10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2012

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                    to                      .

Commission file number 0001-34145

Primoris Services Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	20-4743916 (I.R.S. Employer Identification No.)
2100 McKinney Avenue, Suite 1500 Dallas, Texas (Address of Principal Executive Offices)	75201 (Zip Code)

Registrant’s telephone number, including area code: (214) 740-5600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  x
Non-accelerated filer  o	Smaller reporting company  o
Do not check if a smaller reporting company.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

At August 7, 2012, 51,388,406 shares of the registrant’s common stock were outstanding.

PRIMORIS SERVICES CORPORATION

INDEX

	Page No.
Part I. Financial Information
Item 1. Financial Statements:
—Condensed Consolidated Balance Sheets at June 30, 2012 and December 31, 2011	3
—Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2012 and 2011	4
— Condensed Consolidated Statements of Cash Flows for the three months and six months ended June 30, 2012 and 2011	5
—Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
Part II. Other Information
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. (Removed and Reserved)	33
Item 5. Other Information	33
Item 6. Exhibits	34
Signatures	35

2

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

(Unaudited)

	June 30, 2012		December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	119,286	$	120,306
Short term investments	—		23,000
Customer retention deposits and restricted cash	40,168		31,490
Accounts receivable, net	175,082		187,378
Costs and estimated earnings in excess of billings	45,473		41,866
Inventory and uninstalled contract materials	34,881		31,926
Deferred tax assets	10,659		10,659
Prepaid expenses and other current assets	10,715		13,252
Total current assets	436,264		459,877
Property and equipment, net	151,345		129,649
Investment in non-consolidated entities	12,481		12,687
Intangible assets, net	32,428		32,021
Goodwill	103,569		94,179
Total assets	$	736,087	$	728,413
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	107,752	$	106,725
Billings in excess of costs and estimated earnings	131,688		137,729
Accrued expenses and other current liabilities	66,292		59,923
Dividends payable	1,542		1,532
Current portion of capital leases	3,535		6,623
Current portion of long-term debt	15,244		13,870
Current portion of subordinated debt	3,223		15,167
Current portion of contingent earnout liabilities	9,755		3,450
Total current liabilities	339,031		345,019
Long-term capital leases, net of current portion	4,089		4,047
Long-term debt, net of current portion	58,970		55,852
Long-term subordinated debt, net of current portion	1,777		7,334
Deferred tax liabilities	21,079		21,079
Long-term contingent earnout liabilities, net of current portion	2,842		9,268
Other long-term liabilities	8,813		10,882
Total liabilities	436,601		453,481
Commitments and contingencies
Stockholders’ equity
Common stock—$.0001 par value, 90,000,000 shares authorized, 51,388,406 and 51,059,132 issued and outstanding at June 30, 2012 and December 31, 2011	5		5
Additional paid-in capital	155,417		150,003
Retained earnings	144,064		124,924
Total stockholders’ equity	299,486		274,932
Total liabilities and stockholders’ equity	$	736,087	$	728,413

See Accompanying Notes to Condensed Consolidated Financial Statements

3

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Revenues	$	337,436		$	351,956		$	629,009		$	711,601
Cost of revenues	293,432			310,550			547,409			629,565
Gross profit	44,004			41,406			81,600			82,036
Selling, general and administrative expenses	23,396			20,477			43,670			40,322
Operating income	20,608			20,929			37,930			41,714
Other income (expense):
Income (loss) from non-consolidated entities	(171		)	4,400			886			5,226
Foreign exchange loss	(6		)	(72		)	(48		)	(36		)
Other expense	(371		)	(306		)	(579		)	(603		)
Interest income	25			100			47			258
Interest expense	(1,006		)	(1,353		)	(2,107		)	(2,724		)
Income before provision for income taxes	19,079			23,698			36,129			43,835
Provision for income taxes	(7,346		)	(9,236		)	(13,910		)	(17,095		)
Net income	$	11,733		$	14,462		$	22,219		$	26,740
Earnings per share:
Basic	$	0.23		$	0.28		$	0.43		$	0.53
Diluted	$	0.23		$	0.28		$	0.43		$	0.52
Weighted average common shares outstanding:
Basic	51,435			51,044			51,386			50,363
Diluted	51,435			51,154			51,386			51,111

See Accompanying Notes to Condensed Consolidated Financial Statements

4

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2012			2011
Cash flows from operating activities:
Net income	$	22,219		$	26,740
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	13,557			12,043
Amortization of intangible assets	3,193			5,532
Gain on sale of property and equipment	(1,776		)	(37		)
Income from non-consolidated entities	(886		)	(5,226		)
Non-consolidated entity distributions	1,260			5,997
Changes in assets and liabilities:
Customer retention deposits and restricted cash	(8,678		)	(5,001		)
Accounts receivable	20,813			53,023
Costs and estimated earnings in excess of billings	(2,983		)	(16,309		)
Other current assets	206			(1,466		)
Accounts payable	(2,056		)	1,303
Billings in excess of costs and estimated earnings	(6,455		)	(33,723		)
Contingent earnout liabilities	(2,871		)	603
Accrued expenses and other current liabilities	6,397			10,743
Other long-term liabilities	(2,237		)	(2,285		)
Net cash provided by operating activities	39,703			51,937
Cash flows from investing activities:
Purchase of property and equipment	(12,409		)	(10,810		)
Proceeds from sale of property and equipment	6,731			997
Purchase of short-term investments	—			(23,000		)
Sale of short-term investments	23,000			26,000
Cash paid for acquisitions	(35,131		)	—
Net cash used in investing activities	(17,809		)	(6,813		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	12,776			2,500
Repayment of capital leases	(7,075		)	(2,680		)
Repayment of long-term debt	(8,284		)	(7,900		)
Repayment of subordinated debt	(17,501		)	(13,474		)
Proceeds from issuance of common stock	1,240			822
Purchase of Unit Purchase Option	—			(2,030		)
Dividends paid	(3,069		)	(2,510		)
Repurchase of common stock	(1,001		)	—
Net cash used in financing activities	(22,914		)	(25,272		)
Net change in cash and cash equivalents	(1,020		)	19,852
Cash and cash equivalents at beginning of the period	120,306			115,437
Cash and cash equivalents at end of the period	$	119,286		$	135,289

See Accompanying Notes to Condensed Consolidated Financial Statements

5

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Six Months Ended
	June 30,
	2012			2011
	(Unaudited)
Cash paid during the period for:
Interest	$	1,588		$	2,724
Income taxes, net of refunds received	$	11,081		$	12,693
Components of cash paid for acquisitions:
Fair value of assets acquired — Sprint	$	28,377		$	—
Fair value of assets acquired — Silva	14,109
Cash payment due sellers	(175		)
Contingent liabilities	(6,200		)	—
Common stock issued for acquisition	(980		)	—
Cash paid for acquisitions	$	35,131		$	—

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

	Six Months Ended
	June 30,
	2012		2011
	(Unaudited)
Obligations incurred for the acquisition of property and equipment	$	1,046	$	—
Accrued dividends declared	$	1,542	$	1,276

See Accompanying Notes to Condensed Consolidated Financial Statements

6

PRIMORIS SERVICES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars In Thousands, Except Share and Per Share Amounts)

(Unaudited)

Note 1—Business Activity

Organization and operations — Primoris Services Corporation and its wholly-owned subsidiaries ARB, Inc. (“ARB”), ARB Structures, Inc., All Day Electric Company, Inc., Onquest, Inc., Born Heaters Canada, ULC, Cardinal Contractors, Inc., GML Coatings, LLC, Stellaris, LLC, James Construction Group LLC (“JCG”) and Rockford Corporation, collectively, are engaged in various construction and product engineering activities. 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 in 2011 moved its corporate headquarters from Lake Forest, California to 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

On March 12, 2012, the Company executed an asset purchase agreement with Sprint Pipeline Services, L.P. (“Sprint”).  Headquartered in Pearland (near Houston), Texas, Sprint provides a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in the southeastern United States.  The Company formed Primoris Energy Services Corporation, a Texas corporation, to facilitate the acquisition.  The purchase agreement allows the Company to use the Sprint name for three years.

On May 30, 2012, the Company executed an asset purchase agreement with Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interests, LLC (collectively “Silva”).  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving, and material sales in the Gulf Coast region of the United States.

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

Note 2—Basis of Presentation

Interim consolidated financial statements — The interim condensed consolidated financial statements for the three-month periods ended June 30, 2012 and 2011 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in the Company’s latest audited consolidated financial statements, have been omitted. This Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (the “Second Quarter 2012 Report”) should be read in concert with the Company’s Annual Report on Form 10-K, filed on March 5, 2012, which contains the Company’s audited consolidated financial statements for the year ended December 31, 2011.

The interim financial information for the three-month and six-month periods ended June 30, 2012 and 2011 has been prepared on the same basis as the audited consolidated financial statements; however, the financial statements contained in this Second Quarter 2012 Report do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for audited financial statements. The interim financial information is unaudited.  In the opinion of management, the unaudited information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information.

Revenue recognition — The Company typically structures contracts as unit-price, time and material, fixed-price or cost reimbursable plus fee. Revenue is recognized on the cost-on-total-cost percentage-of-completion method for fixed price contracts.  In the percentage-of-completion method, estimated revenues and resulting contract income is calculated based on the total costs incurred to date as a percentage of total estimated costs. Total estimated costs, and thus contract revenues and income, can be impacted by changes in any of the following: 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 and politics may affect the progress of a project’s completion and thus the timing of revenue recognition. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.

The caption “Costs and estimated earnings in excess of billings” represents the excess of contract revenues recognized under the percentage-of-completion method over billings to date. For those contracts in which billings exceed contract revenues recognized to date, such excesses are included in the caption “Billings in excess of costs and estimated earnings”.

Revenues on cost-plus and time and materials contracts are recognized as the related work is completed.

7

In accordance with applicable terms of construction contracts, certain retainage amounts may be withheld by customers until completion and acceptance of the project. Final payments of the majority of such amounts are expected to be receivable in the following operating cycle.

Significant revision in contract estimate — As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate the revenue to be recognized. Total estimated costs, and thus contract income, are impacted by many factors.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits related to the prior year, had current year estimates of costs to complete been known in the prior year.

Customer concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout primarily the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three-months and six-months ending June 30, 2012, revenues generated by the top ten customers were $184.8 million and $364.2 million, respectively, which represented 54.8% and 57.9%, respectively of total revenues during the periods.  During the three and six month periods ending June 30, 2012, the Louisiana DOT represented 11.6% and 13.3%, respectively, of total revenues and a large gas and electric utility represented 12.1% and 11.9%, respectively, of total revenues. During the three and six months ending June 30, 2011, revenues generated by Rockford under the Ruby contract were $89.5 million and $216.4 million, respectively, which represented 25.4% and 30.4%, respectively, of total revenues during the periods.  The Ruby contract was part of a large project for the construction of a natural gas pipeline from Wyoming to Oregon for which field work was substantially completed by the end of the third quarter 2011.

At June 30, 2012, approximately 6.8% of the Company’s accounts receivable were due from one customer, and that customer provided 4.1% of the Company’s revenues for the six months ended June 30, 2012.  At June 30, 2011, approximately 4.9% of the Company’s accounts receivable were due from one customer, and that customer provided 30.4% of the Company’s revenues for the six months ended June 30, 2011

Multiemployer plans — The Company participates and contributes to a number of multiemployer benefit plans for its union employees at rates determined by the various collective bargaining agreements.  Each plan’s trustees determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP.  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan and recorded a $5 million withdrawal liability as of December 31, 2011.  At this time, the Company has no plans to withdraw from any other agreements.

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method.

Note 3—Recent Accounting Pronouncements

Fair Value Disclosures

In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which provides amendments to FASB ASC Topic 820, Fair Value Measurement. The objective of ASU 2011-04 is to create common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards (“IFRS”). The amendments clarify existing fair value measurement and disclosure requirements and make changes to particular principles or requirements for measuring or disclosing information about fair value measurements.  The Company adopted ASU 2011-04 on January 1, 2012, which did not have a material impact on its consolidated financial statements.

Goodwill Impairment Testing

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill or Impairment (“ASU 2011-08”). ASU 2011-08 provides an option to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that the fair value is not less than its carrying amount, then it is not necessary to perform the two-step impairment test.  An entity can choose to perform the qualitative assessment on none, some or all of its reporting units.  An entity can also bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period.  ASU 2011-08 also includes new qualitative indicators that replace those currently used to determine whether an interim goodwill impairment test is required to be performed. The Company adopted this standard on January 1, 2012 which did not have a material impact on the Company’s financial position, results of operations or cash flows.

8

Intangible Asset Impairment Testing

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other (Topic 350):  Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”).  ASU 2012-02 allows an organization the option of first assessing qualitative factors to determine if a quantitative impairment test of the indefinite-lived intangible asset is necessary.  If the qualitative assessment reveals that it is “more likely than not” that the asset is impaired, a calculation of the asset’s fair value is required.  Otherwise, no quantitative calculation, as outlined in Subtopic 350-30 is necessary.  ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  The Company will adopt this standard on October 1, 2012.  The adoption of ASU 2012-02 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 4—Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements.  ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis.

In general, fair values determined by Level 1 use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.

The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, the Company’s financial assets that are required to be measured at fair value at June 30, 2012 and December 31, 2011:

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets at June 30, 2012:
Cash and cash equivalents	$	119,286	$	119,286	—	—
Assets at December 31, 2011:
Cash and cash equivalents	$	120,306	$	120,306	—	—
Short-term investments	$	23,000	$	23,000	—	—

Short-term investments consist primarily of Certificates of Deposit (“CDs”) purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government FDIC program.

Other financial instruments of the Company consist of accounts receivable, accounts payable and certain accrued liabilities.  These financial instruments generally approximate fair value based on their short-term nature.  The carrying value of the Company’s long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities.

Note 5—Accounts Receivable

The following is a summary of the Company’s accounts receivable at the dates shown:

	June 30, 2012		December 31, 2011
Contracts receivable, net of allowance for doubtful accounts of $ 411 for June 30, 2012 and $363 for December 31, 2011	$	155,454	$	166,298
Retention	18,315		20,378
	173,769		186,676
Other accounts receivable	1,313		702
	$	175,082	$	187,378

9

Note 6—Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of the following at:

	June 30, 2012			December 31, 2011
Costs incurred on uncompleted contracts	$	2,828,550		$	2,977,535
Reserve for estimated losses on uncompleted contracts	337			917
Gross profit recognized	283,374			303,634
	3,112,261			3,282,086
Less: billings to date	(3,198,476		)	(3,377,949		)
	$	(86,215	)	$	(95,863	)

This amount is included in the accompanying consolidated balance sheet under the following captions:

	June 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings	$	45,473		$	41,866
Billings in excess of costs and estimated earnings	(131,688		)	(137,729		)
	$	(86,215	)	$	(95,863	)

Note 7—Equity Method Investments

WesPac Energy LLC

On July 1, 2010, the Company acquired a 50% membership interest in WesPac Energy LLC, a Nevada limited liability company (“WesPac”), from Kealine Holdings, LLC (“Kealine”), a Nevada limited liability company.  Kealine holds the remaining 50% membership interest in WesPac. We have no future obligation to make any additional investments into WesPac. All key investment, management and operating decisions of WesPac will require unanimous approval from a management committee equally represented by Kealine and us.  The Company believes the ownership interest in WesPac will broaden our exposure to a variety of pipeline, terminal and energy-related infrastructure opportunities across North America.

The following is a summary of the financial position and results as of and for the periods ended:

	June 30, 2012		December 31, 2011
WesPac Energy, LLC
Balance sheet data
Assets	$	17,891	$	20,147
Liabilities	288		1,820
Net assets	$	17,603	$	18,327
Company’s equity investment	$	12,348	$	12,415

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Earnings data:
Revenue	$	111		$	—		$	511		$	—
Expenses	$	428		$	11		$	644		$	138
Earnings before taxes	$	(317	)	$	(11	)	$	(133	)	$	(138	)
Company’s equity in earnings	$	(159	)	$	(6	)	$	(67	)	$	(69	)

At the end of 2011, a major oil refining third party terminated two potential projects.  WesPac expensed $5.4 million.  In March 2012, the third party reimbursed WesPac for its share of the terminated project costs.

In December 2011, the Company recorded its 50% share of expenses required by the equity method of accounting.  The Company also reduced its $5.0 million basis difference by $1.7 million to recognize an estimate for an other than temporary decrease in the value of its basis difference between the Company’s original investment and its pro-rata share of the WesPac equity.

10

St.—Bernard Levee Partners

The Company purchased a 30% interest in St.—Bernard Levee Partners (“Bernard”) in the fourth quarter 2009 for $300 and accounts for this investment under the equity method. Bernard engages in construction activities in Louisiana.  Bernard distributed $4,200 and $22,892 to its equity holders during the six months ended June 30, 2012 and 2011, respectively, of which, the Company’s share, as calculated under the joint venture agreement, was $1,260 and $5,880 for the same periods in 2012 and 2011, respectively.  The following is a summary of the financial position and results as of and for the periods ended:

	June 30, 2012		December 31, 2011
St. — Bernard Levee Partners
Balance sheet data
Assets	$	483	$	5,677
Liabilities	40		4,771
Net assets	$	443	$	906
Company’s equity investment	$	133	$	272

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Earnings data:
Revenue	$	499	$	27,674	$	3,934	$	55,710
Expenses	$	126	$	8,757	$	198	$	33,433
Earnings before taxes	$	373	$	18,917	$	3,736	$	22,277
Company’s equity in earnings	$	112	$	4,406	$	1,121	$	5,189

Note 8 — Business Combinations

Sprint Pipeline Services, L.P.

On March 12, 2012, the Company executed an asset purchase agreement with Sprint Pipeline Services, L.P. (“Sprint”).  Headquartered in Pearland (near Houston), Texas, Sprint provides a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in the southeastern United States.  The Company formed Primoris Energy Services Corporation, a Texas corporation, to facilitate the acquisition.  The purchase agreement allows the Company to use the Sprint name for three years.

The fair value of the consideration transferred to selling shareholders consisted of the following:

Cash consideration	$	21,197
Company common stock	980
Earnout consideration	6,200
Total consideration	$	28,377

On the closing date, we paid the sellers $19,228 in cash and in the second quarter paid an additional $1,969 once a final valuation of the net book value of assets purchased was completed.

We issued the sellers 62,052 shares of our common stock with a contractually agreed upon value of $1,000 based on the average closing price of our common stock for the 20 business days prior to the closing date.  The fair value of the stock issued was $980 based on the stock price on the closing date.

As part of the acquisition, the Company agreed to issue additional cash to the sellers, contingent upon Sprint meeting certain operating performance targets for the remainder of 2012 and for the twelve months ending December 31, 2013.  As discussed in Note 12 — “Contingent Earnout Liabilities”, the estimated fair value of the contingency was $6,200 on the acquisition date and $6,422 as of June 30, 2012.

The acquisition of Sprint was accounted for using the acquisition method of accounting.  Accordingly, the assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date.  Sprint’s results of operations have been included in the Company’s consolidated financial statements from March 12, 2012.

11

The following table summarizes the fair value of the assets acquired and the liabilities assumed:

Accounts receivable	$	7,614
Costs and estimated earnings in excess of billings	601
Inventory and other assets	251
Property, plant and equipment	12,078
Intangible assets	3,600
Goodwill	9,389
Accounts payable	(1,458		)
Capital lease obligations	(2,983		)
Other accrued liabilities	(715		)
Net assets acquired	$	28,377

The significant identifiable tangible assets acquired include primarily accounts receivable and property, plant and equipment.  The Company determined that the book value of accounts receivable reflected fair value of those assets.  The Company estimated the fair value of fixed assets on the effective date of the acquisition based on comparable market values for equipment of similar condition and age.

We requested the assistance of an independent third-party to determine the fair value of the intangible assets acquired for the acquisition.

During the second quarter 2012, the Company finalized its estimates of the fair value of the acquired assets and liabilities of Sprint.  The final revision resulted in a change from the values recorded at March 31, 2012, including a decrease in consideration paid to the sellers of $147, an increase in capital lease obligations of $920, an increase of $830 in property, plant and equipment, and a net decrease in working capital of $57.

The fair value measurements of the intangible assets were based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in Note 3 — “Fair Value Measurements”. Based on the Company’s assessment, the acquired intangible assets categories, fair value and average amortization periods, on a straight-line basis, are as follows:

	Amortization	Estimated
	Period	Fair Value
Tradename	3 years	$	700
Non-compete agreements	5 years	$	450
Customer relationship	10 years	$	2,450
Total		$	3,600

The fair value of the tradename was determined based on the “relief from royalty” method, which was selected based on external research of third party trade name licensing agreements and their royalty rate levels and management estimates.  The useful life was based on the agreement providing for the use of the Sprint tradename for three years.

The fair value for the non-compete agreements was based on a discounted “income approach” model, including estimated financial results with and without the non-compete agreements in place.  The agreements were analyzed based on the potential impact of competition that certain individuals could have on the financial results, assuming the agreements were not in place.  An estimate of the probability of competition was applied and the results were compared to a similar model assuming the agreements were in place.

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.

Goodwill largely consists of expected benefits from the geographic expansion and presence of Sprint in the Gulf Coast of the United States and its energy-related opportunities for specialized pipeline construction and related services.  Goodwill also includes the value of the assembled workforce of the Sprint business.  Based on the current tax treatment of the Sprint acquisition, goodwill and other intangible assets are deductible for income tax purposes over a fifteen-year period.

Silva Companies

On May 30, 2012, the Company executed an asset purchase agreement with Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interests, LLC (collectively “Silva”).  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving and material sales in the Gulf Coast region of the United States.

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The acquisition was accounted for using the acquisition method of accounting.  The assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date and such estimates are preliminary and subject to change.  The final determination of the fair value of the assets acquired and liabilities assumed has not been completed because of the short period of time from the date of the Silva acquisition to the end of the quarter.  Silva’s results of operations have been included in the Company’s consolidated financial statements from May 30, 2012.  On the closing date, we paid the sellers $13,934 and will pay an additional $175 in the third quarter 2012, for which we received $14,675 in property, plant and equipment, $903 in accounts and retention receivables and accounts payable of $1,469.

Supplemental Unaudited Pro Forma Information for the three and six months ended June 30, 2011

In accordance with ASC 805 we are combining the Sprint and the Silva acquisition information.  The following pro forma information for the three and six months ended June 30, 2011 presents the results of operations of both the Sprint and Silva acquisitions combined,  as if the acquisitions had both occurred at the beginning of 2011. The supplemental pro forma information has been adjusted to include:

· the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment, based on the purchase price allocations;

· the pro forma impact of the expense associated with the amortization of the discount for the fair value of the contingent consideration for potential earnout liabilities that may be achieved in 2012 and 2013 for the Sprint acquisition;

· the pro forma tax effect of both the income before income taxes for Sprint and Silva and the pro forma adjustments, calculated using a tax rate of 39.0% for the three and six months ended June 30, 2011; and

· the pro forma increase in weighted average shares outstanding includes 62,052 shares of common stock issued as part of the Sprint acquisition.

The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the Sprint and Silva transactions been completed on January 1, 2011.  The pro forma results do not reflect any operating efficiencies and associated cost savings that the Company may have achieved with respect to the combined companies.

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Revenues	340,749		381,408		644,573		754,153
Income before provision for income taxes	18,598		23,495		34,142		36,975
Net income	11,440		14,338		21,007		22,556
Weighted average common shares outstanding:
Basic	51,435		51,106		51,411		50,425
Diluted	51,435		51,216		51,411		51,173
Earnings per share:
Basic	$	0.22	$	0.28	$	0.41	$	0.45
Diluted	$	0.22	$	0.28	$	0.41	$	0.44

Note 9—Intangible Assets

At June 30, 2012 and December 31, 2011, intangible assets totaled $32,428 and $32,021, respectively, net of amortization.  The June 30, 2012 balance includes the effect of the Sprint acquisition (See Note 8).  The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, as follows:

	Amortization	June 30,		December 31,
	Period	2012		2011
Tradename	3 to 10 years	$	18,276	$	18,791
Non-compete agreements	5 years	$	4,388	$	4,695
Customer relationships	5 to 10 years	$	9,764	$	8,181
Backlog	0.75 to 2.25 years	$	—	$	354
Total		$	32,428	$	32,021

Amortization expense of intangible assets was $1,447 and $2,767 for the three months ended June 30, 2012 and 2011, respectively, and amortization expense for the six months ended June 30, 2012 and 2011 was $3,193 and $5,532, respectively.  Estimated future amortization expense for intangible assets is as follows:

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For the Years Ending December 31,	Estimated Intangible Amortization Expense
2012 (remaining six months)	$	2,951
2013	5,233
2014	5,198
2015	3,935
2016	3,539
Thereafter	11,572
	$	32,428

Note 10—Accounts Payable and Accrued Liabilities

At June 30, 2012 and December 31, 2011, accounts payable included retention amounts of approximately $18,315 and $13,980, respectively.  These amounts due to subcontractors have been retained pending contract completion and customer acceptance of jobs.

The following is a summary of accrued expenses and other current liabilities at:

	June 30, 2012		December 31, 2011
Payroll and related employee benefits	$	29,405	$	29,110
Insurance, including self-insurance reserves	19,295		18,732
Reserve for estimated expenses on completed contracts	4,850		524
Reserve for estimated losses on uncompleted contracts	337		917
Corporate income taxes and other taxes	1,812		1,546
Accrued overhead cost	2,202		1,819
Current liabilities of discontinued operations	733		733
Other	7,658		6,542
	$	66,292	$	59,923

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Note 11—Credit Arrangements

As of June 30, 2012, the Company had a Loan and Security Agreement (the “Agreement”) with The PrivateBank and Trust Company (the “Lender”) for a revolving line of credit in the total aggregate amount of $35,000.  The maturity dates, as amended, are as follows:

·a revolving loan in the amount of $20,000 (the “Revolving Loan A”), with a maturity date of October 26, 2014; and

·a revolving loan in the amount of $15,000 (the “Revolving Loan B”), with a maturity date of October 25, 2012.

Under the Agreement, the Lender agreed to issue letters of credit of up to $15,000 under Revolving Loan A.  As of June 30, 2012 and December 31, 2011, total commercial letters of credit outstanding under Revolving Loan A totaled $4,813 and $4,009, respectively.  Other than the commercial letters of credit, there were no borrowings under these two lines of credit during the period January 1, 2011 through June 30, 2012.  At June 30, 2012, available borrowing capacity under Revolving Loan A was $15,187 and under Revolving Loan B was $15,000.

The principal amount of each of Revolving Loan A and Revolving Loan B will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Agreement, or (ii) the prime rate announced by the Lender plus an applicable margin as specified in the Agreement. The principal amount of any loan bearing interest at LIBOR plus an applicable margin may not be prepaid without being subject to certain penalties. There is no prepayment penalty for any loan bearing interest at the prime rate announced by the Lender plus an applicable margin.

All loans made by the Lender under the Agreement are secured by our assets, including, among others, our cash, inventory, equipment (excluding equipment subject to certain permitted liens) and accounts receivable. Certain of our subsidiaries have executed joint and several guaranties in favor of the Lender for all amounts under the Agreement.  The Agreement and the line of credit facilities contain various restrictive covenants, including, among others, restrictions on investments, capital expenditures, minimum tangible net worth and debt service coverage requirements.  The Company was in compliance with the bank covenants at June 30, 2012.

The Company has a credit facility with a Canadian bank for purposes of issuing commercial letters of credit in Canada, for an amount of up to $10,000 in Canadian dollars. The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years. The facility requires an annual fee of 1% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. As of June 30, 2012 and December 31, 2011, total commercial letters of credit outstanding under this credit facility totaled $1,564 and $4,036 in Canadian dollars, respectively.  As of June 30, 2012, the available borrowing capacity under this credit facility was $8,436 in Canadian dollars. The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, Born Heaters Canada.  At June 30, 2012, the Company was in compliance with the bank covenant.

In 2011, the Company entered into an agreement with Bank of the West whereby the Company agrees to maintain a cash balance at the bank equal to the full amount of certain commercial letters of credit.  At both June 30, 2012 and December 31, 2011, the amount of letters of credit with a maturity of twelve months and the related restricted cash amounted to $3,823, and is included as part of customer retention deposits and restricted cash on the balance sheet.

Subordinated promissory note — Rockford .  In connection with the acquisition of Rockford, the Company executed an unsecured promissory note (the “Rockford Note”) on November 12, 2010 in favor of the sellers of Rockford with an initial principal amount of $16,712.  The principal amount of the Rockford Note was divided into two portions.  Approximately $9,669 of the Rockford Note was designated as “Note A,” and approximately $7,043 of the note was designated as “Note B.”  Note B was paid in full on March 10, 2011.

Note A is due and payable on October 31, 2013 and bears interest at different rates until maturity, averaging 6.67% over its life. During the first 12 months, Note A bore interest at a rate equal to 5%.  For months 13 through 24, it bears interest at a rate equal to 7%. Thereafter and until maturity, Note A bears interest at a rate equal to 8%.  Payments of principal and interest are payable monthly in an amount of $269 principal plus interest over 36 months.  At June 30, 2012, a total of $5,000 was outstanding.

In November 2011, the Company placed $5 million in an interest bearing escrow account in lieu of making future payments of that amount to the holders of Rockford’s Note A.  As permitted by the terms of the Rockford Agreement, the amount will remain in escrow until resolution of a dispute related to a certain liability at the time of the closing of the transaction.  The Company has included this escrow amount on its June 30, 2012 balance sheet as “customer retention deposits and restricted cash”.

Note A may be prepaid in whole or in part at any time.  If we complete an equity financing while Note A is outstanding, we have agreed to use 15% of the net proceeds in excess of $10 million to prepay a portion or all of Note A.  In addition, we have agreed to use 33% of any cash proceeds raised in connection with incurrence of any indebtedness (other than under a bank line of credit or to finance operating expenses, equipment and capital expenditures) to prepay a portion or all of Note A.

While any amount is outstanding under Note A, we have agreed not to take certain actions without the prior written consent of the Rockford Note holders’ representative.  We have agreed not to: (i) incur any obligations for seller financing associated with the acquisition of a business without subordinating it to the Rockford Note, (ii) make any payment on outstanding indebtedness that has been subordinated to the Rockford Note, (iii) make any distribution or declare or pay any dividends (except for regular, quarterly dividends), and (iv) consummate any transaction that would require prepayment under the Rockford Note, if we are not permitted to do so by our senior lender and/or surety companies.

The sellers have entered into subordination agreements with our senior lender and bonding agencies, pursuant to which the Rockford Note is subordinated to amounts owed to our senior lender and bonding agencies.

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Subordinated promissory note — JCG .  In connection with the acquisition of JCG, the Company executed an unsecured, subordinated promissory note (the “JCG Note”) on December 18, 2009 in favor of the sellers of JCG with an initial principal amount of $53,500. The JCG Note was due and payable on December 15, 2014 and bore interest at differing rates until maturity.  The JCG note was paid in full on March 12, 2012.

Note 12 — Contingent Earnout Liabilities

Sprint Earnout Consideration

As part of the Sprint acquisition on March 12, 2012, the Company agreed to issue additional cash to the sellers, contingent upon Sprint meeting certain operating performance targets for the remainder of 2012 and for the twelve months ending December 31, 2013.

The 2012 earnout target is measured by income before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the purchase agreement, for the remainder of the calendar year 2012.  If 2012 EBITDA is at least $7.0 million, we have agreed to pay $4.0 million in cash to the sellers.  The estimated fair value of the 2012 potential contingent consideration on the acquisition date was $3.45 million.

The 2013 earnout target provides for an additional cash payment of $4.0 million to the sellers if 2013 EBITDA is at least $7.75 million.  The estimated fair value of the 2013 potential contingent consideration on the acquisition date was $2,745.

At June 30, 2012, the estimated fair value of the potential contingent consideration for the 2012 earnout was $3,580 and for the 2013 earnout target, it was $2,842.

Rockford Earnout Consideration

As part of the Rockford acquisition in November 2010, the Company agreed to issue additional cash and common stock to the sellers, contingent upon Rockford meeting certain operating performance targets for the fourth quarter 2010, for the five quarters ending December 31, 2011 and for the year ended December 31, 2012. The maximum amount of this consideration was $18.4 million, which, when measured on a fair value basis as of the acquisition date, was estimated at $14.3 million and was classified as a liability on the Company’s consolidated balance sheet.

The 2010 earnout target for the fourth quarter 2010 was achieved, and in March 2011, the Company issued 494,095 shares of common stock to the sellers, reducing the liability and increasing stockholders’ equity.

The 2011 earnout target was achieved and the liability as of December 31, 2011 was $6,900.  In April 2012, the Company issued 232,637 shares of common stock to the sellers and made cash payment of $3.45 million.  The stock component of the earnout was based on the Company’s average closing stock price during the month of December 2011 of $14.83 per share.  The April 2012 cash payment reduced the liability, and the stock component reduced the liability and increased stockholders’ equity in the second quarter 2012.

A final contingent earnout liability exists for 2012 based on Rockford’s financial performance as measured by income before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the purchase agreement, for the calendar year 2012.  If 2012 EBITDA is at least $14.0 million, we would pay $6.9 million in cash to the sellers in 2013.

At June 30, 2012 and December 31, 2011, the estimated fair value of the potential contingent consideration for the 2012 earnout was $6,175 and $5,818, respectively.  The $357 change in the fair value of this liability was a non-cash charge to “other expense” in the consolidated statement of income for the six month period ended June 30, 2012.

Note 13—Related Party Transactions

Primoris has entered into various leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Senior Vice President and General Counsel, is secretary of SIGI.  Primoris leases properties located in Bakersfield (lease expires October 31, 2012), Pittsburg (lease expires September 30, 2014) and San Dimas (lease expires March 30, 2019) in California, and in Pasadena, Texas (leases expire in July 2019 and June 2021) from SIGI. During the six months ended June 30, 2012 and 2011, the Company paid $462 and $381, respectively, in lease payments to SIGI for the use of these properties.

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  During the six months ending June 30, 2012 the Company recognized related party revenues of $355 and $4,439 for the same period in the prior year.  The project was substantially completed at December 31, 2011.

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Primoris leases a property from Roger Newnham, one of our stockholders and a manager of our subsidiary, Born Heaters Canada. The property is located in Calgary, Canada. During the six months ended June 30, 2012 and 2011, Primoris paid $141 and $137, respectively, in lease payments to Mr. Newnham for the use of this property. The term of the lease is through December 31, 2014.

As a result of the November 2010 acquisition of Rockford, the Company entered into a lease for property from Lemmie Rockford, one of our stockholders.  The property is located in Toledo, Washington.  During the six months ended June 30, 2012 and 2011, Primoris paid $45 and $46, respectively, in lease payments to Mr. Rockford for the use of this property.  The lease expires on January 15, 2015.

Note 14—Income Taxes

The effective tax rate for the six months ended June 30, 2012 was 38.50%. The rate differs from the U.S. federal statutory rate of 35% due primarily to state income taxes and the “Domestic Production Activity Deduction”.

To determine its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions to which the Company is subject. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.  The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Internal Revenue Service (“IRS”) is presently conducting an examination of our federal income tax returns for 2008 and 2009.  The tax years 2010 through 2011 remain open to examination by the IRS.  The statute of limitations of state and foreign jurisdictions vary generally between 3 to 5 years.  Accordingly, the tax years 2007 through 2011 generally remain open to examination by the other major taxing jurisdictions in which the Company operates.

Note 15—Dividends and Earnings Per Share

The Company has paid or declared cash dividends during 2012 as follows:

·On November 3, 2011, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on December 31, 2011.  The dividend, totaling $1,532, was paid on January 16, 2012.

·On February 24, 2012, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on March 30, 2012.  The dividend, totaling $1,537, was paid on April 16, 2012.

·On May 4, 2012, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on June 29, 2012.  The dividend, totaling $1,542, was paid on July 16, 2012.

The table below presents the computation of basic and diluted earnings per share for the three and six months ended June 30, 2012 and 2011:

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	11,733	$	14,462	$	22,219	$	26,740
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,435		51,044		51,386		50,363
Dilutive effect of warrants and units (1)	—		110		—		66
Dilutive effect of contingently issuable shares (2)	—		—		—		659
Dilutive effect of employee purchased shares (3)	—		—		—		23
Weighted average shares for computation of diluted earnings per share	51,435		51,154		51,386		51,111
Basic earnings per share	$	0.23	$	0.28	$	0.43	$	0.53
Diluted earnings per share	$	0.23	$	0.28	$	0.43	$	0.52

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(1)Represents the dilutive effect of common stock warrants available under the Unit Purchase Option (“UPO”).  See Note 16 — “Stockholders’ Equity”.

(2)Represents the dilutive effect of the following contingency arrangements which were met at the end of each period, but for which shares of common stock were not issued until the end of the first quarter:

a)A total of 494,095 shares issued to Rockford’s former stockholders in March 2011 as a result of Rockford meeting a defined performance target in 2010.

b)A total of 1,095,646 shares issued to JCG’s sellers in March 2011 as a result of JCG meeting a defined performance target in 2010.

(3)Represents the effect of 94,966 shares of common stock issued in 2011 to managers and executives of the Company under a purchase arrangement within the Company’s Long-Term Incentive Plan.

Note 16—Stockholders’ Equity

Common stock — In March 2012, the Company received $1,240 in exchange for 111,790 shares of common stock under a purchase arrangement within the Company’s Long-Term Incentive Plan for managers and executives.  The Company also issued 12,395 shares of common stock in February 2012 as part of the quarterly compensation of non-employee members of the Board of Directors.  Additionally, as part of the acquisition of Sprint, the Company issued 62,052 shares of common stock in March 2012.

In April 2012, the Company issued 232,637 shares of common stock to the Rockford sellers as a result of Rockford meeting a defined performance target in 2011.

In May 2012, the Company’s Board of Directors authorized a share repurchase program under which the Company may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $20 million.  During the three months ending June 30, 2012, the Company purchased and cancelled 89,600 shares of stock for $1.0 million at an average cost of $11.17 per share.  The share repurchase program expires December 31, 2012.

Note 17—Commitments and Contingencies

Leases — The Company leases certain property and equipment under non-cancellable operating leases which expire at various dates through 2019. The leases require the Company to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”.

Total lease expense during the three and six months ended June 30, 2012 amounted to $2,517 and $4,759, respectively, compared to $2,275 and $4,621 for the same periods in 2011.   The amounts for the three and six months ended June 30,  2012 included lease payments made to related parties of $323 and $648, respectively.

Letters of credit — At June 30, 2012, the Company had letters of credit outstanding of $10,162 and at December 31, 2011, the Company had letters of credit outstanding of $11,798.  The outstanding amounts include the U.S. dollar equivalents for letters of credit issued in Canadian dollars.

Litigation— The Company is subject to claims and legal proceedings arising out of its business. Management believes that the Company has meritorious defenses to such claims. Although management is unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, management believes that the outcome of these matters will not have a materially adverse effect on the consolidated financial position of the Company.

Bonding— At June 30, 2012 and December 31, 2011, the Company had bid and completion bonds issued and outstanding totaling approximately $1,108,312 and $1,105,933, respectively.

Note 18—Reportable Operating Segments

The Company segregates the business into three operating segments: the East Construction Services segment, the West Construction Services segment and the Engineering segment.

The East Construction Services segment includes the JCG construction business, located primarily in the southeastern United States.  The segment also includes the businesses located in the Gulf Coast region of the United States, including Cardinal Contractors, Inc. The segment also includes the operating results relating to the acquisition of Sprint Pipeline Services on March 12, 2012.

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The West Construction Services segment includes the construction services performed in the western United States, primarily in the states of California and Oregon.  Entities included in West Construction Services are ARB, ARB Structures, Inc., Rockford, Alaska Continental Pipeline, Inc., All Day Electric Company, Inc., Primoris Renewables, Inc., Juniper Rock, Inc. and Stellaris, LLC.

The Engineering segment includes the results of Onquest, Inc. and Born Heaters Canada, ULC.

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

Segment Revenues

Revenue by segment for the three months ended June 30, 2012 and 2011 were as follows:

	For the three months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	156,057	46.2	%	$	144,538	41.0	%
West Construction Services	167,287		49.6	%	196,623		55.9	%
Engineering	14,092		4.2	%	10,795		3.1	%
Total	$	337,436	100.0	%	$	351,956	100.0	%

Revenue by segment for the six months ended June 30, 2012 and 2011 were as follows:

	For the six months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	277,907	44.2	%	$	272,617	38.3	%
West Construction Services	325,318		51.7	%	416,737		58.6	%
Engineering	25,784		4.1	%	22,247		3.1	%
Total	$	629,009	100.0	%	$	711,601	100.0	%

Segment Gross Profit

Gross profit by segment for the three months ended June 30, 2012 and 2011 were as follows:

	For the three months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	17,360	11.1	%	$	17,295	12.0	%
West Construction Services	24,294		14.5	%	21,687		11.0	%
Engineering	2,350		16.7	%	2,424		22.5	%
Total	$	44,004	13.0	%	$	41,406	11.8	%

Gross profit by segment for the six months ended June 30, 2012 and 2011 were as follows:

	For the six months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	28,778	10.4	%	$	30,338	11.1	%
West Construction Services	48,695		15.0	%	46,450		11.1	%
Engineering	4,127		16.0	%	5,248		23.6	%
Total	$	81,600	13.0	%	$	82,036	11.5	%

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Segment Goodwill

The following presents the amount of goodwill recorded by segment at June 30, 2012 and at December 31, 2011.

Segment	June 30, 2012		December 31, 2011
East Construction Services	$	69,049	$	59,659
West Construction Services	32,079		32,079
Engineering	2,441		2,441
Total	$	103,569	$	94,179

Geographic Region — Revenues and Total Assets

Revenue and total assets by geographic area for the six months ended June 30, 2012 and 2011 were as follows:

	Revenues
	For the six months ended June 30,
	2012				2011				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		June 30, 2012		December 31, 2011
United States	$	624,293	99.3	%	$	703,574	98.9	%	$	727,337	$	719,028
Non-United States	4,716		0.7		8,027		1.1		8,709		9,385
Total	$	629,009	100.0	%	$	711,601	100.0	%	$	736,046	$	728,413

All non-United States revenue has been generated in the Engineering Segment.  For the table above, revenues generated by OnQuest’s Canadian subsidiary, Born Heaters Canada, ULC, were used to determine non-United States revenues.

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PRIMORIS SERVICES CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (“Second Quarter 2012 Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. 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 include all statements that are not historical facts and 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 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. We discuss many of these risks in detail in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2011 and our other filings with the Securities and Exchange Commission (“SEC”). Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Second Quarter 2012 Report. You should read this Second Quarter 2012 Report, our Annual Report on Form 10-K for the year ended December 31, 2011 and our other filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. We assume no obligation to update these 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.

The following discussion and analysis should be read in conjunction with the unaudited financial statements and the accompanying notes included in Part 1, Item 1 of this Second Quarter 2012 Report.

Introduction

Primoris is a holding company of various subsidiaries that forms one of the larger publicly traded specialty contractors and infrastructure companies in the United States.  Serving diverse end-markets, Primoris provides a wide range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services to major public utilities, petrochemical companies, energy companies, municipalities, and other customers. With our acquisitions of JCG in December 2009 and Rockford in November 2010, Primoris has doubled its size and the Company’s national footprint now extends from Florida, along the Gulf Coast, through California, into the Pacific Northwest and Canada.  In March 2012, we acquired Sprint Pipeline Services, L.P. (“Sprint”), providing a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in the southeastern United States.  In May 2012, we acquired certain net assets of Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interests, LLC (collectively “Silva”), which were incorporated as part of JCG.  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving, and material sales in the Gulf Coast region of the United States.

We install, replace, repair and rehabilitate natural gas, refined product, water and wastewater pipeline systems, large diameter gas and liquid pipeline facilities, highway and heavy civil projects, earthwork and site development and also construct mechanical facilities and other structures, including power plants, petrochemical facilities, refineries and parking structures.  In addition, we provide maintenance services, including inspecting, overhaul and emergency repair services, to cogeneration plants, refineries and similar mechanical facilities. Through our subsidiary OnQuest, Inc., we provide engineering and design services for fired heaters and furnaces primarily used in refinery applications. Through our subsidiary Cardinal Contractors, Inc., we construct water and wastewater facilities in the southeastern United States.

We make our press releases, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and all other required filings with the SEC available free of charge through our Internet Web site, as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. Our principal executive offices are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201, and our telephone number is (214) 740-5600.  Our Web site address is www.prim.com. The information on our Internet Web site is neither part of nor incorporated by reference into this Second Quarter 2012 Report.

Range of Services

The Company segregates the business into three operating segments:  the East Construction Services segment, the West Construction Services segment and the Engineering segment.

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East and West Construction Services

Both the East Construction Services and the West Construction Services segments specialize in a range of services that include designing, building/installing, replacing, repairing/rehabilitating and providing management services for construction related projects. Our services include:

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

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

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

·Providing construction of highways and industrial and environmental construction.

East Construction Services

The East Construction Services segment incorporates the JCG construction business, located primarily in the southeastern United States.  The segment also includes the businesses located in the Gulf Coast region of the United States, including Cardinal Contractors, Inc.  The segment also includes the operating results of Sprint since March 12, 2012 and Silva since May 30, 2012.

West Construction Services

The West Construction Services segment includes the construction services performed in the western United States, primarily in the state of California, with Rockford performing work nationwide.  Entities included in West Construction Services are ARB Inc., ARB Structures, Inc., Rockford, Alaska Continental Pipeline, Inc., All Day Electric Company, Inc., Primoris Renewables, Inc., Juniper Rock, Inc. and Stellaris, LLC.

Engineering

The Engineering segment includes the results of OnQuest, Inc. and Born Heaters Canada, ULC.  The Engineering group specializes in designing, supplying, and installing high-performance furnaces, heaters, burner management systems and related combustion and process technologies for clients in the oil refining, petrochemical and power generation industries. The group furnishes turnkey project management with technical expertise and the ability to deliver custom engineering solutions worldwide.

Material trends and uncertainties

We generate our revenue from both large and small construction and engineering projects. The award of these contracts is dependent on a number of factors, many of which are not within our control. Business in the construction industry is cyclical. We depend in part on spending by companies in the energy and oil and gas industries, gas and electric utilities, as well as 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, local highway and bridge needs and from the strength of the oil and gas industry; however, each of these industries and the government agencies periodically are adversely affected by macroeconomic conditions.  Economic factors outside of our control affect the number and size of contracts in any particular period.

We and our customers are operating in a challenging business environment in light of the on-going economic uncertainty and weak capital markets.  We believe we and our customers are not directly impacted by the volatile economic issues being experienced in the European marketplace.  We are closely monitoring our customers and the effect that changes in economic and market conditions may have on them.     We have experienced reduced spending by some of our customers over the last several years, which we attribute to negative economic and market conditions, and we anticipate that these negative conditions may continue to affect demand for our services in the near-term.  However, we believe that most of our customers, some of whom are regulated utilities, remain financially stable in general and will be able to continue with their business plans in the long-term without substantial constraints.

Seasonality and cyclicality

Our results of operations are subject to quarterly variations. Some of the variation is the result of weather, particularly rain, which can impact our ability to perform construction services. The weather also limits our ability to bid for and perform pipeline integrity testing and routine maintenance for our utility customers’ underground systems since the systems are used for heating.  In most years, utility owners obtain bids and award contracts for major maintenance, integrity and replacement work after the heating season, and the work must be completed by the following year.  In addition, demand for new projects can be lower during the early part of the year due to clients’ internal budget cycles.  As a result, we usually experience higher revenues and earnings in the third and fourth quarters of the year as compared to the first two quarters.  We are also dependent on large construction projects which tend not to be seasonal, but can fluctuate from year to year based on

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general economic conditions.  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.

Our industry can be highly cyclical. As a result, our volume of business may be adversely affected by declines or delays in new projects in various geographic regions in the United States.  We have expanded our services both geographically and in the markets we serve, resulting in some counter-cyclical benefits.  Project schedules, in particular in connection with larger, longer-term projects, can also create fluctuations in the services provided, which may adversely affect us in a given period. The financial condition of our customers and their access to capital, variations in the margins of projects performed during any particular period, regional, national and global economic and market conditions, timing of acquisitions, the timing and magnitude of acquisition assimilation costs, interest rate fluctuations and other factors may also materially affect our periodic results. Accordingly, our operating results for any particular period may not be indicative of the results that can be expected for any other period.

Results of operations

Revenues, gross profit, operating income and net income for the three months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,
	2012					2011
	(Thousands)			% of Revenue		(Thousands)			% of Revenue
Revenues	$	337,436		100.0	%	$	351,956		100.0	%
Gross profit	44,004			13.0	%	41,406			11.8	%
Selling, general and administrative expense	23,396			6.9	%	20,477			5.8	%
Operating income	20,608			6.1	%	20,929			6.0	%
Other income (expense)	(1,529		)	(0.4	)%	2,769			0.7	%
Income before income taxes	19,079			5.7	%	23,698			6.7	%
Income tax provision	(7,346		)	(2.2	)%	(9,236		)	(2.6	)%
Net income	$	11,733		3.5	%	$	14,462		4.1	%

Revenues, gross profit, operating income and net income for the six months ended June 30, 2012 and 2011 were as follows:

	Six Months Ended June 30,
	2012					2011
	(Thousands)			% of Revenue		(Thousands)			% of Revenue
Revenues	$	629,009		100.0	%	$	711,601		100.0	%
Gross profit	81,600			13.0	%	82,036			11.5	%
Selling, general and administrative expense	43,670			7.0	%	40,322			5.6	%
Operating income	37,930			6.0	%	41,714			5.9	%
Other income (expense)	(1,801		)	(0.3	)%	2,121			0.3	%
Income before income taxes	36,129			5.7	%	43,835			6.2	%
Income tax provision	(13,910		)	(2.2	)%	(17,095		)	(2.4	)%
Net income	$	22,219		3.5	%	$	26,740		3.8	%

Revenues for the three and six months ended June 30, 2012 were $337.4 million and $629.0 million, which were reductions of $14.5 million (4.1%) and $82.6 million (11.6%) from the prior year, respectively.  The respective prior year periods included revenue of $89.5 million and $216.4 million for the Ruby pipeline project, substantially completed in 2011.  Excluding the Ruby revenue impact, revenues increased by $75.0 million and $121.3 million for the three and six months ended June 30, 2012.  The increased revenues are primarily as a result of increased project work in the West Construction Services segment for both industrial and underground projects as well as the impact of the March 2012 acquisition of Sprint, which contributed $12.8 million and $14.9 million in revenue for the three and six months ended June 30, 2012, respectively.

Gross profit increased by $2.6 million, or 6.3%, for the three months ended June 30, 2012 and decreased by $0.4 million, or 0.5%, for the six months ended June 30, 2012 compared to the same periods in 2011.  Gross profit for the three and six months ended June 30, 2011 included gross profit for the Ruby project of $14.4 million and $25.5 million.  Excluding the impact of the prior year Ruby pipeline project at Rockford, gross profit for the second quarter 2012 increased by $17.4 million and for the six-month period increased by $16.8 million compared to the same periods in the previous year.  The increases in gross margin were due primarily to the increased project work in the West Construction Services segment as well as the gross margin contribution from the March 2012 acquisition of Sprint, which contributed $3.8 million and $4.6 million for the three and six months ended June 30, 2012.

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Gross profit as a percent of revenues increased to 13.0% for the three and six months ended June 30, 2012, compared to 11.8% and 11.5% in the same period in 2011, respectively. The margin improvement for the three and six months ended June 30, 2012 was primarily due to the higher margins contributed by increased project work in the West Construction Services segment and due to the impact of a lower gross margin in the prior year of the Ruby pipeline project.

Geographic areas financial information

Revenue by geographic area for the six months ended June 30, 2012 and 2011 was as follows:

	Six Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Country:
United States	$	624,293	99.3	%	$	703,574	98.9	%
Non—United States	4,716		0.7	%	8,027		1.1	%
Total revenues	$	629,009	100.0	%	$	711,601	100.0	%

All non-United States revenue was generated in the Engineering Segment.  For the table above, we use revenues generated by OnQuest’s Canadian subsidiary, Born Heaters Canada, ULC, to estimate non-United States revenues.

Segment results

The following discusses the significant factors contributing to the results of our operating segments.

East Construction Services Segment

Revenue and gross profit for the East Construction Services segment for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
East Construction Services
Revenue	$	156,057			$	144,538
Gross profit	17,360		11.1	%	17,295		12.0	%

	Six Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
East Construction Services
Revenue	$	277,907			$	272,617
Gross profit	28,778		10.4	%	30,338		11.1	%

Revenue for the East Construction Services segment increased by $11.5 million, or 8.0%, for the three months ended June 30, 2012 and by $5.3 million, or 1.9%, for the six months ended June 30, 2012 compared to the same periods in the prior year.  The revenue increase was due primarily to the March 2012 acquisition of Sprint Pipeline Services, which generated $12.8 million and $14.9 million in revenue for the three and six month periods, respectively, compared to the previous year.  Excluding the impact of the Sprint acquisition, revenues decreased by $1.3 million and $9.6 million for the three and six months ended June 30, 2012.  The decrease was due primarily to decreased industrial work in the petrochemical sector of the Gulf Coast area, offset by increases in infrastructure and maintenance work.  Additionally, heavy civil decreases are due to the substantial completion of a large causeway project in Louisiana in the prior year.

Gross profit for the East Construction Services segment increased by $0.1 million, or 0.4%, for the three months ended June 30, 2012 and decrease by $1.6 million, or 5.1%, for the six months ended June 30, 2012 compared to the same periods in the prior year.  The Sprint acquisition contributed $3.8 million and $4.6 million for the three and six months ended June 30, 2012.  The decreased gross margins of $3.7 million and $6.2 million for the three and six months were as a result of lower margins on heavy civil projects, primarily due to startup of the I-35 projects in Texas as well as the impact from the substantial completion of a large causeway project in Louisiana in the prior year.

For the three months ended June 30, 2012, gross profit as a percent of revenues decreased to 11.1% compared to 12.0% in the prior year quarter and decreased to 10.4% for the six months ended June 30, 2012 compared to 11.1% in the same period in the previous year primarily as a result of decreased margin percentages realized on heavy civil projects, especially the startup of the I-35 projects in Texas.

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West Construction Services Segment

Revenue and gross profit for the West Construction Services segment for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
West Construction Services
Revenue	$	167,287			$	196,623
Gross profit	24,294		14.5	%	21,687		11.0	%

	Six Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
West Construction Services
Revenue	$	325,318			$	416,737
Gross profit	48,695		15.0	%	46,450		11.1	%

Revenue for the West Construction Services segment decreased by $29.3 million, or 14.9%, and by $91.4 million, or 21.9%, respectively, for the three and six months ended June 30, 2012 compared to the same periods in 2011. The three and six months ended June 30, 2011 included revenue of $89.5 million and $216.4 million for the Ruby pipeline project, substantially complete in 2011. Excluding the revenue impact of the Ruby pipeline project at Rockford, revenues increased by $60.2 million and $112.4 million for the respective periods.  Revenues for our California underground business increased by $22.8 million and $52.7 million, and our industrial business increased by $19.2 million and $34.2 million, for the three and six months ended June 30, 2012, respectively.  A significant contributor to the underground increase was pipeline integrity work for the major California gas utilities while work on power plants provided the major increase for the industrial business.

Gross profit for the West Construction Services segment increased by $2.6 million, or 12.0%, for the three months ended June 30, 2012 and $2.2 million, or 4.8%, for the six months ended June 30, 2012, respectively, compared to the same periods in 2011.  Gross profit for the three and six months ended June 30, 2011 included gross profit for the Ruby pipeline project at Rockford of $14.4 million and $25.5 million.  Excluding the impact of the prior year completion of the Ruby pipeline project, gross profit for the second quarter increased by $17.4 million and gross profit for the six month period increased by $19.5 million compared to the same periods in the previous year.  The primary reason for the increase was the significant increase in volume in both the underground and industrial projects.

Gross profit as a percent of revenues increased to 14.5% during the three months ended June 30, 2012 from 11.0% in the same period in 2011, and for the six months ended June 30, 2012, gross profit as a percent of revenue increased to 15.0% compared to 11.1% in the same period in the prior year.  Gross profit as a percent of revenues for the underground business in the prior year were impacted by the lower gross margins of the Ruby pipeline project.  The industrial business margins were impacted in the prior year by delays and contingencies recorded on a large power plant construction project.  As of June 30, 2012, the power plant project is nearing completion and change orders have returned the project to profitability.

Engineering Segment

Revenue and gross profit for the Engineering segment for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Engineering
Revenue	$	14,092			$	10,795
Gross profit	2,350		16.7	%	2,424		22.5	%

	Six Months Ended June 30,
	2012				2011
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Engineering
Revenue	$	25,784			$	22,247
Gross profit	4,127		16.0	%	5,248		23.6	%

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Revenue for the Engineering segment increased by $3.3 million, or 30.5%, and by $3.5 million or 15.9% for the three and six months ended June 30, 2012, respectively, compared to the same periods in 2011.  The increase is mainly due to the completion of several furnace upgrade and refurbishment projects for two major US chemical companies.

Gross profit for the Engineering segment for the three and six months ended June 30, 2012 decreased by $0.1 million and $1.1 million, compared to the same periods in 2011.  The decrease was primarily the result of lower profit margins achieved in international projects at our Canadian location and higher margin project closeouts in the prior year.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) increased $2.9 million, or 14.3% and $3.3 million, or 8.3%, for the three and six months ended June 30, 2012, respectively, compared to the same period in 2011.  The $2.9 million increase for the three month period included $2.0 million as a result of the Sprint acquisition, a $0.5 million increase in legal expenses, a $0.2 million increase in amortization of intangible assets and an increase of $0.8 million in other overhead expenses, offset by a reduction in compensation expenses of $0.6 million.  The $3.3 million increase for the six month period included $2.8 million as a result of the Sprint acquisition, a $0.3 million increase in legal expenses, a $0.3 million increase in amortization of intangible assets and an increase of $1.1 million in other overhead expenses, offset by a net reduction in compensation expenses of $1.2 million.

SG&A as a percentage of revenue increased to 6.9% and 7.0% for the three and six months ended June 30, 2012, from 5.8% and 5.6% for the same period in 2011 primarily as a result of the significant decrease in revenues.   Excluding the impact of Sprint, SG&A as a percentage of revenues was 6.6% and 6.5% for the three and six months ended June 30, 2012, respectively.

Other income and expense

Non-operating income and expense items for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,
	2012			2011
	(Thousands)
Other income (expense)
Income (loss) from non-consolidated investments	$	(171	)	$	4,400
Foreign exchange loss	(6		)	(72		)
Other expense	(371		)	(306		)
Interest income	25			100
Interest expense	(1,006		)	(1,353		)
Total other income (expense)	$	(1,529	)	$	2,769

	Six Months Ended June 30,
	2012			2011
	(Thousands)
Other income (expense)
Income from non-consolidated investments	$	886		$	5,226
Foreign exchange loss	(48		)	(36		)
Other expense	(579		)	(603		)
Interest income	47			258
Interest expense	(2,107		)	(2,724		)
Total other income (expense)	$	(1,801	)	$	2,121

For the three months ended June 30, 2012, the loss from non-consolidated investments was $0.2 million, primarily due to a loss recorded at Wespac.  Income from non-consolidated investments for the six months ended June 30, 2012 of $0.9 million included $1.1 million from the St.-Bernard joint venture, offset by a loss in Wespac of $0.1 million.  As a result of the St. Bernard joint venture nearing completion, income from non-consolidated investments decreased $4.3 million for the six months ended June 30, 2012 compared to the same period in the prior year.

Foreign exchange losses for the six months ended June 30, 2012 and for the same period in 2011 reflect currency exchange fluctuations of the United States dollar compared to the Canadian dollar.  Some of our business is conducted in Canadian dollars, and we acquire assets and liabilities using Canadian dollars.  For financial statement purposes, we convert these transactions to United States dollars creating currency exchange gains or losses.

Other expense of $0.4 million and $0.6 million for the three and six months ended June 30, 2012, respectively represents the change in the estimated fair value of the contingent earnout liabilities for the Rockford and Sprint acquisitions.

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For the three and six months ended June 30, 2012, interest expense was $1.0 million and $2.1 million, respectively, compared to $1.4 million and $2.7 million for the same periods in 2011.  The decrease over both the prior periods was due primarily to the final payoff of the subordinated debt from the JCG subordinated notes in March 2012 and as a result of lower interest rates obtained upon refinancing certain commercial notes in the second quarter 2012.

Provision for income taxes

Our provision for income tax decreased $1.9 million for the three months ended June 30, 2012 to $7.4 million and decreased $3.2 million for the six months ended June 30, 2012 to $13.9 million, compared to the same periods in 2011 as a result of lower earnings.   To determine our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.   The tax rate applied for the six months ended June 30, 2012 was 38.5% as compared to 39.0% for the same period in 2011.

Liquidity and Capital Resources

Liquidity represents our ability to meet our future business operations, our planned capital expenditures, and our needs for working capital, tax payments, earn-out obligations and debt service.  Our primary sources of liquidity are our cash balances at the beginning of each period and our net cash flow.  In addition to cash flow from operations, we have availability under our lines of credit to potentially augment liquidity needs.  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.

At June 30, 2012, our balance sheet included net cash and cash equivalents of $119.3 million.  We currently have the following credit facilities:

·a $20 million credit facility that expires on October 26, 2014, under which we can issue letters of credit for up to $15 million.  At June 30, 2012, we have issued letters of credit of $4.8 million on this facility, resulting in $15.2 million in available borrowing capacity;

·a credit facility of $15 million, with the full borrowing amount available at June 30, 2012, which expires on October 25, 2012; and

·a $10 million (Canadian dollars) facility for commercial letters of credit in Canada. The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years.  At June 30, 2012, $1.6 million of letters of credit (Canadian dollars) were outstanding, with $8.4 million available under this credit facility for additional letters of credit.

Cash Flows

Cash flows during the six months ended June 30, 2012 and 2011 are summarized as follows:

	Six Months Ended June 30,
	2012			2011
	(Thousands)
Change in cash:
Net cash provided by operating activities	$	39,703		$	51,937
Net cash used in investing activities	(17,809		)	(6,813		)
Net cash used in financing activities	(22,914		)	(25,272
Net change in cash	$	(1,020	)	$	19,852

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Operating activities

The source of our cash flow from operating activities and the source or use of a portion of that cash in our operations for the six months ended June 30, 2012 and 2011 were as follows:

	Six Months Ended
	June 30,
	2012			2011			Change
	(Thousands)
Operating Activities:
Operating income	$	37,930		$	41,714		$	(3,784	)
Depreciation	13,557			12,043			1,514
Amortization of intangible assets	3,193			5,532			(2,339		)
Loss (Gain) on sale of property and equipment	(1,776		)	(37		)	(1,739		)
Changes in assets and liabilities	2,136			6,888			(4,752		)
Non-consolidated entity distributions	1,260			5,997			(4,737		)
Foreign exchange gain (loss)	(48		)	(36		)	(12		)
Other expense	(579		)	(603		)	24
Interest income	47			258			(211		)
Interest expense	(2,107		)	(2,724		)	617
Provision for income taxes	(13,910		)	(17,095		)	3,185
Net cash provided by operating activities	$	39,703		$	51,937		$	(12,234	)

The table above summarizes the cash flow elements provided by operating activities for the six months ended June 30, 2012 which decreased by $12.2 million compared to the same period in 2011.  Amortization of intangible assets has decrease by $2.3 million as the JCG and Rockford acquisitions in 2009 and 2010 have amortized their acquired intangible assets, especially the shorter lived backlog intangible assets.  As a result of the St. Bernard joint venture nearing completion at June 30, 2012, non-consolidated entity distributions have decreased by $4.7 million compared to the prior year.  The provision for income taxes decreased by $3.2 million as a result of lower pretax income during the six months ended June 30, 2012.

The significant components of the $2.1 million change in assets and liabilities from the December 31, 2011 balance sheet amounts are summarized as follows:

·a $20.8 million decrease in accounts receivable. At June 30, 2012, accounts receivable represented 23.8% of total assets.  We continue to have an excellent collection history for our receivables and have certain lien rights that can provide additional security for collection;

·a $8.7 million increase in customer retention deposits and restricted cash as a result of increased retention deposits on three large power plant projects in the West Construction Services segment;

·a $2.0 million decrease in accounts payable;

·costs and estimated earnings in excess of billings increased by $3.0 million primarily as a result of the addition of Sprint operations;

·billings in excess of costs and estimated earnings decreased by $6.5 million;

·inventory, prepaid expenses and other current assets increased by $0.2 million;

·other long-term liabilities decreased by $2.2 million;

·accrued expenses and other current liabilities increased by $6.4 million due to increased reserves for estimated expenses on completed projects in the West Construction Services segment; and

·a $2.9 million decrease in contingent earn-out liabilities.

The decreases in accounts receivable and billings in excess of costs and estimated earnings are primarily related to the lower volume in the three and six months ended June 30, 2012, compared with the same period in 2011.

Investing activities

During the six months ended June 30, 2012, we purchased property and equipment for $12.4 million in cash, compared to $10.8 million during the same period in 2011. The purchases were principally for construction equipment.  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 workloads when needed.  In addition, ownership has historically resulted in lower overall equipment costs.

We periodically buy and sell equipment, as part of our overall fleet management program.  During the six months ended June 30, 2012, we received proceeds from the sale of used equipment of $6.7 million compared to $1.0 million for same period in 2011.  For the past few years, we have rented major equipment not used for our own projects to third parties, but with the current economic environment, equipment rentals have decreased.

As part of our cash management program, we sold $23.0 million in short term investments during the sixth months ended June 30, 2012.  In the six months ended June 30, 2011, we purchased $23 million and sold $26 million in short term investments.  Short term investments consist primarily of CDs purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government FDIC program.

In March 2012, we used $35.1 million in cash for the acquisitions of Sprint and Silva.

28

Financing activities

Financing activities used $22.9 million of cash during the six months ended June 30, 2012. Significant transactions using cash flows from financing activities included:

·$15.3 million reduction of long-term debt and capital leases as a result of both loan repayments and refinancing of higher interest rate loans, offset by the proceeds from the new debt of $12.8 million at lower interest rates.

·$17.5 million in total payments of the subordinated notes related to both the JCG and Rockford acquisitions, which included the March 14, 2012 payment in full of the JCG subordinated notes.

·$1.2 million was recorded as equity for the issuance of 111,790 shares purchased by our employees under the Primoris Long-Term Retention Plan

·Dividends of $3.1 million were paid to our stockholders during the six months ended June 30, 2012 representing an annualized dividend rate of $0.12 per share of common stock.

·$1.0 million in purchases of Company common stock under the Company’s stock repurchase program.

Capital requirements

We believe that we will be able to support our ongoing working capital needs for the next twelve months using cash on hand, short term investments, operating cash flows and the availability under our existing credit facilities.  In order to meet the needs of our continued growth, we intend to spend approximately $30 million during the calendar year 2012, primarily on purchases of construction equipment.

Common stock

In March 2012, the Company issued 111,790 shares of common stock to managers and executives of the Company under a purchase arrangement within the Company’s Long-Term Incentive Plan.  The Company issued 12,395 shares of common stock in February 2012 as part of the quarterly compensation of non-employee members of the Board of Directors.  Additionally, as part of the acquisition of Sprint, the Company issued 62,052 shares of common stock in March 2012.

In April 2012, the Company issued 232,637 shares of common stock to the Rockford sellers as a result of Rockford meeting a defined performance target in 2011.

In May 2012, the Company’s Board of Directors authorized a share repurchase program under which the Company may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $20 million.  During the three months ending June 30, 2012, the Company purchased and cancelled 89,600 shares of stock for $1.0 million at an average cost of $11.17 per share.  The share repurchase program expires December 31, 2012.

Credit agreements

For a description of our credit agreements and subordinated notes payable see Note 11 - Credit Arrangements in Item I Financial Statements.

Related party transactions

Primoris has entered into various leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Senior Vice President and General Counsel, is secretary of SIGI.  Primoris leases properties located in Bakersfield (lease expires October 31, 2012), Pittsburg (lease expires September 30, 2014) and San Dimas (lease expires March 30, 2019) in California and in Pasadena, Texas (leases expire in July 2019 and June 2021) from SIGI. During the six months ended June 30, 2012 and 2011, the Company paid $0.46 million and $0.38 million, respectively, in lease payments to SIGI for the use of these properties.

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  During the six months ending June 30, 2012 the Company recognized related party revenues of $0.36 million and $4.44 million for the same period in the prior year.  The project was substantially completed at December 31, 2011.

Primoris leases a property from Roger Newnham, one of our stockholders and a manager of our subsidiary, Born Heaters Canada. The property is located in Calgary, Canada. During the six months ended June 30, 2012 and 2011, Primoris paid $0.14 million and $0.14 million, respectively, in lease payments to Mr. Newnham for the use of this property. The term of the lease is through December 31, 2014.

As a result of the November 2010 acquisition of Rockford, the Company entered into a lease for property from Lemmie Rockford, one of our stockholders.  The property is located in Toledo, Washington.  Primoris paid $0.05 million in lease payments to Mr. Rockford for the use of this property for the first six months in 2012 and 2011.  The lease expires on January 15, 2015.

29

Contractual obligations

A summary of contractual obligations at June 30, 2012 were as follows:

Payments due by period	Total			1 Year			2-3 Years			4-5 Years		After 5 Years
	(Thousands)
Debt and capital lease obligations	$	81,838		$	18,779		$	35,529		$	23,054	$	4,476
Interest on debt and capital lease obligations (1)	5,822			2,185			2,688			843		106
Subordinated debt (2)	5,000			3,223			1,777			—		—
Escrowed cash related to subordinated debt (2)	(5,000		)	(3,223		)	(1,777		)	—		—
Interest on subordinated debt (1)	579			377			202			—		—
Equipment operating leases	9,599			2,868			4,207			2,524		—
Real property leases	12,898			2,647			3,910			2,782		3,559
Real property leases—related parties	7,402			1,458			2,616			1,392		1,936
	$	118,138		$	28,314		$	49,152		$	30,595	$	10,077
Stand-by letters of credit	$	10,162		$	6,461		$	3,701		$	—	$	—

(1)The interest amount assumes principal payments are made as originally scheduled in the obligations.

(2)In November 2011, the Company placed $5.0 million in an interest bearing escrow account. As permitted by the terms of the subordinated note agreement, the amount will remain in escrow until resolution of a dispute related to a certain liability at the time of the Rockford acquisition.

Off-balance sheet transactions

The following represent transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

·Letters of credit issued under our lines of credit.  At June 30, 2012, we had letters of credit outstanding of $10.2 million.

·Equipment operating leases with a balance of $9.6 million at June 30, 2012.

·In the ordinary course of our business, we may be required by our customers to post surety bid or completion bonds in connection with services that we provide.  At June 30, 2011, we had $1,108.0 million in outstanding bonds.

Critical Accounting Policies and Estimates

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 revenues 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, these estimates are particularly difficult to determine and we must exercise significant judgment. Estimates may be used in our assessments of revenue recognition under percentage-of-completion accounting, 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.

Our critical accounting policies, as described in our Annual Report on Form 10-K for the year ended December 31, 2011, relate to fixed price contracts, revenue recognition, income taxes, goodwill, long-lived assets and reserve for uninsured risks.  Recently, the FASB has issued new guidelines for options of using qualitative factors in testing for potential impairment of goodwill and indefinite-lived intangible assets, which the Company is adopting during 2012.  To date, goodwill of $103.6 million has arisen from acquisitions and is recorded at our reporting units as follows:

·JCG in the East Construction Services segment, $59.3 million

·Rockford in the West Construction Services segment, $32.1 million

·Sprint in the East Construction Services segment, $9.4 million

·Cardinal Contractors in the East Construction Services segment, $2.4 million; and

·Born Canada in the Engineering segment, $0.4 million

At June 30, 2012, net intangible assets amounted to $32.4 million.  There have been no material changes to our critical accounting policies since December 31, 2011.

30

Backlog

In the industries in which we operate, backlog can be considered an indicator of potential future performance because it represents a portion of the future revenue stream. Different companies in our industry define backlog differently. We consider backlog as the anticipated revenue from the uncompleted portions of existing contracts. We calculate backlog differently for different types of contracts. For our fixed price and fixed unit price contracts, we include the full remaining portion of the contract in our calculation. Since their ultimate revenue amount is difficult to determine, we do not include time-and-equipment, time-and-materials and cost-plus contracts in the calculation of backlog.

Our contracts may be terminated by our customers on relatively short notice. In the event of a project cancellation, we may be reimbursed for certain costs, but typically we have no contractual right to the total revenues reflected in backlog.  Projects may remain in backlog for extended periods of time.

Backlog by operating segment at March 31, 2012 and June 30, 2012 and the changes in backlog for the three months ended June 30, 2012 were as follows, in thousands:

Segment:	Beginning Backlog as of March 31, 2012		Contract Additions to Backlog for Three Months Ended June 30, 2012		Revenue Recognized from Backlog for Three Months Ended June 30, 2012		Ending Backlog at June 30, 2012		Revenue Recognized from Non-Backlog Projects for Three Months Ended June 30, 2012		Total Revenue for Three Months Ended June 30, 2012
East Construction Services	$	768,759	$	79,093	$	130,958	$	716,894	$	25,099	$	156,057
West Construction Services	329,840		156,335		136,136		350,039		31,151		167,287
Engineering	23,548		1,333		5,636		19,245		8,456		14,092
Total	$	1,122,147	$	236,761	$	272,730	$	1,086,178	$	64,706	$	337,436

Backlog by operating segment at December 31, 2011 and June 30, 2012 and the changes in backlog for the six months ended June 30, 2012 were as follows, in thousands:

Segment:	Beginning Backlog as of December 31, 2011		Contract Additions to Backlog for Six Months Ended June 30, 2012		Revenue Recognized from Backlog for Six Months Ended June 30, 2012		Ending Backlog at June 30, 2012		Revenue Recognized from Non-Backlog Projects for Six Months Ended June 30, 2012		Total Revenue for Six Months Ending June 30, 2012
East Construction Services	$	813,316	$	140,881	$	237,303	$	716,894	$	40,604	$	277,907
West Construction Services	326,845		273,800		250,606		350,039		74,712		325,318
Engineering	25,402		10,226		16,383		19,245		9,401		25,784
Total	$	1,165,563	$	424,907	$	504,292	$	1,086,178	$	124,717	$	629,009

As of June 30, 2012, our total backlog was $1.09 billion representing a decrease of $79.4 million, or 6.8%, from $1.17 billion as of December 31, 2011.  We expect that approximately 61% of the total backlog at June 30, 2012 will be recognized as revenue during the remainder of 2012, with $420 million expected for the East Construction Services segment, $228 million for the West Construction Services segment and $14 million for the Engineering segment.

Backlog should not be considered a comprehensive indicator of future revenues, as a percentage of our revenues are derived from projects that are not part of a backlog calculation.

Revenues recognized from non-backlog projects are generated by projects completed under time-and-equipment, time-and-materials and cost-reimbursable-plus-fee contracts.

31

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, we are exposed to risks related to market conditions. These risks primarily include fluctuations in foreign currency exchange rates, interest rates and commodity prices. We may seek to manage these risks through the use of financial derivative instruments. These instruments may include foreign currency exchange contracts and interest rate swaps.

We do not execute transactions or use financial derivative instruments for trading or speculative purposes. We enter into transactions with counter parties that are generally financial institutions in a matter to limit significant exposure with any one party.

The carrying amounts for cash and cash equivalents, accounts receivable, short-term debt and accounts payable and accrued liabilities shown in the consolidated balance sheets approximate fair value at June 30, 2012 and December 31, 2011 due to the generally short maturities of these items. At June 30, 2012, we had no short-term investments.  At December 31, 2011, we held short term investments which were primarily in four to six month certificates of deposits (“CDs”) through the CDARS (Certificate of Deposit Account Registry Service) process and U. S. Treasury bills with various financial institutions that are backed by the federal government FDIC program.

At June 30, 2012, all of our long-term debt was under fixed interest rates.

At June 30, 2012, we had no derivative financial instruments.  We may hedge foreign currency risks in the future in those situations where we believe such transactions are prudent.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2012, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), of the effectiveness of the design and operation of our “disclosure controls and procedures”, as such term is defined under Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on this evaluation, our CEO and CFO concluded that, at June 30, 2012, the disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives.

Changes in Internal Control Over Financial Reporting

During the last fiscal quarter ended June 30, 2012, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32

Part II. Other Information

Item 1.  Legal Proceedings

From time to time, we are subject to claims and legal proceedings arising out of our business. Our management believes that we have meritorious defenses to such claims. Although we are unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, our management believes that the outcome of these matters will not have a materially adverse effect on our financial condition or results of operations.

Item 1A.  Risk Factors.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011, which to our knowledge have not materially changed. Those risks, which could materially affect our business, financial condition or future results, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

As part of the consideration for the acquisition of Sprint, the Company issued 62,052 shares of unregistered common stock in March 2012.

In April 2012, the Company issued 232,637 shares of unregistered common stock to the Rockford sellers as a result of Rockford meeting a 2011 defined performance target under the Purchase Agreement.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  (Removed and Reserved).

Item 5.  Other Information.

None.

33

Item 6.  Exhibits.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Executive Officer (*)
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Financial Officer (*)
32.1	Section 1350 Certification by the Registrant’s Chief Executive Officer (*)
32.2	Section 1350 Certification by the Registrant’s Chief Financial Officer (*)
101 INS	XBRL Instance Document (**)
101 SCH	XBRL Taxonomy Extension Schema Document (**)
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document (**)
101 LAB	XBRL Taxonomy Extension Label Linkbase Document (**)
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document (**)
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document (**)

(*)

Filed herewith

(**)

Furnished with this Quarterly Report on Form 10-Q and included in Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language):  i) the Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, ii) the Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2012 and 2011 and iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011.  Users of the XBRL data are advised that pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and therefore is not subject to liability under these sections.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRIMORIS SERVICES CORPORATION
Date:  August 8, 2012	/s/ PETER J. MOERBEEK
	Peter J. Moerbeek
	Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

35

EXHIBITS ATTACHED TO THIS QUARTERLY REPORT ON FORM 10-Q

Exhibit Number	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Financial Officer
32.1	Section 1350 Certification by the Registrant’s Chief Executive Officer
32.2	Section 1350 Certification by the Registrant’s Chief Financial Officer
101 INS	XBRL Instance Document (**)
101 SCH	XBRL Taxonomy Extension Schema Document (**)
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document (**)
101 LAB	XBRL Taxonomy Extension Label Linkbase Document (**)
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document (**)
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document (**)

(**) Furnished with this Quarterly Report on Form 10-Q and included in Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language):  i) the Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, ii) the Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2012 and 2011 and iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011.  Users of the XBRL data are advised that pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and therefore is not subject to liability under these sections.

36

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian Pratt, certify that:

1.             I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2012 of Primoris Services Corporation;

2.             Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3.             Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d)           Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 8, 2012

/s/ BRIAN PRATT

Brian Pratt

Chairman of the Board, Chief Executive Officer and President
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter J. Moerbeek, certify that:

1.             I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2012, of Primoris Services Corporation;

2.             Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3.             Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d)           Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 8, 2012

/s/ PETER J. MOERBEEK

Peter J. Moerbeek

Executive Vice President, Chief Financial Officer and Director
(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report of Primoris Services Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Pratt, Chairman of the Board, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: August 8, 2012	/s/ BRIAN PRATT
	Brian Pratt
	Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report of Primoris Services Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter J. Moerbeek, Executive Vice President, Chief Financial Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: August 8, 2012	/s/ PETER J. MOERBEEK
	Peter J. Moerbeek
	Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)_

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Equity Method Investments (Details) (USD $)	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 WesPac	Jun. 30, 2011 WesPac	Jun. 30, 2012 WesPac	Jun. 30, 2011 WesPac	Dec. 31, 2011 WesPac item	Jul. 01, 2010 WesPac	Jul. 01, 2010 WesPac Kealine	Jun. 30, 2012 Bernard	Jun. 30, 2011 Bernard	Jun. 30, 2012 Bernard	Jun. 30, 2011 Bernard	Dec. 31, 2011 Bernard	Dec. 31, 2009 Bernard
Equity method investments
Membership interest (as a percent)											50.00%	50.00%						30.00%
Balance sheet data
Assets						$ 17,891,000		$ 17,891,000		$ 20,147,000			$ 483,000		$ 483,000		$ 5,677,000
Liabilities						288,000		288,000		1,820,000			40,000		40,000		4,771,000
Net assets						17,603,000		17,603,000		18,327,000			443,000		443,000		906,000
Company's equity investment	12,481,000		12,481,000		12,687,000	12,348,000		12,348,000		12,415,000			133,000		133,000		272,000
Earnings data:
Revenue						111,000		511,000					499,000	27,674,000	3,934,000	55,710,000
Expenses						428,000	11,000	644,000	138,000				126,000	8,757,000	198,000	33,433,000
Earnings before taxes						(317,000)	(11,000)	(133,000)	(138,000)				373,000	18,917,000	3,736,000	22,277,000
Company's equity in earnings	(171,000)	4,400,000	886,000	5,226,000		(159,000)	(6,000)	(67,000)	(69,000)				112,000	4,406,000	1,121,000	5,189,000
Number of potential projects terminated by major oil refining third party										2
Amount expensed										5,400,000
Share of expenses recorded by the entity (as a percent)										50.00%
Reduction recorded to recognize an estimate for an other than temporary decrease										1,700,000
Basis difference between the entity's original investment and its pro-rata share of the investee equity prior to any impairment adjustment										5,000,000
Cost of investment																		300,000
Amount distributed															4,200,000	22,892,000
Share in distribution			$ 1,260,000	$ 5,997,000											$ 1,260,000	$ 5,880,000

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Dividends and Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended						3 Months Ended		6 Months Ended
	Jul. 31, 2012	May 31, 2012	Apr. 30, 2012	Feb. 29, 2012	Jan. 31, 2012	Nov. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Dividends and Earnings Per Share
Cash dividend declared (in dollars per share)		$ 0.03		$ 0.03		$ 0.03
Total dividend paid	$ 1,542		$ 1,537		$ 1,532				$ 3,069	$ 2,510
Numerator:
Net income							$ 11,733	$ 14,462	$ 22,219	$ 26,740
Denominator:
Weighted average shares for computation of basic earnings per share							51,435	51,044	51,386	50,363
Dilutive effect of warrants and units (in shares)								110		66
Dilutive effect of contingently issuable shares										659
Dilutive effects of employee purchased shares										23
Weighted average shares for computation of diluted earnings per share							51,435	51,154	51,386	51,111
Basic earnings per share (in dollars per share)							$ 0.23	$ 0.28	$ 0.43	$ 0.53
Diluted earnings per share (in dollars per share)							$ 0.23	$ 0.28	$ 0.43	$ 0.52

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Related Party Transactions (Details) (USD $)	3 Months Ended	6 Months Ended					12 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2012 SIGI	Jun. 30, 2011 SIGI	Jun. 30, 2012 Pluris, LLC	Jun. 30, 2011 Pluris, LLC	Dec. 31, 2010 Pluris, LLC	Jun. 30, 2012 Roger Newnham	Jun. 30, 2011 Roger Newnham	Jun. 30, 2012 Lemmie Rockford	Jun. 30, 2011 Lemmie Rockford
Related party transactions
Lease payments to related party	$ 323,000	$ 648,000	$ 462,000	$ 381,000				$ 141,000	$ 137,000	$ 45,000	$ 46,000
Amount of agreement to construct a wastewater facility							6,100,000
Related party revenues recognized					$ 355,000	$ 4,439,000

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Reportable Operating Segments (Tables)

6 Months Ended

Jun. 30, 2012

Reportable Operating Segments

Schedule of revenue by segment

	For the three months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	156,057	46.2	%	$	144,538	41.0	%
West Construction Services	167,287		49.6	%	196,623		55.9	%
Engineering	14,092		4.2	%	10,795		3.1	%
Total	$	337,436	100.0	%	$	351,956	100.0	%

	For the six months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	277,907	44.2	%	$	272,617	38.3	%
West Construction Services	325,318		51.7	%	416,737		58.6	%
Engineering	25,784		4.1	%	22,247		3.1	%
Total	$	629,009	100.0	%	$	711,601	100.0	%

Schedule of gross profit by segment

	For the three months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	17,360	11.1	%	$	17,295	12.0	%
West Construction Services	24,294		14.5	%	21,687		11.0	%
Engineering	2,350		16.7	%	2,424		22.5	%
Total	$	44,004	13.0	%	$	41,406	11.8	%

	For the six months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	28,778	10.4	%	$	30,338	11.1	%
West Construction Services	48,695		15.0	%	46,450		11.1	%
Engineering	4,127		16.0	%	5,248		23.6	%
Total	$	81,600	13.0	%	$	82,036	11.5	%

Schedule of amount of goodwill recorded by segment

Segment	June 30, 2012		December 31, 2011
East Construction Services	$	69,049	$	59,659
West Construction Services	32,079		32,079
Engineering	2,441		2,441
Total	$	103,569	$	94,179

Schedule of revenue and total assets by geographic area

	Revenues
	For the six months ended June 30,
	2012				2011				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		June 30, 2012		December 31, 2011
United States	$	624,293	99.3	%	$	703,574	98.9	%	$	727,337	$	719,028
Non-United States	4,716		0.7		8,027		1.1		8,709		9,385
Total	$	629,009	100.0	%	$	711,601	100.0	%	$	736,046	$	728,413

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements

Schedule of financial assets that are required to be measured at fair value

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets at June 30, 2012:
Cash and cash equivalents	$	119,286	$	119,286	—	—
Assets at December 31, 2011:
Cash and cash equivalents	$	120,306	$	120,306	—	—
Short-term investments	$	23,000	$	23,000	—	—

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Stockholders' Equity (Details) (USD $)	1 Months Ended		3 Months Ended	6 Months Ended	1 Months Ended
	Mar. 31, 2012	Feb. 29, 2012	Jun. 30, 2012	Jun. 30, 2011	May 31, 2012 Maximum	Mar. 31, 2012 Sprint	Apr. 30, 2012 Rockford 2011 earnout target
Stockholders' equity
Amount received in exchange for shares of common stock under a purchase arrangement	$ 1,240,000
Shares of common stock issued to managers and executives under a purchase arrangement within the Long-Term Incentive Plan	111,790			94,966
Shares of common stock issued as part of quarterly compensation of non-employee members of the Board of Directors		12,395
Common stock issued to sellers (in shares)						62,052	232,637
Aggregate purchase price up to which shares can be acquired under share repurchase program					20,000,000
Number of shares purchased and cancelled under the share repurchase program			89,600
Amount paid for shares purchased and cancelled under share repurchase program			$ 1,000,000
Average cost of repurchased shares of stock (in dollars per share)			$ 11.17

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Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Intangible assets
Intangible assets, net	$ 32,428		$ 32,428		$ 32,021
Amortization expense of intangible assets	1,447	2,767	3,193	5,532
Estimated future amortization expense for intangible assets
2012 (remaining six months)	2,951		2,951
2013	5,233		5,233
2014	5,198		5,198
2015	3,935		3,935
2016	3,539		3,539
Thereafter	11,572		11,572
Total	32,428		32,428		32,021
Tradename
Intangible assets
Intangible assets, net	18,276		18,276		18,791
Estimated future amortization expense for intangible assets
Total	18,276		18,276		18,791
Tradename | Minimum
Intangible assets
Amortization Period			3 years
Tradename | Maximum
Intangible assets
Amortization Period			10 years
Non-compete agreements
Intangible assets
Amortization Period			5 years
Intangible assets, net	4,388		4,388		4,695
Estimated future amortization expense for intangible assets
Total	4,388		4,388		4,695
Customer relationship
Intangible assets
Intangible assets, net	9,764		9,764		8,181
Estimated future amortization expense for intangible assets
Total	9,764		9,764		8,181
Customer relationship | Minimum
Intangible assets
Amortization Period			5 years
Customer relationship | Maximum
Intangible assets
Amortization Period			10 years
Backlog
Intangible assets
Intangible assets, net					354
Estimated future amortization expense for intangible assets
Total					$ 354
Backlog | Minimum
Intangible assets
Amortization Period			9 months
Backlog | Maximum
Intangible assets
Amortization Period			2 years 3 months

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Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts Receivable
Contracts receivable, net of allowance for doubtful accounts	$ 155,454	$ 166,298
Retention	18,315	20,378
Contracts receivable and retention	173,769	186,676
Other accounts receivable	1,313	702
Accounts receivable, net	175,082	187,378
Allowance for doubtful accounts	$ 411	$ 363

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Reportable Operating Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 item	Jun. 30, 2011	Dec. 31, 2011
Reportable Operating Segments
Number of operating segments			3
Segment reporting information
Revenue	$ 337,436	$ 351,956	$ 629,009	$ 711,601
% of Segment Revenue	100.00%	100.00%	100.00%	100.00%
Gross Profit	44,004	41,406	81,600	82,036
% of Segment Revenue	13.00%	11.80%	13.00%	11.50%
Goodwill	103,569		103,569		94,179
East Construction Services
Segment reporting information
Revenue	156,057	144,538	277,907	272,617
% of Segment Revenue	46.20%	41.00%	44.20%	38.30%
Gross Profit	17,360	17,295	28,778	30,338
% of Segment Revenue	11.10%	12.00%	10.40%	11.10%
Goodwill	69,049		69,049		59,659
West Construction Services
Segment reporting information
Revenue	167,287	196,623	325,318	416,737
% of Segment Revenue	49.60%	55.90%	51.70%	58.60%
Gross Profit	24,294	21,687	48,695	46,450
% of Segment Revenue	14.50%	11.00%	15.00%	11.10%
Goodwill	32,079		32,079		32,079
Engineering
Segment reporting information
Revenue	14,092	10,795	25,784	22,247
% of Segment Revenue	4.20%	3.10%	4.10%	3.10%
Gross Profit	2,350	2,424	4,127	5,248
% of Segment Revenue	16.70%	22.50%	16.00%	23.60%
Goodwill	$ 2,441		$ 2,441		$ 2,441

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Income Taxes (Details)	6 Months Ended
	Jun. 30, 2012
Income Taxes
Effective tax rate (as a percent)	38.50%
U.S. federal statutory rate (as a percent)	35.00%
Minimum period of statute of limitations of state and foreign jurisdictions	3 years
Maximum period of statute of limitations of state and foreign jurisdictions	5 years

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Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements

Fair Value Measurements

Note 4—Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements.  ASC Topic 820 addresses fair value GAAP for financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period and for non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis.

In general, fair values determined by Level 1 use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.

The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, the Company’s financial assets that are required to be measured at fair value at June 30, 2012 and December 31, 2011:

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets at June 30, 2012:
Cash and cash equivalents	$	119,286	$	119,286	—	—
Assets at December 31, 2011:
Cash and cash equivalents	$	120,306	$	120,306	—	—
Short-term investments	$	23,000	$	23,000	—	—

Short-term investments consist primarily of Certificates of Deposit (“CDs”) purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government FDIC program.

Other financial instruments of the Company consist of accounts receivable, accounts payable and certain accrued liabilities.  These financial instruments generally approximate fair value based on their short-term nature.  The carrying value of the Company’s long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities.

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Accounts Payable and Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts Payable and Accrued Liabilities
Retention amounts included in accounts payable	$ 18,315	$ 13,980
Accrued expenses and other current liabilities
Payroll and related employee benefits	29,405	29,110
Insurance, including self-insurance reserves	19,295	18,732
Reserve for estimated expenses on completed contracts	4,850	524
Reserve for estimated losses on uncompleted contracts	337	917
Corporate income taxes and other taxes	1,812	1,546
Accrued overhead cost	2,202	1,819
Current liabilities of discontinued operations	733	733
Other	7,658	6,542
Total accrued expenses and other current liabilities	$ 66,292	$ 59,923

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Business Combinations (Tables)

6 Months Ended

Jun. 30, 2012

Business Combinations

Schedule of fair value of the consideration transferred to selling shareholders

Cash consideration	$	21,197
Company common stock	980
Earnout consideration	6,200
Total consideration	$	28,377

Summary of the fair value of assets acquired and the liabilities assumed

Accounts receivable	$	7,614
Costs and estimated earnings in excess of billings	601
Inventory and other assets	251
Property, plant and equipment	12,078
Intangible assets	3,600
Goodwill	9,389
Accounts payable	(1,458		)
Capital lease obligations	(2,983		)
Other accrued liabilities	(715		)
Net assets acquired	$	28,377

Schedule of the acquired intangible assets categories, fair value and average amortization periods

	Amortization	Estimated
	Period	Fair Value
Tradename	3 years	$	700
Non-compete agreements	5 years	$	450
Customer relationship	10 years	$	2,450
Total		$	3,600

Schedule of pro forma results

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Revenues	340,749		381,408		644,573		754,153
Income before provision for income taxes	18,598		23,495		34,142		36,975
Net income	11,440		14,338		21,007		22,556
Weighted average common shares outstanding:
Basic	51,435		51,106		51,411		50,425
Diluted	51,435		51,216		51,411		51,173
Earnings per share:
Basic	$	0.22	$	0.28	$	0.41	$	0.45
Diluted	$	0.22	$	0.28	$	0.41	$	0.44

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Equity Method Investments (Tables)

6 Months Ended

Jun. 30, 2012

WesPac

Equity method investments

Balance sheet data

	June 30, 2012		December 31, 2011
WesPac Energy, LLC
Balance sheet data
Assets	$	17,891	$	20,147
Liabilities	288		1,820
Net assets	$	17,603	$	18,327
Company’s equity investment	$	12,348	$	12,415

Earnings data

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Earnings data:
Revenue	$	111		$	—		$	511		$	—
Expenses	$	428		$	11		$	644		$	138
Earnings before taxes	$	(317	)	$	(11	)	$	(133	)	$	(138	)
Company’s equity in earnings	$	(159	)	$	(6	)	$	(67	)	$	(69	)

Bernard

Equity method investments

Balance sheet data

	June 30, 2012		December 31, 2011
St. — Bernard Levee Partners
Balance sheet data
Assets	$	483	$	5,677
Liabilities	40		4,771
Net assets	$	443	$	906
Company’s equity investment	$	133	$	272

Earnings data

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Earnings data:
Revenue	$	499	$	27,674	$	3,934	$	55,710
Expenses	$	126	$	8,757	$	198	$	33,433
Earnings before taxes	$	373	$	18,917	$	3,736	$	22,277
Company’s equity in earnings	$	112	$	4,406	$	1,121	$	5,189

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Credit Arrangements (Details)	6 Months Ended			1 Months Ended	6 Months Ended		6 Months Ended					18 Months Ended				6 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012 Subordinated Promissory Note Rockford item	Nov. 12, 2010 Subordinated Promissory Note Rockford USD ($)	Dec. 18, 2009 Subordinated Promissory Note JCG USD ($)	Nov. 30, 2011 Note A Rockford USD ($)	Jun. 30, 2012 Note A Rockford USD ($)	Nov. 12, 2010 Note A Rockford USD ($)	Jun. 30, 2012 Note A Rockford For first 12 months	Jun. 30, 2012 Note A Rockford For months 13 through 24	Jun. 30, 2012 Note A Rockford Thereafter until maturity	Jun. 30, 2012 Note A Rockford Over the life of the note	Nov. 12, 2010 Note B Rockford USD ($)	Jun. 30, 2012 Agreement with PrivateBank and Trust Company Revolving line of credit USD ($) item	Jun. 30, 2012 Agreement with PrivateBank and Trust Company Revolving Loan A USD ($)	Dec. 31, 2011 Agreement with PrivateBank and Trust Company Revolving Loan A USD ($)	Jun. 30, 2012 Agreement with PrivateBank and Trust Company Revolving Loan B USD ($)	Jun. 30, 2012 Credit facility with a Canadian bank Commercial letters of credit CAD	Dec. 31, 2011 Credit facility with a Canadian bank Commercial letters of credit CAD	Jun. 30, 2012 Credit facility with a Canadian bank Commercial letters of credit Maximum	Jun. 30, 2012 Agreement with Bank of the West Commercial letters of credit USD ($)	Dec. 31, 2011 Agreement with Bank of the West Commercial letters of credit USD ($)
Credit arrangements
Maximum borrowing capacity												$ 35,000,000	$ 20,000,000		$ 15,000,000	10,000,000
Maximum borrowing capacity													15,000,000
Total commercial letters of credit outstanding													4,813,000	4,009,000		1,564,000	4,036,000
Number of lines of credit												2
Available borrowing capacity													15,187,000		15,000,000	8,436,000
Term of credit facility																		5 years	12 months	12 months
Annual fee (as a percent)																1.00%
Restricted cash																			3,823,000	3,823,000
Initial principal amount		16,712,000	53,500,000			9,669,000					7,043,000
Number of portions of principal amount of debt instrument	2
Interest rate (as a percent)							5.00%	7.00%	8.00%	6.67%
Monthly payment of principal and interest					269,000
Period over which principal and interest are payable					36 months
Amount outstanding					5,000,000
Percentage of net proceeds from equity financing in excess of specified amount agreed to be used to prepay a portion or all of debt instrument					15.00%
Threshold of net proceeds from completion of equity financing to be used in determining prepayment amount of debt instrument					10,000,000
Percentage of cash proceeds raised from incurrence of indebtedness agreed to be used to prepay a portion or all of debt instrument					33.00%
Escrow deposit				$ 5,000,000

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Intangible Assets

Summary of intangible asset categories, amounts and the average amortization periods

	Amortization	June 30,		December 31,
	Period	2012		2011
Tradename	3 to 10 years	$	18,276	$	18,791
Non-compete agreements	5 years	$	4,388	$	4,695
Customer relationships	5 to 10 years	$	9,764	$	8,181
Backlog	0.75 to 2.25 years	$	—	$	354
Total		$	32,428	$	32,021

Schedule of estimated future amortization expense for intangible assets

For the Years Ending December 31,	Estimated Intangible Amortization Expense
2012 (remaining six months)	$	2,951
2013	5,233
2014	5,198
2015	3,935
2016	3,539
Thereafter	11,572
	$	32,428

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Accounts Payable and Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Accounts Payable and Accrued Liabilities

Schedule of accrued expenses and other current liabilities

	June 30, 2012		December 31, 2011
Payroll and related employee benefits	$	29,405	$	29,110
Insurance, including self-insurance reserves	19,295		18,732
Reserve for estimated expenses on completed contracts	4,850		524
Reserve for estimated losses on uncompleted contracts	337		917
Corporate income taxes and other taxes	1,812		1,546
Accrued overhead cost	2,202		1,819
Current liabilities of discontinued operations	733		733
Other	7,658		6,542
	$	66,292	$	59,923

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 3—Recent Accounting Pronouncements

Fair Value Disclosures

In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which provides amendments to FASB ASC Topic 820, Fair Value Measurement. The objective of ASU 2011-04 is to create common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards (“IFRS”). The amendments clarify existing fair value measurement and disclosure requirements and make changes to particular principles or requirements for measuring or disclosing information about fair value measurements.  The Company adopted ASU 2011-04 on January 1, 2012, which did not have a material impact on its consolidated financial statements.

Goodwill Impairment Testing

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill or Impairment (“ASU 2011-08”). ASU 2011-08 provides an option to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that the fair value is not less than its carrying amount, then it is not necessary to perform the two-step impairment test.  An entity can choose to perform the qualitative assessment on none, some or all of its reporting units.  An entity can also bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period.  ASU 2011-08 also includes new qualitative indicators that replace those currently used to determine whether an interim goodwill impairment test is required to be performed. The Company adopted this standard on January 1, 2012 which did not have a material impact on the Company’s financial position, results of operations or cash flows.

Intangible Asset Impairment Testing

In July 2012, the FASB issued ASU 2012-02, Intangibles — Goodwill and Other (Topic 350):  Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”).  ASU 2012-02 allows an organization the option of first assessing qualitative factors to determine if a quantitative impairment test of the indefinite-lived intangible asset is necessary.  If the qualitative assessment reveals that it is “more likely than not” that the asset is impaired, a calculation of the asset’s fair value is required.  Otherwise, no quantitative calculation, as outlined in Subtopic 350-30 is necessary.  ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  The Company will adopt this standard on October 1, 2012.  The adoption of ASU 2012-02 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Dividends and Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Dividends and Earnings Per Share

Schedule of computation of basic and diluted earnings per share

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	11,733	$	14,462	$	22,219	$	26,740
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,435		51,044		51,386		50,363
Dilutive effect of warrants and units (1)	—		110		—		66
Dilutive effect of contingently issuable shares (2)	—		—		—		659
Dilutive effect of employee purchased shares (3)	—		—		—		23
Weighted average shares for computation of diluted earnings per share	51,435		51,154		51,386		51,111
Basic earnings per share	$	0.23	$	0.28	$	0.43	$	0.53
Diluted earnings per share	$	0.23	$	0.28	$	0.43	$	0.52

(1)Represents the dilutive effect of common stock warrants available under the Unit Purchase Option (“UPO”).  See Note 16 — “Stockholders’ Equity”.

(2)Represents the dilutive effect of the following contingency arrangements which were met at the end of each period, but for which shares of common stock were not issued until the end of the first quarter:

a)A total of 494,095 shares issued to Rockford’s former stockholders in March 2011 as a result of Rockford meeting a defined performance target in 2010.

b)A total of 1,095,646 shares issued to JCG’s sellers in March 2011 as a result of JCG meeting a defined performance target in 2010.

(3)Represents the effect of 94,966 shares of common stock issued in 2011 to managers and executives of the Company under a purchase arrangement within the Company’s Long-Term Incentive Plan.

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Business Combinations (Details) (USD $) In Thousands, except Share data, unless otherwise specified		1 Months Ended
	Jun. 30, 2012	Mar. 31, 2012 Sprint	Jun. 30, 2012 Sprint	Mar. 12, 2012 Sprint	Jun. 30, 2012 Sprint Net Adjustments to Fair Value	Jun. 30, 2012 Silva	May 30, 2012 Silva
Business combinations
Period for which the acquiree name is allowed to be used		3 years
Fair value of the consideration transferred to selling shareholders
Cash consideration				$ 21,197
Company common stock				980
Earnout consideration			6,422	6,200
Total consideration				28,377	(147)
Cash paid	35,131		1,969	19,228			13,934
Additional disclosure
Number of shares of common stock issued		62,052
Value of shares of common stock agreed to be issued	(980)			1,000
Number of business days prior to the closing date upon which average closing price of common stock is based		20 days
Fair value of the assets acquired and the liabilities assumed
Accounts receivable				7,614			903
Costs and estimated earnings in excess of billings				601
Inventory and other assets				251
Property, plant and equipment				12,078	830		14,675
Intangible assets			3,600	3,600
Goodwill				9,389
Accounts payable				(1,458)			(1,469)
Capital lease obligations				(2,983)	(920)
Other accrued liabilities				(715)
Net assets acquired				28,377
Working capital					(57)
Additional cash payable in the third quarter 2012	$ 175					$ 175

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Reportable Operating Segments (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Revenues and total assets by geographic area
Revenues	$ 337,436	$ 351,956	$ 629,009	$ 711,601
% of revenue	100.00%	100.00%	100.00%	100.00%
Total Assets	736,087		736,087		728,413
United States
Revenues and total assets by geographic area
Revenues			624,293	703,574
% of revenue			99.30%	98.90%
Total Assets	727,337		727,337		719,028
Non-United States
Revenues and total assets by geographic area
Revenues			4,716	8,027
% of revenue			0.70%	1.10%
Total Assets	$ 8,709		$ 8,709		$ 9,385

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 119,286	$ 120,306
Short term investments		23,000
Customer retention deposits and restricted cash	40,168	31,490
Accounts receivable, net	175,082	187,378
Costs and estimated earnings in excess of billings	45,473	41,866
Inventory and uninstalled contract materials	34,881	31,926
Deferred tax assets	10,659	10,659
Prepaid expenses and other current assets	10,715	13,252
Total current assets	436,264	459,877
Property and equipment, net	151,345	129,649
Investment in non-consolidated entities	12,481	12,687
Intangible assets, net	32,428	32,021
Goodwill	103,569	94,179
Total assets	736,087	728,413
Current liabilities:
Accounts payable	107,752	106,725
Billings in excess of costs and estimated earnings	131,688	137,729
Accrued expenses and other current liabilities	66,292	59,923
Dividends payable	1,542	1,532
Current portion of capital leases	3,535	6,623
Current portion of long-term debt	15,244	13,870
Current portion of subordinated debt	3,223	15,167
Current portion of contingent earnout liabilities	9,755	3,450
Total current liabilities	339,031	345,019
Long-term capital leases, net of current portion	4,089	4,047
Long-term debt, net of current portion	58,970	55,852
Long-term subordinated debt, net of current portion	1,777	7,334
Deferred tax liabilities	21,079	21,079
Long-term contingent earnout liabilities, net of current portion	2,842	9,268
Other long-term liabilities	8,813	10,882
Total liabilities	436,601	453,481
Commitments and contingencies
Stockholders' equity
Common stock-$.0001 par value, 90,000,000 shares authorized, 51,388,406 and 51,059,132 issued and outstanding at June 30, 2012 and December 31, 2011	5	5
Additional paid-in capital	155,417	150,003
Retained earnings	144,064	124,924
Total stockholders' equity	299,486	274,932
Total liabilities and stockholders' equity	$ 736,087	$ 728,413

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Contingent Earnout Liabilities (Details) (USD $)	6 Months Ended		1 Months Ended					6 Months Ended			6 Months Ended			6 Months Ended		6 Months Ended	1 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Mar. 31, 2012 Sprint	Jun. 30, 2012 Sprint	Mar. 12, 2012 Sprint	Jun. 30, 2012 Sprint 2012 earnout target	Mar. 12, 2012 Sprint 2012 earnout target	Jun. 30, 2012 Sprint 2012 earnout target Minimum	Jun. 30, 2012 Sprint 2013 earnout target	Mar. 12, 2012 Sprint 2013 earnout target	Jun. 30, 2012 Sprint 2013 earnout target Minimum	Nov. 30, 2010 Rockford	Nov. 30, 2010 Rockford Maximum	Jun. 30, 2012 Rockford 2012 earnout target	Dec. 31, 2011 Rockford 2012 earnout target	Jun. 30, 2012 Rockford 2012 earnout target Minimum	Mar. 31, 2011 Rockford 2010 earnout target	Apr. 30, 2012 Rockford 2011 earnout target	Dec. 31, 2011 Rockford 2011 earnout target
Contingent earnout liabilities
EBITDA threshold for measuring financial performance								$ 7,000,000			$ 7,750,000					$ 14,000,000
Potential contingent consideration						4,000,000			4,000,000					6,900,000
Potential contingent consideration													18,400,000
Estimated fair value of potential contingent consideration				6,422,000	6,200,000	3,580,000	3,450,000		2,842,000	2,745,000		14,300,000		6,175,000	5,818,000				6,900,000
Number of shares of common stock issued			62,052														494,095	232,637
Cash payment made	35,131,000			1,969,000	19,228,000													3,450,000
Average closing stock price during the period on which stock component of the earnout was based (in dollars per share)																			$ 14.83
Change in fair value of liability	$ 2,871,000	$ (603,000)												$ 357,000

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Business Activity

6 Months Ended

Jun. 30, 2012

Business Activity

Business Activity

Note 1—Business Activity

Organization and operations — Primoris Services Corporation and its wholly-owned subsidiaries ARB, Inc. (“ARB”), ARB Structures, Inc., All Day Electric Company, Inc., Onquest, Inc., Born Heaters Canada, ULC, Cardinal Contractors, Inc., GML Coatings, LLC, Stellaris, LLC, James Construction Group LLC (“JCG”) and Rockford Corporation, collectively, are engaged in various construction and product engineering activities. 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 in 2011 moved its corporate headquarters from Lake Forest, California to 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

On March 12, 2012, the Company executed an asset purchase agreement with Sprint Pipeline Services, L.P. (“Sprint”).  Headquartered in Pearland (near Houston), Texas, Sprint provides a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in the southeastern United States.  The Company formed Primoris Energy Services Corporation, a Texas corporation, to facilitate the acquisition.  The purchase agreement allows the Company to use the Sprint name for three years.

On May 30, 2012, the Company executed an asset purchase agreement with Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interests, LLC (collectively “Silva”).  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving, and material sales in the Gulf Coast region of the United States.

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

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Basis of Presentation (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Customer concentration
Revenues	$ 337,436,000	$ 351,956,000	$ 629,009,000	$ 711,601,000
Multiemployer Plans
Withdrawal liability recorded					5,000,000
Revenues | Customer concentration | Top ten customers
Customer concentration
Number of top customers			10
Number of calendar years in which top customers typically generate minimum specified percentage of revenue			1
Revenues	184,800,000		364,200,000
Percentage of concentration risk	54.80%		57.90%
Revenues | Customer concentration | Top ten customers | Minimum
Customer concentration
Minimum percentage of revenues generated by top ten customers			50.00%
Revenues | Customer concentration | Louisiana DOT
Customer concentration
Percentage of concentration risk	11.60%		13.30%
Revenues | Customer concentration | Large gas and electric utility
Customer concentration
Percentage of concentration risk	12.10%		11.90%
Revenues | Customer concentration | Ruby contract
Customer concentration
Revenues		$ 89,500,000		$ 216,400,000
Percentage of concentration risk		25.40%		30.40%
Revenues | Customer concentration | One customer
Customer concentration
Percentage of concentration risk			4.10%	30.40%
Accounts receivable | Customer concentration | One customer
Customer concentration
Percentage of concentration risk			6.80%	4.90%
Number of customers			1	1

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies

Commitments and Contingencies

Note 17—Commitments and Contingencies

Leases — The Company leases certain property and equipment under non-cancellable operating leases which expire at various dates through 2019. The leases require the Company to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”.

Total lease expense during the three and six months ended June 30, 2012 amounted to $2,517 and $4,759, respectively, compared to $2,275 and $4,621 for the same periods in 2011.   The amounts for the three and six months ended June 30,  2012 included lease payments made to related parties of $323 and $648, respectively.

Letters of credit — At June 30, 2012, the Company had letters of credit outstanding of $10,162 and at December 31, 2011, the Company had letters of credit outstanding of $11,798.  The outstanding amounts include the U.S. dollar equivalents for letters of credit issued in Canadian dollars.

Litigation— The Company is subject to claims and legal proceedings arising out of its business. Management believes that the Company has meritorious defenses to such claims. Although management is unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, management believes that the outcome of these matters will not have a materially adverse effect on the consolidated financial position of the Company.

Bonding— At June 30, 2012 and December 31, 2011, the Company had bid and completion bonds issued and outstanding totaling approximately $1,108,312 and $1,105,933, respectively.

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair value measurements
Short term investments		$ 23,000
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value measurements
Cash and cash equivalents	119,286	120,306
Short term investments		23,000
Recurring | Amount Recorded on Balance Sheet
Fair value measurements
Cash and cash equivalents	119,286	120,306
Short term investments		$ 23,000

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2012

Basis of Presentation

Revenue recognition

Revenue recognition — The Company typically structures contracts as unit-price, time and material, fixed-price or cost reimbursable plus fee. Revenue is recognized on the cost-on-total-cost percentage-of-completion method for fixed price contracts.  In the percentage-of-completion method, estimated revenues and resulting contract income is calculated based on the total costs incurred to date as a percentage of total estimated costs. Total estimated costs, and thus contract revenues and income, can be impacted by changes in any of the following: 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 and politics may affect the progress of a project’s completion and thus the timing of revenue recognition. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.

The caption “Costs and estimated earnings in excess of billings” represents the excess of contract revenues recognized under the percentage-of-completion method over billings to date. For those contracts in which billings exceed contract revenues recognized to date, such excesses are included in the caption “Billings in excess of costs and estimated earnings”.

Revenues on cost-plus and time and materials contracts are recognized as the related work is completed.

In accordance with applicable terms of construction contracts, certain retainage amounts may be withheld by customers until completion and acceptance of the project. Final payments of the majority of such amounts are expected to be receivable in the following operating cycle.

Significant revision in contract estimate

Significant revision in contract estimate — As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate the revenue to be recognized. Total estimated costs, and thus contract income, are impacted by many factors.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits related to the prior year, had current year estimates of costs to complete been known in the prior year.

Customer concentration

Customer concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout primarily the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three-months and six-months ending June 30, 2012, revenues generated by the top ten customers were $184.8 million and $364.2 million, respectively, which represented 54.8% and 57.9%, respectively of total revenues during the periods.  During the three and six month periods ending June 30, 2012, the Louisiana DOT represented 11.6% and 13.3%, respectively, of total revenues and a large gas and electric utility represented 12.1% and 11.9%, respectively, of total revenues. During the three and six months ending June 30, 2011, revenues generated by Rockford under the Ruby contract were $89.5 million and $216.4 million, respectively, which represented 25.4% and 30.4%, respectively, of total revenues during the periods.  The Ruby contract was part of a large project for the construction of a natural gas pipeline from Wyoming to Oregon for which field work was substantially completed by the end of the third quarter 2011.

At June 30, 2012, approximately 6.8% of the Company’s accounts receivable were due from one customer, and that customer provided 4.1% of the Company’s revenues for the six months ended June 30, 2012.  At June 30, 2011, approximately 4.9% of the Company’s accounts receivable were due from one customer, and that customer provided 30.4% of the Company’s revenues for the six months ended June 30, 2011

Multiemployer plans

Multiemployer plans — The Company participates and contributes to a number of multiemployer benefit plans for its union employees at rates determined by the various collective bargaining agreements.  Each plan’s trustees determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP.  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan and recorded a $5 million withdrawal liability as of December 31, 2011.  At this time, the Company has no plans to withdraw from any other agreements.

Inventory and uninstalled contract materials

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method.

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation

Basis of Presentation

Note 2—Basis of Presentation

Interim consolidated financial statements — The interim condensed consolidated financial statements for the three-month periods ended June 30, 2012 and 2011 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in the Company’s latest audited consolidated financial statements, have been omitted. This Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (the “Second Quarter 2012 Report”) should be read in concert with the Company’s Annual Report on Form 10-K, filed on March 5, 2012, which contains the Company’s audited consolidated financial statements for the year ended December 31, 2011.

The interim financial information for the three-month and six-month periods ended June 30, 2012 and 2011 has been prepared on the same basis as the audited consolidated financial statements; however, the financial statements contained in this Second Quarter 2012 Report do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for audited financial statements. The interim financial information is unaudited.  In the opinion of management, the unaudited information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information.

Revenue recognition — The Company typically structures contracts as unit-price, time and material, fixed-price or cost reimbursable plus fee. Revenue is recognized on the cost-on-total-cost percentage-of-completion method for fixed price contracts.  In the percentage-of-completion method, estimated revenues and resulting contract income is calculated based on the total costs incurred to date as a percentage of total estimated costs. Total estimated costs, and thus contract revenues and income, can be impacted by changes in any of the following: 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 and politics may affect the progress of a project’s completion and thus the timing of revenue recognition. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.

The caption “Costs and estimated earnings in excess of billings” represents the excess of contract revenues recognized under the percentage-of-completion method over billings to date. For those contracts in which billings exceed contract revenues recognized to date, such excesses are included in the caption “Billings in excess of costs and estimated earnings”.

Revenues on cost-plus and time and materials contracts are recognized as the related work is completed.

In accordance with applicable terms of construction contracts, certain retainage amounts may be withheld by customers until completion and acceptance of the project. Final payments of the majority of such amounts are expected to be receivable in the following operating cycle.

Significant revision in contract estimate — As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate the revenue to be recognized. Total estimated costs, and thus contract income, are impacted by many factors.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits related to the prior year, had current year estimates of costs to complete been known in the prior year.

Customer concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout primarily the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three-months and six-months ending June 30, 2012, revenues generated by the top ten customers were $184.8 million and $364.2 million, respectively, which represented 54.8% and 57.9%, respectively of total revenues during the periods.  During the three and six month periods ending June 30, 2012, the Louisiana DOT represented 11.6% and 13.3%, respectively, of total revenues and a large gas and electric utility represented 12.1% and 11.9%, respectively, of total revenues. During the three and six months ending June 30, 2011, revenues generated by Rockford under the Ruby contract were $89.5 million and $216.4 million, respectively, which represented 25.4% and 30.4%, respectively, of total revenues during the periods.  The Ruby contract was part of a large project for the construction of a natural gas pipeline from Wyoming to Oregon for which field work was substantially completed by the end of the third quarter 2011.

At June 30, 2012, approximately 6.8% of the Company’s accounts receivable were due from one customer, and that customer provided 4.1% of the Company’s revenues for the six months ended June 30, 2012.  At June 30, 2011, approximately 4.9% of the Company’s accounts receivable were due from one customer, and that customer provided 30.4% of the Company’s revenues for the six months ended June 30, 2011

Multiemployer plans — The Company participates and contributes to a number of multiemployer benefit plans for its union employees at rates determined by the various collective bargaining agreements.  Each plan’s trustees determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP.  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan and recorded a $5 million withdrawal liability as of December 31, 2011.  At this time, the Company has no plans to withdraw from any other agreements.

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	51,388,406	51,059,132
Common stock, shares outstanding	51,388,406	51,059,132

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Contingent Earnout Liabilities

6 Months Ended

Jun. 30, 2012

Contingent Earnout Liabilities

Contingent Earnout Liabilities

Note 12 — Contingent Earnout Liabilities

Sprint Earnout Consideration

As part of the Sprint acquisition on March 12, 2012, the Company agreed to issue additional cash to the sellers, contingent upon Sprint meeting certain operating performance targets for the remainder of 2012 and for the twelve months ending December 31, 2013.

The 2012 earnout target is measured by income before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the purchase agreement, for the remainder of the calendar year 2012.  If 2012 EBITDA is at least $7.0 million, we have agreed to pay $4.0 million in cash to the sellers.  The estimated fair value of the 2012 potential contingent consideration on the acquisition date was $3.45 million.

The 2013 earnout target provides for an additional cash payment of $4.0 million to the sellers if 2013 EBITDA is at least $7.75 million.  The estimated fair value of the 2013 potential contingent consideration on the acquisition date was $2,745.

At June 30, 2012, the estimated fair value of the potential contingent consideration for the 2012 earnout was $3,580 and for the 2013 earnout target, it was $2,842.

Rockford Earnout Consideration

As part of the Rockford acquisition in November 2010, the Company agreed to issue additional cash and common stock to the sellers, contingent upon Rockford meeting certain operating performance targets for the fourth quarter 2010, for the five quarters ending December 31, 2011 and for the year ended December 31, 2012. The maximum amount of this consideration was $18.4 million, which, when measured on a fair value basis as of the acquisition date, was estimated at $14.3 million and was classified as a liability on the Company’s consolidated balance sheet.

The 2010 earnout target for the fourth quarter 2010 was achieved, and in March 2011, the Company issued 494,095 shares of common stock to the sellers, reducing the liability and increasing stockholders’ equity.

The 2011 earnout target was achieved and the liability as of December 31, 2011 was $6,900.  In April 2012, the Company issued 232,637 shares of common stock to the sellers and made cash payment of $3.45 million.  The stock component of the earnout was based on the Company’s average closing stock price during the month of December 2011 of $14.83 per share.  The April 2012 cash payment reduced the liability, and the stock component reduced the liability and increased stockholders’ equity in the second quarter 2012.

A final contingent earnout liability exists for 2012 based on Rockford’s financial performance as measured by income before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the purchase agreement, for the calendar year 2012.  If 2012 EBITDA is at least $14.0 million, we would pay $6.9 million in cash to the sellers in 2013.

At June 30, 2012 and December 31, 2011, the estimated fair value of the potential contingent consideration for the 2012 earnout was $6,175 and $5,818, respectively.  The $357 change in the fair value of this liability was a non-cash charge to “other expense” in the consolidated statement of income for the six month period ended June 30, 2012.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 07, 2012
Document and Entity Information
Entity Registrant Name	Primoris Services Corp
Entity Central Index Key	0001361538
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		51,388,406
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Related Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions

Related Party Transactions

Note 13—Related Party Transactions

Primoris has entered into various leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Senior Vice President and General Counsel, is secretary of SIGI.  Primoris leases properties located in Bakersfield (lease expires October 31, 2012), Pittsburg (lease expires September 30, 2014) and San Dimas (lease expires March 30, 2019) in California, and in Pasadena, Texas (leases expire in July 2019 and June 2021) from SIGI. During the six months ended June 30, 2012 and 2011, the Company paid $462 and $381, respectively, in lease payments to SIGI for the use of these properties.

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  During the six months ending June 30, 2012 the Company recognized related party revenues of $355 and $4,439 for the same period in the prior year.  The project was substantially completed at December 31, 2011.

Primoris leases a property from Roger Newnham, one of our stockholders and a manager of our subsidiary, Born Heaters Canada. The property is located in Calgary, Canada. During the six months ended June 30, 2012 and 2011, Primoris paid $141 and $137, respectively, in lease payments to Mr. Newnham for the use of this property. The term of the lease is through December 31, 2014.

As a result of the November 2010 acquisition of Rockford, the Company entered into a lease for property from Lemmie Rockford, one of our stockholders.  The property is located in Toledo, Washington.  During the six months ended June 30, 2012 and 2011, Primoris paid $45 and $46, respectively, in lease payments to Mr. Rockford for the use of this property.  The lease expires on January 15, 2015.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues	$ 337,436	$ 351,956	$ 629,009	$ 711,601
Cost of revenues	293,432	310,550	547,409	629,565
Gross profit	44,004	41,406	81,600	82,036
Selling, general and administrative expenses	23,396	20,477	43,670	40,322
Operating income	20,608	20,929	37,930	41,714
Other income (expense):
Income (loss) from non-consolidated entities	(171)	4,400	886	5,226
Foreign exchange loss	(6)	(72)	(48)	(36)
Other expense	(371)	(306)	(579)	(603)
Interest income	25	100	47	258
Interest expense	(1,006)	(1,353)	(2,107)	(2,724)
Income before provision for income taxes	19,079	23,698	36,129	43,835
Provision for income taxes	(7,346)	(9,236)	(13,910)	(17,095)
Net income	$ 11,733	$ 14,462	$ 22,219	$ 26,740
Earnings per share:
Basic (in dollars per share)	$ 0.23	$ 0.28	$ 0.43	$ 0.53
Diluted (in dollars per share)	$ 0.23	$ 0.28	$ 0.43	$ 0.52
Weighted average common shares outstanding:
Basic (in shares)	51,435	51,044	51,386	50,363
Diluted (in shares)	51,435	51,154	51,386	51,111

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Equity Method Investments

6 Months Ended

Jun. 30, 2012

Equity Method Investments

Equity Method Investments

Note 7—Equity Method Investments

WesPac Energy LLC

On July 1, 2010, the Company acquired a 50% membership interest in WesPac Energy LLC, a Nevada limited liability company (“WesPac”), from Kealine Holdings, LLC (“Kealine”), a Nevada limited liability company.  Kealine holds the remaining 50% membership interest in WesPac. We have no future obligation to make any additional investments into WesPac. All key investment, management and operating decisions of WesPac will require unanimous approval from a management committee equally represented by Kealine and us.  The Company believes the ownership interest in WesPac will broaden our exposure to a variety of pipeline, terminal and energy-related infrastructure opportunities across North America.

The following is a summary of the financial position and results as of and for the periods ended:

	June 30, 2012		December 31, 2011
WesPac Energy, LLC
Balance sheet data
Assets	$	17,891	$	20,147
Liabilities	288		1,820
Net assets	$	17,603	$	18,327
Company’s equity investment	$	12,348	$	12,415

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Earnings data:
Revenue	$	111		$	—		$	511		$	—
Expenses	$	428		$	11		$	644		$	138
Earnings before taxes	$	(317	)	$	(11	)	$	(133	)	$	(138	)
Company’s equity in earnings	$	(159	)	$	(6	)	$	(67	)	$	(69	)

At the end of 2011, a major oil refining third party terminated two potential projects.  WesPac expensed $5.4 million.  In March 2012, the third party reimbursed WesPac for its share of the terminated project costs.

In December 2011, the Company recorded its 50% share of expenses required by the equity method of accounting.  The Company also reduced its $5.0 million basis difference by $1.7 million to recognize an estimate for an other than temporary decrease in the value of its basis difference between the Company’s original investment and its pro-rata share of the WesPac equity.

St.—Bernard Levee Partners

The Company purchased a 30% interest in St.—Bernard Levee Partners (“Bernard”) in the fourth quarter 2009 for $300 and accounts for this investment under the equity method. Bernard engages in construction activities in Louisiana.  Bernard distributed $4,200 and $22,892 to its equity holders during the six months ended June 30, 2012 and 2011, respectively, of which, the Company’s share, as calculated under the joint venture agreement, was $1,260 and $5,880 for the same periods in 2012 and 2011, respectively.  The following is a summary of the financial position and results as of and for the periods ended:

	June 30, 2012		December 31, 2011
St. — Bernard Levee Partners
Balance sheet data
Assets	$	483	$	5,677
Liabilities	40		4,771
Net assets	$	443	$	906
Company’s equity investment	$	133	$	272

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Earnings data:
Revenue	$	499	$	27,674	$	3,934	$	55,710
Expenses	$	126	$	8,757	$	198	$	33,433
Earnings before taxes	$	373	$	18,917	$	3,736	$	22,277
Company’s equity in earnings	$	112	$	4,406	$	1,121	$	5,189

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Costs and Estimated Earnings on Uncompleted Contracts

6 Months Ended

Jun. 30, 2012

Costs and Estimated Earnings on Uncompleted Contracts

Costs and Estimated Earnings on Uncompleted Contracts

Note 6—Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of the following at:

	June 30, 2012			December 31, 2011
Costs incurred on uncompleted contracts	$	2,828,550		$	2,977,535
Reserve for estimated losses on uncompleted contracts	337			917
Gross profit recognized	283,374			303,634
	3,112,261			3,282,086
Less: billings to date	(3,198,476		)	(3,377,949		)
	$	(86,215	)	$	(95,863	)

This amount is included in the accompanying consolidated balance sheet under the following captions:

	June 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings	$	45,473		$	41,866
Billings in excess of costs and estimated earnings	(131,688		)	(137,729		)
	$	(86,215	)	$	(95,863	)

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Reportable Operating Segments

6 Months Ended

Jun. 30, 2012

Reportable Operating Segments

Reportable Operating Segments

Note 18—Reportable Operating Segments

The Company segregates the business into three operating segments: the East Construction Services segment, the West Construction Services segment and the Engineering segment.

The East Construction Services segment includes the JCG construction business, located primarily in the southeastern United States.  The segment also includes the businesses located in the Gulf Coast region of the United States, including Cardinal Contractors, Inc. The segment also includes the operating results relating to the acquisition of Sprint Pipeline Services on March 12, 2012.

The West Construction Services segment includes the construction services performed in the western United States, primarily in the states of California and Oregon.  Entities included in West Construction Services are ARB, ARB Structures, Inc., Rockford, Alaska Continental Pipeline, Inc., All Day Electric Company, Inc., Primoris Renewables, Inc., Juniper Rock, Inc. and Stellaris, LLC.

The Engineering segment includes the results of Onquest, Inc. and Born Heaters Canada, ULC.

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

Segment Revenues

Revenue by segment for the three months ended June 30, 2012 and 2011 were as follows:

	For the three months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	156,057	46.2	%	$	144,538	41.0	%
West Construction Services	167,287		49.6	%	196,623		55.9	%
Engineering	14,092		4.2	%	10,795		3.1	%
Total	$	337,436	100.0	%	$	351,956	100.0	%

Revenue by segment for the six months ended June 30, 2012 and 2011 were as follows:

	For the six months ended June 30,
	2012				2011
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East Construction Services	$	277,907	44.2	%	$	272,617	38.3	%
West Construction Services	325,318		51.7	%	416,737		58.6	%
Engineering	25,784		4.1	%	22,247		3.1	%
Total	$	629,009	100.0	%	$	711,601	100.0	%

Segment Gross Profit

Gross profit by segment for the three months ended June 30, 2012 and 2011 were as follows:

	For the three months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	17,360	11.1	%	$	17,295	12.0	%
West Construction Services	24,294		14.5	%	21,687		11.0	%
Engineering	2,350		16.7	%	2,424		22.5	%
Total	$	44,004	13.0	%	$	41,406	11.8	%

Gross profit by segment for the six months ended June 30, 2012 and 2011 were as follows:

	For the six months ended June 30,
	2012				2011
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East Construction Services	$	28,778	10.4	%	$	30,338	11.1	%
West Construction Services	48,695		15.0	%	46,450		11.1	%
Engineering	4,127		16.0	%	5,248		23.6	%
Total	$	81,600	13.0	%	$	82,036	11.5	%

Segment Goodwill

The following presents the amount of goodwill recorded by segment at June 30, 2012 and at December 31, 2011.

Segment	June 30, 2012		December 31, 2011
East Construction Services	$	69,049	$	59,659
West Construction Services	32,079		32,079
Engineering	2,441		2,441
Total	$	103,569	$	94,179

Geographic Region — Revenues and Total Assets

Revenue and total assets by geographic area for the six months ended June 30, 2012 and 2011 were as follows:

	Revenues
	For the six months ended June 30,
	2012				2011				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		June 30, 2012		December 31, 2011
United States	$	624,293	99.3	%	$	703,574	98.9	%	$	727,337	$	719,028
Non-United States	4,716		0.7		8,027		1.1		8,709		9,385
Total	$	629,009	100.0	%	$	711,601	100.0	%	$	736,046	$	728,413

All non-United States revenue has been generated in the Engineering Segment.  For the table above, revenues generated by OnQuest’s Canadian subsidiary, Born Heaters Canada, ULC, were used to determine non-United States revenues.

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes

Income Taxes

Note 14—Income Taxes

The effective tax rate for the six months ended June 30, 2012 was 38.50%. The rate differs from the U.S. federal statutory rate of 35% due primarily to state income taxes and the “Domestic Production Activity Deduction”.

To determine its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions to which the Company is subject. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.  The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Internal Revenue Service (“IRS”) is presently conducting an examination of our federal income tax returns for 2008 and 2009.  The tax years 2010 through 2011 remain open to examination by the IRS.  The statute of limitations of state and foreign jurisdictions vary generally between 3 to 5 years.  Accordingly, the tax years 2007 through 2011 generally remain open to examination by the other major taxing jurisdictions in which the Company operates.

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Accounts Payable and Accrued Liabilities

6 Months Ended

Jun. 30, 2012

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

Note 10—Accounts Payable and Accrued Liabilities

At June 30, 2012 and December 31, 2011, accounts payable included retention amounts of approximately $18,315 and $13,980, respectively.  These amounts due to subcontractors have been retained pending contract completion and customer acceptance of jobs.

The following is a summary of accrued expenses and other current liabilities at:

	June 30, 2012		December 31, 2011
Payroll and related employee benefits	$	29,405	$	29,110
Insurance, including self-insurance reserves	19,295		18,732
Reserve for estimated expenses on completed contracts	4,850		524
Reserve for estimated losses on uncompleted contracts	337		917
Corporate income taxes and other taxes	1,812		1,546
Accrued overhead cost	2,202		1,819
Current liabilities of discontinued operations	733		733
Other	7,658		6,542
	$	66,292	$	59,923

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Business Combinations

6 Months Ended

Jun. 30, 2012

Business Combinations

Business Combinations

Note 8 — Business Combinations

Sprint Pipeline Services, L.P.

On March 12, 2012, the Company executed an asset purchase agreement with Sprint Pipeline Services, L.P. (“Sprint”).  Headquartered in Pearland (near Houston), Texas, Sprint provides a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in the southeastern United States.  The Company formed Primoris Energy Services Corporation, a Texas corporation, to facilitate the acquisition.  The purchase agreement allows the Company to use the Sprint name for three years.

The fair value of the consideration transferred to selling shareholders consisted of the following:

Cash consideration	$	21,197
Company common stock	980
Earnout consideration	6,200
Total consideration	$	28,377

On the closing date, we paid the sellers $19,228 in cash and in the second quarter paid an additional $1,969 once a final valuation of the net book value of assets purchased was completed.

We issued the sellers 62,052 shares of our common stock with a contractually agreed upon value of $1,000 based on the average closing price of our common stock for the 20 business days prior to the closing date.  The fair value of the stock issued was $980 based on the stock price on the closing date.

As part of the acquisition, the Company agreed to issue additional cash to the sellers, contingent upon Sprint meeting certain operating performance targets for the remainder of 2012 and for the twelve months ending December 31, 2013.  As discussed in Note 12 — “Contingent Earnout Liabilities”, the estimated fair value of the contingency was $6,200 on the acquisition date and $6,422 as of June 30, 2012.

The acquisition of Sprint was accounted for using the acquisition method of accounting.  Accordingly, the assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date.  Sprint’s results of operations have been included in the Company’s consolidated financial statements from March 12, 2012.

The following table summarizes the fair value of the assets acquired and the liabilities assumed:

Accounts receivable	$	7,614
Costs and estimated earnings in excess of billings	601
Inventory and other assets	251
Property, plant and equipment	12,078
Intangible assets	3,600
Goodwill	9,389
Accounts payable	(1,458		)
Capital lease obligations	(2,983		)
Other accrued liabilities	(715		)
Net assets acquired	$	28,377

The significant identifiable tangible assets acquired include primarily accounts receivable and property, plant and equipment.  The Company determined that the book value of accounts receivable reflected fair value of those assets.  The Company estimated the fair value of fixed assets on the effective date of the acquisition based on comparable market values for equipment of similar condition and age.

We requested the assistance of an independent third-party to determine the fair value of the intangible assets acquired for the acquisition.

During the second quarter 2012, the Company finalized its estimates of the fair value of the acquired assets and liabilities of Sprint.  The final revision resulted in a change from the values recorded at March 31, 2012, including a decrease in consideration paid to the sellers of $147, an increase in capital lease obligations of $920, an increase of $830 in property, plant and equipment, and a net decrease in working capital of $57.

The fair value measurements of the intangible assets were based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in Note 3 — “Fair Value Measurements”. Based on the Company’s assessment, the acquired intangible assets categories, fair value and average amortization periods, on a straight-line basis, are as follows:

	Amortization	Estimated
	Period	Fair Value
Tradename	3 years	$	700
Non-compete agreements	5 years	$	450
Customer relationship	10 years	$	2,450
Total		$	3,600

The fair value of the tradename was determined based on the “relief from royalty” method, which was selected based on external research of third party trade name licensing agreements and their royalty rate levels and management estimates.  The useful life was based on the agreement providing for the use of the Sprint tradename for three years.

The fair value for the non-compete agreements was based on a discounted “income approach” model, including estimated financial results with and without the non-compete agreements in place.  The agreements were analyzed based on the potential impact of competition that certain individuals could have on the financial results, assuming the agreements were not in place.  An estimate of the probability of competition was applied and the results were compared to a similar model assuming the agreements were in place.

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.

Goodwill largely consists of expected benefits from the geographic expansion and presence of Sprint in the Gulf Coast of the United States and its energy-related opportunities for specialized pipeline construction and related services.  Goodwill also includes the value of the assembled workforce of the Sprint business.  Based on the current tax treatment of the Sprint acquisition, goodwill and other intangible assets are deductible for income tax purposes over a fifteen-year period.

Silva Companies

On May 30, 2012, the Company executed an asset purchase agreement with Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interests, LLC (collectively “Silva”).  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving and material sales in the Gulf Coast region of the United States.

The acquisition was accounted for using the acquisition method of accounting.  The assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date and such estimates are preliminary and subject to change.  The final determination of the fair value of the assets acquired and liabilities assumed has not been completed because of the short period of time from the date of the Silva acquisition to the end of the quarter.  Silva’s results of operations have been included in the Company’s consolidated financial statements from May 30, 2012.  On the closing date, we paid the sellers $13,934 and will pay an additional $175 in the third quarter 2012, for which we received $14,675 in property, plant and equipment, $903 in accounts and retention receivables and accounts payable of $1,469.

Supplemental Unaudited Pro Forma Information for the three and six months ended June 30, 2011

In accordance with ASC 805 we are combining the Sprint and the Silva acquisition information.  The following pro forma information for the three and six months ended June 30, 2011 presents the results of operations of both the Sprint and Silva acquisitions combined,  as if the acquisitions had both occurred at the beginning of 2011. The supplemental pro forma information has been adjusted to include:

· the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment, based on the purchase price allocations;

· the pro forma impact of the expense associated with the amortization of the discount for the fair value of the contingent consideration for potential earnout liabilities that may be achieved in 2012 and 2013 for the Sprint acquisition;

· the pro forma tax effect of both the income before income taxes for Sprint and Silva and the pro forma adjustments, calculated using a tax rate of 39.0% for the three and six months ended June 30, 2011; and

· the pro forma increase in weighted average shares outstanding includes 62,052 shares of common stock issued as part of the Sprint acquisition.

The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the Sprint and Silva transactions been completed on January 1, 2011.  The pro forma results do not reflect any operating efficiencies and associated cost savings that the Company may have achieved with respect to the combined companies.

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Revenues	340,749		381,408		644,573		754,153
Income before provision for income taxes	18,598		23,495		34,142		36,975
Net income	11,440		14,338		21,007		22,556
Weighted average common shares outstanding:
Basic	51,435		51,106		51,411		50,425
Diluted	51,435		51,216		51,411		51,173
Earnings per share:
Basic	$	0.22	$	0.28	$	0.41	$	0.45
Diluted	$	0.22	$	0.28	$	0.41	$	0.44

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Intangible Assets

6 Months Ended

Jun. 30, 2012

Intangible Assets

Intangible Assets

Note 9—Intangible Assets

At June 30, 2012 and December 31, 2011, intangible assets totaled $32,428 and $32,021, respectively, net of amortization.  The June 30, 2012 balance includes the effect of the Sprint acquisition (See Note 8).  The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, as follows:

	Amortization	June 30,		December 31,
	Period	2012		2011
Tradename	3 to 10 years	$	18,276	$	18,791
Non-compete agreements	5 years	$	4,388	$	4,695
Customer relationships	5 to 10 years	$	9,764	$	8,181
Backlog	0.75 to 2.25 years	$	—	$	354
Total		$	32,428	$	32,021

Amortization expense of intangible assets was $1,447 and $2,767 for the three months ended June 30, 2012 and 2011, respectively, and amortization expense for the six months ended June 30, 2012 and 2011 was $3,193 and $5,532, respectively.  Estimated future amortization expense for intangible assets is as follows:

For the Years Ending December 31,	Estimated Intangible Amortization Expense
2012 (remaining six months)	$	2,951
2013	5,233
2014	5,198
2015	3,935
2016	3,539
Thereafter	11,572
	$	32,428

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Credit Arrangements

6 Months Ended

Jun. 30, 2012

Credit Arrangements

Credit Arrangements

Note 11—Credit Arrangements

As of June 30, 2012, the Company had a Loan and Security Agreement (the “Agreement”) with The PrivateBank and Trust Company (the “Lender”) for a revolving line of credit in the total aggregate amount of $35,000.  The maturity dates, as amended, are as follows:

·a revolving loan in the amount of $20,000 (the “Revolving Loan A”), with a maturity date of October 26, 2014; and

·a revolving loan in the amount of $15,000 (the “Revolving Loan B”), with a maturity date of October 25, 2012.

Under the Agreement, the Lender agreed to issue letters of credit of up to $15,000 under Revolving Loan A.  As of June 30, 2012 and December 31, 2011, total commercial letters of credit outstanding under Revolving Loan A totaled $4,813 and $4,009, respectively.  Other than the commercial letters of credit, there were no borrowings under these two lines of credit during the period January 1, 2011 through June 30, 2012.  At June 30, 2012, available borrowing capacity under Revolving Loan A was $15,187 and under Revolving Loan B was $15,000.

The principal amount of each of Revolving Loan A and Revolving Loan B will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Agreement, or (ii) the prime rate announced by the Lender plus an applicable margin as specified in the Agreement. The principal amount of any loan bearing interest at LIBOR plus an applicable margin may not be prepaid without being subject to certain penalties. There is no prepayment penalty for any loan bearing interest at the prime rate announced by the Lender plus an applicable margin.

All loans made by the Lender under the Agreement are secured by our assets, including, among others, our cash, inventory, equipment (excluding equipment subject to certain permitted liens) and accounts receivable. Certain of our subsidiaries have executed joint and several guaranties in favor of the Lender for all amounts under the Agreement.  The Agreement and the line of credit facilities contain various restrictive covenants, including, among others, restrictions on investments, capital expenditures, minimum tangible net worth and debt service coverage requirements.  The Company was in compliance with the bank covenants at June 30, 2012.

The Company has a credit facility with a Canadian bank for purposes of issuing commercial letters of credit in Canada, for an amount of up to $10,000 in Canadian dollars. The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years. The facility requires an annual fee of 1% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. As of June 30, 2012 and December 31, 2011, total commercial letters of credit outstanding under this credit facility totaled $1,564 and $4,036 in Canadian dollars, respectively.  As of June 30, 2012, the available borrowing capacity under this credit facility was $8,436 in Canadian dollars. The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, Born Heaters Canada.  At June 30, 2012, the Company was in compliance with the bank covenant.

In 2011, the Company entered into an agreement with Bank of the West whereby the Company agrees to maintain a cash balance at the bank equal to the full amount of certain commercial letters of credit.  At both June 30, 2012 and December 31, 2011, the amount of letters of credit with a maturity of twelve months and the related restricted cash amounted to $3,823, and is included as part of customer retention deposits and restricted cash on the balance sheet.

Subordinated promissory note — Rockford .  In connection with the acquisition of Rockford, the Company executed an unsecured promissory note (the “Rockford Note”) on November 12, 2010 in favor of the sellers of Rockford with an initial principal amount of $16,712.  The principal amount of the Rockford Note was divided into two portions.  Approximately $9,669 of the Rockford Note was designated as “Note A,” and approximately $7,043 of the note was designated as “Note B.”  Note B was paid in full on March 10, 2011.

Note A is due and payable on October 31, 2013 and bears interest at different rates until maturity, averaging 6.67% over its life. During the first 12 months, Note A bore interest at a rate equal to 5%.  For months 13 through 24, it bears interest at a rate equal to 7%. Thereafter and until maturity, Note A bears interest at a rate equal to 8%.  Payments of principal and interest are payable monthly in an amount of $269 principal plus interest over 36 months.  At June 30, 2012, a total of $5,000 was outstanding.

In November 2011, the Company placed $5 million in an interest bearing escrow account in lieu of making future payments of that amount to the holders of Rockford’s Note A.  As permitted by the terms of the Rockford Agreement, the amount will remain in escrow until resolution of a dispute related to a certain liability at the time of the closing of the transaction.  The Company has included this escrow amount on its June 30, 2012 balance sheet as “customer retention deposits and restricted cash”.

Note A may be prepaid in whole or in part at any time.  If we complete an equity financing while Note A is outstanding, we have agreed to use 15% of the net proceeds in excess of $10 million to prepay a portion or all of Note A.  In addition, we have agreed to use 33% of any cash proceeds raised in connection with incurrence of any indebtedness (other than under a bank line of credit or to finance operating expenses, equipment and capital expenditures) to prepay a portion or all of Note A.

While any amount is outstanding under Note A, we have agreed not to take certain actions without the prior written consent of the Rockford Note holders’ representative.  We have agreed not to: (i) incur any obligations for seller financing associated with the acquisition of a business without subordinating it to the Rockford Note, (ii) make any payment on outstanding indebtedness that has been subordinated to the Rockford Note, (iii) make any distribution or declare or pay any dividends (except for regular, quarterly dividends), and (iv) consummate any transaction that would require prepayment under the Rockford Note, if we are not permitted to do so by our senior lender and/or surety companies.

The sellers have entered into subordination agreements with our senior lender and bonding agencies, pursuant to which the Rockford Note is subordinated to amounts owed to our senior lender and bonding agencies.

Subordinated promissory note — JCG .  In connection with the acquisition of JCG, the Company executed an unsecured, subordinated promissory note (the “JCG Note”) on December 18, 2009 in favor of the sellers of JCG with an initial principal amount of $53,500. The JCG Note was due and payable on December 15, 2014 and bore interest at differing rates until maturity.  The JCG note was paid in full on March 12, 2012.

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Business Activity (Details) (Sprint)	1 Months Ended
	Mar. 31, 2012
Sprint
Asset purchase agreement
Period for which the acquiree name is allowed to be used	3 years

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended				6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Letters of credit	Dec. 31, 2011 Letters of credit	Jun. 30, 2012 Bonding	Dec. 31, 2011 Bonding
Commitments and Contingencies
Total lease expense	$ 2,517	$ 2,275	$ 4,759	$ 4,621
Lease payments to related party	323		648
Commitments and contingencies
Total commercial letters of credit outstanding					10,162	11,798
Bid and completion bonds issued and outstanding							$ 1,108,312	$ 1,105,933

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity

Stockholders' Equity

Note 16—Stockholders’ Equity

Common stock — In March 2012, the Company received $1,240 in exchange for 111,790 shares of common stock under a purchase arrangement within the Company’s Long-Term Incentive Plan for managers and executives.  The Company also issued 12,395 shares of common stock in February 2012 as part of the quarterly compensation of non-employee members of the Board of Directors.  Additionally, as part of the acquisition of Sprint, the Company issued 62,052 shares of common stock in March 2012.

In April 2012, the Company issued 232,637 shares of common stock to the Rockford sellers as a result of Rockford meeting a defined performance target in 2011.

In May 2012, the Company’s Board of Directors authorized a share repurchase program under which the Company may, from time to time and depending on market conditions, share price and other factors, acquire shares of its common stock on the open market or in privately negotiated transactions up to an aggregate purchase price of $20 million.  During the three months ending June 30, 2012, the Company purchased and cancelled 89,600 shares of stock for $1.0 million at an average cost of $11.17 per share.  The share repurchase program expires December 31, 2012.

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2012

Accounts Receivable

Summary of accounts receivable

	June 30, 2012		December 31, 2011
Contracts receivable, net of allowance for doubtful accounts of $ 411 for June 30, 2012 and $363 for December 31, 2011	$	155,454	$	166,298
Retention	18,315		20,378
	173,769		186,676
Other accounts receivable	1,313		702
	$	175,082	$	187,378

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Dividends and Earnings Per Share (Details 2)	1 Months Ended	6 Months Ended	1 Months Ended
	Mar. 31, 2012	Jun. 30, 2011	Apr. 30, 2012 Rockford 2011 earnout target	Mar. 31, 2011 Rockford 2010 earnout target	Mar. 31, 2011 JCG 2010 earnout target
Earnings per share
Number of shares of common stock issued			232,637	494,095	1,095,646
Shares of common stock issued to managers and executives under a purchase arrangement within the Long-Term Incentive Plan	111,790	94,966

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Business Combinations (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended				6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Sprint	Mar. 12, 2012 Sprint	Jun. 30, 2012 Sprint Tradename	Jun. 30, 2012 Sprint Non-compete agreements	Jun. 30, 2012 Sprint Customer relationship
Acquired intangible assets
Amortization Period							3 years	5 years	10 years
Estimated Fair Value					$ 3,600	$ 3,600	$ 700	$ 450	$ 2,450
Period for which goodwill and other intangible assets are deductible for income tax purposes			15 years
Pro forma results
Percentage of pro forma tax rate used in calculating taxes on income from continuing operations		39.00%		39.00%
Revenues	340,749	381,408	644,573	754,153
Income before provision for income taxes	18,598	23,495	34,142	36,975
Net income	$ 11,440	$ 14,338	$ 21,007	$ 22,556
Weighted average common shares outstanding:
Basic (in shares)	51,435	51,106	51,411	50,425
Diluted (in shares)	51,435	51,216	51,411	51,173
Earnings per share:
Basic (in dollars per share)	$ 0.22	$ 0.28	$ 0.41	$ 0.45
Diluted (in dollars per share)	$ 0.22	$ 0.28	$ 0.41	$ 0.44

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 11,733	$ 22,219	$ 26,740
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		13,557	12,043
Amortization of intangible assets	1,447	3,193	5,532
Gain on sale of property and equipment		(1,776)	(37)
Income from non-consolidated entities	171	(886)	(5,226)
Non-consolidated entity distributions		1,260	5,997
Changes in assets and liabilities:
Customer retention deposits and restricted cash		(8,678)	(5,001)
Accounts receivable		20,813	53,023
Costs and estimated earnings in excess of billings		(2,983)	(16,309)
Other current assets		206	(1,466)
Accounts payable		(2,056)	1,303
Billings in excess of costs and estimated earnings		(6,455)	(33,723)
Contingent earnout liabilities		(2,871)	603
Accrued expenses and other current liabilities		6,397	10,743
Other long-term liabilities		(2,237)	(2,285)
Net cash provided by operating activities		39,703	51,937
Cash flows from investing activities:
Purchase of property and equipment		(12,409)	(10,810)
Proceeds from sale of property and equipment		6,731	997
Purchase of short-term investments			(23,000)
Sale of short-term investments		23,000	26,000
Cash paid for acquisitions		(35,131)
Net cash used in investing activities		(17,809)	(6,813)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		12,776	2,500
Repayment of capital leases		(7,075)	(2,680)
Repayment of long-term debt		(8,284)	(7,900)
Repayment of subordinated debt		(17,501)	(13,474)
Proceeds from issuance of common stock		1,240	822
Purchase of Unit Purchase Option			(2,030)
Dividends paid		(3,069)	(2,510)
Repurchase of common stock		(1,001)
Net cash used in financing activities		(22,914)	(25,272)
Net change in cash and cash equivalents		(1,020)	19,852
Cash and cash equivalents at beginning of the period		120,306	115,437
Cash and cash equivalents at end of the period	119,286	119,286	135,289
Cash paid during the period for:
Interest		1,588	2,724
Income taxes, net of refunds received		11,081	12,693
Components of cash paid for acquisitions:
Fair value of assets acquired - Sprint	28,377	28,377
Fair value of assets acquired - Silva	14,109	14,109
Cash payment due sellers	175	175
Contingent liabilities	(6,200)	(6,200)
Common stock issued for acquisition	(980)	(980)
Cash paid for acquisitions	35,131	35,131
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Obligations incurred for the acquisition of property and equipment		1,046
Accrued dividends declared	$ 1,542	$ 1,542	$ 1,276

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Accounts Receivable

6 Months Ended

Jun. 30, 2012

Accounts Receivable

Accounts Receivable

Note 5—Accounts Receivable

The following is a summary of the Company’s accounts receivable at the dates shown:

	June 30, 2012		December 31, 2011
Contracts receivable, net of allowance for doubtful accounts of $ 411 for June 30, 2012 and $363 for December 31, 2011	$	155,454	$	166,298
Retention	18,315		20,378
	173,769		186,676
Other accounts receivable	1,313		702
	$	175,082	$	187,378

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Costs and Estimated Earnings on Uncompleted Contracts (Tables)

6 Months Ended

Jun. 30, 2012

Costs and Estimated Earnings on Uncompleted Contracts

Schedule of costs and estimated earnings on uncompleted contracts

	June 30, 2012			December 31, 2011
Costs incurred on uncompleted contracts	$	2,828,550		$	2,977,535
Reserve for estimated losses on uncompleted contracts	337			917
Gross profit recognized	283,374			303,634
	3,112,261			3,282,086
Less: billings to date	(3,198,476		)	(3,377,949		)
	$	(86,215	)	$	(95,863	)

Schedule of costs and estimated earnings on uncompleted contracts included in consolidated balance sheet

	June 30, 2012			December 31, 2011
Costs and estimated earnings in excess of billings	$	45,473		$	41,866
Billings in excess of costs and estimated earnings	(131,688		)	(137,729		)
	$	(86,215	)	$	(95,863	)

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Costs and Estimated Earnings on Uncompleted Contracts (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Costs and Estimated Earnings on Uncompleted Contracts
Costs incurred on uncompleted contracts	$ 2,828,550	$ 2,977,535
Reserve for estimated losses on uncompleted contracts	337	917
Gross profit recognized	283,374	303,634
Costs and Estimated Earnings on Uncompleted Contracts	3,112,261	3,282,086
Less: billings to date	(3,198,476)	(3,377,949)
Net cost and estimated earnings in excess of billings	(86,215)	(95,863)
Amount included in consolidated balance sheet
Costs and estimated earnings in excess of billings	45,473	41,866
Billings in excess of costs and estimated earnings	(131,688)	(137,729)
Net cost and estimated earnings in excess of billings	$ (86,215)	$ (95,863)

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Dividends and Earnings Per Share

6 Months Ended

Jun. 30, 2012

Dividends and Earnings Per Share

Dividends and Earnings Per Share

Note 15—Dividends and Earnings Per Share

The Company has paid or declared cash dividends during 2012 as follows:

·On November 3, 2011, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on December 31, 2011.  The dividend, totaling $1,532, was paid on January 16, 2012.

·On February 24, 2012, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on March 30, 2012.  The dividend, totaling $1,537, was paid on April 16, 2012.

·On May 4, 2012, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on June 29, 2012.  The dividend, totaling $1,542, was paid on July 16, 2012.

The table below presents the computation of basic and diluted earnings per share for the three and six months ended June 30, 2012 and 2011:

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Numerator:
Net income	$	11,733	$	14,462	$	22,219	$	26,740
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,435		51,044		51,386		50,363
Dilutive effect of warrants and units (1)	—		110		—		66
Dilutive effect of contingently issuable shares (2)	—		—		—		659
Dilutive effect of employee purchased shares (3)	—		—		—		23
Weighted average shares for computation of diluted earnings per share	51,435		51,154		51,386		51,111
Basic earnings per share	$	0.23	$	0.28	$	0.43	$	0.53
Diluted earnings per share	$	0.23	$	0.28	$	0.43	$	0.52

(1)Represents the dilutive effect of common stock warrants available under the Unit Purchase Option (“UPO”).  See Note 16 — “Stockholders’ Equity”.

(2)Represents the dilutive effect of the following contingency arrangements which were met at the end of each period, but for which shares of common stock were not issued until the end of the first quarter:

a)A total of 494,095 shares issued to Rockford’s former stockholders in March 2011 as a result of Rockford meeting a defined performance target in 2010.

b)A total of 1,095,646 shares issued to JCG’s sellers in March 2011 as a result of JCG meeting a defined performance target in 2010.

(3)Represents the effect of 94,966 shares of common stock issued in 2011 to managers and executives of the Company under a purchase arrangement within the Company’s Long-Term Incentive Plan.