Greetings. Welcome to the Primoris Services Corporations Reports First Quarter Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kate Tholking, Director of Investor Relations. Thank you, Ms. Tholking, you may begin.

Thank you, Rob. Good morning, everyone, and thank you for joining us today. Our speakers for today will be Brian Pratt, Chairman, President and Chief Executive Officer of Primoris Services Corporation; and Pete Moerbeek, Executive Vice President and Chief Financial Officer. Before we start, I'd like to remind everyone that statements made during today's call may contain certain forward-looking statements, including with regard to the company's future performance. Words such as estimated, believes, expects, projects, may and future or similar expressions are intended to identify forward-looking statements. Forward-looking statements inherently involve risks and uncertainties, including, without limitation, those discussed in this morning's press release, those detailed in the Risk Factors section and other portions in our annual report on Form 10-K for the period ending December 31, 2013, our quarterly report for the Form 10-Q, which was filed this morning, and other filings with the Securities and Exchange Commission. Primoris does 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. I'd now like to turn the call over to our CEO, Brian Pratt.

Good morning, everyone, and thanks for joining us. While we undeniably were impacted by the same difficult weather conditions as nearly everyone else, it's a great tribute to our men and women in the field that we're able to enjoy the kind of quarter we, or better said, they produced. We had a sizable exposure to the weather this winter and really had a very difficult January and early February. And when the weather finally allowed, our people went out and performed brilliantly to make up for this unusually tough start. I cannot begin to express how proud I am of them. Now onto specifics. We grew our first quarter revenue by 15% to $470 million over last year's first quarter. This is effectively all organic growth as our only acquisition in 2013, FSS, was so small that really, it was more of a startup than a true acquisition, and it contributed very little to top or bottom lines. It's worth noting that our 12-month trailing revenue is now just over $2 billion, a new milestone for Primoris. It was only 3 years ago that we passed the $1 billion revenue mark. It shouldn't come as a surprise that we saw some gross margin decline in the quarter due to challenges presented by unusually tough weather, and some permitting and engineering issues experienced by our clients. But I'm quite pleased that our overall operating margins remained steady when compared to last year's first quarter. Our balance sheet remains solid with $167 million in cash and equivalents. With our cash on hand and available credit facilities, we have nearly $300 million of available liquidity. This should provide us ample flexibility, not only support us in upcoming boom in the Gulf region, but also facilitate growth through either acquisitions or continued investment…

Thank you, Brian. From a financial viewpoint, this was a relatively straightforward quarter. As Kate said earlier, we filed our form 10-Q this morning, so it will be a very short time before we find out who's first in the question queue. In first quarter of 2014, we earned $0.21 per share on revenue of $470 million compared to $0.19 per share on revenue of $410 million in the first quarter a year ago. The increase in revenue was spread across our subsidiaries and operating divisions, with the largest increases coming from ARB Industrial, Q3 Contracting and the James Construction Group Heavy Civil division. For the quarter, we've derived 12.7% of our revenues from a large solar project in the West, and our second largest customer was Texas DOT with 9.3% of total revenue. Gross margin, as a percentage of revenue, declined to 10.6% in the quarter compared to 11.2% in the previous year's first quarter. We know that normally -- that normal winter weather creates operating challenges in the first quarter. But this quarter's weather was more extreme than usual. Fortunately, we did well enough overall that I do not need to explain the word polar vortex. But I do want to echo Brian's earlier comments. Our operations people did a great job in March. As a percentage of revenue, our SG&A expenses declined from 6.9% in the first quarter of 2013 to 6.3% in the first quarter of this year. At the operating income level, we achieved the same margin of 4.3% of revenue in the first quarter of both 2013 and 2014. Our effective tax rate for net income attributable to Primoris increased to 39.6% for the quarter compared to 38.8% in the first quarter of 2013. The increase is primarily from the variability and state tax…

[Operator Instructions] Our first question comes from the line of Tahira Afzal with KeyBanc.

