Primoris Services Corporation (PRIM): PESTLE Analysis [Nov-2025 Updated]

You're looking at Primoris Services Corporation (PRIM) and seeing a direct line to the multi-year US infrastructure boom, but don't confuse opportunity with ease. The company is positioned perfectly to capture billions from the Infrastructure Investment and Jobs Act and clean energy mandates, but the operational reality is a tight squeeze. Near-term, the biggest threats to their margins-and your investment thesis-are the persistent inflation in materials and the severe shortage of skilled trade labor, which is defintely pushing wage costs higher. It's a high-growth environment, but the execution risk is real, so let's map out the Political, Economic, and other external forces shaping their 2025 outlook.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Political factors

The political landscape for Primoris Services Corporation is defintely a tailwind in 2025, primarily due to massive, multi-year federal spending commitments and a significant, pro-development shift in key energy regulation. The key takeaway is that federal funds are actively converting into project backlog, and a major regulatory hurdle for natural gas pipeline construction has been removed, accelerating project timelines and improving revenue visibility.

Continued funding from the Infrastructure Investment and Jobs Act (IIJA) drives new Civil and Utility projects.

The Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law, continues to be the single largest political driver for Primoris's Civil and Utility segments. This five-year legislation authorized $1.2 trillion in total spending, and as of late 2025, an estimated $492 billion in federal funding remains for American infrastructure projects between 2024 and 2026.

Specifically, the U.S. Department of Transportation is slated to distribute $134 billion in 2025, primarily for highways and bridges, which directly feeds into Primoris's Heavy Civil division. This formula-based funding provides a high degree of revenue predictability for state and local government contracts. Here's the quick math: a substantial portion of the $350 billion allocated for Federal highway programs over the FY2022-FY2026 period is still flowing into construction contracts, supporting the high-volume, lower-margin work that forms the base of the Civil segment.

State-level renewable portfolio standards (RPS) mandate utility-scale solar and wind build-out.

State-level Renewable Portfolio Standards (RPS) are not just goals; they are legislative mandates that create non-discretionary demand for Primoris's utility-scale solar and wind construction services within the Energy segment. These state laws require utilities to source a minimum percentage of their electricity from renewable resources by specific deadlines, forcing capital expenditure. For example, New Mexico's RPS requires 40% of electricity to come from renewables by 2025, while large Investor-Owned Utilities (IOUs) in Oregon must hit at least 27% by the same year.

This political pressure translates directly to construction volume. The U.S. Energy Information Administration (EIA) projects that 32.5 GW of new utility-scale solar capacity will be added to the U.S. grid in 2025, a significant jump from the prior year. This environment is why Primoris has raised its full-year 2025 renewables revenue estimate to be closer to $3 billion, up from an earlier estimate of $2.6 billion. You can see the direct link between state policy and Primoris's revenue forecast.

Regulatory stability for natural gas pipeline infrastructure remains a key, shifting operational risk.

The regulatory environment for natural gas pipeline construction has seen a significant, positive shift in late 2025, directly impacting operational risk and project timing. The Federal Energy Regulatory Commission (FERC) issued a Final Rule on October 7, 2025, which rescinded Order No. 871. This former rule had barred construction on approved natural gas infrastructure while rehearing requests were pending, a process that often caused project delays of 150 days or more.

The new, streamlined approach is intended to accelerate energy projects, particularly those needed to support the rapid build-out of data centers and gas-fired power generation. This regulatory clarity is a major boost for the Energy segment's pipeline and industrial construction services, contributing to Primoris's visibility of a $100 million to $200 million revenue growth opportunity in pipeline alone going into 2026.

Government emphasis on grid hardening and modernization increases Utility segment backlog.

Federal and state governments are prioritizing grid hardening (making the electric grid more resilient to extreme weather and cyberattacks) and modernization, which is a core offering of Primoris's Utility segment. The IIJA allocated over $21 billion to support upgrades to the electric grid, including $5 billion in competitive grants for grid resilience. This is a direct government signal to utilities to invest in transmission, distribution, and power delivery.

This political emphasis is clearly visible in the company's financial performance:

• The Utility segment's Master Service Agreement (MSA) backlog increased by $492 million from Q2 to Q3 2025.
• This increase is explicitly driven by heightened customer investment in power delivery and gas operations.
• The total IIJA funding for electric grid reliability, resilience, and cybersecurity is approximately $14.9 billion (FY2022-FY2026), ensuring a multi-year pipeline of work.

