# Primoris Services Corp (PRIM) FY 2021 MD&A Verbatim Item 7 Management's Discussion and Analysis from Primoris Services Corp's 10-K for fiscal year 2021. SEC filing source: https://www.sec.gov/Archives/edgar/data/1361538/000155837022002400/prim-20211231x10k.htm Accession: 0001558370-22-002400 Filing date: 2022-03-01 Report date: 2021-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/PRIM/ All MD&A years: /company/PRIM/mda/ Next year: /company/PRIM/mda/fy2022/ (FY 2022) ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included in Item 8 in this Annual Report on Form 10-K. This discussion includes forward-looking statements that are based on current expectations and are subject to uncertainties and unknown or changed circumstances. For a further discussion, please see “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those risks inherent with our business as discussed in “Item 1A Risk Factors”. ​ The following discussion starts with an overview of our business and a discussion of trends, including seasonality, that affect our industry. That is followed by an overview of the critical accounting policies and estimates that we use to prepare our financial statements. Next we discuss our results of operations and liquidity and capital resources, including our off-balance sheet arrangements and contractual obligations. We conclude with a discussion of our outlook and backlog. ​ Introduction ​ We are one of the leading providers of specialty contracting services operating mainly in the United States and Canada. We provide a wide range of specialty construction services, maintenance, replacement, fabrication, and engineering services to a diversified base of customers. ​ Through the end of 2020, we segregated our business into five reportable segments: The Power, Industrial and Engineering segment, the Pipeline and Underground segment, the Utilities and Distribution segment, the Transmission and Distribution segment, and the Civil segment. In the first quarter of 2021, we changed our reportable segments in connection with a realignment of our internal organization and management structure. The segment changes reflect the focus of our chief operating decision maker (“CODM”) on the range of services we provide to our end user markets. Our CODM regularly reviews our operating and financial performance based on these segments. ​ The current reportable segments include the Utilities segment, the Energy/Renewables segment and the Pipeline Services (“Pipeline”) segment. ​ The new Utilities segment is composed of the previous Utilities and Distribution and Transmission and Distribution segments. The Utilities segment operates throughout the United States and specializes in a range of services, including installation and maintenance of new and existing natural gas and electric utility distribution and transmission systems, and communication systems. ​ The Energy/Renewables segment is composed of the previous Power, Industrial and Engineering and Civil segments. This new segment operates throughout the United States and in Canada and specializes in a range of services that include engineering, procurement, and construction, retrofits, highway and bridge construction, demolition, site work, soil stabilization, mass excavation, flood control, upgrades, repairs, outages, and maintenance services for entities in the renewable energy and energy storage, renewable fuels, and petroleum and petrochemical industries, as well as state departments of transportation. ​ The Pipeline and Underground segment has become the new Pipeline segment. The Pipeline segment operates throughout the United States and specializes in a range of services, including pipeline construction and maintenance, pipeline facility and integrity services, installation of compressor and pump stations, and metering facilities for entities in the petroleum, refining, and petrochemical industries, as well as gas, water, and sewer utilities. ​ We have completed major underground and industrial projects for a number of large natural gas transmission and petrochemical companies in the United States, major electrical and gas projects for a number of large utility companies in the United States, as well as significant projects for our engineering customers. We enter into a large number of contracts each year, and the projects can vary in length from daily work orders to as long as 36 months, and occasionally longer, for completion on larger projects. Although we have not been dependent upon any one customer in any year, a small number of customers tend to constitute a substantial portion of our total revenue in any given year. 29 Table of Contents ​ We generate revenue under a range of contracting types, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts, each of which has a different risk profile. A substantial portion of our revenue is derived from contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value. For these contracts, revenue is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For certain contracts, where scope is not adequately defined and we can’t reasonably estimate total contract value, revenue is recognized either on an input basis, based on contract costs incurred as defined within the respective contracts, or an output basis based on units completed. Costs to obtain contracts are generally not significant and are expensed in the period incurred. ​ The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses were made. ​ On January 15, 2021, we acquired Future Infrastructure Holdings, LLC (“FIH”) in an all-cash transaction valued at approximately $604.7 million, net of cash acquired. FIH is a provider of non-discretionary maintenance, repair, upgrade, and installation services to the communications, regulated gas utility, and infrastructure markets. FIH furthers our strategic plan to expand our service lines, enter new markets, and grow our MSA revenue base. The transaction directly aligns with our strategy to grow in large, higher growth, higher margin markets, and expands our utility services capabilities. We incorporated the operations of FIH into our Utilities segment. ​ Business Environment ​ We believe there are growth opportunities across the industries we serve and we continue to have a positive long-term outlook. Although not without risks and challenges, including those discussed below and in Forward-Looking Statements and included in Item 1A. Risk Factors, we believe, with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to capitalize on opportunities and trends in our industries. ​ We have seen and continue to anticipate potential changes to the already stringent regulatory and environmental requirements for many of our clients’ infrastructure projects, which may improve the timing and certainty of the projects. While fluctuating oil prices create uncertainty as to the timing of some of our opportunities, we continue to see preliminary bidding activity for numerous gas, oil and derivatives projects. We believe that we have the financial and operational strength to meet either short-term delays, or the impact of significant increases in work. We continue to be optimistic about both short and longer-term opportunities. Our current view of the outlook for our major end markets is as follows: ​ [[GREPCENT_TABLE]] [["","\u25cf","Construction of petroleum, natural gas, natural gas liquid, and other liquid pipelines \u2014We expect that the volatility in the price of oil could reduce activities in most, if not all of the shale basins. In addition, the ability of our customers to obtain permits for projects could impact the demand for our services, especially for larger interstate pipelines. However, if production from the shale formations continues to increase in the near term, the current capacity limitations between production and processing locations would provide opportunities for our Pipeline segment."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Inspection, maintenance and replacement of pipeline infrastructure \u2014 We believe that regulatory measures around the frequency or stringency of pipeline integrity testing requirements provides growth opportunity in our Pipeline segment. Regulatory requirements continue to mandate or require our customers to test, inspect, repair, maintain and replace pipeline infrastructure to ensure that it operates safely, reliably and in an environmentally conscious manner. In addition, permitting challenges associated with construction of new pipelines can make existing pipeline infrastructure more valuable, motivating owners to extend the useful life of existing pipeline assets through maintenance and integrity initiatives. As a result, we expect demand to continue to grow for our pipeline integrity services."]] [[/GREPCENT_TABLE]] ​ 30 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","Inspection, maintenance and replacement of gas utility infrastructure \u2014 We expect that ongoing safety enhancements to gas pipeline systems and the gas utility infrastructure will provide continuing opportunities for our Utilities segment in California, the Midwest, and the Atlantic coast. We also expect that ongoing gas utility repair and maintenance opportunities will continue."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Inspection, maintenance and replacement of electric utility infrastructure \u2014 We expect the demand for electricity in the U.S. to grow over the long term and believe enhancements to the electric utility infrastructure are needed to efficiently serve the power needs of the future. Renewable generation will require substations and transmission lines to connect the new generation sources to customers. In addition, current federal legislation also requires the power industry to meet federal reliability standards for its transmission and distribution systems. We expect these opportunities, as well as ongoing electric utility repair and maintenance opportunities to benefit our Utilities segment."