available evidence, including recent financial operations, projected future taxable income, scheduled reversals of deferred tax liabilities, tax planning strategies, and the length of tax asset carryforward periods. The realization of deferred tax assets is primarily dependent upon our ability to generate sufficient future taxable earnings in certain jurisdictions. If we subsequently determine that some or all deferred tax assets that were previously offset by a valuation allowance are realizable, the value of the deferred tax assets would be increased by reducing the valuation allowance, thereby increasing income in the period when that determination is made.

          A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained based on its technical merits in a tax examination, using the presumption that the tax authority has full knowledge of all relevant facts regarding the position. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on ultimate settlement with the tax authority. For tax positions not meeting the more likely than not test, no tax benefit is recorded.

          Litigation and contingencies — Litigation and contingencies are included in our consolidated financial statements based on our assessment of the expected outcome of litigation proceedings or the expected resolution of the contingency. We provide for costs related to contingencies when a loss from such claims is probable and the amount is reasonably estimable. In determining whether it is possible to provide an estimate of loss, or range of possible loss, we review and evaluate litigation and regulatory matters on a quarterly basis in light of potentially relevant factual and legal developments. If we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for a potential litigation loss. Management is unable to ascertain the ultimate outcome of other claims and legal proceedings; however, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles/self-insurance retention, management believes that it has meritorious defense to the claims and believes that the

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reasonably possible outcome of such claims will not, individually or in the aggregate, have a material adverse effect on our consolidated results of operations, financial condition or cash flows. See Note 13 — "Commitments and Contingencies" of the Notes to Consolidated Financial Statements included elsewhere in this prospectus supplement for further information.

Recently Issued Accounting Pronouncements

          See Note 2 — "Summary of Significant Accounting Policies — Recently Issued Accounting Pronouncements" of the Notes to Consolidated Financial Statements included elsewhere in this prospectus supplement for a discussion of recently issued accounting pronouncements.

Results of Operations

Consolidated Results

Revenue

2020 and 2019

          Revenue for the year ended December 31, 2020 increased by $385.2 million, or 12.4%, compared to 2019. The increase was primarily due to growth in our Pipeline and Power segments, partially offset by lower revenue in our Transmission and Civil segments.

2019 and 2018

          Revenue for the year ended December 31, 2019 increased by $166.9 million, or 5.7%, compared to 2018. The increase was primarily due to incremental revenue in 2019 from the Willbros acquisition ($301.5 million), and organic growth in our Civil segment, partially offset by lower revenue in our Pipeline and Utilities segments.

Gross Profit

2020 and 2019

          For the year ended December 31, 2020, gross profit increased by $39.3 million, or 11.9%, compared to 2019. The increase was primarily due to the increase in revenue. Gross profit as a percentage of revenue was comparable to 2019.

2019 and 2018

          For the year ended December 31, 2019, gross profit increased by $5.2 million, or 1.6%, compared to 2018. The increase was primarily due to revenue growth, partially offset by a decrease in gross profit as a percentage of revenue.

          Gross profit as a percentage of revenue decreased to 10.7% in 2019 from 11.1% in the same period in 2018 primarily due to lower gross profit percentages for the Power and Transmission segments, mostly offset by significant improvement in the Civil segment.

Selling, general and administrative expenses

          Selling, general and administrative expenses ("SG&A") consist primarily of compensation and benefits to executive, management level and administrative employees, marketing and communications, professional fees, and facility lease and utilities.

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2020 and 2019

          SG&A expenses were $202.8 million for the year ended December 31, 2020, an increase of $12.8 million, or 6.7% compared to 2019 primarily due to a $7.4 million increase in compensation related expenses, including incentive compensation and a $3.4 million increase in new information technology systems and related implementation expenses. SG&A expense as a percentage of revenue for the year ended December 31, 2020 decreased to 5.8% compared to 6.1% for the year ended December 31, 2019 due to increased revenue.

2019 and 2018

          SG&A expenses were $190.1 million for the year ended December 31, 2019, an increase of $8.1 million, or 4.4% primarily due to $10.9 million of incremental expense from the Willbros acquisition and a $2.2 million increase in facility lease expense, partially offset by a $5.8 million decrease in compensation related expenses. SG&A expense as a percentage of revenue was comparable to 2018.

