Primoris plans to divest Texas Heavy Civil unit
Primoris announced its board has authorized a plan to offer for sale its Texas Heavy Civil unit, which operates as a division of James Construction Group, or JCG, part of Primoris' East Construction Services segment. Primoris will continue to operate the division while actively seeking a buyer and has engaged a financial advisor to assist in the sale. The Company expects to record a charge for the divestiture in the third quarter of 2016. This charge anticipates that as part of the divestiture, the expected profitability of current construction projects will be reduced. This expected reduction would include a reduction of costs and estimated earnings in excess of billings and an increase to the reserve for anticipated job losses. Primoris also needs to complete its analysis of the fair value of the assets that will be part of the divestiture. Based on its initial estimates, Primoris expects that the divestiture will result in a pre-tax charge of $35M-$40M for the quarter. This initial estimate of the charge is preliminary, and the actual amount that will be recorded may vary from the initial estimates. In addition, Primoris believes that the divestiture will require an analysis of the goodwill amount recorded on the JCG books, and that this analysis will result in an impairment of that goodwill. Based on its initial review, the Company anticipates recording a non-cash goodwill impairment charge of $8M-$10M on a pre-tax basis. The initial calculations are preliminary, and the final goodwill impairment charge may vary from the initial estimates.