So I guess my first question is, you have some sort of headwinds in the sense that the weather slow start some projects. It seems you also have some pre-active bookings that have happened, maybe will happen after the first quarter, some contingency releases that could happen, some projects that were a little slow to start off last year and seems to have started off now. So just stepping back and summing everything up, Brian, can you give us a sort of high-level idea of how we should be modeling out this year from a revenue and margin perspective, given you do have some large completions that happened last year?

Well, it's a great question, Tahira. I wish I -- I guess, I do have plenty of time because Pete only had 1.5 page of mundane stuff to talk about. I think the year is shaping up pretty well. I -- John Rogers asked at the last quarter earnings call about delays and projects. I think that's our biggest concern. The stuff in the Southeast continues to drag a little bit, although we did get some pretty good news on one of the larger projects just last night. They're back on track for a quick start. The good news is for us, in the Southeast, as most of what we do is Heavy Civil and a lot of that's dirt. And that's kind of the first thing they have to do to get these projects out of the ground, because most of the places these projects are built are pretty unstable sites until we stabilize them. I think the pipeline group has got -- they got to go out and win some work. But they have to do that every year. It's not like we usually start this time of year with $400 million or $500 million of backlog. I think the utilities in the West, one in the North continues to struggle because they're constantly in reorganization. They're good guys, but they struggle getting work turned out. That's why Scott had kind of a weaker first quarter. But we did just recently pick up a part of the -- a bigger part of the piece of the program for Southern California. And that's a sizable revenue. So I think Scott is going to have his normal, forgive me, the hassles and elbow kind of year-end. I think, in general, I'm really optimistic on where we are. I think it's just a matter of the clients and get the work through engineering permitting fast enough across the board to get us where we want to go. The biggest challenge, I think, we're going to have is keeping our better people because when times get good like this, a lot of your competitors look to hire from places like us because we do have such great people. And then the shortage of crafts people, I think, is going to be very acute by year-end. But I -- it's going to be a great year. I don't have much doubt. I know a lot of you have Tim pegged for a soft year this year, but he had a great first quarter and he stacked it up pretty well, and he's going to have bigger jobs to finish up through the year with contingency releases and stuff like that from now on. So I'm really happy with where he is. And that was one of our concerns last year. So I'm really pleased.

Brian, and just a quick follow-up. It seems even from the 10-Q, as I've gone through, there seem to be some industrial work that has started to ramp up. And it seems you talked a little more about the volume of projects out there on the industrial side, more like [indiscernible]. So can you -- I don't know if you can name the projects, but can you talk about those LNG opportunities that you see in front of yourselves? How many -- the number, specifically, if possible, and same goes for the petrochem type of work?

Well, there's -- I've been touting the Micro mini LNG opportunities for years. And you guys -- not you, Tahira, but some of your compatriots kind of poo pooed it. So now that it's upon us, I'm not going to tout it anymore. I'm going to let our competitors figure out where we're going to get to work on their own. But there is a tremendous opportunity in the shipping business. Any of the heavy industrial users, heavy transportation industrial users between the boats and the trains, and then the frac-ing business and everything else. And it's going to be all we can say grace over to be able to get it executed over the next 3 or 4 years. I think our biggest challenge there, again, is going to be just manning up and staying ahead of the process because it's finally upon us. And we've got guys that were 2 years ago, kicking tires on projects, are now pulling the trigger, so I can mix my metaphor there. I think -- so I think there's lot of opportunity there. It's kind of -- where one of the few guys in the business that's kind of harsh to lose. But I think Randy has done a great job of picking the right clients and picking the right kind of projects where our skill sets and our supply stream are well matched for the market. In the general industrial side, again, we do the front end of these projects, unlike some of the guys that focus more on piping or equipment. And so we're going to probably see some of it before they do. And this stuff is running through Engineering so fast, and the Engineering is going to be a real problem because they're out of capacity. And we're…

Our next question is from the line of Lee Jagoda, CJS Securities.

