Reportable Segments

6 Months Ended

Jun. 30, 2017

Reportable Segments

Reportable Segments

Note 18—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 CODM on the range of services we provide to our end user markets. Our CODM regularly reviews the operating and financial performance of our business units based on these segments.

The current reportable segments include the Power segment, the Pipeline segment, the Utilities segment, and the Civil segment.  Segment information for prior periods have been restated to conform to the new segment presentation.

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 is a brief description of the reportable segments and their business units and operations.

The Power division of the Power segment includes ARB Industrial, Primoris Power, ARB Structures, and Primoris Renewable Energy. This division operates primarily in our California markets, with select projects performed nationwide. The Industrial division of this segment includes Primoris Industrial Constructors, Primoris Fabrication, and Primoris Mechanical Contractors. These groups are headquartered in and around Houston, TX and focus on the Southern region of the United States. The Engineering division of this segment includes OnQuest, with offices in California, OnQuest with offices in Calgary, and Primoris Design and Construction, located in Tyler, TX.

The Pipeline segment includes Rockford, Vadnais Trenchless, Primoris Field Services, Primoris Pipeline, and Primoris Coastal Field Services. Rockford operates throughout the United States. Vadnais Trenchless provides specialized trenchless solutions in California and other select areas. Presently, Primoris Field Services,  Primoris Pipeline and Primoris Coastal Field Services operate in Texas and surrounding states.

The Utilities segment is comprised of ARB Underground, Q3C, Primoris AV, and Primoris Distribution Services.  ARB Underground operates primarily in California, Q3C and Primoris AV are present throughout the Midwest region of the United States, and Primoris Distribution Services operates in Florida and the Southeast region of the United States.

The Civil segment includes Primoris Heavy Civil, Primoris I&M, and BW Primoris. These business units are located primarily in the Southeastern and Gulf Coast regions of the United States.

Each of the four segments specializes in a range of services that include engineering, designing, building/installing, replacing, repairing/rehabilitating, and providing management services for construction and construction-related projects. Our services include:

· Providing installation of underground pipeline, cable, and conduits for entities in the petroleum, petrochemical, and water industries;

· Providing maintenance services to utilities for installation and repair of gas distribution lines; 

· Providing engineering, installation, and maintenance of industrial facilities for entities in the petroleum, petrochemical, water, and other industries; 

· Providing installation of commercial and industrial cast-in-place structures; 

· Providing construction of highways and bridges; and

· Providing industrial and environmental construction.

All intersegment revenues and gross profit, which were immaterial, have been eliminated in the following tables. 

Segment Revenues

Revenue by segment for the three and six months ended June 30, 2017 and 2016 were as follows:

	For the three months ended June 30,
	2017			2016
			% of			% of
			Total			Total
Segment	Revenue		Revenue	Revenue		Revenue
Power	$	157,773	25.0%	$	126,576	27.7%
Pipeline		134,623	21.3%		56,804	12.4%
Utilities		212,942	33.8%		157,119	34.4%
Civil		125,827	19.9%		116,312	25.5%
Total	$	631,165	100.0%	$	456,811	100.0%

	For the six months ended June 30,
	2017			2016
			% of			% of
			Total			Total
Segment	Revenue		Revenue	Revenue		Revenue
Power	$	289,013	24.2%	$	265,214	29.9%
Pipeline		318,068	26.7%		111,140	12.5%
Utilities		329,922	27.7%		260,873	29.4%
Civil		255,664	21.4%		250,030	28.2%
Total	$	1,192,667	100.0%	$	887,257	100.0%

Segment Gross Profit

Gross profit by segment for the three and six months ended June 30, 2017 and 2016 were as follows:

	For the three months ended June 30,
	2017			2016
			% of			% of
			Segment			Segment
Segment	Gross Profit		Revenue	Gross Profit		Revenue
Power	$	18,132	11.5%	$	14,092	11.1%
Pipeline		39,366	29.2%		6,469	11.4%
Utilities		32,347	15.2%		22,841	14.5%
Civil		(5,362)	(4.3%)		(117)	(0.1%)
Total	$	84,483	13.4%	$	43,285	9.5%

	For the six months ended June 30,
	2017			2016
			% of			% of
			Segment			Segment
Segment	Gross Profit		Revenue	Gross Profit		Revenue
Power	$	33,656	11.6%	$	25,677	9.7%
Pipeline		67,491	21.2%		11,468	10.3%
Utilities		40,620	12.3%		34,726	13.3%
Civil		(2,231)	(0.9%)		10,691	4.3%
Total	$	139,536	11.7%	$	82,562	9.3%

Segment Goodwill

The amount of goodwill recorded by segment at June 30, 2017 and at December 31, 2016 is presented in Note 8 – “Goodwill and Intangible Assets”.  

Geographic Region — Revenues and Total Assets

The Company’s revenues are derived from customers primarily in the United States, with less than 1.0% generated from sources outside of the United States. At June 30, 2017, approximately 1.0% of total assets were located outside of the United States.