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Communications construction opportunities \u2014 We believe the federal government remains committed to improving or expanding communications access. The ReConnect and Rural Broadband Programs provide funding to help construct or improve facilities required to provide sufficient broadband access to rural areas where households have historically had lower access to broadband compared with households in urban and suburban arears. In addition, the Infrastructure Investment and Jobs Act (\u201cInfrastructure Bill\u201d) passed by Congress in November 2021 authorized funds for additional broadband improvement and expansion. We expect these opportunities, as well as ongoing spending by communications companies, to benefit our Utilities segment."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Construction of natural gas-fired power plants and industrial plants \u2014 We expect continued construction opportunities for both base-load and peak shaving power plants; however, we are aware that environmental concerns in California over gas fired power plants may impact the timing and location of near-term construction opportunities in that state. We believe that based on continuing population growth, the intermittency of renewable power resources, and the environmental requirements limiting using ocean water for cooling, power plants will be needed in spite of vocal opposition to these \u201cnon-green\u201d generation sources. In addition, the current low price of natural gas could result in the replacement of coal-fired power plants and the conversion and expansion at chemical plants and industrial facilities in other parts of the United States. These opportunities would benefit our Energy/Renewables segment."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Construction of alternative energy facilities, renewable natural gas facilities, solar power facilities, wind farms, battery storage \u2014 We believe state governments, investors and utilities remain committed to a changing fuel generation mix that is moving toward more alternative energy sources. As this trend grows, along with the demand for power, we expect an increase in new power generation facilities powered by renewable energy sources, as well as energy storage systems. To the extent this dynamic continues, we anticipate continued engineering and construction opportunities, primarily benefitting our Energy/Renewables segment."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Transportation infrastructure construction opportunities \u2014 We believe that the passing of longer-term highway funding by the federal government in 2015 and voter approval of highway funding proposition 7 in Texas, will continue to provide opportunity for our heavy civil group, especially in the state of Texas. We expect that opportunities in the Louisiana market may improve, but will remain at lower levels than in Texas, except for specific programs. This market solely impacts the operations of our Energy/Renewables segment. Additionally, the Infrastructure Bill authorized Federal funds for Federal-aid highways, highway safety programs and transit programs."]] [[/GREPCENT_TABLE]] ​ Material trends and uncertainties ​ We generate our revenue from construction and engineering projects, as well as from providing a variety of specialty construction services. We depend in part on spending by companies in the communications, gas and electric utility industries, the energy, chemical, and oil and gas industries, as well as state departments of transportation and 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, more reliable gas and electric utility infrastructure, local highway and bridge needs, and from the activity level in the oil and gas industry. However, 31 Table of Contents periodically, each of these industries and government agencies is adversely affected by macroeconomic conditions. Economic and other factors outside of our control may affect the amount and size of contracts we are awarded in any particular period. ​ Since March 2020, the COVID-19 outbreak has adversely impacted global activity and contributed to significant volatility in financial markets. While our services have generally been unaffected by various government measures enacted to slow the spread of COVID-19, the initial impacts to all segments were various levels of project interruptions and restrictions that delayed project timelines from those originally planned. In some cases, we experienced temporary work stoppages. This led to general inefficiencies from having to start and stop work, re-sequencing work, requiring on-site health screenings before entering a job site, and following proper social distancing practices. We were also restricted from completing work or prevented from starting work on certain projects. While we continued to be impacted by these factors in 2021, the primary impacts to our business were inefficiencies in our workforce from absenteeism because of illness or quarantining. However, despite these impacts, our work has generally been deemed essential, our business model appears to be resilient, and we have adapted accordingly. ​ During 2021 COVID-19 vaccination coverage has broadened considerably across the United States since the vaccines were first approved and became available in late 2020, but progress in vaccination rates has slowed. The duration of effectiveness of the vaccines, as well as their effectiveness against future variants is uncertain. As such, due to the fluidity of the COVID-19 pandemic, uncertainties as to its scope and duration and macroeconomic implications, and ongoing changes in the way that governments, businesses and individuals react and respond to the pandemic, the ultimate impact on the Company remains uncertain. We anticipate that the COVID-19 pandemic could have a continued adverse impact on economic and market conditions and we could see an extended period of global economic slowdown. When COVID-19 is demonstrably contained, we anticipate a rebound in economic activity, depending on the rate, pace, and effectiveness of vaccinations and the containment efforts deployed by various national, state, and local governments. ​ To date, the inefficiencies experienced have had an unquantifiable impact on our business. We will continue to actively monitor the situation and may take further actions to alter our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business or on our financial results for the foreseeable future. ​ We also monitor our customers and their industries to assess the effect that changes in economic, market, and regulatory conditions may have on them. We have experienced reduced spending, project delays, and project cancellations by some of our customers, which we attribute to negative economic and market conditions, and we anticipate that these negative conditions and the impact of COVID-19 may continue to affect demand for our services in the near-term. ​ Fluctuations in market prices of oil, gas and other fuel sources have affected demand for our services. While we have seen signs of a recovery in the price of oil, the volatility in the prices of oil, gas, and liquid natural gas that has occurred in the past few years could create uncertainty with respect to demand for our oil and gas pipeline services, specifically in our pipeline services and Canadian operations. While the construction of gathering lines within the oil shale formations may remain at lower levels for an extended period, we believe that over time, the need for pipeline infrastructure for mid-stream and gas utility companies will result in a continuing need for our services. However, a prolonged period of depressed oil prices could delay midstream pipeline opportunities. ​ The continuing changes in the regulatory environment may affect the demand for our services, either by increasing our work, delaying projects, or cancelling projects. For example, environmental laws and regulation can provide challenges to major pipeline projects, resulting in delays or cancellations that impact the timing of revenue recognition. In addition, the regulatory environment in California may result in delays for the construction of gas-fired power plants, while regulators continue to search for significant renewable resources. Renewable resources are also creating a demand for our construction and specialty services, such as the need for battery storage and the construction of solar power production facilities. ​ 32 Table of Contents Seasonality, cyclicality and variability ​ Our results of operations are subject to quarterly variations. Some of the variation is the result of weather, particularly rain, ice, snow, and named storms, which can impact our ability to perform construction and specialty services. These seasonal impacts can affect revenue and profitability in all of our businesses. Any quarter can be affected either negatively, or positively by atypical weather patterns in any part of the country. In addition, demand for new projects tends to be lower during the early part of the calendar year due to clients’ internal budget cycles. As a result, we usually experience higher revenue and earnings in the third and fourth quarters of the year as compared to the first two quarters. ​ Our project values range in size from several hundred dollars to several hundred million dollars. The bulk of our work is comprised of project sizes that average less than $5.0 million. We also perform construction projects which tend not to be seasonal, but can fluctuate from year to year based on customer timing, project duration, weather, and general economic conditions. Our business may be affected by declines, or delays in new projects, or by client project schedules. 