The political mandate for resilience means utility capital expenditure is non-cyclical and growing, a solid foundation for the Utility segment's revenue, which was $737.5 million in Q3 2025 alone.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Economic factors

The economic environment in 2025 presents a dual reality for Primoris Services Corporation: a significant tailwind from robust utility capital spending is directly offset by the persistent headwind of high interest rates and sticky material inflation. Your focus should be on how Primoris's long-term, fixed-price contracts manage these volatile costs.

High interest rates increase the cost of capital for large-scale utility and civil projects.

While the Federal Reserve has begun easing, the cost of capital remains a material concern for the large-scale, multi-year infrastructure projects that Primoris Services Corporation undertakes. The U.S. Bank Prime Loan Rate, the baseline for many commercial loans, stood at 7.00% as of November 2025, a rate significantly higher than the low-rate environment of the early 2020s. This high rate directly impacts the borrowing costs for utilities and state transportation departments funding new transmission lines, pipelines, and civil works.

For Primoris, this affects clients' final investment decisions (FIDs), potentially delaying or scaling back new, large-diameter pipeline or civil projects. However, the company's Utilities segment, which has a backlog of $6.03 billion, is somewhat insulated because regulated utilities can often pass these higher financing costs to ratepayers, maintaining project viability.

Here's the quick math: The Fed cut the target Federal Funds Rate to a range of 3.75%-4.00% in October 2025, following a cut in September, which is a positive sign, but the overall cost structure is still elevated.

Persistent inflation in materials (steel, concrete) and equipment rental squeezes project margins.

Inflationary pressure on construction inputs is a primary threat to Primoris Services Corporation's targeted gross margins of 10.0% to 12.0% for both the Utilities and Energy segments in 2025. While overall U.S. construction input prices rose 3.5% year-over-year as of October 2025, the pinch points are highly specific and non-uniform.

The biggest margin risk comes from equipment and steel inputs, which are critical for the company's heavy civil and energy work. Nonresidential construction input prices climbed at an annualized rate of 6% through the first half of 2025. The cost for parts for construction machinery and equipment-a proxy for maintenance and rental costs-is up a massive 41.3% year-over-year as of September 2025. Primoris mitigates this risk through Master Service Agreements (MSAs) and cost-reimbursable contracts, which shift the inflation burden back to the client.

Construction Input Category	Year-over-Year Price Change (2025 Data)	Impact on PRIM Projects
Parts for Construction Machinery & Equipment	+41.3% (as of Sept 2025)	Significant pressure on equipment-intensive project margins (Civil, Heavy Industrial).
Steel Mill Products	+5.1% (as of June 2025)	Directly affects transmission towers, pipelines, and structural components.
Ready-Mix Concrete	+0.4% (as of Sept 2025)	Relatively stable, easing pressure on foundation and civil work.
Overall Construction Input Prices	+3.5% (as of Oct 2025)	General cost pressure persists, requiring tight procurement discipline.

Utility capital expenditure (CapEx) budgets remain robust, supporting consistent demand for services.

This is defintely the strongest economic tailwind. Demand for Primoris Services Corporation's core utility and power delivery services is exceptionally strong, driven by a U.S. infrastructure super-cycle. Projected capital expenditures for 47 major U.S. energy utilities in 2025 are forecast to reach over $212 billion, representing a 22% increase from 2024.

This massive spending is fueled by grid modernization, renewable energy integration, and the explosive growth of data centers. Investor-owned electric companies, represented by the Edison Electric Institute (EEI), are projected to invest nearly $208 billion in 2025 alone to strengthen the grid. This consistent, regulated spending provides high revenue visibility, evidenced by Primoris's total backlog of $11.1 billion as of Q3 2025. A key driver is the projected $1.4 trillion in electric utility investment from 2025 to 2030.

• Utility CapEx is up 22% for energy utilities in 2025, reaching over $212 billion.
• Water utility CapEx is projected to grow approximately 15% to $6.2 billion in 2025.
• Primoris is evaluating approximately $1.7 billion in data center-related work expected to be contracted by the end of 2025.

Oil and gas price volatility impacts the timing and scale of midstream and downstream energy projects.

