HOUSTON, May 3, 2018 /PRNewswire/ -- Quanta Services, Inc.
(NYSE: PWR) today announced results for the three months ended
March 31, 2018. Revenues in the first
quarter of 2018 were $2.42 billion,
compared to revenues of $2.18 billion
in the first quarter of 2017, and net income attributable to common
stock was $37.6 million in the first
quarter of 2018, or $0.24 per diluted
share, compared to net income attributable to common stock of
$48.3 million, or $0.31 per diluted share, in the first quarter of
2017. Adjusted diluted earnings per share attributable to common
stock (a non-GAAP measure) was $0.40
for the first quarter of 2018 compared to $0.39 for the first quarter of 2017.
"We are pleased with how Quanta has started the year. The
electric power segment performed particularly well, with strong
revenue and margin growth due to excellent execution across our
operations," said Duke Austin,
President and Chief Executive Officer of Quanta Services. "As a
result of our solid first quarter results, strengthening end
markets and confidence in our ability to safely execute, we are
raising our full year revenue and earnings per share expectations.
With the largest specialized workforce in our industry, as well as
our scope and scale, innovative solutions and ability to execute
complex projects while providing cost certainty, we remain well
positioned in our markets and believe our visibility into
opportunities for multi-year growth are strengthening."
Negatively impacting the quarter and reflected as adjustments in
Quanta's adjusted diluted earnings per share calculation were
acquisition and integration costs of $7.2
million ($6.2 million net of
tax), or $0.04 per diluted share
attributable to common stock, primarily associated with two
acquisitions completed during the quarter.
RECENT HIGHLIGHTS
- Selected for Large Metro Fiber Build - In the first
quarter of 2018, Quanta was selected by a large telecommunications
company for turnkey engineering and construction services for fiber
deployment throughout a tier 2 market in Texas. This deployment is designed to support
the customer's existing 4G and developing 5G wireless networks and
the delivery of high-speed broadband services. Quanta anticipates
beginning this project later this year with completion anticipated
by the end of 2020.
- Secured Large Diameter Pipeline Project - In
April 2018, Quanta entered into a
contract to build a large diameter pipeline project in Oklahoma, which is designed to transport
natural gas from the SCOOP and STACK plays to end users in support
of LNG export, industrial demand, electric power generation, local
distribution companies and downstream users. Quanta's scope of work
includes the construction and installation of approximately 80
miles of new 36-inch diameter mainline pipe. Quanta's construction
on the project is anticipated to begin in the third quarter of this
year with completion anticipated in mid-2019.
- Repurchased Stock - During the first quarter of 2018,
Quanta repurchased $173.9 million of
its outstanding common stock, acquiring 5.0 million shares through
open market repurchases. Taking into account stock repurchases
during the fourth quarter of 2017, Quanta has acquired 6.4 million
shares of its common stock for $223.9
million under its current $300
million stock repurchase program.
Quanta completed two acquisitions during the first three months
of 2018 and three acquisitions during the full-year 2017.
Therefore, Quanta's results for the three months ended March 31, 2018 include the results of the
acquired businesses from the acquisition dates and are compared to
the historical results for the three months ended March 31,
2017. For further information on the items that impacted
comparability in 2018 and 2017, see the footnotes to the
Supplemental Segment Data table and the non-GAAP reconciliation of
adjusted diluted earnings per share attributable to common stock
below.
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 2018. The following forward-looking statements
are based on current expectations, and actual results may differ
materially.
Prior to the company's conference call, management will post a
summary of updated 2018 guidance expectations with additional
commentary in the "Investors & Media" section of Quanta's
website at http://investors.quantaservices.com. For the full-year
2018, Quanta now expects revenues to range between $9.95 billion and $10.55
billion, net income attributable to common stock to range
between $321.0 million and
$383.0 million and diluted earnings
per share attributable to common stock to range between
$2.07 and $2.47. Additionally, for the full-year 2018,
Quanta now expects adjusted diluted earnings per share attributable
to common stock (a non-GAAP measure) to be between $2.55 and $2.95,
EBITDA (a non-GAAP measure) to be between $756.5 million and $858.1
million, and adjusted EBITDA (a non-GAAP measure) to be
between $815.4 million and
$917.0 million. See the attached
tables for reconciliations of estimated adjusted diluted earnings
per share attributable to common stock to estimated GAAP diluted
earnings per share attributable to common stock and estimated
EBITDA and estimated adjusted EBITDA to estimated GAAP net income
attributable to common stock for the full-year 2018.
