HOUSTON, Aug. 3, 2017 /PRNewswire/ -- Quanta Services,
Inc. (NYSE: PWR) today announced results for the three months ended
June 30, 2017. Revenues in the second
quarter of 2017 were $2.20 billion,
compared to revenues of $1.79 billion
in the second quarter of 2016, and net income attributable to
common stock was $63.8 million in the
second quarter of 2017, or $0.41 per
diluted share, compared to net income attributable to common stock
of $16.6 million, or $0.11 per diluted share, in the second quarter of
2016. Adjusted diluted earnings per share attributable to common
stock (a non-GAAP measure) was $0.50
for the second quarter of 2017 compared to $0.18 for the second quarter of 2016. As
described further below, certain items negatively impacted GAAP
diluted earnings per share attributable to common stock for the
second quarter of 2017 by $0.03 per
share.
"We remain on track to achieve our full-year outlook and believe
momentum is building for continued growth in 2018. Larger electric
transmission and pipeline projects are moving forward, as evidenced
by our recent contracts for the Wind Catcher Generation Tie Line
powerline project and the Line 3 Replacement Program pipeline
project. We also booked approximately $150
million of new communications work during the second
quarter, the majority of which is in the
United States," said Duke
Austin, President and Chief Executive Officer of Quanta
Services. "Further, the recent acquisition of Stronghold expands
our industrial services solutions for the energy industry, enhances
our recurring revenues and provides us with cross-selling
opportunities. We continue to believe that our innovative solutions
and ability to safely execute projects while providing cost
certainty, along with positive end market fundamentals, provide the
opportunity for multi-year growth."
Negatively impacting the second quarter of 2017 was a
$2.4 million charge to expense
($1.7 million net of tax), or
$0.01 per diluted earnings per share
attributable to common stock, associated with a charitable
contribution made in connection with the formation and funding of a
non-profit line school. Also impacting the quarter were
acquisition and integration charges of $4.7
million ($3.0 million net of
tax), or $0.02 per diluted share
attributable to common stock, primarily associated with the
acquisitions further discussed below.
RECENT HIGHLIGHTS
- Chosen for the Wind Catcher Generation Tie Line - In
July 2017, American Electric Power
(AEP) chose Quanta to provide engineering, procurement and
construction (EPC) solutions for the Wind Catcher Generation Tie
Line (Wind Catcher Tie Line). The anticipated contract value for
this project makes it the largest project award in Quanta's
history. The Wind Catcher Tie Line consists of approximately 350
miles of a single circuit 765kV power line and two new substations
located between Guymon and
Tulsa, Oklahoma. Quanta will
provide turnkey EPC services for the entire project and has begun
early-phase project support services. Subject to AEP obtaining
required state and federal regulatory approvals, Quanta expects
construction to begin in the latter part of 2018, with completion
expected in late 2020. Quanta has yet to determine whether the
project will be included in third quarter 2017 backlog.
- Selected for Line 3 Replacement Program in Canada - In July
2017, Quanta was selected by Enbridge Pipelines Inc. for two
spreads of the Canadian section of the Line 3 Replacement Program.
Quanta's scope of work includes the construction and installation
of approximately 168 miles (270 kilometers) of new 36-inch diameter
crude oil mainline pipe, which will begin in Hardisty, Alberta and continue into the
province of Saskatchewan, Canada.
Quanta's construction of the project is expected to begin in
August 2017 and is anticipated to
continue through 2019.
- Booked Approximately $150
Million of Communications Work - During the second
quarter of 2017, Quanta booked approximately $150 million of new work for several major North
American communications companies, with the majority of the work to
be performed in the United States.
Quanta's scope of work on these projects includes long-haul fiber
and fiber-to-the-home deployments and is expected to be performed
over the next few years.
- Acquired Stronghold - In July
2017, Quanta acquired Stronghold, Ltd. and Stronghold
Specialty, Ltd. (Stronghold), a leading specialized services
company that provides high pressure and critical path solutions to
the downstream and midstream energy markets. The transaction
consideration consisted of an upfront payment of approximately
$450 million, comprised of
$360 million of cash and 2.7 million
shares of Quanta common stock, with a cash and stock earnout that
could provide maximum additional consideration of $100 million if cumulative three-year EBITDA
targets are achieved. Stronghold's financial results will be
reflected in Quanta's Oil and Gas Infrastructure Services segment
beginning at the date of acquisition.