Transaction and related costs

2020 and 2019

          Transaction and related costs incurred for the year ended December 31, 2020 were $3.4 million consisting primarily of professional fees related to our acquisition of FIH. No transaction and related costs were incurred for the year ended December 31, 2019.

2019 and 2018

          No transaction and related costs were incurred for the year ended December 31, 2019, compared to $13.3 million for the year ended December 31, 2018, related to the acquisition of Willbros, which consisted primarily of severance and retention bonus costs for certain employees of Willbros, professional fees paid to advisors, and exiting or impairing certain duplicate facilities.

Other income and expense

          Non-operating income and expense items for the years ended December 31, 2020, 2019 and 2018 were as follows (in millions):

    Year Ended December 31,
 

    2020     2019     2018
 

Foreign exchange gain (loss), net

  $ 0.4   $ (0.7 ) $ 0.7  

Other income (expense), net

    1.2     (3.1 )   (0.8 )

Interest income

    0.4     0.9     1.7  

Interest expense

    (20.3 )   (20.1 )   (18.7 )

Total other income (expense)

  $ (18.3 ) $ (23.0 ) $ (17.1 )

          Foreign exchange gain (loss) in 2020, 2019 and 2018 is primarily related to currency exchange fluctuations associated with our Canadian engineering operation, which operates principally in United States dollars.

          The change in Other income (expense), net for the years ended December 31, 2020 and 2018 compared to the year ended December 31, 2019 is primarily due to a $2.9 million loss recognized in 2019 related to the sale of a utility customer's pre-petition bankruptcy accounts receivable to a financial institution.

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          Interest expense for the year ended December 31, 2020 was comparable to the same period in 2019.

          Interest expense increased in 2019 compared to the same period in 2018 due primarily to higher average debt balances in 2019. In addition, we had a $3.6 million unrealized loss on the change in the fair value of our interest rate swap agreement during the year ended December 31, 2019, compared to $2.8 million in 2018.

          The weighted average interest rate on total debt outstanding at December 31, 2020, 2019 and 2018 was 3.7%, 4.0% and 4.1%, respectively.

Provision for income taxes

          Our provision for income taxes increased $6.8 million to $40.7 million for 2020 compared to 2019. The increase was primarily due to increased pre-tax profits in 2020, partially offset by a reduction in state income taxes. The 2020 effective tax rate on income including noncontrolling interests and on income attributable to Primoris was 27.9%.

          Our provision for income taxes increased $8.0 million to $33.8 million for 2019 compared to 2018. This increase was primarily due to a combination of increased pre-tax profits in 2019 and a decrease in the amount of investment tax credits generated in 2019. The 2019 effective tax rate on income including noncontrolling interests was 28.7%. The 2019 effective tax rate on income attributable to Primoris (excluding noncontrolling interests) was 29.1%.

Segment Results

Power Segment

          Revenue and gross profit for the Power segment for the years ending December 31, 2020, 2019 and 2018 were as follows:

    Year Ended December 31,
 

    2020     2019     2018
 

    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
 

Power Segment

                                     

Revenue

  $ 795.4         $ 729.3         $ 694.0        

Gross profit

    53.5     6.7 %   76.1     10.4 %   109.8     15.8 %

2020 and 2019

          Revenue increased by $66.1 million, or 9.1%, during 2020 compared to 2019. The growth is primarily due to an increase in solar energy projects and progress on an industrial project for a utility customer in California ($129.8 million combined), partially offset by the substantial completion of a carbon monoxide and hydrogen plant project that began in 2019 and lower revenue at our Canadian industrial operations.

          Gross profit decreased by $22.6 million, or 29.7%, during 2020 compared to 2019. The decrease is primarily due to lower margins partially offset by higher revenue. Gross profit as a percentage of revenue decreased to 6.7% in 2020 compared to 10.4% in 2019 due to higher costs associated with a liquefied natural gas ("LNG") plant project in the Northeast in 2020, partially offset by strong performance and favorable margins realized on our solar projects in 2020, the favorable impact of the Canadian Emergency Wage Subsidy in 2020, and higher costs associated with two industrial projects in 2019.

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2019 and 2018

          Revenue increased by $35.3 million, or 5.1%, during 2019 compared to 2018. The increase is primarily due to an additional solar project in West Texas in 2019 ($96.4 million) and the acquisition of Willbros in June of 2018 ($89.7 million). The overall increase was partially offset by the substantial completion of our Carlsbad joint venture project and refinery projects in Southern California in 2018 ($145.9 million combined).