NON-GAAP FINANCIAL MEASURES
The non-GAAP measures in
this press release 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.
CONFERENCE CALL INFORMATION
Quanta Services has
scheduled a conference call for 9:00 a.m.
Eastern Time on May 3, 2018,
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 First Quarter 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 May 11, 2018 by dialing 1-877-660-6853 and
referencing the conference ID 13678503. 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, EBITDA, 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;
performance obligations and backlog; the potential benefits from
acquisitions or investments; the expected financial and operational
performance of acquired businesses; the future demand for and
availability of labor resources in the industries Quanta serves;
future capital allocation initiatives, including the amount, timing
and strategies with respect to any future stock repurchases; 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 legislation or regulation, including the Tax
Cuts and Jobs Act of 2017; 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, protests or other political activity, legal
challenges or customers' capital constraints; the successful
negotiation, execution, performance and completion of anticipated,
pending and existing contracts, including the ability to obtain
future project awards; 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 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 demand
for Quanta's services; unexpected costs or liabilities that may
arise from pending or threatened litigation, indemnity obligations
or other claims asserted against Quanta including liabilities
associated with multiemployer pension plans; liabilities for claims
that are not covered by third-party insurance; 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
customer capital programs and 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,
performance obligations and backlog; the ability to successfully
complete performance obligations or 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 acquired
businesses, the potential increase in risks already existing in
Quanta's operations and poor performance or decline in value of
Quanta's investment in infrastructure assets; 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 new information technology solutions; 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 Quanta's 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 Quanta and its 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 governmental 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, 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 - Lynn
Hancock
|
|
Kip Rupp, CFA -
Investors
|
Ward
|
|
Quanta Services,
Inc.
|
713-818-6719
|
|
713-629-7600
|
|
Quanta Services,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations
For the Three
Months Ended March 31, 2018 and 2017
(In thousands, except
per share information)
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
Revenues
|
$
|
2,417,576
|
|
|
$
|
2,178,170
|
|
Cost of services
(including depreciation)
|
2,116,528
|
|
|
1,911,982
|
|
Gross
profit
|
301,048
|
|
|
266,188
|
|
Selling, general and
administrative expenses
|
215,422
|
|
|
184,552
|
|
Amortization of
intangible assets
|
10,405
|
|
|
6,562
|
|
Operating
income
|
75,221
|
|
|
75,074
|
|
Interest
expense
|
(6,778)
|
|
|
(3,965)
|
|
Interest
income
|
146
|
|
|
287
|
|
Other income
(expense), net
|
(11,975)
|
|
|
(364)
|
|
Income before income
taxes
|
56,614
|
|
|
71,032
|
|
Provision for income
taxes
|
18,003
|
|
|
22,592
|
|
Net income
|
38,611
|
|
|
48,440
|
|
Less: Net income
attributable to non-controlling interests
|
997
|
|
|
173
|
|
Net income
attributable to common stock
|
$
|
37,614
|
|
|
$
|
48,267
|
|
|
|
|
|
Earnings per share
attributable to common stock - basic and diluted
|
$
|
0.24
|
|
|
$
|
0.31
|
|
|
|
|
|
Shares used in
computing earnings per share:
|
|
|
|
Weighted average
basic shares outstanding
|
156,546
|
|
|
155,168
|
|
Weighted average
diluted shares outstanding
|
157,556
|
|
|
155,168
|
|
Quanta Services,
Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
101,736
|
|
|
$
|
138,285
|
|
Accounts receivable,
net
|
2,088,682
|
|
|
1,985,077
|