- Authorized $300 Million Stock
Repurchase Program - In May 2017,
Quanta's Board of Directors authorized the company to repurchase up
to $300 million in shares of its
outstanding common stock through June 30,
2020, through open market repurchases or privately
negotiated transactions, at management's discretion. Quanta
anticipates utilizing this repurchase program opportunistically
from time to time as deemed appropriate, as well as to potentially
offset dilution from future issuances of stock under its equity
compensation programs and as consideration for future
acquisitions.
- Acquired Communications Infrastructure Services Contractor
- In June 2017, Quanta acquired
an established communications infrastructure services contractor
that provides construction and maintenance services in the
southeast and other regions of the United
States.
RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 2017 AND 2016
Revenues in the first six months of 2017 were $4.38 billion, compared to revenues of
$3.51 billion in the first six months
of 2016, and net income attributable to common stock was
$112.1 million in the first six
months of 2017, or $0.72 per diluted
share, compared to net income attributable to common stock of
$37.1 million, or $0.23 per diluted share, in the first six months
of 2016. Adjusted diluted earnings per share attributable to common
stock (a non-GAAP measure) was $0.89
for the first six months of 2017 compared to $0.41 for the first six months of 2016.
In addition to the items affecting second quarter 2017 results
previously discussed in this release, negatively impacting the
first six months of 2017 were attorneys' fees and related expenses
of approximately $4.2 million
($2.7 million net of tax), or
$0.02 per diluted share attributable
to common stock, associated with the litigation involving the
non-compete agreement entered into in connection with Quanta's
disposition of certain communications construction operations to
Dycom Industries in December 2012,
which was resolved during the first quarter of 2017. Also
negatively impacting the first quarter of 2017 was a $1.9 million charge to expense ($1.2 million net of tax), or $0.01 per diluted share attributable to common
stock, associated with the planned sale of a construction
barge.
Quanta completed one acquisition during the first six months of
2017 and five acquisitions during the full year of 2016.
Therefore, Quanta's results for the three and six months ended
June 30, 2017 included these
acquisitions and are compared to the historical results for the
three and six months ended June 30, 2016.
OUTLOOK
The long-term outlook for Quanta's business is positive.
However, weather, regulatory, permitting, project timing, execution
challenges and other factors have impacted the company's historical
results, and may impact Quanta's future financial results.
Therefore, Quanta's financial outlook for revenues, margins and
earnings reflects management's effort to properly align these
uncertainties with the backlog that the company is executing on and
the opportunities that are expected to materialize during 2017. The
following forward-looking statements are based on current
expectations, and actual results may differ materially.
Quanta is increasing its full-year 2017 revenue expectation to
range between $8.65 billion and $9.05
billion. Quanta expects diluted earnings per share
attributable to common stock to be $1.57 to
$1.75 and adjusted diluted earnings per share attributable
to common stock (a non-GAAP measure) for the full-year 2017 to be
$1.92 to $2.10. Included in our
outlook is the expectation that for the remainder of 2017, the
acquired business of Stronghold is anticipated to generate
approximately $240 million to $260
million of revenues and approximately $6.0 million to
$7.5 million of net income
attributable to common stock and to be accretive to Quanta's GAAP
diluted earnings per share attributable to common stock
by $0.02 to $0.03 and to
non-GAAP adjusted diluted earnings per share attributable to common
stock by $0.06 to $0.07. See the attached table for a
reconciliation of estimated adjusted diluted earnings per share
attributable to common stock to estimated GAAP diluted earnings per
share attributable to common stock for the full-year 2017.
NON-GAAP FINANCIAL MEASURES
The non-GAAP measures in this press release and on Quanta's
website are provided to enable investors, analysts and management
to evaluate Quanta's performance excluding the effects of certain
items that management believes impact the comparability of
operating results between reporting periods. In addition,
management believes these measures are useful in comparing Quanta's
operating results with those of its competitors. These measures
should be used in addition to, and not in lieu of, results prepared
in conformity with GAAP. Reconciliations of other non-GAAP to GAAP
measures not included in the tables attached to this press release
can be found on the company's website at www.quantaservices.com in
the "Investors & Media" section.
CONFERENCE CALL INFORMATION
Quanta Services has scheduled a conference call for 9:00 a.m. Eastern Time on August 3, 2017, which will also be broadcast live
over the Internet. To participate in the call, dial 1-201-689-8345
or 1-877-407-8291 at least 10 minutes before the conference call
begins and ask for the Quanta Services Second Quarter 2017 Earnings
Conference Call or visit the Investors and Media section of the
Quanta Services website at http://investors.quantaservices.com/ to
access the Internet broadcast. Please allow at least 15 minutes to
register and download and install any necessary audio software. For
those who cannot participate live, shortly following the call a
digital recording will be available on the company's website and a
telephonic replay will be available through August 11, 2017 by dialing 1-877-660-6853 and
referencing the conference ID 13666301. For more information,
please contact Kip Rupp, Vice
President - Investor Relations at Quanta Services, at 713-341-7260
or investors@quantaservices.com.