          Gross profit decreased by $33.7 million, or 30.7%, during 2019 compared to 2018 due primarily to a $17.4 million settlement in 2018 of a disputed receivable and higher costs in 2019 associated with two industrial projects. Gross profit as a percentage of revenue decreased to 10.4% in 2019 compared to 15.8% in 2018 primarily due to the reasons noted above and a strong performance and favorable margins realized by our Carlsbad joint venture project in 2018.

Pipeline Segment

          Revenue and gross profit for the Pipeline segment for the years ended December 31, 2020, 2019 and 2018 were as follows:

    Year Ended December 31,
 

    2020     2019     2018
 

    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
 

Pipeline Segment

                                     

Revenue

  $ 897.0         $ 505.2         $ 590.9        

Gross profit

    97.5     10.9 %   61.6     12.2 %   66.6     11.3 %

2020 and 2019

          Revenue increased by $391.8 million, or 77.6%, during 2020 compared to 2019. The increase is primarily due to pipeline projects in Texas that began in 2020 ($481.8 million combined), partially offset by reduced activity on a pipeline project in the Mid-Atlantic that was cancelled by the developers and the substantial completion of a pipeline project in 2019.

          Gross profit increased by $35.9 million, or 58.3%, during 2020 compared to 2019. The increase is primarily attributable to revenue growth, partially offset by lower margins. Gross profit as a percentage of revenue decreased to 10.9% in 2020 compared to 12.2% in 2019. The decrease is primarily due to higher costs on pipeline projects in Virginia and Texas in 2020 and the favorable impact from the closeout of multiple pipeline projects in 2019, partially offset by strong performance and favorable margins realized on a Texas pipeline project in 2020.

2019 and 2018

          Revenue decreased by $85.7 million, or 14.5%, during 2019 compared to 2018. The decrease is primarily due to reduced activity on major pipeline projects in the Mid-Atlantic and West Texas that began in 2018 ($181.9 million combined), partially offset by increased pipeline maintenance, facility construction and specialty services activity ($108.2 million).

          Gross profit decreased by $5.0 million, or 7.5%, during 2019 compared to 2018 due to lower revenue, partially offset by higher margins. Gross profit as a percentage of revenue increased to 12.2% in 2019 compared to 11.3% in 2018 primarily due to the favorable impact from the closeout of multiple pipeline projects in 2019.

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Utilities Segment

          Revenue and gross profit for the Utilities segment for the years ended December 31, 2020, 2019 and 2018 were as follows:

    Year Ended December 31,
 

    2020     2019     2018
 

    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
 

Utilities Segment

                                     

Revenue

  $ 906.6         $ 886.5         $ 902.8        

Gross profit

    132.9     14.7 %   116.6     13.2 %   111.8     12.4 %

2020 and 2019

          Revenue increased by $20.1 million, or 2.3%, during 2020 compared to 2019. The increase is primarily attributable to increased activity with customers in nearly all of the geographic regions we serve ($102.4 million combined), partially offset by decreased activity with two utility customers in California.

          Gross profit increased $16.3 million, or 14.0%, during 2020 compared to 2019 primarily due to higher revenue and margins. Gross profit as a percentage of revenue increased to 14.7% in 2020 compared to 13.2% in 2019 primarily due to favorable margins on projects in the Southeast from increased productivity and favorable weather conditions in 2020 and unfavorable weather conditions experienced in the Midwest in 2019.

2019 and 2018

          Revenue decreased by $16.3 million, or 1.8%, during 2019 compared to 2018 primarily due to net decreased activity with three major utility customers in California ($30.7 million combined), partially offset by increased activity with utility customers in the Midwest.

          Gross profit increased $4.8 million, or 4.3%, during 2019 compared to 2018 due to higher margins, partially offset by lower revenue. Gross profit as a percent of revenue increased to 13.2% in 2019 compared to 12.4% in 2018 primarily due to a favorable mix of projects in 2019, and the impact of a client delay and unfavorable weather conditions experienced by a major utility customer in the Midwest in 2018.

Transmission Segment

          Revenue and gross profit for the Transmission segment for the years ended December 31, 2020, 2019 and 2018 were as follows:

    Year Ended December 31,
 

    2020     2019     2018
 

    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
 

Transmission Segment

                                     

Revenue

  $ 459.0         $ 497.3         $ 286.8        

Gross profit

    44.9     9.8 %   22.6     4.5 %   31.9     11.1 %

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          The Transmission segment was created in connection with the acquisition of Willbros. Revenue and gross profit for the year ended December 31, 2018 represent results from June 1, 2018, the acquisition date, to December 31, 2018.