If I look at Rockford in 2013 versus '12, it had a pretty large revenue increase, but minimal gross profit improvement. And now, in Q1, revenue was slightly down, but gross profit was up $2.2 million. If I look at the year-over-year comparisons for the balance of the year at Rockford, how should we think about revenue and profitability improvement?

My mandate to Frank was make as much as you can. I'm just kidding you, Lee. I told you guys, and you guys -- please don't go back and replay my calls because they're difficult for me to talk on anyway. But anytime you see a ramp-up like this, the first year is tough. The first shoot out of the gate, it's tough because you got crappy clients. You got stupid competitors that are buying cheap work. It takes them a while to get it into their head that they can get a little bit more for their services. Labor realizes it's coming, so they start growling about more money and being more difficult to work with. So traditionally, the first year is a tough year in a boom, and I think we're back into almost that mode right now. So it's a no surprise to me that the margins have increased. In any regard, I think the first quarter might be a bit of an aberration, but because of the closeouts -- but we're going to have close-outs every quarter, and Frank will continue to do well with his work. So I think, last year, the margins were kind of too low, lower than they should have been. This year, they're going to be kind of where they should be, and next year, they should be exemplary.

Okay. And then just switching gears a little bit to the East. Where are we in the ramp process for the Heavy Civil work in Texas? And when do you think we'll hit that run rate of a normal margin percentage on that work?

You guys like to lump everything together and put a big number on it. We manage each project individually. And some of them, the littles ones and the big ones, and we look at each one, and they roll up to an average number. I think where -- some of their projects were still in the 15%, 20% completion areas. Some of them were getting towards 50%. A lot of what we struggle with on the Heavy Civil side in the east is delays, and they're typically owner-caused delays because most of these owners, TxDOT and LADOT, they don't do a lot of the advanced work on these projects until the projects are awarded, and the money's budgeted and their shirt's within budget and they award it. And then they go out and they tell the utilities to move their lines and to get out of our way, and they do some of the heavy lifting that a lot of the private clients will do in advance of that. So we always end up with these delays. And one of the challenges is how do you deal with that in your numbers because your overhead goes on. You have the prospects to having to fight them over liquidated damages, even though it's not your fault. They still want to negotiate it as if it was. So these projects stretch. They get into the 50%, 60% area. We can start taking more contingency or releasing more contingencies and things like that. I think we're in a low spot in terms of what we'll recognize. I think our current amount of unrecognized backlog is close to $1 billion just in Heavy Civil. And that, traditionally, is a lower margin because of the nature of the market than other areas. But I would look for margins to increase across the board in the East. Don't forget, we have a couple of pretty good drags in the Energy Services, the new Energy Services segment last year with Saxon and FSS, who gave us losses last year. So if we can just get them into the black or breakeven, we're going to see pretty good margin expansion.

Our next question is from the line of Adam Thalhimer of BB&T. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Hey, can I press you a little bit more on the East margins, Brian? I mean, does improvement mean double digits?

We're seeing a huge expansion in the private side of the East market. Whether that will outweigh the lower margins and Heavy Civil in the East, I'm not sure. I don't really segment it that way. You guys like to slice and dice this. I'm a lower right hand number guy. I care about earnings per share, and everything else is kind of how you get there. I don't think you'll ever see double digits across the board in that area. Now -- and it's also more a little bit auspicated for me because we're going to re-segment. I don't think I can give you a good answer there, Adam. I think we'll see some -- between the east jobs kind of maturing, particularly in the Texas market, and the heavier amount of work in the private side with the petrochem and the refinery stuff coming on, I think you'll see very significant margin expansion but I can't typify it into double digits. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Okay. The Pasadena power projects, can you expand a little bit on that in terms...

[Indiscernible] fast. Adam R. Thalhimer - BB&T Capital Markets, Research Division: When does that start and what else are you seeing to date in power?

That starts almost immediately. They have to go through kind of a process, and most cities do this. That's why we haven't announced it. We are apparent low bidder, and they started the contract process. Typically, they go through, and to make sure you met your DBE requirements and you're responsive, and then they have to finalize their little power purchase agreement or their CEC filing. So -- but I look for it to start right away. It's got a small component of the design-build, but that's kind of designed on the fly kind of stuff. They own the engines, they're going to hit the ground running. A lot of the power work we're seeing is smaller stuff that kind of goes immediately. But as we've talked, the massive stuff, it starts in the '15. We're still hard at work at that stuff, and those are anywhere from $190 million up kind of projects. Their wings just been worn out on that stuff between a couple of key developers in the West. And then we're looking at quite a bit of solar stuff here and there. And solar, Tim's making a steady dive of that right now. It's a little more difficult market because of the Texan clients you have there. Some of them are cash poor, and difficult guys to work with. But Tim's got a steady dive at it going right now. So we're bidding some more of that, and then we're bidding some less than conventional type things. So it's a mixed bag, but I think Tim's -- like I've said all along, he's going to find enough work to keep his guys busy, and contribute well until the bigger stuff kicks in, in '14 -- late '14, early '15. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Okay. And then, I mean, Brian, just lastly, kind of hoping you can expand on your comments in terms of this being the first year of a kind of big cycle. And can you help us understand, as you get into the second year 2015, what should we be seeing? Is it multiple or big industrial jobs, where you're doing the Heavy Civil work for? Is it big ramp on the pipe side? What does year 2 of your big cycle look like?

Well, the -- year 2 will be much like the fourth quarter, I think, even a bit more exacerbated. I think, as we stretch into it, you're going to see major labor shortages. It's going to be all kinds of problems for us, but I don't think it will flow through to the bottom line. It's high-quality problems. So I'd much rather try and keep our people when times are busy than when times are slow. But I couldn't begin to tell you what the second year is going to look like. We hired Jim and Henry down in the Southeast because traditionally, the guys we had were very good at the Heavy Civil side. And Jim and some of the team we put together is very good at the piping and the equipment side. So as this thing stretches into the second and third year, it's more likely [ph] we're going to see some more shift from our more traditional kind of Heavy Civil to more the mechanical side, and I think we're going to grow into that. But we're also very focused on recurring side of revenues. And so we're looking real hard at trying to pick up more maintenance work, an ongoing step. And we're not boom chasers. We like to get into a market. We dig in like a tick. And we survive the ups and downs of the market. So we're looking to take advantage of this. But we're also looking to do it in a way where we retain our better customers. We pick up some good customers. And then we're the last man standing when this boom goes away in a couple of years.

Our next question is from the line of John Rogers, D.A. Davidson. John B. Rogers - D.A. Davidson & Co., Research Division: I guess, 2 things. First of all, on a little bit of a shorter-term basis, the -- a lot of the other contractors have talked about impact in the second quarter from a rough spring breakup. Are your guys at Rockford concerned about that in terms of slowing production?

Based on what, John? John B. Rogers - D.A. Davidson & Co., Research Division: I guess, the heavy frost cold weather in the Northern regions. I mean, it's just a slow start up in the spring. I assume it doesn't impact your Southern business.

No, not really. We're pretty much off the end of Seaway. We just had some cold days and some windy days and wet, and that really hurts productivity. Most of the work we do, like with Q3C and Rockford works in West Virginia, so you're not worried about permanent frost and things like that. As long as the temperature gets up above anywhere between 0 and 10 degrees, the distribution work can move forward. When you get below that temperature, the pipe won't fuse, and you end up with inconsistent fusions, which really -- and then you get people slipping and sliding all over the world out there, which is kind of dangerous. But Q3C is ramping up pretty good right now. And when you look at their business plan, which is well ahead of last year, they did 168 last year and they did 93 the year before, and they're in that kind of growth pattern this year. They really have to go like hell after having not done any work through April. But I got to tell, Mike Russell [ph], the guy who runs the east side of Q3C is a monster when it comes to getting the work done. He will perform well for us, and Jason will continue on the clip he's got in Denver. So we really aren't going to be impacted with a -- if you bar -- I would never say this, but if you bar revenues or profits from second quarter, and you got to pay the piper now, yes, you might have a tougher second quarter, but we don't do that. So I think we're in pretty good stead. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. And then my other question, Brian, is just relative to acquisitions. I mean, as you noted, it's been a little quieter for you, and you can't help yourself in terms of always looking at opportunities out there. What's the market look like ahead of presumably a much better environment? Are multiples going up? Is that what's been slower or you just can't find anything that you particularly like or you're better off growing it yourself?