ABOUT QUANTA SERVICES
Quanta Services is a leading specialized contracting services
company, delivering infrastructure solutions for the electric
power, oil and gas and communications industries. Quanta's
comprehensive services include designing, installing, repairing and
maintaining energy and communications infrastructure. With
operations throughout the United
States, Canada,
Latin America, Australia and select other international
markets, Quanta has the manpower, resources and expertise to safely
complete projects that are local, regional, national or
international in scope. For more information, visit
www.quantaservices.com.
FOLLOW QUANTA IR ON SOCIAL MEDIA
Investors and others should note that while we announce material
financial information and make other public disclosures of
information regarding Quanta through SEC filings, press releases
and public conference calls, we also utilize social media to
communicate this information. It is possible that the
information we post on social media could be deemed material.
Accordingly, we encourage investors, the media and others
interested in our company to follow Quanta, and review the
information we post, on the social media channels listed on our
website in the "Investors & Media" section.
Forward-Looking Statements
This press release (and oral statements regarding the subject
matter of this press release, including those made on the
conference call and webcast announced herein) contains
forward-looking statements intended to qualify for the "safe
harbor" from liability established by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements relating to projected revenues,
net income, earnings per share attributable to common stock,
weighted average shares outstanding, margins, capital expenditures,
tax rates and other operating or financial results; expectations
regarding Quanta's business or financial outlook; growth, trends or
opportunities in particular markets; backlog; the potential
benefits from acquisitions, including Stronghold, or investments;
the expected financial and operational performance of acquired
businesses; future capital allocation initiatives; the ability to
deliver increased value and return capital to stockholders; the
strategic use of Quanta's balance sheet; the expected value of
contracts or intended contracts with customers; the scope,
services, term and results of any projects awarded or expected to
be awarded for services to be provided by Quanta; the anticipated
commencement and completion dates for any projects awarded; the
development of larger electric transmission and oil and natural gas
pipeline projects and the level of oil, natural gas and natural gas
liquids prices and their impact on Quanta's business or the demand
for Quanta's services; the impact of existing or potential energy
legislation; potential opportunities that may be indicated by
bidding activity or discussions with customers; the expected
outcome of pending and threatened litigation; beliefs and
assumptions about the collectability of receivables; the business
plans or financial condition of Quanta's customers; Quanta's plans
and strategies; the current economic and regulatory conditions and
trends in the industries Quanta serves; and possible recovery on
pending or contemplated change orders or affirmative claims against
customers or third parties, as well as statements reflecting
expectations, intentions, assumptions or beliefs about future
events, and other statements that do not relate strictly to
historical or current facts. Although Quanta's management believes
that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations
will prove to be correct. These statements can be affected by
inaccurate assumptions and by known and unknown risks and
uncertainties that are difficult to predict or beyond Quanta's
control, including, among others, market conditions; the effects of
industry, economic, financial or political conditions outside
of the control of Quanta, including weakness in capital markets;
quarterly variations in operating results; trends and growth
opportunities in relevant markets; delays, reductions in scope or
cancellations of anticipated, pending or existing projects,
including as a result of weather, regulatory or permitting issues,
environmental processes, project performance issues, claimed force
majeure events, or customers' capital constraints; the successful
negotiation, execution, performance and completion of anticipated,
pending and existing contracts, including the ability to obtain
awards of projects on which Quanta bids or is otherwise discussing
with customers; the ability to attract and the potential shortage
of skilled labor; the ability to retain key personnel and qualified
employees; dependence on fixed price contracts and the potential to
incur losses with respect to these contracts; estimates relating to
the use of percentage-of-completion accounting; adverse impacts
from weather; the ability to generate internal growth; competition
in Quanta's business, including the ability to effectively compete
for new projects and market share; the failure of existing or
potential legislative actions to result in increased demand for
Quanta's services; liabilities associated with multiemployer
pension plans, including underfunding of liabilities and
termination or withdrawal liabilities, and the possibility of
further increases in the liability associated with Quanta's
withdrawal from a multiemployer pension plan; liabilities for
claims that are self-insured or not insured; unexpected costs or
liabilities that may arise from lawsuits, indemnity obligations or
other claims asserted against Quanta, including liabilities and
costs for which Quanta is self-insured or uninsured; the outcome of
pending or threatened litigation; risks relating to the potential
unavailability or cancellation of third party insurance, the
exclusion of coverage for certain losses, and potential increases
in premiums for coverage deemed beneficial to Quanta; cancellation
provisions within contracts and the risk that contracts expire and
are not renewed or are replaced on less favorable terms; loss of
customers with whom Quanta has long-standing or significant
relationships; the potential that participation in joint ventures
or similar structures exposes Quanta to liability and/or harm to
its reputation for acts or omissions by partners; Quanta's
inability or failure to comply with the terms of its contracts,
which may result in additional costs, unexcused delays, warranty
claims, failure to meet performance guarantees, damages or contract
terminations; the effect of natural gas, natural gas liquids and
oil prices on Quanta's operations and growth opportunities and on
Quanta's customers' capital programs and the resulting impact on
demand for Quanta's services; the future development of natural
resources; the inability or refusal of customers to pay for
services, including failure to collect outstanding receivables; the
failure to recover on payment claims against project owners or
third party contractors or to obtain adequate compensation for
customer-requested change orders; the failure of Quanta's customers
to comply with regulatory requirements applicable to their
projects, which may result in project delays and cancellations;
budgetary or other constraints that may reduce or eliminate tax
incentives or government funding for projects, which may result in
project delays or cancellations; estimates and assumptions in
determining financial results and backlog; the ability to realize
backlog; risks associated with operating in international markets,
including instability of foreign governments, currency
fluctuations, tax and investment strategies, as well as compliance
with foreign legal systems and cultural practices, the U.S. Foreign
Corrupt Practices Act and other applicable anti-bribery and
anti-corruption laws; the ability to successfully identify,
complete, integrate and realize synergies from acquisitions; the
potential adverse impact resulting from uncertainty surrounding
investments and acquisitions, including the ability to retain key
personnel from an acquired business and the potential increase in
risks already existing in Quanta's operations; the adverse impact
of impairments of goodwill, receivables, property and equipment and
other intangible assets or investments; growth outpacing Quanta's
decentralized management and infrastructure; requirements relating
to governmental regulation and changes thereto; inability to
enforce Quanta's intellectual property rights or the obsolescence
of such rights; risks related to the implementation of an
information technology solution; the impact of a unionized
workforce on operations, including labor stoppages or interruptions
due to strikes or lockouts; potential liabilities and other adverse
effects arising from occupational health and safety matters;
Quanta's dependence on suppliers, subcontractors, equipment
manufacturers and other third party contractors; the cost of
borrowing, availability of credit and cash, fluctuations in the
price and volume of Quanta's common stock, debt covenant
compliance, interest rate fluctuations and other factors affecting
financing and investing activities; fluctuations of prices of
certain materials used in our business; the ability to access
sufficient funding to finance desired growth and operations; the
ability to obtain performance bonds; potential exposure to
environmental liabilities; the ability to continue to meet certain
regulatory requirements applicable to us and our subsidiaries;
rapid technological and other structural changes that could reduce
the demand for Quanta's services; new or changed tax laws, treaties
or regulations; increased healthcare costs arising from healthcare
reform legislation and other legislative action; regulatory changes
that result in increased labor costs; significant fluctuations in
foreign currency exchange rates; and other risks and uncertainties
detailed in Quanta's Annual Report on Form 10-K for the year ended
Dec. 31, 2016, Quanta's Quarterly
Report on Form 10-Q for the quarter ended Mar. 31, 2017 and any other documents that Quanta
files with the Securities and Exchange Commission (SEC). For a
discussion of these risks, uncertainties and assumptions, investors
are urged to refer to Quanta's documents filed with the SEC that
are available through the company's website at
www.quantaservices.com or through the SEC's Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov.
Should one or more of these risks materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those expressed or implied in any forward-looking statements.
Investors are cautioned not to place undue reliance on these
forward-looking statements, which are current only as of this date.
Quanta does not undertake and expressly disclaims any obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Quanta
further expressly disclaims any written or oral statements made by
any third party regarding the subject matter of this press
release.
Contacts:
|
Derrick Jensen,
CFO
|
Media - Deborah Buks
and Molly LeCronier
|
|
Kip Rupp, CFA -
Investors
|
Ward
|
|
Quanta Services,
Inc.
|
713-869-0707
|
|
713-629-7600
|
|
|
|
|
Quanta Services,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
For the Three and
Six Months Ended June 30, 2017 and 2016
|
(In thousands, except
per share information)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
$
|
2,200,374
|
|
|
$
|
1,792,430
|
|
|
$
|
4,378,544
|
|
|
$
|
3,506,167
|
|
Cost of services
(including depreciation)
|
1,898,209
|
|
|
1,592,213
|
|
|
3,810,191
|
|
|
3,102,637
|
|
Gross
profit
|
302,165
|
|
|
200,217
|
|
|
568,353
|
|
|
403,530
|
|
Selling, general and
administrative expenses
|
185,880
|
|
|
156,607
|
|
|
370,432
|
|
|
315,131
|
|
Amortization of
intangible assets
|
6,494
|
|
|
8,141
|
|
|
13,056
|
|
|
15,636
|
|
Operating
income
|
109,791
|
|
|
35,469
|
|
|
184,865
|
|
|
72,763
|
|
Interest
expense
|
(4,271)
|
|
|
(3,583)
|
|
|
(8,236)
|
|
|
(7,172)
|
|
Interest
income
|
164
|
|
|
641
|
|
|
451
|
|
|
1,157
|
|
Other income
(expense), net
|
(1,079)
|
|
|
(1,103)
|
|
|
(1,443)
|
|
|
(1,022)
|
|
Income before income
taxes
|
104,605
|
|
|
31,424
|
|
|
175,637
|
|
|
65,726
|
|
Provision for income
taxes
|
40,245
|
|
|
14,695
|
|
|
62,837
|
|
|
28,138
|
|
Net income
|
64,360
|
|
|
16,729
|
|
|
112,800
|
|
|
37,588
|
|
Less: Net income
attributable to non-controlling interests
|
523
|
|
|
167
|
|
|
696
|
|
|
530
|
|
Net income
attributable to common stock
|
$
|
63,837
|
|
|
$
|
16,562
|
|
|
$
|
112,104
|
|
|
$
|
37,058
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to common stock - basic and diluted
|
$
|
0.41
|
|
|
$
|
0.11
|
|
|
$
|
0.72
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing earnings per share attributable to common
stock:
|
|
|
|
|
|
|
|
Basic
|
155,090
|
|
|
156,128
|
|
|
154,859
|
|
|
159,577
|
|
Diluted
|
156,165
|
|
|
156,130
|
|
|
155,745
|
|
|
159,579
|
|
|
|
|
Quanta Services,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
99,565
|
|
|
$
|
112,183
|
|
Accounts receivable,
net
|
1,614,113
|
|
|
1,500,115
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
630,880
|
|
|
473,308
|
|
Inventories
|
94,152
|
|
|
88,548
|
|
Prepaid expenses and
other current assets
|
178,489
|
|
|
114,591
|
|
Total
current assets
|
2,617,199
|
|
|
2,288,745
|
|
PROPERTY AND
EQUIPMENT, net
|
1,190,333
|
|
|
1,174,094
|
|
OTHER ASSETS,
net
|
145,120
|
|
|
101,028
|
|
OTHER INTANGIBLE
ASSETS, net
|
184,375
|
|
|
187,023
|
|
GOODWILL
|
1,616,317
|
|
|
1,603,169
|
|
Total
assets
|
$
|
5,753,344
|
|
|
$
|
5,354,059
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current maturities of
long-term debt and short-term debt
|
$
|
1,375
|
|
|
$
|
7,563
|
|
Accounts payable and
accrued expenses
|
969,654
|
|
|
922,819
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
314,987
|
|
|
274,846
|
|
Total
current liabilities
|
1,286,016
|
|
|
1,205,228
|
|
LONG-TERM DEBT AND
NOTES PAYABLE, net of current maturities
|
483,638
|
|
|
353,562
|
|
DEFERRED INCOME TAXES
AND OTHER NON-CURRENT LIABILITIES
|
474,359
|
|
|
452,567
|
|
Total
liabilities
|
2,244,013
|
|
|
2,011,357
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
3,506,723
|
|
|
3,339,427
|
|
NON-CONTROLLING
INTERESTS
|
2,608
|
|
|
3,275
|
|
TOTAL
EQUITY
|
3,509,331
|
|
|
3,342,702
|
|
Total
liabilities and equity
|
$
|
5,753,344
|
|
|
$
|
5,354,059
|
|
|
|
|
Quanta Services,
Inc. and Subsidiaries
|
Supplemental
Segment Data
|
For the Three and
Six Months Ended June 30, 2017 and 2016
|
(Unaudited)
|
|
Segment
Results
|
|
Quanta reports its
results under two reportable segments: (1) Electric Power
Infrastructure Services and (2) Oil and Gas Infrastructure
Services, as set forth below (in thousands, except
percentages).
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services
|
$
|
1,300,729
|
|
|
59.1
|
%
|
|
$
|
1,159,087
|
|
|
64.7
|
%
|
|
$
|
2,520,231
|
|
|
57.6
|
%
|
|
$
|
2,346,089
|
|
|
66.9
|
%
|
Oil and Gas
Infrastructure Services
|
899,645
|
|
|
40.9
|
|
|
633,343
|
|
|
35.3
|
|
|
1,858,313
|
|
|
42.4
|
|
|
1,160,078
|
|
|
33.1
|
|
Consolidated
revenues
|
$
|
2,200,374
|
|
|
100.0
|
%
|
|
$
|
1,792,430
|
|
|
100.0
|
%
|
|
$
|
4,378,544
|
|
|
100.0
|
%
|
|
$
|
3,506,167
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services (a)
|
$
|
113,043
|
|
|
8.7
|
%
|
|
$
|
75,934
|
|
|
6.6
|
%
|
|
$
|
212,715
|
|
|
8.4
|
%
|
|
$
|
163,258
|
|
|
7.0
|
%
|
Oil and Gas
Infrastructure Services (b)
|
67,751
|
|
|
7.5
|
|
|
11,899
|
|
|
1.9
|
|
|
106,568
|
|
|
5.7
|
|
|
17,740
|
|
|
1.5
|
|
Corporate and
Non-Allocated Costs (c)
|
(71,003)
|
|
|
N/A
|
|
|
(52,364)
|
|
|
N/A
|
|
|
(134,418)
|
|
|
N/A
|
|
|
(108,235)
|
|
|
N/A
|
|
Consolidated
operating income
|
$
|
109,791
|
|
|
5.0
|
%
|
|
$
|
35,469
|
|
|
2.0
|
%
|
|
$
|
184,865
|
|
|
4.2
|
%
|
|
$
|
72,763
|
|
|
2.1
|
%
|
(a) Included in operating income for the Electric Power
Infrastructure Services segment for the three and six months ended
June 30, 2016 were $30.5 million and $51.8
million of losses related to a power plant construction
project in Alaska.
(b) Included in operating income for the Oil and Gas
Infrastructure Services segment for the six months ended
June 30, 2017 was a $1.9 million charge to expense associated with
the planned sale of a construction barge. Included in operating
income for the six months ended June 30, 2016 were
approximately $2 million in severance
and restructuring costs.
(c) Included in Corporate and Non-Allocated Costs for the three
and six months ended June 30, 2017
was a $2.4 million charitable
contribution made in connection with the formation and funding of a
non-profit line school and $4.7
million associated with acquisitions, while included in the
three and six months ended June 30, 2016 were $0.8 million and $2.1
million of charges associated with acquisitions. Also
included in Corporate and Non-Allocated Costs for the six months
ended June 30, 2017 was the
$4.2 million associated with the
litigation involving the non-compete agreement entered into in
connection with Quanta's disposition of certain communications
construction operations to Dycom Industries in December 2012, which was resolved in the first
quarter of 2017.
Backlog
Backlog is not a term recognized under United States generally accepted accounting
principles (GAAP); however, it is a common measurement used in the
industry. Quanta's methodology for determining backlog may not be
comparable to the methodologies used by other companies.
Quanta's backlog represents the amount of consolidated revenue that
it expects to realize from future work under construction
contracts, long-term maintenance contracts and master service
agreements. These estimates include revenues from the remaining
portion of firm orders not yet completed and on which work has not
yet begun, as well as revenues from change orders, renewal options,
and funded and unfunded portions of government contracts to the
extent that they are reasonably expected to occur. For purposes of
calculating backlog, Quanta includes 100% of estimated revenues
attributable to consolidated joint ventures and variable interest
entities. The following table presents Quanta's total backlog by
reportable segment as of June 30, 2017, December 31, 2016
and June 30, 2016, along with an estimate of the backlog
amounts expected to be realized within 12 months of each balance
sheet date (in millions):
|
Backlog as
of
|
|
June 30,
2017
|
|
December 31,
2016
|
|
June 30,
2016
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services
|
$
|
3,631.1
|
|
|
$
|
6,759.9
|
|
|
$
|
3,369.3
|
|
|
$
|
6,657.5
|
|
|
$
|
3,270.2
|
|
|
$
|
6,347.2
|
|
Oil and Gas
Infrastructure Services
|
1,709.0
|
|
|
2,422.9
|
|
|
2,484.0
|
|
|
3,092.3
|
|
|
2,437.6
|
|
|
3,408.5
|
|
Total
|
$
|
5,340.1
|
|
|
$
|
9,182.8
|
|
|
$
|
5,853.3
|
|
|
$
|
9,749.8
|
|
|
$
|
5,707.8
|
|
|
$
|
9,755.7
|
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measure
Adjusted Diluted Earnings Per Share Attributable
to Common Stock
For the Three and Six Months Ended
June 30, 2017 and 2016
(In
thousands, except per share information)
(Unaudited)
The non-GAAP measure of adjusted diluted earnings per share
attributable to common stock, when used in connection with diluted
earnings per share attributable to common stock, is intended to
provide useful information to investors and analysts as they
evaluate Quanta's performance. Management believes that the
exclusion of certain items from net income attributable to common
stock enables it to more effectively evaluate Quanta's operations
period over period and better identify operating trends that may
not otherwise be apparent. As to certain of the items below,
(i) amortization of intangible assets is impacted by Quanta's
acquisition activity, which can cause these amounts to vary from
period to period; (ii) non-cash stock-based compensation
expense may vary due to acquisition activity, changes in the
estimated fair value of performance-based awards, forfeiture rates,
accelerated vesting and amounts granted during the period;
(iii) acquisition and integration costs vary period to period
depending on the level of Quanta's ongoing acquisition activity;
and (iv) severance costs related to the departure of Quanta's
former president and chief executive officer and severance and
restructuring costs associated with certain operations primarily
within Quanta's Oil and Gas Infrastructure segment are not
regularly occurring items. Because adjusted diluted earnings per
share attributable to common stock, as defined, excludes some, but
not all, items that affect net income attributable to common stock,
adjusted diluted earnings per share attributable to common stock as
presented in this press release may or may not be comparable to
similarly titled measures of other companies. The most comparable
GAAP financial measure, net income attributable to common stock,
and information reconciling the GAAP and non-GAAP financial
measures, are included below. Reconciliations of other
non-GAAP to GAAP measures not included in the table below can be
found on Quanta's website at www.quantaservices.com in the
"Investors & Media" section. See table on the following
page.
|
|
Quanta Services,
Inc. and Subsidiaries
|
Reconciliation of
Non-GAAP Financial Measure
|
Adjusted Diluted
Earnings Per Share Attributable to Common Stock
|
For the Three and
Six Months Ended June 30, 2017 and 2016
|
(In thousands, except
per share information)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Reconciliation of
adjusted net income attributable to common stock:
|
|
|
|
|
|
|
|
Net income
attributable to common stock (GAAP as reported)
|
$
|
63,837
|
|
|
$
|
16,562
|
|
|
$
|
112,104
|
|
|
$
|
37,058
|
|
Adjustments:
|
|
|
|
|
|
|
|
Severance and restructuring charges (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
6,352
|
|
Acquisition and integration costs
|
4,745
|
|
|
830
|
|
|
4,745
|
|
|
2,083
|
|
Income tax impact of adjustments (b)
|
(1,733)
|
|
|
(221)
|
|
|
(1,733)
|
|
|
(2,835)
|
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
66,849
|
|
|
17,171
|
|
|
115,116
|
|
|
42,658
|
|
Non-cash stock-based
compensation
|
11,557
|
|
|
9,503
|
|
|
23,423
|
|
|
21,513
|
|
Amortization of
intangible assets
|
6,494
|
|
|
8,141
|
|
|
13,056
|
|
|
15,636
|
|
Income tax impact of
non-cash adjustments (b)
|
(6,603)
|
|
|
(6,371)
|
|
|
(13,347)
|
|
|
(13,616)
|
|
Adjusted net income
attributable to common stock
|
$
|
78,297
|
|
|
$
|
28,444
|
|
|
$
|
138,248
|
|
|
$
|
66,191
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding for basic earnings per share attributable to
common stock
|
155,090
|
|
|
156,128
|
|
|
154,859
|
|
|
159,577
|
|
Weighted average
shares outstanding for diluted and adjusted diluted earnings per
share attributable to common stock
|
156,165
|
|
|
156,130
|
|
|
155,745
|
|
|
159,579
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share and adjusted diluted earnings per share attributable to
common stock:
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to common stock (c)
|
$
|
0.41
|
|
|
$
|
0.11
|
|
|
$
|
0.72
|
|
|
$
|
0.23
|
|
Adjusted diluted
earnings per share attributable to common stock (c)
|
$
|
0.50
|
|
|
$
|
0.18
|
|
|
$
|
0.89
|
|
|
$
|
0.41
|
|
(a) The amount for the six months ended June 30, 2016
reflects the elimination of severance costs associated with the
departure of Quanta's former president and chief executive officer
and severance and restructuring costs associated with certain
operations primarily within the Oil and Gas Infrastructure Services
segment.
