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Primoris Services (PRIM -26%) is under heavy pressure after significantly lowering FY26 guidance last night. The company, which is hired by utilities and energy companies to build power plants, electric transmission lines, substations, and infrastructure that supplies power to data centers, slashed FY26 adjusted EPS guidance to $2.05-2.60 from $4.80-5.00. In addition, COO Jeremy Kinch has stepped down. The problem was with its Renewables segment, where PRIM cited project delays and cost overruns primarily related to six projects. PRIM now expects FY26 revenue for its Renewables business to decline to $2.1 bln from $3 bln in 2025. It was not all bad news, PRIM also said it was awarded several projects in Q2 with a combined value of ~$2 bln, which were secured by its Energy segment.

• Project risk: The newly identified overruns came from continued project progress and an ongoing assessment by a third-party industry expert, suggesting the review uncovered deeper issues.
• Timing of cleanup: Two of the six troubled projects were substantially completed in Q2, one is expected to be substantially completed early in Q3, two later in Q3, and one in Q4, which gives investors a rough timeline for when the renewables drag could begin to roll off.
• Backlog offset: Primoris won several Q2 projects with a combined value of about $2.0 bln in the Energy segment, focused on natural gas generation, industrial work, and electric construction services.
• Why the disappointment is sharp: The update marks a major reversal from the company's earlier setup, when management had pointed to strong renewables activity, structural utility margin improvement, and meaningful data center-related opportunities.

Briefing.com Analyst Insight

This is more than a typical guidance cut. Primoris has now lowered guidance twice in less than two months, raising concerns that management may not yet have full visibility into the extent of the problems within its Renewables segment. The magnitude of the latest reduction, with adjusted EPS guidance cut by more than half, suggests these are not isolated project hiccups but significant execution issues. The departure of the COO only adds to investor unease as the company works through these challenges. The disappointing aspect is that Primoris remains well-positioned to benefit from several attractive long-term themes, including AI-driven data center construction. The roughly $2 bln of new project awards announced alongside the guidance cut demonstrates that customer demand remains healthy and that the company's core Energy segment continues to win meaningful work.

Unfortunately, investors are likely to discount those positives until confidence in Renewables execution is restored. The key question now is whether these six troubled projects represent a finite cleanup process or evidence of a broader structural problem within the Renewables business. If losses are ultimately contained to this group of projects, the stock could eventually recover as investors refocus on the company's substantial exposure to power and data center infrastructure spending. However, after two guide-downs in rapid succession, management will need to rebuild credibility before investors are willing to assign much value to those opportunities. For now, the story has shifted from secular growth to execution risk.