While the utility sector provides stability, the Energy segment, particularly midstream and downstream work, faces volatility tied to commodity prices. Crude oil futures (WTI) traded around $60.59 per barrel in mid-November 2025, a level that causes caution among producers. This uncertainty has led to a reduction in drilling activity, with the U.S. oil rig count dropping to 583 in early April 2025, the lowest level since 2022.

This volatility prompts exploration and production (E&P) companies to trim capital budgets, such as EOG Resources, which cut its 2025 budget by $200 million (3%). However, Primoris Services Corporation's midstream work is somewhat cushioned because midstream operators (pipelines, storage) are more reliant on stable production volumes than on fluctuating prices. Downstream refining activity, another area for Primoris, can actually benefit from lower crude input costs, potentially expanding margins for refiners and supporting maintenance and upgrade projects.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Social factors

Severe shortage of skilled trade labor (welders, linemen) forces higher wage costs and recruitment spend.

The persistent shortage of skilled tradespeople in the US construction and utility sectors is a major social headwind for Primoris Services Corporation in 2025. This scarcity directly translates into higher operating costs and competitive pressure for talent.

The industry needs to hire an estimated 439,000 additional workers this year just to meet demand, a gap that forces companies like Primoris to increase compensation and recruitment spending to secure critical craft labor like welders and linemen. Here's the quick math: the national average hourly earnings (AHE) in construction rose to $39.33 as of April 2025, an increase of 3.6% year-over-year, and union construction workers saw an average pay rise of 4.5% between March 2024 and March 2025.

This pressure is already visible in the financials. Primoris reported that Selling, General, and Administrative (SG&A) expenses for the first quarter of 2025 increased by $10.9 million, or 12.3 percent, with a primary driver being increased 'people costs' to support revenue growth.

• 439,000 new workers needed by construction in 2025.
• 67% of construction firms are raising wages in 2025.
• 22% of firms reported project delays in 2025 due to labor shortages.

Growing public and investor demand for Environmental, Social, and Governance (ESG) compliance in all projects.

ESG is no longer a niche concern; it is a core business driver and a contractual requirement, fundamentally shaping Primoris's project pipeline. Investors and customers increasingly demand measurable social and environmental impact from infrastructure providers.

The company is capitalizing on the $\text{E}$ (Environmental) aspect of ESG, which is a significant opportunity. As of year-end 2024, Primoris had approximately $3.1 billion in solar backlog, positioning the Energy segment for continued growth in 2025.

A concrete example of this commitment is the construction services provided for the solar project powering the world's first large-scale Direct Air Capture (DAC) facility in Texas, which is scheduled to begin commercial production in 2025. This facility is expected to remove 500,000 tons of carbon dioxide from the atmosphere per year. That's a defintely strong social and environmental statement.

Increased urbanization and aging infrastructure drive the need for utility system upgrades and replacements.

The state of US infrastructure presents a massive, non-cyclical demand tailwind for Primoris's Utilities and Energy segments. Urban expansion and the sheer age of existing systems necessitate continuous capital expenditure (CapEx) for modernization.

The American Society of Civil Engineers (ASCE) 2025 Infrastructure Report Card gave the US a 'C' grade, the highest since the report began, but still pointing to a significant investment gap.

The total investment needed for US infrastructure is estimated at $9.1 trillion between 2024 and 2033. For the energy sector, a key market for Primoris, the ASCE downgraded the grade to a D+ in 2025, highlighting safety risks and capacity concerns.

This macro-trend translates into a huge project pipeline, particularly as the energy sector faces an estimated investment requirement of approximately $1.4 trillion between 2025 and 2030 to modernize and expand the grid.

Focus on diversity and inclusion in the workforce is becoming a stronger contractual requirement.

Diversity and Inclusion (D\&I) is shifting from a corporate goal to a baseline expectation, often included in master service agreements (MSAs) and large public-sector contracts. Primoris Services Corporation has formalized this through its own Diversity and Inclusion Committee and a policy that prohibits discrimination.

The company's ability to demonstrate a commitment to a diverse workforce is a competitive advantage when bidding on government-funded infrastructure projects. While the construction industry is historically male-dominated, Primoris's workforce demographics show the current composition, which provides a benchmark for future D\&I progress.

