Note 1—Nature of Business

Organization and operations — Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware, and its corporate headquarters is located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

Reportable Segments — Through the end of the year 2016, the Company segregated its business into three reportable segments: the Energy segment, the East Construction Services segment and the West Construction Services segment. In the first quarter 2017, the Company changed its reportable segments in connection with a realignment of the Company’s internal organization and management structure. The segment changes during the quarter reflect the focus of our Chief Executive Officer and our Chief Operating Officer on the range of services we provide to our end user markets. Our Chief Operating Officer regularly reviews the operating and financial performance of our business units based on these segments.

The current reportable segments include the Power, Industrial and Engineering segment (“PI&E segment”), the Pipeline and Underground segment (“P&U segment”), the Utilities and Distribution segment (“U&D segment”), and the Civil segment. Segment information for prior periods have been restated. See Note 18 – “Reportable Segments” for a brief description of the reportable segments and their operations.

The classification of our business unit revenues and gross profit for segment reporting purposes can at times require judgment on the part of management. Our business units 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.

The following table lists the Company’s primary business units and their reportable segment:


Subsidiary	Reportable Segment	Prior Operating Segment
ARB Industrial (a division of ARB, Inc.)	PI&E	West
ARB Structures, Inc.	PI&E	West
Primoris Power (formerly PES Saxon division)	PI&E	Energy
Primoris Renewable Energy (a division of Primoris Aevenia, Inc.)	PI&E	Energy
Primoris Industrial Constructors (formerly PES Industrial Division)	PI&E	Energy
Primoris Fabrication (a division of PES)	PI&E	Energy
Primoris Mechanical Contractors (a combination of a division of PES and Cardinal Contractors, Inc.)	PI&E	Energy
OnQuest, Inc.	PI&E	Energy
OnQuest Canada, ULC	PI&E	Energy
Primoris Design and Construction (“PD&C”); created 2017	PI&E	NA
Rockford Corporation (“Rockford”)	P&U	West
Vadnais Trenchless Services, Inc. (“Vadnais”)	P&U	West
Primoris Field Services (a division of PES Primoris Pipeline)	P&U	Energy
Primoris Pipeline (a division of PES Primoris Pipeline)	P&U	Energy
ARB Underground (a division of ARB, Inc.)	U&D	West
Q3 Contracting (“Q3C”)	U&D	West
Primoris Aevenia, Inc. ("Aevenia")	U&D	Energy
Primoris Heavy Civil (formerly JCG Heavy Civil Division)	Civil	East
Primoris I&M (formerly JCG Infrastructure & Maintenance Division)	Civil	East
BW Primoris, LLC ("BW Primoris")	Civil	East

The Company owns a 50% interest in two separate joint ventures, both formed in 2015. The Carlsbad Power Constructors joint venture (“Carlsbad”) will engineer and construct a gas-fired power generation facility and a joint venture titled “ARB Inc. & B&M Engineering Co.” (“Wilmington”) will also engineer and construct a gas-fired power generation facility. Both projects are located in the Southern California area. The joint venture operations are included as part of the Power division of the PI&E segment. As a result of determining that the Company is the primary beneficiary of the two variable interest entities (“VIEs”), the results of the Carlsbad and Wilmington joint ventures are consolidated in the Company’s financial statements. Both projects are expected to be completed in 2018. Financial information for the joint ventures is presented in Note 11 – “Noncontrolling Interests”.

On January 29, 2016, the Company acquired the net assets of Mueller Concrete Construction Company (“Mueller”) for $4.1 million, and on November 18, 2016, the Company acquired the net assets of Northern Energy & Power (“Northern”) for $6.9 million. Both Mueller and Northern operate as divisions of Aevenia. See Note7— “Business Combinations”.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries.