Executives from Primoris Services (NYSE:PRIM) and Argan discussed their strategic positioning, end-market demand trends, and capacity constraints during a conference discussion led by Goldman Sachs analysts Ati Modak and Adam Bubes. The conversation centered on the multi-year outlook for U.S. energy and infrastructure construction, with both companies emphasizing rising electricity demand and the importance of disciplined execution and contract risk management.
Primoris highlights energy infrastructure breadth and a portfolio reshaping plan
Primoris President and COO Jeremy described the company as broadly exposed to “critical infrastructure,” particularly critical energy infrastructure. He cited activity across power generation in solar and gas, transmission and distribution (T&D) and substations, highways and bridges, and oil and gas pipelines. Jeremy said gas-powered generation has “come to the forefront” over the last couple of years and is expected to be a growth driver, supported by capabilities the company maintained from prior cycles.
Argan positions as a power generation-focused EPC with long project durations
Argan President and CEO David Watson characterized Argan as more concentrated on power generation, describing it as a “bit of a pure play” in building large gas-fired plants. He said the company’s key subsidiary, Gemma Power Systems, has built gas-fired combined cycle plants and peaking plants since 2006 and also has a smaller renewables component. Watson emphasized Gemma’s track record, noting it “has not had a lost job in 20+ years,” and described the execution challenge of power EPC work as heavily dependent on having the right terms, partners, and subcontractor ecosystem across different U.S. regions.
Watson also noted international operations through a 2015 acquisition in Limerick, Ireland, which builds power plants in Ireland and the UK, with lessons applied back in the U.S. He said Argan’s industrial segment is a growing portion of the business, about 20%, and that the company is increasingly involved in data center-related industrial work. Historically, the industrial business served markets such as pulp and paper, petrochemical, and pharmaceutical projects, primarily in the Southeast.
Solar, gas generation, and execution scope: simple cycle vs. combined cycle
On solar, Jeremy said Primoris grew its solar EPC business rapidly but expects growth to moderate from recent levels. He referenced uncertainty in the prior year around “timing, tax credits, and tariffs,” but said clients now have more clarity and are planning near-term portfolios. He also said some 2026 work was pulled into 2025—about $500 million—which affects the year-to-year comparison. As a result, Primoris expects 2026 in solar PV EPC to be “flattish to maybe even down a bit” before returning to growth in 2027.
In gas generation, Jeremy said Primoris has focused on simple cycle projects, driven partly by the nature of opportunities available and risk management. He described Primoris’ typical project “sweet spot” as roughly $80 million to $400 million rather than billion-dollar contracts, and said simple cycle work aligns with that scale and provides manageable risk and project duration. He added that the company is expanding teams carefully, hiring project teams in advance of work and prioritizing execution certainty, noting that “you can erase a lot of good work with a bad job.”
Watson contrasted Argan’s focus on combined cycle work, which he said is more complex and riskier than simple cycle but offers efficiency benefits and, in his view, a stronger competitive “moat” because fewer contractors have deep combined cycle experience. He cited Argan’s completion of the 1.85 GW Guernsey Power Station in Ohio as evidence of its ability to execute large projects.
Watson said Argan is currently working on about 6 GW of power projects, with 5.5 GW tied to gas or biofuel. He described Argan’s backlog as a record $3 billion and said these projects tend to be long-duration—about three and a half to four years—providing visibility as backlog converts to revenue. He added that the market environment reflects a supply-demand imbalance among qualified EPC providers, leading to “triage” of inbound opportunities and an emphasis on selecting projects with the right pricing, customer, location, contract terms, and risk allocation.
Utility work and midstream recovery: Primoris discusses growth areas and constraints
Jeremy said Primoris’ power delivery business is roughly $1.2 billion in annual revenue, representing about 45% of its utility segment and heavily weighted toward distribution (about 80% of power delivery revenue). He said transmission and substation work is growing faster than distribution, creating opportunities for organic expansion and potentially acquisitions. However, he highlighted a key constraint: linemen are specialized and take years to train, making labor availability a limiting factor. Primoris is investing in training, including a new facility in Texas, and is looking to recruit labor from less active markets. Jeremy said that, on the acquisition front, a company with a transmission and substation labor force would be a top priority if the right opportunity emerges.
On midstream pipelines, Jeremy said the business has historically been volatile and contracted sharply during COVID. He described a decline from about $900 million per year in revenue to roughly $300 million, but said opportunities have improved over the last 12–18 months. Primoris is seeing a healthier funnel and believes the business could reach $500 million to $600 million by the end of the year if it wins certain larger projects. He clarified that this refers to higher-pressure, large-diameter steel pipeline work, distinct from the company’s gas distribution operations within its utility segment.
Labor constraints, contract terms, and capital allocation priorities
Both executives identified labor—especially experienced project leadership—as a significant constraint on growth. Jeremy said linemen are the most acute bottleneck for Primoris, while Watson said Argan’s “biggest bottleneck” is site project leadership teams. Both companies described investments in training pipelines, apprenticeships, recruiting, and engaging with trade schools.
On margins and the current bidding environment, Jeremy said the early benefit has been a more “equitable allocation of risk” in contracts rather than simply higher bid margins. He cited equipment delivery timing and subsurface conditions as examples of risks that can be addressed through terms and conditions. Watson agreed that pricing has improved, but emphasized that better economics may come through de-risking contracts—adjusting scope, terms, and risk allocation—rather than purely increasing stated margins.
Finally, both companies discussed capital allocation. Watson said Argan has been more focused on organic growth than M&A, emphasizing investment in people, a commitment to dividends—he said the dividend has been increased three times in the last three years—and share repurchases. He also noted that Argan’s balance sheet supports its credibility as a “bankable” EPC partner for multi-year projects. Jeremy described Primoris’ priorities as organic growth first (people and equipment), followed by debt reduction, then targeted acquisitions in high-growth, margin-accretive areas such as power delivery and electrical-related capabilities, with a modest dividend and share buyback authorization as additional tools.
About Primoris Services (NYSE:PRIM)
Primoris Services Corporation, a specialty contractor company, provides a range of construction, fabrication, maintenance, replacement, and engineering services in the United States and Canada. It operates through three segments: Utilities, Energy/Renewables, and Pipeline Services. The Utilities segment offers installation and maintenance services for new and existing natural gas distribution systems, electric utility distribution and transmission systems, and communications systems. The Energy/Renewables segment provides a range of services, including engineering, procurement, and construction, as well as retrofits, highway and bridge construction, demolition, site work, soil stabilization, mass excavation, flood control, upgrades, repairs, outages, and maintenance services to renewable energy and energy storage, renewable fuels, petroleum, refining, and petrochemical industries, as well as state departments of transportation.