2020 and 2019

          Revenue decreased by $38.3 million, or 7.7%, during 2020 compared to 2019. The decrease is primarily due to decreased activity with utility customers in Texas, the Midwest, the Southeast and generally being more selective in the type of work we perform.

          Gross profit increased $22.3 million, or 98.7%, during 2020 compared to 2019 primarily due to higher margins offset by lower revenue. Gross profit as a percentage of revenue increased to 9.8% in 2020 compared to 4.5% in 2019 primarily due to upfront costs to expand our operations and unfavorable weather conditions experienced in certain regions in 2019, being more selective in the type of work we perform resulting in higher margin work in 2020 and an increase in higher margin storm work in 2020.

2019 and 2018

          Revenue increased by $210.5 million during 2019 compared 2018 primarily due to the Willbros acquisition in June 2018, resulting in twelve months of revenue recognized in 2019 compared to seven months in 2018.

          Gross profit decreased $9.3 million, or 29.2%, during 2019 compared to 2018 primarily due to lower margins on expiring MSAs, higher than expected equipment costs, and labor productivity issues. Gross profit as a percentage of revenue decreased to 4.5% in 2019 compared to 11.1% in 2018, primarily due to reduced revenue on higher margin storm work, unusually severe weather conditions experienced in certain regions in 2019, upfront costs to expand our operations, and relocation costs to move crews to other service areas in 2019. In addition, the segment experienced strong performance on a major project in the Southeast that completed in 2018.

Civil Segment

          Revenue and gross profit for the Civil segment for the years ended December 31, 2020, 2019 and 2018 were as follows:

    Year Ended December 31,
 

    2020     2019     2018
 

    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
    (Millions)     % of
Segment
Revenue
 

Civil Segment

                                     

Revenue

  $ 433.5         $ 488.0         $ 465.0        

Gross profit

    41.4     9.6 %   54.0     11.1 %   5.6     1.2 %

2020 and 2019

          Revenue decreased by $54.5 million, or 11.2%, during 2020 compared to 2019. The decrease is primarily due to the substantial completion of a project with a major refining customer and an ethylene plant project in 2019 ($41.4 million combined), as well as lower Texas Department of Transportation ("DOT") volumes. These amounts were partially offset by progress on an LNG plant project in Texas that began in late 2019.

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          Gross profit decreased by $12.6 million, or 23.3%, during 2020 compared to 2019. The decrease was primarily due to lower revenue and margins. Gross profit as a percentage of revenue decreased to 9.6% in 2020 compared to 11.1% in 2019 primarily due to the resolution of claims associated with three Belton area projects in 2019. The year over year decrease was partially offset by strong performance on an LNG plant project in Texas in 2020, increased profit on Louisiana Department of Transportation and Development ("DOTD") projects, and the favorable impact from the resolution of claims associated with the two other Belton area projects in 2020.

2019 and 2018

          Revenue increased by $23.0 million, or 4.9%, during 2019 compared to 2018. The increase is primarily due to a project with a major refining customer and a methanol plant project that both began in 2019 ($38.1 million combined), and higher Louisiana DOTD volumes. The overall increase was partially offset by lower Texas DOT volumes.

          Gross profit increased by $48.4 million during 2019 compared to 2018 primarily due to a favorable impact from the resolution of claims associated with three of the Belton area projects in 2019, increases from expected claim recovery on the remaining two Belton area projects, and higher costs on an airport project in 2018. Gross profit as a percentage of revenue increased to 11.1% in 2019 compared to 1.2% in 2018 due primarily to the reasons noted above.

Liquidity and Capital Resources

Cash Needs

          Liquidity represents our ability to pay our liabilities when they become due, fund business operations, and meet our contractual obligations and execute our business plan. Our primary sources of liquidity are our cash balances at the beginning of each period and our cash flows from operating activities. If needed, we have availability under our lines of credit to augment liquidity needs. At December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility, commercial letters of credit outstanding were $51.5 million, and available borrowing capacity was $148.5 million. On January 15, 2021, we entered into the Second Amended and Restated Credit Agreement (the "Amended Credit Agreement") to increase the Term Loan by $400.0 million to an aggregate principal amount of $592.5 million (the "New Term Loan"). The proceeds from the New Term Loan were used to finance the acquisition of FIH and for general corporate purposes. In order to maintain sufficient liquidity, we evaluate our working capital requirements on a regular basis. We may elect to raise additional capital by issuing common stock, convertible notes, term debt or increasing our credit facility as necessary to fund our operations or to fund the acquisition of new businesses.