Here is a snapshot of the estimated employee diversity at Primoris Services Corporation, which highlights the area for continued focus:

Demographic Category	Percentage of Employees	Percentage of Executives
Female Employees	18%	24%
Minority Employees (Total)	47%	38%
Most Common Minority Ethnicity	Hispanic or Latino (22%)	Hispanic or Latino (N/A)

What this estimate hides is the need to actively recruit and retain a diverse, skilled workforce to successfully execute the $11.4 billion total backlog reported in the first quarter of 2025.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Technological factors

Increased adoption of Building Information Modeling (BIM) and drone surveying improves project planning and execution efficiency.

You know that in large-scale infrastructure, every hour saved in planning is millions saved on site. Primoris Services Corporation is positioned to capitalize on the industry-wide shift toward digital pre-construction tools like Building Information Modeling (BIM) and Unmanned Aerial Vehicles (UAVs), or drones. BIM creates a digital twin of the project, allowing for clash detection and precise material takeoffs long before ground is broken. Drone surveying, which is part of a global construction drone market estimated at $4.6 Billion in 2024, feeds real-time, high-resolution 3D data into these models, dramatically reducing the time for topographic mapping and progress reporting.

The core advantage here is risk mitigation. Using BIM integrated with drone data, our project managers can spot potential errors-like a utility line conflict-virtually, preventing costly rework. This increased efficiency is a key component in maintaining the company's targeted gross margins of 10.0% to 12.0% for the full year 2025 in both the Utilities and Energy segments.

Utility segment uses advanced grid technology (smart meters, sensors) requiring specialized installation expertise.

The national push for grid modernization and electrification is a massive tailwind for Primoris Services Corporation, but it demands specialized technical skill. The Utilities segment, which had a total backlog of approximately $6.6 billion as of September 30, 2025, is heavily engaged in installing advanced grid technology (A-GT).

This includes deploying smart meters, installing distribution automation sensors, and upgrading high-voltage transmission lines to support the massive increase in load from new AI data centers. The company is evaluating approximately $1.7 billion worth of data center-related projects, which require complex power generation and transmission services.

The challenge isn't just laying pipe or wire anymore; it's integrating complex digital hardware into an aging physical infrastructure. This focus on high-tech utility work is why the Utilities segment saw a gross margin of 14.1% in Q2 2025, up from 10.3% in the prior year, driven by favorable project work mix and increased productivity.

Construction automation and robotics are slowly being integrated to mitigate labor shortages on large sites.

Labor shortages are a constant headache, but construction automation and robotics offer a tangible solution. The U.S. construction robots market, which includes automated material handling and surveying systems, is projected to reach approximately $442.49 million in 2025, growing at a CAGR of 15.50% through 2030.

While full-scale robotic construction is still emerging, the integration is happening now, focusing on repetitive, high-volume tasks like material handling. Primoris Services Corporation's capital expenditure (CapEx) for the nine months ended September 30, 2025, was $108.2 million, including $64.2 million for construction equipment purchases. A portion of this CapEx is defintely being directed toward semi-autonomous equipment and advanced machinery to boost productivity and reduce reliance on manual labor for non-specialized tasks.

Here's the quick math on the investment pool:

Metric (FY 2025 YTD Q3)	Amount (in Millions)
Total Capital Expenditures (9 Months)	$108.2 million
Construction Equipment Purchases (9 Months)	$64.2 million
Remaining CapEx Guidance (Q4)	$15.0M to $20.0 million

Cybersecurity risks are rising due to increased reliance on digital project management systems.

As Primoris Services Corporation digitizes its operations-from BIM models to cloud-based project management-it expands its attack surface. The risk of a cyber incident, which could disrupt a project with a backlog value of $11.1 billion (as of Q3 2025), is a serious concern.

Globally, cybersecurity spending is expected to grow by 12.2% in 2025, reflecting the escalating threat landscape. Primoris Services Corporation manages this risk with a multi-layered program based on the National Institute of Standards and Technology (NIST) Framework, and it engages third-party consulting firms to perform biennial assessments.

The focus is on protecting sensitive data, financial records, and operational technology (OT) systems from threats like phishing, malicious attacks, and third-party vendor vulnerabilities. This investment in digital defense is a necessary cost of doing business in a high-tech infrastructure market. Any failure here could quickly erode the company's full-year 2025 adjusted EPS guidance of $5.35 to $5.55 per diluted share.

The key risk areas are clear:

• Protecting proprietary BIM models and project plans.
• Securing the operational technology (OT) used in smart grid installations.
• Managing third-party vendor access to digital systems.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Legal factors

Strict Occupational Safety and Health Administration (OSHA) regulations mandate significant safety compliance investment.

