Texas outfit to buy Little Canada gas pipeline service firm
- Article by: PATRICK KENNEDY
- Star Tribune
- November 14, 2012 - 9:27 PM
Q3 Contracting Inc., a Little Canada-based gas pipeline service company, has agreed to be acquired for $48.1 million in cash by specialty contractor Primoris Services Corp. of Dallas.
Q3, which has 700 employees serving utilities in the Midwest, including Minnesota, Iowa and Wisconsin, provides repair and replacement of existing gas distribution lines for local distribution companies. The company's specialty is installing small to medium-size pipe and cable packages for customers in the gas, oil, electric and telecommunications industries.
Primoris, a public company, is one of the largest specialty contractors and infrastructure companies in the United States.
Privately held Q3 has branch offices in Denver, Milwaukee and Des Moines. It will become part of Primoris' West Construction Services segment.
Q3's president, Jay Osborn, will continue to manage day-to-day operations, Primoris said.
"The acquisition of Q3 continues to broaden our national presence in pipeline construction, replacement and integrity work," Brian Pratt, chairman, president and CEO of Primoris, said in the company's news release. "We are pleased to have Jay Osborn and his team of nearly 700 employees join Primoris."
A respected company
Primoris is respected by stock analysts. The company is covered by eight analysts and all have "buy" ratings on the stock. In a research note Nov. 7, Richard Paget, an analyst for Imperial Capital, maintained his buy rating on the company, saying "the company continues to have a bullish view on the pipeline transmission and petrochemical markets in the U.S., given the relatively low price of natural gas."
Primoris stock closed Wednesday at $14.29 per share, up 31 cents, or 2.2 percent.
The purchase price for Q3 could increase by $10 million if the company achieves certain performance targets over the next two years. Company officials at Primoris and Q3 were unavailable for comment Wednesday.
For the year ended Dec. 31, 2011, Q3 had revenue of $84 million and operating income of $8.9 million.
Primoris recently reported third-quarter revenue of $431 million, a 15 percent increase over same quarter last year, and net income of $17.9 million, or 34 cents per share.
Revenue for the nine months ended Sept. 30 was $1.06 billion, a 2.4 percent decrease over the same period last year. Net income for the nine months was $40.3 million, down 12.5 percent from the same period a year ago.
The company's West Construction Services segment accounted for about 55 percent of the company's revenue.
Patrick Kennedy 612-673-7926
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