|
Contract assets
(1)
|
498,190
|
|
|
497,292
|
|
Inventories
|
94,548
|
|
|
80,890
|
|
Prepaid expenses and
other current assets
|
173,913
|
|
|
168,363
|
|
Total
current assets
|
2,957,069
|
|
|
2,869,907
|
|
PROPERTY AND
EQUIPMENT, net
|
1,301,545
|
|
|
1,288,602
|
|
OTHER ASSETS,
net
|
221,091
|
|
|
189,866
|
|
OTHER INTANGIBLE
ASSETS, net
|
270,826
|
|
|
263,179
|
|
GOODWILL
|
1,902,871
|
|
|
1,868,600
|
|
Total
assets
|
$
|
6,653,402
|
|
|
$
|
6,480,154
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current maturities of
long-term debt
|
$
|
2,775
|
|
|
$
|
1,220
|
|
Accounts payable and
accrued expenses
|
1,040,661
|
|
|
1,057,460
|
|
Contract liabilities
(1)
|
506,203
|
|
|
433,387
|
|
Total
current liabilities
|
1,549,639
|
|
|
1,492,067
|
|
LONG-TERM DEBT AND
NOTES PAYABLE, net of current maturities
|
882,795
|
|
|
670,721
|
|
DEFERRED INCOME TAXES
AND OTHER NON-CURRENT LIABILITIES
|
574,003
|
|
|
521,737
|
|
Total
liabilities
|
3,006,437
|
|
|
2,684,525
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
3,643,352
|
|
|
3,791,571
|
|
NON-CONTROLLING
INTERESTS
|
3,613
|
|
|
4,058
|
|
TOTAL
EQUITY
|
3,646,965
|
|
|
3,795,629
|
|
Total
liabilities and equity
|
$
|
6,653,402
|
|
|
$
|
6,480,154
|
|
|
(1) The
amounts previously reported as "Costs and estimated earnings in
excess of billings on uncompleted contracts" and "Billings in
excess of costs and estimated earnings on uncompleted contracts" on
Quanta's consolidated balance sheets have been included in the
newly titled "Contract assets" and "Contract liabilities" in
accordance with the newly adopted revenue recognition
guidance.
|
Quanta Services, Inc. and Subsidiaries
Supplemental Segment Data
For the Three Months Ended
March 31, 2018 and 2017
(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
March 31,
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services
|
$
|
1,568,507
|
|
|
64.9
|
%
|
|
$
|
1,219,502
|
|
|
56.0
|
%
|
Oil and Gas
Infrastructure Services
|
849,069
|
|
|
35.1
|
|
|
958,668
|
|
|
44.0
|
|
Consolidated
revenues
|
$
|
2,417,576
|
|
|
100.0
|
%
|
|
$
|
2,178,170
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services
|
$
|
140,895
|
|
|
9.0
|
%
|
|
$
|
99,672
|
|
|
8.2
|
%
|
Oil and Gas
Infrastructure Services (a)
|
10,057
|
|
|
1.2
|
|
|
38,817
|
|
|
4.0
|
|
Corporate and
Non-Allocated Costs (b)
|
(75,731)
|
|
|
N/A
|
|
|
(63,415)
|
|
|
N/A
|
|
Consolidated
operating income
|
$
|
75,221
|
|
|
3.1
|
%
|
|
$
|
75,074
|
|
|
3.4
|
%
|
|
(a) Included in the
three months ended March 31, 2017 was a $1.9 million charge to
expense associated with the planned sale of a construction
barge.
|
(b) Included in the
three months ended March 31, 2018 were $7.2 million of acquisition
and integration costs. Included in the three months ended March 31,
2017 were attorneys' fees and related expenses of approximately
$4.2 million associated with certain litigation that was resolved
in the first quarter of 2017.
|
Quanta Services, Inc. and Subsidiaries
Supplemental Data
For the Three Months Ended
March 31, 2018 and 2017
(Unaudited)
Performance Obligations and Backlog (a non-GAAP
measure)
Effective January 1,
2018, Quanta adopted the new revenue recognition guidance
issued by the Financial Accounting Standards Board. Pursuant to the
new guidance, Quanta is required to disclose, as of the end of each
interim and annual period, the aggregate amount of the remaining
performance obligations under its contracts with customers. A
performance obligation is a promise in a contract with a customer
to transfer a distinct good or service. Quanta's remaining
performance obligations represent management's estimate of
consolidated revenues that are expected to be realized from the
remaining portion of firm orders for fixed price contracts not yet
completed or for which work has not yet begun. For purposes of
calculating remaining performance obligations, Quanta includes all
estimated revenues attributable to consolidated joint ventures and
variable interest entities, revenues from funded and unfunded
portions of government contracts to the extent they are reasonably
expected to occur and revenues from change orders to the extent
management believes additional contract revenues will be earned and
are deemed probable of collection.