Well, I wouldn't want you to refer to me as a pathological acquirer. But we have a guide. That's what he does. He looks, and we've been -- on the bigger side, yes, I mean, the multiples have gotten to the point where I just couldn't justify. And now on the last 1.5 month or so, the public multiples have come down or at least the prices have. I don't know if that's because of lack of performance or perception of what a multiple should be. For us, it is a question of can we grow it or should we buy it? And when the margins have gone up like they have, it's tougher to pay those kinds of margins. When we're selling for a 7, 7.5x EBITDA and the public -- the private market, these guys want to get paid at 8.5 or 9. I can't do that with off conscience with our money. So we've looked at smaller deals, and then we've looked -- we did virtually a startup up in North Carolina. We're going to look up more of those. You guys in the public side, that doesn't help us with you because that gets earnings immediately, and we're an acquisition. We can go out, and it's all good news because you buy something, that's good and then they immediately contribute towards earnings, whereas a start-up takes time. So -- but we've always approached this with a long view, and so we are looking for more startups and smaller acquisitions that we would look at startups into markets that we would like to be in. We've got a lot of running room on new markets. And they're not in your traditional places, where everybody has been looking lately, like in the Southeast because everybody knows that the refineries and the petrochem guys are going to be crazy in the next couple of years. So we're trying to -- I said this on the last call, my job is to find the next boom, and I take that pretty seriously. So we're looking at areas that the other guys aren't. And those aren't getting the kind of multiples that the markets that are getting all the attention are. So -- but we're not out of things. We've got a lot of smaller wins we're looking at and several bigger ones, but it's a mixed bag. And a lot of guys in the private side think they're worth a higher multiple than the guys on the public side.

[Operator Instructions] The next question is from the line of Jason Wangler of Wunderlich.

Most of mine have been answered. Just curious if there's any more color just on how at least you're thinking early on about the breakdown of the segments. Is it going to be based on the business or is it going to continue to be geographical or just anything on that side?

I'm laughing because Brian said, "It's yours, Pete." I think we may go through a couple of stages. Initially, what we've been talking about is taking some of the energy people and putting them together with maybe the engineering. And eventually, I think we will end up at the point where we get to industrial end industries, but that may be a couple of stages along for us. So I think where we will end up is we may still have an East segment, a West segment, and then we'll have an Engineering and Energy segment or something like that.

Okay. And then, Brian, maybe if I could, on your side. Just with the utility, now that we're getting in kind of the -- to the middle of the year, are you starting to see them start to deploy their capital and getting now back to a more steady work rate for you guys?

Yes, it's always this way. They always -- and they do so in a good spirit, but they always promise you, "Yes, we're going to work you all the way through the winter." But these guys all have -- the ones we work for, most of them have 3-year rate cases, and they have to spend their capital money or they don't get their rates, and so they try and spend CapEx within 0.5% of what they budget. So anything they don't spend in the first quarter, it comes back with a vengeance in the later quarters. We did pick up the region, a couple of regions in Southern California just recently. That's a lot of money that has to be spent by midyear '16. So that's going to be a lot of help. And I think the replacement program up in the North is really going to get into gear soon. And that really bodes well for us because we have more capacity and more ability to man up and down than any of our competitors, probably all of our competitors combined in those 2 areas. So this fluctuation and workforce really, really plays into our hand better because, like I say, we have the ability to manage that better than anybody else.

Our next question comes from the line of Dan Mannes, Avondale Partners.