          Due to the uncertainties around the impact of COVID-19 and the general economic conditions, we reduced capital expenditures and temporarily suspended our share repurchase program early in the second quarter of 2020 in order to conserve cash and cash equivalents. Late in the second quarter of 2020, we resumed spending for share repurchases. Additionally, we deferred FICA tax payments through the end of 2020 as allowed under The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). This deferral was $40.8 million at December 31, 2020. Half of the deferral is due on December 31, 2021, and the other half is due on December 31, 2022.

          Our cash and cash equivalents totaled $326.7 million at December 31, 2020 compared to $120.3 million at December 31, 2019. We anticipate that our cash and investments on hand, existing borrowing capacity under our credit facility and our future cash flows from operations will provide sufficient funds to enable us to meet our operating needs, our planned capital expenditures, and settle our commitments and contingencies for at least the next twelve months.

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          The construction industry is capital intensive, and we expect to continue to make capital expenditures to meet anticipated needs for our services. In 2020, we spent approximately $64.4 million for capital expenditures, which included $42.1 million for construction equipment. Capital expenditures are expected to total $60 to $80 million for 2021.

Cash Flows

          Cash flows during the years ended December 31, 2020, 2019 and 2018 are summarized as follows (in millions):

    Year Ended December 31,
 

    2020     2019     2018
 

Change in cash:

                   

Net cash provided by operating activities

  $ 311.9   $ 118.0   $ 126.8  

Net cash used in investing activities

    (42.5 )   (65.9 )   (209.1 )

Net cash provided by (used in) financing activities

    (62.8 )   (83.3 )   63.9  

Effect of exchange rate changes

    (0.1 )   0.4     (0.9 )

Net change in cash and cash equivalents

  $ 206.5   $ (30.8 ) $ (19.3 )

Operating Activities

          The sources and uses of cash flow associated with operating activities for the years ended December 31, 2020, 2019 and 2018 were as follows (in millions):

    Year Ended December 31,
 

    2020     2019     2018
 

Operating Activities:

                   

Net income

  $ 105.0   $ 84.1   $ 87.6  

Depreciation and amortization

    82.4     85.4     79.2  

Changes in assets and liabilities

    127.1     (45.1 )   (40.8 )

Other

    (2.6 )   (6.4 )   0.8  

Net cash provided by operating activities

  $ 311.9   $ 118.0   $ 126.8  

2020 and 2019

          Net cash provided by operating activities for 2020 was $311.9 million an increase of $193.9 million compared to 2019. The change year-over-year was primarily due to a favorable impact from the changes in assets and liabilities and an increase in net income.

          The significant components of the $127.1 million change in assets and liabilities for the year ended December 31, 2020 are summarized as follows:

    Contract liabilities increased by $74.8 million from December 31, 2019, primarily due to higher deferred revenue;

    Accounts payable and accrued liabilities increased by $29.7 million from December 31, 2019, primarily due to the timing of payments to our vendors and suppliers and the deferral of FICA tax payments under the CARES Act;

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    Other long-term liabilities increased by $23.0 million from December 31, 2019 primarily due to the deferral of FICA tax payments under the CARES Act;

    Contract assets decreased by $19.3 million from December 31, 2019 primarily due to a reduction in unbilled revenue, partially offset by an increase in retention receivable; and

    Accounts receivable increased by $30.0 million from December 31, 2019, primarily due to increased revenue.

2019 and 2018

          Net cash provided by operating activities for 2019 was $118.0 million, a decrease of $8.8 million compared to 2018. The change year-over-year was primarily due to a decrease in net income and an unfavorable impact from the changes in assets and liabilities.

          The significant components of the $45.1 million change in assets and liabilities for the year ended December 31, 2019 are summarized as follows:

    Accounts payable and accrued liabilities decreased by $36.8 million from December 31, 2018, due to the timing of payments;

    Accounts receivable increased by $28.2 million from December 31, 2018, due primarily to the timing of billing our customers and increased revenue; and

    Contract assets decreased by $19.7 million from December 31, 2018, primarily due to decreases in contract materials not yet installed and retention receivable.