Quanta has also historically disclosed its backlog, and while
backlog is not a defined term under United States generally accepted accounting
principles (GAAP), it is a common measurement used in Quanta's
industry. Quanta also believes this non-GAAP measure enables it to
more effectively forecast its future results and better identify
future operating trends that may not otherwise be apparent.
Quanta's remaining performance obligations, as described above, are
a component of Quanta's backlog calculation, which also includes
estimated orders under master service agreements (MSAs), including
estimated renewals, and non-fixed price contracts expected to be
completed within one year. Quanta's methodology for determining
backlog may not be comparable to the methodologies used by other
companies.
The following table reconciles Quanta's total remaining
performance obligations to its backlog (a non-GAAP measure) as of
March 31, 2018, along with estimates of amounts expected to be
realized within 12 months of March 31, 2018 (in millions):
|
12
Month
|
|
Total
|
Remaining performance
obligations
|
$
|
4,153.2
|
|
|
$
|
5,193.4
|
|
Estimated orders
under MSAs and short-term, non-fixed price contracts
|
2,729.6
|
|
|
6,463.8
|
|
Backlog
|
$
|
6,882.8
|
|
|
$
|
11,657.2
|
|
The following table presents Quanta's backlog by reportable
segment as of March 31, 2018, December 31, 2017 and
March 31, 2017, along with an estimate of the backlog amounts
expected to be realized within 12 months of each balance sheet date
(in millions):
|
Backlog (a
non-GAAP measure) as of
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Services
|
$
|
4,214.8
|
|
|
$
|
7,596.1
|
|
|
$
|
4,032.4
|
|
|
$
|
7,359.2
|
|
|
$
|
3,573.0
|
|
|
$
|
6,757.3
|
|
Oil and Gas
Infrastructure Services
|
2,668.0
|
|
|
4,061.1
|
|
|
2,413.8
|
|
|
3,818.5
|
|
|
1,878.3
|
|
|
2,481.9
|
|
Total
|
$
|
6,882.8
|
|
|
$
|
11,657.2
|
|
|
$
|
6,446.2
|
|
|
$
|
11,177.7
|
|
|
$
|
5,451.3
|
|
|
$
|
9,239.2
|
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
EBITA,
EBITDA and Adjusted EBITDA
For the Three Months Ended
March 31, 2018 and 2017
(In
thousands)
(Unaudited)
The following table presents the non-GAAP financial measures of
EBITA, EBITDA and Adjusted EBITDA for the three months ended
March 31, 2018 and 2017, which, when used in connection with
net income attributable to common stock, is intended to provide
useful information to investors and analysts as they evaluate
Quanta's performance. EBITA is defined as earnings before interest,
taxes, amortization and equity in (earnings) losses of
unconsolidated affiliates. EBITDA is defined as earnings before
interest, taxes, depreciation, amortization and equity in
(earnings) losses of unconsolidated affiliates, and Adjusted EBITDA
is defined as earnings before interest, taxes, depreciation,
amortization, equity in (earnings) losses of unconsolidated
affiliates and certain other items as described below. These
measures should not be considered as an alternative to net income
attributable to common stock or other measures of performance that
are derived in accordance with GAAP. Management believes that the
exclusion of these items from net income attributable to common
stock enables it to more effectively evaluate Quanta's operations
period over period and to identify operating trends that might not
be apparent when including the excluded items. As to certain of the
items below, (i) amortization of intangible assets is impacted
by Quanta's acquisition activity, and therefore can 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; and (iii) acquisition
and integration costs vary period to period depending on the level
of Quanta's ongoing acquisition activity. Because EBITA, EBITDA and
Adjusted EBITDA, as defined, exclude some, but not all, items that
affect net income attributable to common stock, such measures 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.
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
|
|
|
|
Net income
attributable to common stock (GAAP as reported)
|
$
|
37,614
|
|
|
$
|
48,267
|
|
Interest
expense
|
6,778
|
|
|
3,965
|
|
Interest
income
|
(146)
|
|
|
(287)
|
|
Provision for income
taxes
|
18,003
|
|
|
22,592
|
|
Amortization of
intangible assets
|
10,405
|
|
|
6,562
|
|
Equity in (earnings)
losses of unconsolidated affiliates
|
13,343
|
|
|
603
|
|
|
|
|
|
EBITA
|
$
|
85,997
|
|
|
$
|
81,702
|
|
Depreciation
expense
|
48,719
|
|
|
42,693
|
|
|
|
|
|
EBITDA
|
$
|
134,716
|
|
|
$
|
124,395
|
|
Non-cash stock-based
compensation
|
14,687
|
|
|
11,866
|
|
Acquisition and
integration costs
|
7,178
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
156,581
|
|
|
$
|
136,261
|
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Three Months Ended March 31,
2018 and 2017
(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, and therefore can 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; 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 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.