You cannot operate in heavy civil construction, pipeline, or power delivery without treating safety compliance as a core capital expenditure, not just an overhead cost. Primoris Services Corporation (PRIM) faces rigorous oversight from the Occupational Safety and Health Administration (OSHA) and state-level equivalents, which demands substantial, ongoing investment in training, equipment, and compliance personnel.

The company's commitment to safety is a competitive necessity, but it is also a major cost driver. For 2025, Primoris has budgeted capital expenditures of $90 million to $110 million, with $60 million to $80 million specifically earmarked for construction equipment. A significant portion of this equipment budget is tied to mandated safety standards, such as trenching shoring, aerial lifts, and specialized utility gear.

The financial risk from non-compliance is real, even with a strong safety culture. Historically, the company has faced penalties. For example, a single case closed in September 2024 for a subsidiary, Primoris T&D Services LLC, resulted in a final penalty of $5,000 for a safety violation after a formal settlement.

Complex permitting and environmental review processes (e.g., National Environmental Policy Act) cause project delays.

The sheer scale of Primoris's infrastructure work-especially in the Energy and Renewables segments-means the National Environmental Policy Act (NEPA) and state-level environmental reviews are a constant source of schedule risk. These reviews require federal agencies to take a hard look at a project's environmental impact, which can add months or even years to a timeline.

For large-scale projects, like the utility-scale solar farms or new transmission lines in their $11.4 billion total backlog as of Q1 2025, the permitting process is the critical path. A delay of just a few months on a multi-hundred-million-dollar project can drastically erode the gross margin, which is targeted between 10.0% and 12.0% for the Energy segment in 2025. You have to factor in the cost of carrying project overhead-salaries, equipment leases, and insurance-during these regulatory pauses.

State and federal contract law complexity requires robust legal and compliance teams.

Operating across the United States and Canada, Primoris must navigate a patchwork of state and federal contract laws, labor regulations, and tax codes. This complexity is compounded by the variety of contracts they execute, from long-term Master Service Agreements (MSAs) to fixed-price, lump-sum Engineering, Procurement, and Construction (EPC) contracts.

To manage this, the company's Selling, General, and Administrative (SG&A) expense, which includes legal, compliance, and corporate overhead, is a key metric. For the full year 2025, Primoris is targeting SG&A expense as a percentage of revenue to be approximately 6 percent.

Here's the quick math: based on the 2024 revenue of approximately $6.4 billion, a 6% SG&A target implies a corporate overhead spend of roughly $384 million in 2025, a substantial portion of which funds the legal and compliance infrastructure necessary to manage multi-jurisdictional risk.

• Manage compliance across 50+ states and provinces.
• Ensure adherence to the Foreign Corrupt Practices Act (FCPA) for international operations.
• Mitigate risk in complex contract structures.

Litigation risk tied to large-scale project delays or cost overruns remains a constant factor.

In the construction and engineering industry, litigation is a cost of doing business, especially on large, fixed-price contracts where unforeseen issues-like weather, material cost inflation, or permitting delays-can lead to disputes over change orders and cost overruns. This risk is always present, but the size of the projects makes the stakes enormous.

A concrete example from 2025 is the ongoing case of Primoris Energy Services Corporation v. Air Products and Chemicals, Inc., which saw a discovery dispute in the Southern District of Texas in September 2025. These disputes, even if settled favorably, consume significant legal resources and management time, indirectly impacting project execution.

The table below summarizes the key legal and compliance cost drivers for the 2025 fiscal year:

Legal/Compliance Risk Area	2025 Financial/Operational Context	Impact on Business
OSHA/Safety Compliance	$60M - $80M in equipment CapEx for safety-related gear	Mandatory investment; prevents operational shutdowns and fines.
Environmental Permitting (NEPA)	Part of $11.4 billion backlog, especially Renewables segment	Causes non-recoverable project delays; increases carrying costs.
Contract/Litigation Risk	SG&A target of approx. 6% of revenue (includes legal overhead)	Direct cost of legal teams and external counsel; distracts management.
Regulatory Fines/Penalties	Historical penalty total for safety: over $371,032	Direct cash outflow; damages customer and regulatory relationships.

Primoris Services Corporation (PRIM) - PESTLE Analysis: Environmental factors

Here's the quick math: The tailwinds from government spending are strong, but the labor market is a real anchor. You need to watch their gross margin on fixed-price contracts very closely.