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. ​ Critical Accounting Policies and Estimates ​ General—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 revenue 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, estimates are particularly difficult to determine, and we must exercise significant judgment. Estimates may be used in our accounting for revenue recognized over time, 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 materially differ from those that result from using the estimates under different assumptions or conditions. ​ An accounting policy is deemed to be critical if it requires an accounting estimate to be based on assumptions about matters that are highly uncertain at the time the estimate is made, and different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. ​ The following accounting policies require critical accounting estimates that are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management’s estimates are based on the relevant information available at the end of each period. We periodically review these accounting policies and critical accounting estimates with the Audit Committee of the Board of Directors. ​ Revenue recognition — We generate revenue under a range of contracting types, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts, each of which has a different risk profile. A substantial portion of our revenue is derived from contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value. For these contracts, revenue is recognized over time as work is completed because of the continuous transfer of control to the customer (typically using an input measure such as costs incurred to date relative to total estimated costs at completion to measure progress). For certain contracts, where scope is not adequately defined and we can’t reasonably estimate total contract value, revenue is recognized either on an input basis, based on contract costs incurred as defined within the respective contracts, or an output basis based on units completed.. Costs to obtain contracts are generally not significant and are expensed in the period incurred. ​ We evaluate whether two or more contracts should be combined and accounted for as one single performance obligation and whether a single contract should be accounted for as more than one performance obligation. ASC 606 defines a performance obligation as a contractual promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, 33 Table of Contents the performance obligation is satisfied. Our evaluation requires significant judgment and the decision to combine a group of contracts or separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and, therefore, is not distinct. However, occasionally we have contracts with multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the observable standalone selling price, if available, or alternatively our best estimate of the standalone selling price of each distinct performance obligation in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach for each performance obligation. ​ Accounting for long-term contracts involves the use of various techniques to estimate total transaction price and costs. For long-term contracts, transaction price, estimated cost at completion and total costs incurred to date are used to calculate revenue earned. Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract. Total estimated costs, and thus contract revenue and income, can be impacted by changes in 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, politics and any prevailing impacts from the pandemic caused by the coronavirus may affect the progress of a project’s completion, and thus the timing of revenue recognition. To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected. ​ The nature of our contracts gives rise to several types of variable consideration, including contract modifications (change orders and claims), liquidated damages, volume discounts, performance bonuses, incentive fees, and other terms that can either increase or decrease the transaction price. We estimate variable consideration as the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent we believe we have an enforceable right, and it is probable that a significant reversal of cumulative revenue recognized will not occur. Our estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at this time. ​ Contract modifications result from changes in contract specifications or requirements. We consider unapproved change orders to be contract modifications for which customers have not agreed to both scope and price. We consider claims to be contract modifications for which we seek, or will seek, to collect from customers, or others, for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers. Claims can also be caused by non-customer-caused changes, such as rain or other weather delays. Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. In some cases, settlement of contract modifications may not occur until after completion of work under the contract. ​ As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the cumulative impact of the profit adjustment is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on a contract, the projected loss is recognized in full, including any previously recognized profit, in the period it is identified and recognized as an “accrued loss provision” which is included in “Contract liabilities” on the Consolidated Balance Sheets. For contract revenue recognized over time, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods. ​ At December 31, 2021, we had approximately $86.9 million of unapproved contract modifications included in the aggregate transaction prices. These unapproved contract modifications were in the process of being negotiated in the normal course of business. Approximately $79.5 million of the unapproved contract modifications had been recognized as revenue on a cumulative catch-up basis through December 31, 2021. 34 Table of Contents ​ In all forms of contracts, we estimate the collectability of contract amounts at the same time that we estimate project costs. If we anticipate that there may be issues associated with the collectability of the full amount calculated as the transaction price, we may reduce the amount recognized as revenue to reflect the uncertainty associated with realization of the eventual cash collection. For example, when a cost reimbursable project exceeds the client’s expected budget amount, the client frequently requests an adjustment to the final amount. Similarly, some utility clients reserve the right to audit costs for significant periods after performance of the work. ​ The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability. ​ The caption “Contract assets” in the Consolidated Balance Sheets represents the following: ​ [[GREPCENT_TABLE]] [["","\u25cf","unbilled revenue, which arise when revenue has been recorded, but the amount will not be billed until a later date;"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","retainage amounts for the portion of the contract price earned by us for work performed, but held for payment by the customer as a form of security until we reach certain construction milestones; and"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","contract materials for certain job specific materials not yet installed, which are valued using the specific identification method relating the cost incurred to a specific project."]] [[/GREPCENT_TABLE]] ​ The caption “Contract liabilities” in the Consolidated Balance Sheets represents the following: ​ [[GREPCENT_TABLE]] [["","\u25cf","deferred revenue on billings in excess of contract revenue recognized to date, and"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","the accrued loss provision."]] [[/GREPCENT_TABLE]] ​ Business combinations—We use the fair value of the consideration paid and the fair value of the assets acquired and liabilities assumed to account for the purchase price of businesses we acquire. The determination of fair value requires estimates and judgments of future cash flow expectations for the assignment of the fair values to the identifiable tangible and intangible assets. ​ Identifiable Tangible Assets. Significant identifiable tangible assets acquired would include accounts receivable, contract assets, inventory and fixed assets (generally consisting of facilities and construction equipment). We determine the fair value of these assets as of the acquisition date. For current assets and current liabilities of an acquisition, we will evaluate whether the book value is equivalent to fair value due to their short term nature. We estimate the fair value of fixed assets using a market approach, based on comparable market values for similar equipment of similar condition and age. ​ Identifiable Intangible Assets. When necessary, we use the assistance of an independent third-party valuation specialist to determine the fair value of the intangible assets acquired. ​ A liability for contingent consideration based on future earnings is estimated at its fair value at the date of acquisition, with subsequent changes in fair value recorded in earnings as a gain or loss. Fair value is estimated as of the acquisition date based on management’s best estimate of estimated earnout payments. ​ Accounting principles generally accepted in the United States provide a “measurement period” of up to one year in which to finalize all fair value estimates associated with the acquisition of a business. Most estimates are preliminary until the end of the measurement period. During the measurement period, adjustments to initial valuations and estimates that reflect newly discovered information that existed at the acquisition date are recorded. After the measurement date, any adjustments would be recorded as a current period gain or loss. ​ 35 Table of Contents Goodwill and Indefinite-Lived Intangible Assets—Goodwill and certain intangible assets acquired in a business combination and determined to have indefinite useful lives are not amortized but are assessed for impairment annually and more frequently if triggering events occur. In performing these assessments, management relies on various factors, including operating results, business plans, economic projections, anticipated future cash flows, comparable transactions and other market data. There are inherent uncertainties related to these factors and judgment in applying them to the analysis of goodwill for impairment. Since judgment is involved in performing fair value measurements used in goodwill impairment analyses, there is risk that the carrying values of our goodwill may not be properly