See the table on the following page.
Quanta Services,
Inc. and Subsidiaries
Reconciliation of
Non-GAAP Financial Measures
Adjusted Diluted
Earnings Per Share
Attributable to
Common Stock
For the Three
Months Ended March 31, 2018 and 2017
(In thousands, except
per share information)
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
Reconciliation of
adjusted net income attributable to common stock:
|
|
|
|
Net income
attributable to common stock (GAAP as reported)
|
$
|
37,614
|
|
|
$
|
48,267
|
|
Adjustments:
|
|
|
|
Acquisition and
integration costs
|
7,178
|
|
|
—
|
|
Income tax impact of
adjustments (a)
|
(961)
|
|
|
—
|
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
43,831
|
|
|
48,267
|
|
Non-cash stock-based
compensation
|
14,687
|
|
|
11,866
|
|
Amortization of
intangible assets
|
10,405
|
|
|
6,562
|
|
Income tax impact of
non-cash adjustments (a)
|
(6,558)
|
|
|
(6,744)
|
|
Adjusted net income
attributable to common stock
|
$
|
62,365
|
|
|
$
|
59,951
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Weighted average
shares outstanding for basic earnings per share attributable to
common stock
|
156,546
|
|
|
155,168
|
|
Weighted average
shares outstanding for diluted and adjusted diluted earnings per
share attributable to common stock
|
157,556
|
|
|
155,168
|
|
|
|
|
|
Diluted earnings
per share attributable to common stock and adjusted diluted
earnings per share attributable to common stock:
|
|
|
|
Diluted earnings per
share attributable to common stock (b)
|
$
|
0.24
|
|
|
$
|
0.31
|
|
Adjusted diluted
earnings per share attributable to common stock (b)
|
$
|
0.40
|
|
|
$
|
0.39
|
|
|
(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.
|
(b) Both diluted and
adjusted diluted earnings per share attributable to common stock
for the three months ended March 31, 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
certain litigation that 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, associated with a construction barge in order to record the
asset to its estimated fair market value.
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Free
(Negative Free) Cash Flow
and Other Non-GAAP
definitions
For the Three Months Ended March 31, 2018 and 2017
(In
thousands)
(Unaudited)
The non-GAAP measure of free (negative free) cash flow, when
used in connection with net cash provided by (used in) operating
activities, is intended to provide useful information to investors
and analysts as they evaluate Quanta's ability to generate the cash
required to maintain and potentially expand its business. Free
(negative free) cash flow is defined as net cash provided by (used
in) operating activities less net capital expenditures. Net capital
expenditures is defined as additions to property and equipment less
proceeds from sale of property and equipment and proceeds from
insurance settlements related to property and equipment. Management
believes that free (negative free) cash flow provides useful
information to Quanta's investors because free (negative free) cash
flow is viewed by management as an important indicator of how much
cash is provided or used by routine business operations, including
the impact of net capital expenditures. Management uses free
(negative free) cash flow for capital allocation purposes as it is
viewed as a measure of cash available to pay debt, acquire
businesses, repurchase common stock and transact other investing
and financing activities. The most comparable GAAP financial
measure, net cash provided by (used in) operating activities, and
information reconciling the GAAP and non-GAAP financial measures,
are included below.
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
Net cash provided
by (used in) operating activities
|
$
|
25,993
|
|
|
$
|
(3,705)
|
|
Less: Net capital
expenditures:
|
|
|
|
Additions to property
and equipment
|
(66,807)
|
|
|
(47,024)
|
|
Proceeds from sale of
property and equipment
|
5,769
|
|
|
4,801
|
|
Proceeds from
insurance settlements related to property and equipment
|
—
|
|
|
597
|
|
Net
capital expenditures
|
(61,038)
|
|
|
(41,626)
|
|
Free (Negative
Free) Cash Flow
|
$
|
(35,045)
|
|
|
$
|
(45,331)
|
|
Definition of Days Sales Outstanding:
Days Sales
Outstanding is calculated by using the sum of current accounts
receivable, net of allowance (which includes retainage and unbilled
balances), plus contract assets, less contract liabilities, and
divided by average revenues per day during the quarter.