Investing activities

          Net cash used in investing activities was $42.5 million, $65.9 million, and $209.1 million in the years ended December 31, 2020, 2019 and 2018, respectively.

          We purchased property and equipment for $64.4 million, $94.5 million and $110.2 million in the years ended December 31, 2020, 2019 and 2018, respectively, principally for our construction activities and facilities investment. We believe the ownership of equipment is generally preferable to renting equipment on a project-by-project basis, as ownership helps to ensure the equipment is available for our projects when needed. In addition, ownership has historically resulted in lower overall equipment costs.

          We periodically sell equipment, typically to update our fleet. We received proceeds from the sale of used equipment of $21.9 million, $28.6 million and $11.7 million for 2020, 2019 and 2018, respectively.

          During 2018, we used $110.6 million for the acquisition of Willbros.

          In connection with the acquisition of Willbros, we agreed to provide, at our discretion, up to $20.0 million in secured bridge financing to support Willbros' working capital needs through the closing date. In March 2018 and May 2018, we provided $10.0 million and $5.0 million, respectively, in secured bridge financing to Willbros. The $15.0 million was repaid to us in its entirety on June 1, 2018.

Financing activities

          Financing activities used cash of $62.8 million in 2020, which was primarily due to the following:

    Repayment of long-term debt of $68.9 million;

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    Dividend payments to our stockholders of $11.6 million;

    Repurchase of common stock of $11.5 million; and

    Proceeds from the issuance of debt secured by our equipment and real estate of $33.9 million.

          Financing activities used cash of $83.3 million in 2019, which was primarily due to the following:

    Repayment of long-term debt of $72.1 million;

    Repurchase of common stock of $50.0 million;

    Dividend payments to our stockholders of $12.2 million;

    Cash distributions to noncontrolling interest holders of $3.5 million; and

    Proceeds from the issuance of debt secured by our equipment and real estate of $55.0 million.

          Financing activities provided cash of $63.9 million in 2018, which was primarily due to the following:

    Proceeds from the issuance of a term loan of $220.0 million;

    Proceeds from the issuance of debt secured by our equipment and real estate of $36.0 million;

    Repayment of long-term debt of $145.7 million;

    Repurchase of common stock of $20.0 million;

    Cash distributions to noncontrolling interest holders of $13.1 million; and

    Dividend payments to our stockholders of $12.3 million.

Debt Activities

Credit Agreement

          On September 29, 2017, we entered into an amended and restated credit agreement, as amended July 9, 2018 and August 3, 2018 (the "Credit Agreement") with CIBC Bank USA, as administrative agent (the "Administrative Agent") and co-lead arranger, and the financial parties thereto (collectively, the "Lenders"). The Credit Agreement consisted of a $220.0 million term loan (the "Term Loan") and a $200.0 million revolving credit facility ("Revolving Credit Facility"), whereby the Lenders agreed to make loans on a revolving basis from time to time and to issue letters of credit for up to the $200.0 million committed amount. The Credit Agreement contained an accordion feature that would allow us to increase the Term Loan or the borrowing capacity under the Revolving Credit Facility by up to $75.0 million. The Credit Agreement was scheduled to mature on July 9, 2023.

          On January 15, 2021, we entered into the Amended Credit Agreement with the Administrative Agent and the Lenders, amending and restating our Credit Agreement to increase the Term Loan by $400.0 million to an aggregate principal amount of $592.5 million and to extend the maturity date of the Credit Agreement from July 9, 2023 to January 15, 2026.

          In addition to the New Term Loan, the Amended Credit Agreement consists of the existing $200.0 million Revolving Credit Facility whereby the Lenders agreed to make loans on a revolving basis from time to time and to issue letters of credit for up to the $200.0 million committed amount,

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and contains an accordion feature that would allow us to increase the New Term Loan or the borrowing capacity under the Revolving Credit Facility by up to $75.0 million.

          At February 15, 2021, commercial letters of credit outstanding were $51.2 million, borrowings under the Amended Credit Agreement were $100.0 million, and available borrowing capacity was $48.8 million.

          Under the Amended Credit Agreement, we must make quarterly principal payments on the New Term Loan in an amount equal to approximately $7.4 million, with the balance due on January 15, 2026. The first principal payment will be due on March 31, 2021.

          The proce