stated. ​ We account for goodwill, including evaluation of any goodwill impairment under ASC 350, “Intangibles — Goodwill and Other”, performed at the reporting unit level for those units with recorded goodwill as of October 1 of each year, unless there are indications requiring a more frequent impairment test. ​ Under ASC 350, we can assess qualitative factors to determine if a quantitative impairment test of intangible assets is necessary. Our qualitative assessment is used to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying value, including goodwill. Factors used in our qualitative assessment include, but are not limited to, macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and Company and reporting unit specific events. If deemed necessary, we use the quantitative impairment test outlined in ASC 350, which compares the fair value of a reporting unit with its carrying amount. Fair value for the goodwill impairment test is determined utilizing a discounted cash flow analysis based on our financial plan discounted using our weighted average cost of capital and market indicators of terminal year cash flows. Other valuation methods may be used to corroborate the discounted cash flow method. If the carrying amount of a reporting unit is in excess of its fair value, goodwill is considered impaired and an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill of the reporting unit. ​ There were no impairments of goodwill for the years ended December 31, 2021, 2020 and 2019. ​ Disruptions to our business, such as end market conditions, protracted economic weakness, unexpected significant declines in operating results of reporting units and the divestiture of a significant component of a reporting unit, may result in our having to perform a goodwill impairment analysis for some or all of our reporting units prior to the required annual assessment. These types of events and the resulting analysis could result in goodwill impairment charges in future periods. ​ Income taxes—We account for income taxes under the asset and liability method as set forth in ASC 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting bases and tax bases of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of changes in tax rates on net deferred tax assets or liabilities is recognized as an increase or decrease in net income in the period the tax change is enacted. ​ Deferred tax assets may be reduced by a valuation allowance if, in the judgment of management, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making such determination, we consider all available evidence, including recent financial operations, projected future taxable income, scheduled reversals of deferred tax liabilities, tax planning strategies, and the length of tax asset carryforward periods. The realization of deferred tax assets is primarily dependent upon our ability to generate sufficient future taxable earnings in certain jurisdictions. If we subsequently determine that some or all deferred tax assets that were previously offset by a valuation allowance are realizable, the value of the deferred tax assets would be increased by reducing the valuation allowance, thereby increasing income in the period when that determination is made. ​ A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained based on its technical merits in a tax examination, using the presumption that the tax authority has full knowledge of all relevant facts regarding the position. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on ultimate settlement with the tax authority. For tax positions not meeting the more likely than not test, no tax benefit is recorded. 36 Table of Contents Based on our results for the year ended December 31, 2021, a one-percentage point increase in our effective tax rate would have resulted in an increase in our income tax expense of approximately $1.5 million. ​ Litigation and contingencies—Litigation and contingencies are included in our consolidated financial statements based on our assessment of the expected outcome of litigation proceedings or the expected resolution of the contingency. We record costs related to contingencies when a loss from such claims is probable and the amount is reasonably estimable. In determining whether it is possible to provide an estimate of loss, or range of possible loss, we review and evaluate litigation and regulatory matters on a quarterly basis in light of potentially relevant factual and legal developments. If we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for a potential litigation loss. Management is unable to ascertain the ultimate outcome of other claims and legal proceedings; however, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles/self-insurance retention, management believes that it has meritorious defense to the claims and believes that the reasonably possible outcome of such claims will not, individually or in the aggregate, have a material adverse effect on our consolidated results of operations, financial condition or cash flows. See Note 13 — “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information. ​ Recently Issued Accounting Pronouncements ​ See Note 2 — “Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements. ​ Results of Operations ​ Consolidated Results ​ Revenue ​ 2021 and 2020 ​ Revenue for the year ended December 31, 2021 increased by $6.1 million, or 0.2%, compared to 2020. The increase was primarily due to growth in our Energy/Renewables and Utilities segments, including $266.6 million from our acquisition of FIH, mostly offset by a decrease in revenue in our Pipeline segment as described in the segment results below. ​ 2020 and 2019 ​ Revenue for the year ended December 31, 2020 increased by $385.2 million, or 12.4%, compared to 2019. The increase was primarily due to growth in our Pipeline and Energy/Renewables segments, partially offset by lower revenue in our Utilities segment as described in the segment results below. ​ Gross Profit ​ 2021 and 2020 ​ For the year ended December 31, 2021, gross profit increased by $46.4 million, or 12.5%, compared to 2020. The increase was primarily due to our acquisition of FIH ($43.6 million). Gross profit as a percentage of revenue increased to 11.9% from 10.6% in the same period in 2020 as described in the segment results below. ​ 2020 and 2019 ​ For the year ended December 31, 2020, gross profit increased by $39.3 million, or 11.9%, compared to 2019. The increase was primarily due to the increase in revenue. Gross profit as a percentage of revenue was comparable to 2019. ​ 37 Table of Contents Selling, general and administrative expenses ​ Selling, general and administrative expenses (“SG&A”) consist primarily of compensation and benefits to executive, management level and administrative employees, marketing and communications, professional fees, rent for facilities and utilities. ​ 2021 and 2020 ​ SG&A expenses were $230.1 million for the year ended December 31, 2021, an increase of $27.3 million, or 13.4% compared to 2020, primarily due to $28.7 million of incremental expense from the FIH acquisition during the period. SG&A expense as a percentage of revenue for the year ended December 31, 2021 increased to 6.6% compared to 5.8% for the year ended December 31, 2020, primarily due to increased expense as we integrate FIH into our operations, as well as lower revenue from our legacy operations. ​ ​ 2020 and 2019 ​ SG&A expenses were $202.8 million for the year ended December 31, 2020, an increase of $12.8 million, or 6.7% compared to 2019 primarily due to a $7.4 million increase in compensation related expenses, including incentive compensation and a $3.4 million increase in new information technology systems and related implementation expenses. SG&A expense as a percentage of revenue for the year ended December 31, 2020 decreased to 5.8% compared to 6.1% for the year ended December 31, 2019 due to increased revenue. ​ Transaction and related costs ​ 2021 and 2020 ​ Transaction and related costs for the year ended December 31, 2021 were $16.4 million, an increase of $13.0 million compared to 2020 primarily due to an increase in professional fees related to our acquisition of FIH, as well as the expense incurred in 2021 associated with the purchase of Primoris common stock by certain employees of FIH at a 15% discount. ​ 2020 and 2019 ​ Transaction and related costs for the year ended December 31, 2020 were $3.4 million, an increase of $2.5 million compared to 2019 primarily due to professional fees incurred in 2020 related to our acquisition of FIH. ​ Other income and expense ​ Non-operating income and expense items for the years ended December 31, 2021, 2020 and 2019 were as follows (in millions): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,","\u200b"],["\u200b","","2021","","2020","","2019"],["Foreign exchange (loss) gain, net","\u200b","$","(0.1)","\u200b","$","0.4","\u200b","$","(0.7)","\u200b"],["Other income (expense), net","\u200b","","0.3","\u200b","","1.2","\u200b","","(3.1)","\u200b"],["Interest expense, net","\u200b","","(18.5)","\u200b","","(19.9)","\u200b","","(19.2)","\u200b"],["Total other expense","\u200b","$","(18.3)","\u200b","$","(18.3)","\u200b","$","(23.0)","\u200b"]] [[/GREPCENT_TABLE]] ​ Foreign exchange (loss) gain in 2021, 2020 and 2019 is primarily related to currency exchange fluctuations associated with our Canadian engineering operation, which operates principally in United States dollars. ​ The change in Other income (expense), net for the years ended December 31, 2021 and 2020 compared to the year ended December 31, 2019 is primarily due to a $2.9 million loss recognized in 2019 related to the sale of a utility customer’s pre-petition bankruptcy accounts receivable to a financial institution. 