Definition of Total Liquidity:
Total liquidity
includes Quanta's cash and cash equivalents and availability under
Quanta's senior secured revolving credit facility.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Full Year
2018
(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, and therefore can 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; 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 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.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2018
|
Reconciliation of
estimated adjusted net income attributable to common
stock:
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
|
321,000
|
|
|
$
|
383,000
|
|
Acquisition and
integration costs
|
8,000
|
|
|
8,000
|
|
Income tax impact of
adjustments (a)
|
(1,200)
|
|
|
(1,200)
|
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
327,800
|
|
|
389,800
|
|
Non-cash stock-based
compensation
|
50,900
|
|
|
50,900
|
|
Amortization of
intangible assets
|
41,900
|
|
|
41,900
|
|
Income tax impact of
non-cash adjustments (a)
|
(24,200)
|
|
|
(24,200)
|
|
Estimated adjusted
net income attributable to common stock
|
$
|
396,400
|
|
|
$
|
458,400
|
|
|
|
|
|
Estimated weighted
average shares:
|
|
|
|
Weighted average
shares outstanding for diluted and adjusted diluted earnings per
share attributable to common stock
|
155,200
|
|
|
155,200
|
|
|
|
|
|
Estimated diluted
earnings per share attributable to common stock and estimated
adjusted diluted earnings per share attributable to common
stock:
|
|
|
|
Estimated diluted
earnings per share attributable to common stock
|
$
|
2.07
|
|
|
$
|
2.47
|
|
Estimated adjusted
diluted earnings per share attributable to common stock
|
$
|
2.55
|
|
|
$
|
2.95
|
|
|
(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.
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated EBITA, EBITDA and Adjusted EBITDA
For the
Full Year 2018
(In thousands)
(Unaudited)
The following table presents the non-GAAP financial measures of
estimated EBITA, EBITDA and Adjusted EBITDA, which, when used in
connection with estimated net income attributable to common stock,
is intended to provide useful information to investors and analysts
as they evaluate Quanta's performance. EBITA is defined as earnings
before interest, taxes, amortization and equity in (earnings)
losses of unconsolidated affiliates. EBITDA is defined as earnings
before interest, taxes, depreciation, amortization and equity in
(earnings) losses of unconsolidated affiliates, and Adjusted EBITDA
is defined as earnings before interest, taxes, depreciation,
amortization, equity in (earnings) losses of unconsolidated
affiliates and certain other items as described below. These
measures should not be considered as an alternative to net income
attributable to common stock or other measures of performance that
are derived in accordance with GAAP. Management believes that the
exclusion of these items from net income attributable to common
stock enables it to more effectively evaluate Quanta's operations
period over period and to identify operating trends that might not
be apparent when including the excluded items. As to certain of the
items below, (i) amortization of intangible assets is impacted
by Quanta's acquisition activity, and therefore can 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; and (iii) acquisition
and integration costs vary period to period depending on the level
of Quanta's ongoing acquisition activity. Because EBITA, EBITDA and
Adjusted EBITDA, as defined, exclude some, but not all, items that
affect net income attributable to common stock, such measures 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.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2018
|
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
|
321,000
|
|
|
$
|
383,000
|
|
Interest
expense
|
31,000
|
|
|
31,000
|
|
Interest
income
|
(400)
|
|
|
(400)
|
|
Provision for income
taxes
|
132,000
|
|
|
161,600
|
|
Amortization of
intangible assets
|
41,900
|
|
|
41,900
|
|
Equity in (earnings)
losses of unconsolidated affiliates
|
30,000
|
|
|
40,000
|
|
|
|
|
|
EBITA
|
$
|
555,500
|
|
|
$
|
657,100
|
|
Depreciation
expense
|
201,000
|
|
|
201,000
|
|
|
|
|
|
EBITDA
|
$
|
756,500
|
|
|
$
|
858,100
|
|
Non-cash stock-based
compensation
|
50,900
|
|
|
50,900
|
|
Acquisition and
integration costs
|
8,000
|
|
|
8,000
|
|
Adjusted
EBITDA
|
$
|
815,400
|
|
|
$
|
917,000
|
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/quanta-services-reports-2018-first-quarter-results-300641848.html
SOURCE Quanta Services, Inc.