Focus on carbon emission reduction mandates the shift to lower-carbon energy infrastructure projects

The regulatory push for decarbonization is a primary driver for Primoris Services Corporation's (PRIM) growth in the Energy segment. This isn't just a future opportunity; it's the core of their current backlog. The Energy segment's revenue surged by 47.0% year-over-year in the third quarter of 2025, with renewable energy and industrial activity being the main catalysts. Renewables activity alone outpaced expectations by over $900 million year-to-date through Q3 2025. The company finished 2024 with a solar backlog of approximately $3.1 billion, securing $2.4 billion in new solar project awards during the year. This positioning as the number two ranked solar Engineering, Procurement, and Construction (EPC) contractor nationally in 2024 shows their clear competitive advantage in this pivot.

The shift extends beyond solar to other lower-carbon solutions, including:

• Constructing a 183.87 MWdc solar project to power the world's first large-scale Direct Air Capture (DAC) facility in Texas.
• Retrofitting oil refining facilities to process biofuels and vegetable oils for green diesel.
• Natural gas repowering projects that incorporate Battery Energy Storage Systems (BESS) and carbon capture technology.

This is a clear, defensive strategy against the long-term decline in traditional fossil fuel infrastructure work.

Increased scrutiny on construction waste management and site remediation practices

The construction industry's environmental footprint is under increasing scrutiny, particularly concerning Construction and Demolition (C&D) waste, which historically accounts for about 23% of the US total waste stream. While Primoris Services Corporation mentions a commitment to a sustainability framework, the pressure is mounting for all large contractors to provide quantifiable metrics. The US C&D waste management market is a significant business in itself, valued at $178.7 billion in 2025 and projected to grow at a CAGR of 7.18% through 2033, reflecting the rising cost and regulatory complexity of disposal.

For a company operating large-scale projects, compliance with hazardous substance laws and site remediation is a constant, unhedged risk. The industry trend is toward proactive waste diversion and lean construction principles to reduce material wastage on-site, a practice that can yield up to a 70% material recovery rate in deconstruction projects. This is a cost-saving opportunity that directly impacts project profitability.

Demand for sustainable materials and construction methods is slowly becoming a competitive differentiator

The use of sustainable materials is moving from a niche requirement to a competitive necessity, particularly for utility-scale and industrial clients seeking green building certifications like LEED. The global sustainable construction materials market is projected to be valued at $484.48 billion in 2025, demonstrating the massive scale of this transition. In the US, the market is expected to grow at a CAGR of 10.8% between 2025 and 2034. Honestly, over 84% of builders already incorporate sustainable materials at least occasionally, so it's no longer a bonus-it's table stakes.

For Primoris Services Corporation, this means their Engineering, Procurement, and Construction (EPC) services must increasingly focus on sourcing recycled steel, sustainable concrete mixes, and other low-carbon inputs to win bids. Their ability to integrate these materials efficiently, as seen in projects like the Moapa solar facility, which sourced local materials, is what separates them from less agile competitors.

Climate change-related weather events (hurricanes, extreme heat) increase operational downtime and insurance costs

Extreme weather is no longer an outlier risk; it's a standard operational variable that directly hits the bottom line. Primoris Services Corporation operates across the US and Canada, making it highly exposed to regional climate volatility, from intense Gulf Coast hurricanes to extreme heat in the Southwest. The financial impact is already visible in the Q3 2025 results.

Look at the margin compression:

Segment	Q3 2025 Gross Profit Margin	Q3 2024 Gross Profit Margin	Impact
Energy Segment	10.1%	11.0%	Decrease partially due to unfavorable weather
Utilities Segment Operating Income	Decreased by $2.1 million	N/A	Primarily due to lower storm response activity YoY

Unfavorable weather conditions directly influenced the Energy segment's gross profit margin decrease in Q3 2025. Also, the Utilities segment's operating income decreased by $2.1 million in the same quarter, but this was due to lower storm response work compared to the prior year's active storm season, indicating that storm response revenue is a volatile, high-margin component of their business. Still, the core risk remains: unexpected extreme weather causes costly project delays, higher insurance premiums, and increased labor costs from travel and standby time.

Finance: Track the ratio of cost-plus contracts (lower risk) to fixed-price contracts (higher risk) in the Q4 2025 backlog update.