(b) The income tax impact of adjustments that are subject to tax
is determined using the incremental statutory tax rate of the
jurisdictions to which each adjustment relates for the respective
periods.
(c) Both diluted and adjusted diluted earnings per share
attributable to common stock for the three and six months ended
June 30, 2017 were impacted by a $2.4 million ($1.7 million
net of tax), or $0.01 per share, charitable contribution made in
connection with the formation and funding of a non-profit line
school. Additionally, both diluted and adjusted diluted
earnings per share attributable to common stock for the six months
ended June 30, 2017 were impacted by attorneys' fees and
related expenses of approximately $4.2 million ($2.7
million net of tax), or $0.02 per share, associated with the
Dycom Industries litigation, which was resolved in the first
quarter of 2017, and a $1.9 million charge ($1.2 million net of
tax), or $0.01 per share, to expense associated with the planned
sale of a construction barge in order to record the asset to its
estimated fair market value. For the three months ended
June 30, 2016, both diluted and adjusted diluted earnings per
share attributable to common stock were impacted by $30.5 million
($18.6 million net of tax), or $0.12 per share, of losses related
to a power plant construction project in Alaska. For the six
months ended June 30, 2016, both diluted and adjusted diluted
earnings per share attributable to common stock were impacted by
$51.8 million ($31.6 million net of tax), or $0.20 per share, of
losses related to the same power plant construction project.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measure
Estimated
Adjusted Diluted Earnings Per Share Attributable to Common
Stock
For the Full Year 2017
(In thousands, except
per share information)
The non-GAAP measure of adjusted diluted earnings per share
attributable to common stock, when used in connection with diluted
earnings per share attributable to common stock, is intended to
provide useful information to investors and analysts as they
evaluate Quanta's performance. Management believes that the
exclusion of certain items from net income attributable to common
stock enables it to more effectively evaluate Quanta's operations
period over period and better identify operating trends that may
not otherwise be apparent. As to certain of the items below,
(i) amortization of intangible assets is impacted by Quanta's
acquisition activity, which can cause these amounts to vary from
period to period, (ii) non-cash stock-based compensation
expense may vary due to acquisition activity, changes in the
estimated fair value of performance-based awards, forfeiture rates,
accelerated vesting and amounts granted during the period; and
(iii) acquisition and integration costs vary period to period
depending on the level of Quanta's ongoing acquisition activity.
Because adjusted diluted earnings per share attributable to common
stock, as defined, excludes some, but not all, items that affect
net income attributable to common stock, adjusted diluted earnings
per share attributable to common stock as presented in this press
release may or may not be comparable to similarly titled measures
of other companies. The most comparable GAAP financial measure, net
income attributable to common stock, and information reconciling
the GAAP and non-GAAP financial measures, are included below.
Reconciliations of other non-GAAP to GAAP measures not included in
the table below can be found on Quanta's website at
www.quantaservices.com in the "Investors & Media" section.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2017
|
Reconciliation of
estimated adjusted net income attributable to common
stock:
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
|
247,000
|
|
|
$
|
275,300
|
|
Acquisition and integration costs
|
9,300
|
|
|
9,300
|
|
Income
tax impact of adjustments (a)
|
(3,400)
|
|
|
(3,400)
|
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
252,900
|
|
|
281,200
|
|
Non-cash stock-based
compensation
|
47,000
|
|
|
47,000
|
|
Amortization of
intangible assets
|
30,600
|
|
|
30,600
|
|
Income tax impact of
non-cash adjustments (a)
|
(28,500)
|
|
|
(28,500)
|
|
Estimated adjusted
net income attributable to common stock
|
$
|
302,000
|
|
|
$
|
330,300
|
|
|
|
|
|
Estimated weighted
average shares:
|
|
|
|
Weighted average
shares outstanding for diluted and adjusted diluted earnings per
share attributable to common stock
|
157,300
|
|
|
157,300
|
|
|
|
|
|
Estimated diluted
earnings per share and estimated adjusted diluted earnings per
share attributable to common stock:
|
|
|
|
Estimated diluted
earnings per share attributable to common stock
|
$
1.57
|
|
|
$
1.75
|
|
Estimated adjusted
diluted earnings per share attributable to common stock
|
$
1.92
|
|
|
$
2.10
|
|
(a) The income tax impact of adjustments that are subject to tax
is determined using the incremental statutory tax rate of the
jurisdictions to which each adjustment relates for the respective
periods.
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SOURCE Quanta Services, Inc.