38 Table of Contents ​ Interest expense, net for the year ended December 31, 2021 was $18.5 million compared to $19.9 million for the year ended December 31, 2020. The decrease of $1.4 million was due to a $4.9 million unrealized gain in 2021 and a $2.8 million unrealized loss in 2020 on our interest rate swap, as well as a lower weighted average interest rate. This decrease was partially offset by higher average debt balances in 2021 from the borrowings incurred related to the FIH acquisition. ​ Interest expense, net for the year ended December 31, 2020 was comparable to the same period in 2019. ​ The weighted average interest rate on total debt outstanding at December 31, 2021, 2020 and 2019 was 2.8%, 3.7% and 4.0%, respectively. ​ Provision for income taxes ​ Our provision for income taxes decreased $4.5 million to $36.1 million for 2021 compared to 2020. The decrease was primarily due to the temporary law change allowing full deductibility of per diem expenses through 2022, partially offset by tax on increased pre-tax profits. The 2021 effective tax rate on income including noncontrolling interests and on income attributable to Primoris was 23.8%. ​ Our provision for income taxes increased $6.8 million to $40.7 million for 2020 compared to 2019. The increase was primarily due to increased pre-tax profits in 2020, partially offset by a reduction in state income taxes. The 2020 effective tax rate on income including noncontrolling interests and on income attributable to Primoris was 27.9%. ​ 39 Table of Contents Segment Results ​ Utilities Segment ​ Revenue and gross profit for the Utilities segment for the years ended December 31, 2021, 2020 and 2019 were as follows: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019"],["\u200b","","\u200b","\u200b","","% of","\u200b","\u200b","\u200b","","% of","\u200b","\u200b","\u200b","","% of"],["\u200b","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment"],["\u200b","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue"],["Utilities Segment","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Revenue","\u200b","$","1,658.0","\u200b","\u200b","\u200b","$","1,365.6","\u200b","\u200b","\u200b","$","1,383.8","\u200b","\u200b"],["Gross profit","\u200b","\u200b","186.3","","11.2%","\u200b","\u200b","177.8","","13.0%","\u200b","\u200b","139.2","","10.1%"]] [[/GREPCENT_TABLE]] ​ 2021 and 2020 ​ Revenue increased by $292.4 million, or 21.4%, during 2021 compared to 2020. The increase is primarily attributable to the FIH acquisition ($266.6 million) and increased activity with electric utility customers, partially offset by lower activity with gas utility customers as well as the impact of customer project and material delays. ​ Gross profit increased $8.5 million, or 4.8%, during 2021 compared to 2020. The increase is primarily attributable to the incremental impact of the FIH acquisition ($43.6 million), partially offset by lower margins from our legacy operations. Gross profit as a percentage of revenue decreased to 11.2% in 2021 compared to 13.0% in 2020 primarily due to unfavorable weather conditions, customer project and material delays and a decrease in higher margin storm work in 2021, as well as strong performance and favorable margins realized on projects in the Southeast in 2020. These amounts were partially offset by the favorable margins realized by FIH. ​ 2020 and 2019 ​ Revenue decreased by $18.2 million, or 1.3%, during 2020 compared to 2019. The decrease is primarily attributable to decreased activity with utility customers in Texas, the Midwest, and the Southeast offset by increased utilities work in nearly all of the geographic regions we serve. ​ Gross profit increased $38.6 million, or 27.7%, during 2020 compared to 2019 primarily due to higher margins. Gross profit as a percentage of revenue increased to 13.0% in 2020 compared to 10.1% in 2019 primarily due to favorable margins on projects in the Southeast, being more selective in the type of work we perform resulting in higher margin work in 2020, an increase in higher margin storm work in 2020, and unfavorable weather conditions experienced in certain areas in 2019. ​ 40 Table of Contents Energy/Renewables Segment ​ Revenue and gross profit for the Energy/Renewables segment for the years ending December 31, 2021, 2020 and 2019 were as follows: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019"],["\u200b","","\u200b","\u200b","","% of","\u200b","\u200b","\u200b","","% of","\u200b","\u200b","\u200b","","% of"],["\u200b","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment"],["\u200b","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue"],["Energy/Renewables Segment","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Revenue","\u200b","$","1,408.2","\u200b","\u200b","\u200b","$","1,228.8","\u200b","\u200b","\u200b","$","1,217.4","\u200b","\u200b"],["Gross profit","\u200b","\u200b","150.3","","10.7%","\u200b","\u200b","94.9","","7.7%","\u200b","\u200b","130.2","","10.7%"]] [[/GREPCENT_TABLE]] ​ ​ 2021 and 2020 ​ Revenue increased by $179.4 million, or 14.6%, during 2021 compared to 2020, primarily due to increased renewable energy activity ($286.2 million), partially offset by the substantial completion of industrial projects in Texas, Louisiana, and California in 2020. ​ Gross profit increased by $55.4 million, or 58.3%, during 2021 compared to 2020, primarily due to higher revenue and margins. Gross profit as a percentage of revenue increased to 10.7% in 2021 compared to 7.7% in 2020, primarily due to favorable claims resolution on an industrial plant project in 2021 and higher costs in 2020 associated with a liquefied natural gas (“LNG”) plant project in the Northeast. These amounts were partially offset by the favorable impact of the Canadian Emergency Wage Subsidy in 2020. ​ 2020 and 2019 ​ Revenue increased by $11.4 million, or 0.9%, during 2020 compared to 2019. The growth is primarily due to an increase in solar energy projects and progress on an industrial project for a utility customer in California ($129.8 million combined), partially offset by the substantial completion of a carbon monoxide and hydrogen plant project that began in 2019 and lower revenue at our Canadian industrial operations. ​ Gross profit decreased by $35.3 million, or 27.1%, during 2020 compared to 2019. The decrease is primarily due to lower margins. Gross profit as a percentage of revenue decreased to 7.7% in 2020 compared to 10.7% in 2019 due to higher costs associated with a LNG plant project in the Northeast in 2020, partially offset by strong performance and favorable margins realized on our solar projects in 2020, the favorable impact of the Canadian Emergency Wage Subsidy in 2020, and higher costs associated with two industrial projects in 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 41 Table of Contents Pipeline Segment ​ Revenue and gross profit for the Pipeline segment for the years ended December 31, 2021, 2020 and 2019 were as follows: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019"],["\u200b","","\u200b","\u200b","","% of","","\u200b","\u200b","","% of","","\u200b","\u200b","","% of"],["\u200b","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment","\u200b","\u200b","\u200b","\u200b","Segment"],["\u200b","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue","\u200b","(Millions)","\u200b","Revenue"],["Pipeline Segment","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Revenue","\u200b","$","431.5","\u200b","\u200b","\u200b","$","897.0","\u200b","\u200b","\u200b","$","505.2","\u200b","\u200b"],["Gross profit","\u200b","\u200b","80.1","","18.6%","\u200b","\u200b","97.5","","10.9%","\u200b","\u200b","61.6","","12.2%"]] [[/GREPCENT_TABLE]] ​ 2021 and 2020 ​ Revenue decreased by $465.5 million, or 51.9%, during 2021 compared to 2020. The decrease is attributable to the substantial completion of several pipeline projects in 2020 ($416.7 million) and a decline in the overall midstream pipeline market demand from historically high levels, along with challenges in permitting new pipelines. The revenue levels in 2021 are more consistent with those experienced historically and with our expectations for the Pipeline segment. ​ Gross profit decreased by $17.4 million, or 17.8%, during 2021 compared to 2020, primarily due to lower revenue, partially offset by higher margins. Gross profit as a percentage of revenue increased to 18.6% in 2021 compared to 10.9% in 2020, primarily due to the favorable impact from the closeout of multiple pipeline projects in 2021 and higher costs on pipeline projects in Virginia and Texas in 2020, partially offset by strong performance and favorable margins realized on a Texas pipeline project in 2020. Gross profit as a percentage of revenue experienced in 2020 is more consistent with those experienced historically and with our expectations going forward for the Pipeline segment. ​ 2020 and 2019 ​ Revenue increased by $391.8 million, or 77.6%, during 2020 compared to 2019. The increase is primarily due to pipeline projects in Texas that began in 2020 ($481.8 million combined), partially offset by reduced activity on a pipeline project in the Mid-Atlantic that was cancelled by the developers and the substantial completion of a pipeline project in 2019. ​ Gross profit increased by $35.9 million, or 58.3%, during 2020 compared to 2019. The increase is primarily attributable to revenue growth, partially offset by lower margins. Gross profit as a percentage of revenue decreased to 10.9% in 2020 compared to 12.2% in 2019. The decrease is primarily due to higher costs on pipeline projects in Virginia and Texas in 2020 and the favorable impact from the closeout of multiple pipeline projects in 2019, partially offset by strong performance and favorable margins realized on a Texas pipeline project in 2020. ​ ​ ​ ​ ​ 42 Table of Contents Liquidity and Capital Resources ​ Cash Needs ​ Liquidity represents our ability to pay our liabilities when they become due, fund business operations, and meet our contractual obligations and execute our business plan. Our primary sources of liquidity are our cash balances at the beginning of each period and our cash flows from operating activities. If needed, we have availability under our lines of credit to augment liquidity needs, and we have a current shelf registration statement filed with the SEC that allows for the issuance of an indeterminate amount of debt and equity securities. Our short-term and long-term cash requirements consist primarily of working