So real quick on a follow-up to the last question. When you look at the replacement cycle both in Northern and Southern California, where do you think we are, given that San Bruno happened, I guess, what, 4 years ago now and Pack Ass [ph] has been at us for a couple of years? How much longer does this go? How much more room is there from a cycle standpoint?

Kate's got a slide on that on the work that the Northern California guys' committed to and what's left, and I'm going from memory. But I think they probably accomplished something like 15% to 20% of what they have to accomplish. And these guys like to measure things and like to feel they've accomplished things. So when you talk to a lot of these guys, they do the easy first so they can claim they've replaced x many percentage of the amount of pipes that needs to be replaced. Kate just showed it for me. It's -- I don't know, you boil it out for me. I'll give it to Dan. It's too complicated for me to figure out. And that a lot of people make the mistake of measuring us based on the PSEP programs, and that's maybe 30%, 40% of the work we do for these guys. The rest of it is replacement and new capital and things like the copper services that we did for PG&E over a 5-year program. Now that was 60,000 services. That was, I think, $40 million, $50 million a year in the peak years. And the elbow A and the elbow B services are 250,000 services that we're looking down the barrel of, and that's -- I don't know how long they're going to do that, but that is separate from the PSEP program. So it's kind of -- at this point, it's kind of like one of those cokes you buy at Chili's. It's bottomless. So I'm not too worried about it. Kate just handed this to me. They've done 100 -- PG&E's done 127 miles out of the -- what does this say?

Miles of replacement.

Speak up, girl.

127 miles of replaced pipe. They've only checked 657 miles. They verified that. Out of the total system, that includes 6,700 miles.

Got it. And then the follow up there is now that looks like Southern Cal is pretty close to regulatory verdict, and they're starting to hand out the work. How meaningful is the SoCal work when you compare it to what you're doing in NorCal, meaning, how incremental is it and how much larger could it be?

Well, SoCal is broken -- they broke the work into 5 regions. We got 2 of the 5. They're talking about roughly $325 million for their contracts over the next 2.5 years. We've got the heart of the project, which was the L.A. Basin, and then we got what they call North Coastal, which is the work up to San Luis. They estimate that at about 60% of that $325 million. So -- and we signed that alliance contract with them last week. That's why we haven't -- at the end of last week. That's why we haven't announced it yet. So I don't know how you can annualize that [indiscernible] one. And the next phase, phase 2 starts in 2016. Now I don't know how to measure the North and the South, but I think SoCal's always ahead of the North. So a long ways ahead. So when you look at the amount of money that's being spent in the South, then it help you gauge how long the legs the work in the North has.

Got it. And then one last somewhat separate topic on Q3C. It looks like you're expanding that business regionally. I'm seeing you in some markets you haven't been before. Can you talk about the strategy there and kind of how you're moving to the new markets and how big a footprint Q3C could ultimately have?

The -- Jay Osborn's kind of got this business plan that reminds me of the life of Attila the Hun. He's going to go anywhere where there's a soft spot in a few hard places. So we're looking at expansion. He's shown and his guys have shown a remarkable ability to do well in this newer markets and moving his people around, and I think they're going to continue to show us that. He's done a great job kind of nurturing these clients. And we'll go wherever the existing clients are and wherever our existing skill sets will take us. And I got to tell you, it's a long ways to the next market out in that part of the world because everything's so far apart, but he's got a lot of room to run this year. Any -- I can't really talked too much about '15 because he had -- Wednesday night, I get the plan. So well, ask me again next quarter.

At this time, I'll turn the floor back to management for further or closing comments.

I'd like to complement the James Industrial. They've reached a real milestone in their safety record, and they work to million hours with no recordable injuries, and there's only -- you can count the number of companies on 2 hands that have been able to do that in our business over the years. And Conrad's group's just done an amazing job of really managing their safety in a market, as we've talked about, where you have to hire a lot of new people. And I really want to compliment Conrad and Jim Henry for their accomplishment there. So also, as usual, I'd like to thank everyone for their interest and support of Primoris. And I especially like to thank the men and women that made the first quarter win that you can be very proud of. Goodbye.