Primoris's Solar Stumble Reshapes Its Growth Narrative
Cost overruns and a guidance cut sent shares down more than 60%, but the company's pivot to gas generation and utilities offers a path forward.
PRIM · Earnings Call · 2026-05-06
Primoris Services, a diversified engineering and construction company, delivered a sobering first-quarter report that erased months of market confidence. Shares have fallen more than 60% from their May peak after management disclosed cost overruns in its solar business and slashed full-year guidance. The quarter exposed the perils of rapid geographic expansion, even as the company pivots toward what it sees as more durable growth in gas generation and electrical infrastructure.
The Cost of Rapid Expansion
The trouble traces to a small cluster of solar projects bid in 2024. As CEO Koti Vadlamudi explained on the call, the root causes were not market-related but internal: “Through our review, we identified two primary drivers behind these challenges: preconstruction planning and the complexity associated with new geographic labor markets.” — Koti Vadlamudi, President and Chief Executive Officer · 2026-05-06 These were not isolated incidents—they came on top of an earlier project with subsurface issues. The company has since made leadership changes and stopped pursuing work in unfamiliar geographies. Yet the financial damage was immediate: gross margin compressed to 8.6% from 10.4% a year earlier, and total revenue fell 5%. Gross margin fell to 8.6% from 10.4% a year ago while total revenue slipped 5% year over year, driven by lower Energy segment activity and delayed project starts.A Reset in Guidance and Focus
The company cut its full-year adjusted EPS guidance to $4.80–$5.00 and adjusted EBITDA to $480–$500 million. CFO Ken Dodgen laid out the impact in three buckets:Management remains bullish on the broader opportunity, especially in gas generation. Koti reiterated: “We still have a deep conviction on the end market with gas power generation.” — Koti Vadlamudi, President and Chief Executive Officer · 2026-05-06 He pointed to a funnel of over $7 billion, with nearly $800 million in verbal awards expected imminently. On the booking front, the company sees strong momentum: “On the $1.1 billion of verbal awards and $2.8 billion that we said we will sign, some projects have slipped to the right, but what gives us confidence is that we are still working closely with our customers.” — Koti Vadlamudi, President and Chief Executive Officer · 2026-05-06 The Paynecrest acquisition, closed in early May, adds a data-center-focused electrical contractor, broadening exposure to the hyperscaler buildout. This aligns with the company's strategy, though the near-term attention remains on executing the troubled renewables book.The $110 million, it is kind of in three buckets if you think about it. We talked about the revenue pushout and the lower revenue in renewables. That is about $400 million for the year, and so at kind of our normal gross margins, that is about $45 million, give or take. Then the cost overruns on the jobs in Q1 are about $35 million to $40 million of it. And then there is about another $25 million or so that will just be lower margins as we finish out the jobs over the course of Q2, predominantly Q2 and Q3.