capital, investments to support revenue growth and maintain our equipment and facilities, general corporate needs, and to service our debt obligations. At December 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, commercial letters of credit outstanding were $42.0 million, and available borrowing capacity was $158.0 million. ​ On January 15, 2021, we entered into the Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”) to increase the Term Loan by $400.0 million to an aggregate principal amount of $592.5 million (the “New Term Loan”). The proceeds from the New Term Loan were used to finance the acquisition of FIH. ​ In March 2021, we entered into an underwriting agreement with Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and UBS Securities LLC, as representatives of the underwriters, in connection with a public offering, pursuant to which we agreed to issue and sell 4,500,000 shares of common stock, par value $.0001 per share. The shares were offered and sold at a public offering price of $35.00 per share. Our net proceeds were approximately $149.3 million and were used to repay a portion of the borrowings incurred under our Amended Credit Agreement in connection with the acquisition of FIH. ​ 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. ​ Due to the uncertainties around the impact of COVID-19 and the general economic conditions, we deferred FICA tax payments during part of 2020 as allowed under The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This deferral was $42.1 million at December 31, 2021. Half of the deferral was paid on January 3, 2022, and the other half is due on January 3, 2023. ​ Our cash and cash equivalents totaled $200.5 million at December 31, 2021, compared to $326.7 million at December 31, 2020. We anticipate that our cash and investments on hand, existing borrowing capacity under our credit facility, access to and capacity under a shelf registration statement, and our future cash flows from operations will provide sufficient funds to enable us to meet our operating needs, our planned capital expenditures, and settle our commitments and contingencies for the next twelve months and the foreseeable future. ​ The construction industry is capital intensive, and we expect to continue to make capital expenditures to meet anticipated needs for our services. In 2021, we spent approximately $133.8 million for capital expenditures, which included $119.4 million for construction equipment. Capital expenditures are expected to total between $120.0 million and $140.0 million for 2022, which includes $70.0 million to $90.0 million for construction equipment. ​ 43 Table of Contents Cash Flows ​ Cash flows during the years ended December 31, 2021, 2020 and 2019 are summarized as follows (in millions): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","","2021","","2020","","2019"],["Change in cash:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net cash provided by operating activities","\u200b","$","79.7","\u200b","$","313.0","\u200b","$","118.9"],["Net cash used in investing activities","\u200b","","(691.3)","\u200b","","(42.5)","\u200b","","(65.8)"],["Net cash provided by (used in) financing activities","\u200b","","485.8","\u200b","","(62.9)","\u200b","","(83.3)"],["Effect of exchange rate changes","\u200b","\u200b","0.5","\u200b","\u200b","(0.1)","\u200b","\u200b","0.4"],["Net change in cash, cash equivalents and restricted cash","\u200b","$","(125.3)","\u200b","$","207.5","\u200b","$","(29.8)"]] [[/GREPCENT_TABLE]] ​ Operating Activities ​ The sources and uses of cash flow associated with operating activities for the years ended December 31, 2021, 2020 and 2019 were as follows (in millions): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","","2021","","2020","","2019"],["Operating Activities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net income","\u200b","$","115.7","\u200b","$","105.0","\u200b","$","84.1"],["Depreciation and amortization","\u200b","","105.6","\u200b","","82.4","\u200b","","85.4"],["Changes in assets and liabilities","\u200b","","(132.7)","\u200b","","128.2","\u200b","","(44.2)"],["Other","\u200b","","(8.9)","\u200b","","(2.6)","\u200b","","(6.4)"],["Net cash provided by operating activities","\u200b","$","79.7","\u200b","$","313.0","\u200b","$","118.9"]] [[/GREPCENT_TABLE]] ​ 2021 and 2020 ​ Net cash provided by operating activities for 2021 was $79.7 million, a decrease of $233.3 million compared to 2020. The change year-over-year was primarily due to an unfavorable impact from the changes in assets and liabilities. ​ The significant components of the $132.7 million change in assets and liabilities for the year ended December 31, 2021 are summarized as follows: ​ [[GREPCENT_TABLE]] [["","\u25cf","Contract assets increased by $67.0 million from December 31, 2020 primarily due to the timing of billing our customers;"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Other current assets increased by $54.7 million from December 31, 2020 primarily due to $23.0 million of prepaid material purchases related to solar projects and a $22.9 million increase in income taxes receivable;"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Contract liabilities decreased by $29.1 million from December 31, 2020, primarily due to lower deferred revenue; and"]] [[/GREPCENT_TABLE]] ​ 2020 and 2019 ​ Net cash provided by operating activities for 2020 was $313.0 million an increase of $194.1 million compared to 2019. The change year-over-year was primarily due to a favorable impact from the changes in assets and liabilities and an increase in net income. ​ The significant components of the $128.2 million change in assets and liabilities for the year ended December 31, 2020 are summarized as follows: ​ [[GREPCENT_TABLE]] [["","\u25cf","Contract liabilities increased by $74.8 million from December 31, 2019, primarily due to higher deferred revenue;"]] [[/GREPCENT_TABLE]] 44 Table of Contents ​ [[GREPCENT_TABLE]] [["","\u25cf","Accounts payable and accrued liabilities increased by $29.7 million from December 31, 2019, primarily due to the timing of payments to our vendors and suppliers and the deferral of FICA tax payments under the CARES Act;"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Other long-term liabilities increased by $23.0 million from December 31, 2019 primarily due to the deferral of FICA tax payments under the CARES Act;"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Contract assets decreased by $19.3 million from December 31, 2019 primarily due to a reduction in unbilled revenue, partially offset by an increase in retention receivable; and"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Accounts receivable increased by $30.0 million from December 31, 2019, primarily due to increased revenue."]] [[/GREPCENT_TABLE]] ​ Investing activities ​ Net cash used in investing activities was $691.3 million, $42.5 million, and $65.8 million in the years ended December 31, 2021, 2020 and 2019, respectively. ​ During 2021, we used $607.0 million for acquisitions, primarily for the acquisition of FIH. ​ We purchased property and equipment for $133.8 million, $64.4 million and $94.5 million in the years ended December 31, 2021, 2020 and 2019, respectively, principally for our construction activities and facilities investment. We believe the ownership or long-term leasing of equipment is generally preferable to renting equipment on a project-by-project basis, as this strategy helps to ensure the equipment is available for our projects when needed. In addition, this approach has historically resulted in lower overall equipment costs. ​ We periodically sell assets, typically to update our fleet. We received proceeds from the sale of assets of $49.5 million, $21.9 million and $28.6 million for 2021, 2020 and 2019, respectively. ​ Financing activities ​ Financing activities provided cash of $485.8 million in 2021, which was primarily due to the following: ​ [[GREPCENT_TABLE]] [["","\u25cf","Proceeds from the entry into an amended and upsized term loan of $395.1 million, net of debt issuance costs paid;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Proceeds from the issuance of common stock $178.7 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Proceeds from the issuance of debt secured by our equipment of $61.7 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Payment of long-term debt of $113.9 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Purchase of common stock of $14.7 million; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Dividend payments to our stockholders of $12.6 million."]] [[/GREPCENT_TABLE]] ​ Financing activities used cash of $62.8 million in 2020, which was primarily due to the following: ​ [[GREPCENT_TABLE]] [["","\u25cf","Payment of long-term debt of $68.9 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Dividend payments to our stockholders of $11.6 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Purchase of common stock of $11.5 million; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Proceeds from the issuance of debt secured by our equipment and real estate of $33.9 million."]] [[/GREPCENT_TABLE]] ​ Financing activities used cash of $83.3 million in 2019, which was primarily due to the following: ​ [[GREPCENT_TABLE]] [["","\u25cf","Payment of long-term debt of $72.1 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Purchase of common stock of $50.0 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Dividend payments to our stockholders of $12.2 million;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Cash distributions to noncontrolling interest holders of $3.5 million; and"]] [[/GREPCENT_TABLE]] 45 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","Proceeds from the issuance of debt secured by our equipment and real estate of $55.0 million."]] [[/GREPCENT_TABLE]] ​ Debt Activities ​ Credit Agreement ​ On January 15, 2021, we entered into the Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with CIBC Bank USA, as administrative agent (the “Administrative Agent”) and co-lead arranger, and the financial parties thereto (collectively, the “Lenders”), amending and restating our credit agreement (the “Credit Agreement”) to increase the original term loan (“Term Loan”) by $400.0 million to an aggregate principal amount of $592.5 million (the “New Term Loan”) and to extend the maturity date of the Credit Agreement from July 9, 2023 to January 15, 2026. The proceeds from the New Term Loan were used to finance the acquisition of FIH. ​ ​ In addition to the New Term Loan, the Amended Credit Agreement consists of the existing $200.0 million revolving credit facility (“Revolving Credit Facility”) whereby the Lenders agreed to make loans on a revolving basis from time to time and to issue letters of credit for up to the $200.0 million committed amount, and contains an accordion feature that would allow us to increase the New Term Loan or the borrowing capacity under the Revolving Credit Facility by up to $75.0 million. ​ At February 21, 2022 there were no outstanding borrowings under the Revolving Credit Facility, commercial letters of credit outstanding were $42.0 million, and available borrowing capacity was $158.0 million. ​ Under the Amended Credit Agreement, we must make quarterly principal payments on the New Term Loan in an amount equal to approximately $7.4 million, with the balance due on January 15, 2026. ​ The principal amount of all loans under the Amended Credit Agreement will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Amended Credit Agreement (based on our senior debt to EBITDA ratio as defined in the Amended Credit Agreement), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.5% or (b) the prime rate as announced by the Administrative Agent) plus an applicable margin as specified in the Amended Credit Agreement. Quarterly non-use fees, letter of credit fees and administrative agent fees are payable at rates specified in the Amended Credit Agreement. ​ The principal amount of any loan drawn under the Amended Credit Agreement may be prepaid in whole or in part at any time, with a minimum prepayment of $5.0 million. During the year ended December 31, 2021, we made additional payments on the New Term Loan of $42.6 million. ​ Loans made under the Amended Credit Agreement are secured by our assets, including, among others, our cash, inventory, equipment (excluding equipment subject to permitted liens), and accounts receivable. Certain of our domestic subsidiaries have issued joint and several guaranties in favor of the Lenders for all amounts under the Amended Credit Agreement. ​ The Amended Credit Agreement contains various restrictive and financial covenants including, among others, a senior debt/EBITDA ratio and debt service coverage requirements. In addition, the Amended Credit Agreement includes restrictions on investments, change of control provisions and provisions in the event we dispose of more than 20% of our total assets. ​ We were in compliance with the covenants for the Amended Credit Agreement at December 31, 2021. ​ On September 13, 2018, we entered into an interest rate swap agreement to manage our exposure to the fluctuations in variable interest rates. The swap effectively exchanged the interest rate on 75% of the debt outstanding under our Term Loan from variable LIBOR to a fixed rate of 2.89% per annum, in each case plus an applicable margin, which was 2.00% at December 31, 2021. ​ 46 Table of Contents Canadian Credit Facilities ​ We have a demand credit facility for $4.0 million in Canadian dollars with a Canadian bank for purposes of issuing commercial letters of credit in Canada (“Canadian Credit Facility”). 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 provides for an annual fee of 1.0% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. At December 31, 2021, commercial letters of credit outstanding were $0.4 million in Canadian dollars, and the available borrowing capacity was $3.6 million in Canadian dollars. The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, OnQuest Canada, ULC. At December 31, 2021, OnQuest Canada, ULC was in compliance with the covenant. ​ We have a credit facility for $10.0 million in Canadian dollars with CIBC Bank for working capital purposes in the normal course of business (“Working Capital Credit Facility”). At December 31, 2021, there were no outstanding borrowings under the Working Capital Credit Facility, and available borrowing capacity was $10.0 million in Canadian dollars. The Working Capital Credit Facility contains a cross default restrictive covenant where a default under our Credit Agreement will represent a default in the Working Capital Credit Facility. ​ Contractual Obligations ​ As of December 31, 2021, we had $665.7 million of outstanding long-term debt, and there were no short-term borrowings. ​ A summary of contractual obligations as of December 31, 2021 was as follows (in millions): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","Total","","1 Year","","2 - 3 Years","","4 - 5 Years","","After 5 Years"],["Long-term debt","\u200b","$","665.7","\u200b","$","67.2","\u200b","$","105.6","\u200b","$","481.3","\u200b","$","11.6"],["Interest on long-term debt (1)","\u200b","","56.4","\u200b","","17.9","\u200b","","26.1","\u200b","","11.5","\u200b","","0.9"],["Operating leases","\u200b","","168.6","\u200b","","65.8","\u200b","","77.7","\u200b","","13.5","\u200b","","11.6"],["\u200b","\u200b","$","890.7","\u200b","$","150.9","\u200b","$","209.4","\u200b","$","506.3","\u200b","$","24.1"],["Letters of credit","\u200b","$","42.3","\u200b","$","42.3","\u200b","$","\u2014","\u200b","$","\u2014","\u200b","$","\u2014"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","The interest amount represents interest payments for our fixed rate debt assuming that principal payments are made as originally scheduled. Our Credit Agreement bears interest at variable market rates, and estimated payments are based on the interest rate in effect as of December 31, 2021, including the impact of our interest rate swap."]] [[/GREPCENT_TABLE]] ​ The summary does not include potential obligations under multi-employer pension plans in which some of our employees participate. Our multi-employer pension plan contribution rates are generally specified in our collective bargaining agreements, and contributions are made to the plans based on employee payrolls. Our obligations for future periods cannot be determined because we cannot predict the number of employees that we will employ at any given time nor the plans in which they may participate. ​ We may also be required to make additional contributions to multi-employer pension plans if they become underfunded, and these contributions will be determined based on our union payroll. The Pension Protection Act of 2006 added special funding and operational rules for multi-employer plans that are classified as “endangered,” “seriously endangered” or “critical” status. Plans in these classifications must adopt measures to improve their funded status through a funding improvement or rehabilitation plan, which may require additional contributions from employers. The amounts of additional funds that we may be obligated to contribute cannot be reasonably estimated and is not included in the table above. ​ Related Party Transactions ​ For information regarding related party transactions, see Note 18 — “Related Party Transactions” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference. ​ 47 Table of Contents Off Balance Sheet Arrangements ​ We enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheet. We have no off-balance sheet financing arrangement with VIEs. The following represents transactions, obligations or relationships that could be considered material off-balance sheet arrangements. ​ [[GREPCENT_TABLE]] [["","\u25cf","At December 31, 2021, we had letters of credit outstanding of $42.3 million under the terms of our credit agreements. These letters of credit are primarily used by our insurance carriers to ensure reimbursement for amounts that they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance program. In addition, from time to time, certain customers require us to post a letter of credit to ensure payments to our subcontractors or guarantee performance under our contracts. Letters of credit reduce our borrowing availability under our Amended Credit Agreement and Canadian Credit Facility. If these letters of credit were drawn on by the beneficiary, we would be required to reimburse the issuer of the letter of credit, and we may be required to record a charge to earnings for the reimbursement. We do not believe that it is likely that any material claims will be made under a letter of credit."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","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 December 31, 2021, we had bid and completion bonds issued and outstanding totaling approximately $3.2 billion. The remaining performance obligation on those bonded projects totaled approximately $1.2 billion at December 31, 2021. We do not believe that it is likely that we would have to fund material claims under our surety arrangements."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Certain of our subsidiaries are parties to collective bargaining agreements with unions. In most instances, these agreements require that we contribute to multi-employer pension and health and welfare plans. For many plans, the contributions are determined annually and required future contributions cannot be determined since contribution rates depend on the total number of union employees and actuarial calculations based on the demographics of all participants. The Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multi-Employer Pension Amendments Act of 1980, subjects employers to potential liabilities in the event of an employer\u2019s complete or partial withdrawal of an underfunded multi-employer pension plan. The Pension Protection Act of 2006 added new funding rules that are classified as \u201cendangered\u201d, \u201cseriously endangered\u201d, or \u201ccritical\u201d status. We currently do not anticipate withdrawal from any multi-employer pension plans. Withdrawal liabilities or requirements for increased future contributions could negatively impact our results of operations and liquidity."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","We enter into employment agreements with certain employees which provide for compensation and benefits under certain circumstances and which may contain a change of control clause. We may be obligated to make payments under the terms of these agreements."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","From time to time we make other guarantees, such as guaranteeing the obligations of our subsidiaries."]] [[/GREPCENT_TABLE]] ​ Backlog ​ For companies in the construction industry, backlog can be an indicator of future revenue streams. Different companies define and calculate backlog in different manners. We define backlog as a combination of: (1) anticipated revenue from the uncompleted portions of existing contracts where scope is adequately defined, and therefore we can reasonably estimate total contract value (“Fixed Backlog”), and (2) the estimated revenue on MSA work for the next four quarters (“MSA Backlog”). We do not include certain contracts in the calculation of backlog where scope, and therefore contract value, is not adequately defined. ​ The two components of backlog, Fixed Backlog and MSA Backlog, are detailed below. ​ 48 Table of Contents Fixed Backlog ​ Fixed Backlog by reporting segment and the changes in Fixed Backlog for the periods ending December 31, 2021, 2020 and 2019 were as follows, (in millions): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","Beginning Fixed","","\u200b","\u200b","","\u200b","\u200b","","Ending Fixed","","\u200b","Revenue","","\u200b","Total Revenue"],["\u200b","\u200b","Backlog at","\u200b","Net Contract","\u200b","Revenue","\u200b","Backlog at","\u200b","\u200b","Recognized from","\u200b","\u200b","for 12 Months"],["\u200b","\u200b","December 31,","\u200b","Additions to","\u200b","Recognized from","\u200b","December 31,","\u200b","\u200b","Non-Fixed","\u200b","\u200b","ended December 31,"],["Reportable Segment","\u200b","2020","\u200b","Fixed Backlog","\u200b","Fixed Backlog","\u200b","2021","00","00","Backlog Projects","00","00","2021"],["Utilities","\u200b","$","36.8","\u200b","$","288.6","\u200b","$","288.4","\u200b","$","37.0","\u200b","\u200b","$","1,369.6","\u200b","\u200b","$","1,658.0"],["Energy/Renewables","\u200b","\u200b","1,256.5","\u200b","\u200b","2,298.9","\u200b","\u200b","1,227.1","\u200b","\u200b","2,328.3","\u200b","\u200b","\u200b","181.1","\u200b","\u200b","\u200b","1,408.2"],["Pipeline","\u200b","\u200b","346.3","\u200b","\u200b","127.0","\u200b","\u200b","359.4","\u200b","\u200b","113.9","\u200b","\u200b","\u200b","72.0","\u200b","\u200b","\u200b","431.4"],["Total","\u200b","$","1,639.6","\u200b","$","2,714.5","\u200b","$","1,874.9","\u200b","$","2,479.2","\u200b","\u200b","$","1,622.7","\u200b","\u200b","$","3,497.6"]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","Beginning Fixed","","\u200b","\u200b","","\u200b","\u200b","","Ending Fixed","","\u200b","Revenue","","\u200b","Total Revenue"],["\u200b","\u200b","Backlog at","\u200b","Net Contract","\u200b","Revenue","\u200b","Backlog at","\u200b","\u200b","Recognized from","\u200b","\u200b","for 12 Months"],["\u200b","\u200b","December 31,","\u200b","Additions to","\u200b","Recognized from","\u200b","December 31,","\u200b","\u200b","Non-Fixed","\u200b","\u200b","ended December 31,"],["Reportable Segment","\u200b","2019","\u200b","Fixed Backlog","\u200b","Fixed Backlog","\u200b","2020","00","00","Backlog Projects","00","00","2020"],["Utilities","\u200b","$","59.6","\u200b","$","260.2","\u200b","$","283.0","\u200b","$","36.8","\u200b","\u200b","$","1,082.6","\u200b","\u200b","$","1,365.6"],["Energy/Renewables","\u200b","\u200b","956.4","\u200b","\u200b","1,377.5","\u200b","\u200b","1,077.4","\u200b","\u200b","1,256.5","\u200b","\u200b","\u200b","151.5","\u200b","\u200b","\u200b","1,228.9"],["Pipeline","\u200b","","743.4","\u200b","","360.0","\u200b","","757.1","\u200b","","346.3","\u200b","\u200b","","139.9","\u200b","\u200b","","897.0"],["Total","\u200b","$","1,759.4","\u200b","$","1,997.7","\u200b","$","2,117.5","\u200b","$","1,639.6","\u200b","\u200b","$","1,374.0","\u200b","\u200b","$","3,491.5"]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","Beginning Fixed","","\u200b","\u200b","","\u200b","\u200b","","Ending Fixed","","\u200b","Revenue","","\u200b","Total Revenue"],["\u200b","\u200b","Backlog at","\u200b","Net Contract","\u200b","Revenue","\u200b","Backlog at","\u200b","\u200b","Recognized from","\u200b","\u200b","for 12 months"],["\u200b","\u200b","December 31,","\u200b","Additions to","\u200b","Recognized from","\u200b","December 31,","\u200b","\u200b","Non-Fixed","\u200b","\u200b","ended December 31,"],["Reportable Segment","\u200b","2018","\u200b","Fixed Backlog","\u200b","Fixed Backlog","\u200b","2019","00","00","Backlog Projects","00","00","2019"],["Utilities","\u200b","$","52.6","\u200b","$","333.6","\u200b","$","326.6","\u200b","$","59.6","\u200b","\u200b","$","1,057.2","\u200b","\u200b","$","1,383.8"],["Energy/Renewables","\u200b","\u200b","750.9","\u200b","\u200b","1,222.0","\u200b","\u200b","1,016.5","\u200b","\u200b","956.4","\u200b","\u200b","\u200b","200.8","\u200b","\u200b","\u200b","1,217.3"],["Pipeline","\u200b","","672.5","\u200b","","461.4","\u200b","","390.5","\u200b","","743.4","\u200b","\u200b","","114.7","\u200b","\u200b","","505.2"],["Total","\u200b","$","1,476.0","\u200b","$","2,017.0","\u200b","$","1,733.6","\u200b","$","1,759.4","\u200b","\u200b","$","1,372.7","\u200b","\u200b","$","3,106.3"]] [[/GREPCENT_TABLE]] ​ Revenue recognized from non-Fixed Backlog projects shown above is generated by MSA projects and projects completed under contracts where scope, and therefore contract value, is not adequately defined, or are generated from the sale of construction materials, such as rock or asphalt to outside third parties. ​ At December 31, 2021, our total Fixed Backlog was $2.48 billion, representing an increase of $839.6 million, or 51.2%, from $1.64 billion as of December 31, 2020. ​ MSA Backlog ​ The following table outlines historical MSA revenue for the twelve months ending December 31, 2021, 2020 and 2019 (in millions): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b"],["Year:","","MSA Revenue"],["2021","","$","1,603.8","\u200b"],["2020","","","1,360.4","\u200b"],["2019","","","1,356.5","\u200b"]] [[/GREPCENT_TABLE]] ​ MSA Backlog includes anticipated MSA revenue for the next twelve months. We estimate MSA revenue based on historical trends, anticipated seasonal impacts and estimates of customer demand based on information from our customers. ​ The following table shows our estimated MSA Backlog at December 31, 2021, 2020 and 2019 by reportable segment (in millions): ​ 49 Table of Contents [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","MSA Backlog","\u200b","MSA Backlog","\u200b","MSA Backlog"],["\u200b","\u200b","at December 31,","\u200b","at December 31,","\u200b","at December 31,"],["Reportable Segment:","","2021","\u200b","2020","\u200b","2019"],["Utilities","\u200b","$","1,346.6","\u200b","$","1,008.4","\u200b","$","1,181.4"],["Energy/Renewables","\u200b","\u200b","127.0","\u200b","\u200b","97.2","\u200b","\u200b","117.8"],["Pipeline","\u200b","","50.0","\u200b","","31.4","\u200b","","118.9"],["Total","\u200b","$","1,523.6","\u200b","$","1,137.0","\u200b","$","1,418.1"]] [[/GREPCENT_TABLE]] ​ Total Backlog ​ The following table shows total backlog (Fixed Backlog plus MSA Backlog), by reportable segment at December 31, 2021, 2020 and 2019 (in millions): ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Total Backlog","","Total Backlog","","Total Backlog"],["\u200b","\u200b","at December 31,","\u200b","at December 31,","\u200b","at December 31,"],["Reportable Segment:","\u200b","2021","","2020","\u200b","2019"],["Utilities","\u200b","$","1,383.6","\u200b","$","1,045.2","\u200b","$","1,241.0","\u200b"],["Energy/Renewables","\u200b","\u200b","2,455.3","\u200b","\u200b","1,353.7","\u200b","\u200b","1,074.2","\u200b"],["Pipeline","\u200b","","163.9","\u200b","","377.7","\u200b","","862.3","\u200b"],["Total","\u200b","$","4,002.8","\u200b","$","2,776.6","\u200b","$","3,177.5","\u200b"]] [[/GREPCENT_TABLE]] ​ We expect that during 2022, we will recognize as revenue approximately 74% of the total backlog at December 31, 2021, comprised of backlog of approximately: 100% of the Utilities segment; 57% of the Energy/Renewables segment; and 97% of the Pipeline segment. ​ Backlog should not be considered a comprehensive indicator of future revenue, as a percentage of our revenue is derived from projects that are not part of a backlog calculation. The backlog estimates include amounts from estimated MSAs, but our customers are not contractually obligated to purchase an amount of services from us under the MSAs. Any of our contracts may be terminated by our customers on relatively short notice. In the event of a project cancellation, we are typically reimbursed for all of our costs through a specific date, as well as all reasonable costs associated with demobilizing from the jobsite, but typically we have no contractual right to the total revenue reflected in backlog. Projects may remain in backlog for extended periods of time as a result of customer delays, regulatory requirements or project specific issues. Future revenue from projects where scope, and therefore contract value, is not adequately defined may not be included in our estimated backlog amount. ​ Effects of Inflation and Changing Prices ​ Our operations are affected by increases in prices, whether caused by inflation or other economic factors. We attempt to recover anticipated increases in the cost of labor, equipment, fuel and materials through price escalation provisions in certain major contracts or by considering the estimated effect of such increases when bidding or pricing new work or by entering into back-to-back contracts with suppliers and subcontractors, though these measures may not be effective. During the years ended December 31, 2021, 2020 and 2019, inflation did not have a material impact on our business. ​