Third Quarter Consolidated
Revenues of $5.62 Billion*
Third Quarter GAAP Diluted EPS of
$1.83* and Adjusted Diluted
EPS of $2.24*
Net Income Attributable to Common Stock of
$272.8 Million* and Adjusted EBITDA
of $592.5 Million*
Cash Flow From Operations
of $406.6 Million* and Strong Free Cash Flow*
Remaining Performance Obligations of
$13.6 Billion* and Total Backlog of
$30.1 Billion*
Raising Full-Year 2023 Revenue and Adjusted
EBITDA Expectations
* = Record quarterly or record third quarter result
HOUSTON, Nov. 2, 2023
/PRNewswire/ -- Quanta Services, Inc. (NYSE: PWR) today
announced results for the three months ended September 30,
2023. Revenues in the third quarter of 2023 were $5.62 billion compared to revenues of
$4.46 billion in the third quarter of
2022, and net income attributable to common stock was $272.8 million, or $1.83 per diluted share, in the third quarter of
2023 compared to net income attributable to common stock of
$156.0 million, or $1.06 per diluted share, in the third quarter of
2022. Adjusted diluted earnings per share attributable to common
stock (a non-GAAP financial measure) was $2.24 for the third quarter of 2023 compared to
$1.77 for the third quarter of
2022.
"Quanta delivered strong results in the third quarter, led by
record revenues and operating income from the Electric Power
Infrastructure Solutions and Renewable Energy Infrastructure
Solutions segments, which contributed to multiple record financial
metrics, including revenues, adjusted EBITDA, adjusted earnings per
share and free cash flow. Additionally, total backlog at the end of
the third quarter reached $30.10 billion, an all time high, which we
believe reflects the value of our collaborative client
relationships and indicates momentum for 2024. Quanta continues to
profitably grow and perform at a high-level, which we believe
demonstrates the capability of our repeatable and sustainable model
and the successful execution of our strategic initiatives to drive
operational excellence, total cost solutions for our clients and
value for our stakeholders," said Duke
Austin, President and Chief Executive Officer of Quanta
Services.
"We are currently pacing ahead of the long-term financial
targets articulated at our Investor Day last year and are
increasingly comfortable with our ability to achieve them. This
belief is driven by the long-term programmatic spend of our
customers and our confidence that we can capitalize on the energy
transition across our portfolio of services, which we believe is in
the beginning stages of a multi-decade process. Quanta is investing
in the future to meet the needs of our customers and take advantage
of the visible opportunities ahead of us, which we believe
positions us well for double-digit earnings per share growth in
2024.
"Finally, this morning we announced the strategic acquisition of
Pennsylvania Transformer Technology, LLC, an established and
reliable domestic manufacturer of power transformers and components
for the investor-owned electric utility, renewable energy,
municipal power and industrials markets. North America's energy transition and other
megatrends that are driving current and anticipated future demand
for our electric power and renewable energy solutions are also
driving significant demand and growth opportunities for the
transformer market. We believe this acquisition provides Quanta and
our clients with an important supply chain solution that is
consistent with our strategy."
Certain items impacted Quanta's results for the three and nine
months ended September 30, 2023 and 2022 and are reflected as
adjustments in the calculation of Quanta's adjusted diluted
earnings per share attributable to common stock (a non-GAAP
financial measure). These items are described in the accompanying
tables reconciling adjusted diluted earnings per share attributable
to common stock to GAAP diluted earnings per share attributable to
common stock. Quanta completed four acquisitions during the first
nine months of 2023 and one acquisition during the full year 2022,
and the results of the acquired businesses are included in Quanta's
consolidated results from the respective acquisition dates. For
further information on the items that impacted comparability of
2023 and 2022, see the footnotes in the accompanying tables
presenting Supplemental Segment Data and reconciliations of EBITDA,
adjusted EBITDA, adjusted net income and adjusted diluted earnings
per share attributable to common stock (non-GAAP financial
measures) to their comparable GAAP financial measures.
ACQUIRED PENNSYLVANIA
TRANSFORMER TECHNOLOGY, LLC
As mentioned above, Quanta
completed the strategic acquisition of Pennsylvania Transformer
Technology, LLC (PTT). Founded in 1996 and headquartered in
Canonsburg, Pennsylvania, PTT is
an established domestic manufacturer of power transformers and
components for the investor-owned electric utility, renewable
energy, municipal power and industrial markets. The company has two
manufacturing facilities that produce substation units, step-up
units, autotransformers, grounding transformers, mobile
transformers, unit auxiliaries, unit substations and three-phase
voltage regulators. The operations for PTT are expected to be
reflected in Quanta's Electric Power Infrastructure Solutions and
Renewable Energy Infrastructure Solutions segments.
Strategic Rationale - PTT expands the suite
of solutions that Quanta can deliver to its customers. The North
American transformer market is expected to be poised for
significant growth as grid modernization, electrification and
energy transition initiatives accelerate over the coming years.
Transformers are critical power infrastructure components and have
experienced demand and supply imbalances, as well as supply chain
constraints, for several years. Quanta believes there is
opportunity to enhance PTT's operations and expand its production
capacity to provide a comprehensive solution for Quanta and
its customers.
Financially Attractive; Growth Synergy Opportunities
- PTT is expected to significantly grow its revenues over
the next several years, without considering potential growth
synergies with Quanta. Furthermore, over the course of its
multi-decade operating history, PTT has developed proven
manufacturing methods, expertise and know-how. As a result, Quanta
believes there are opportunities to enhance and expand PTT's
capacity and product portfolio, which could accelerate PTT's growth
and create synergies with Quanta's electric power and renewable
energy infrastructure solutions. PTT generates solid free cash flow
and is expected to have a margin and earnings profile that is
accretive to Quanta.
RECENT HIGHLIGHTS
- SunZia Wind Contract Executed - During the third quarter
of 2023, Quanta entered into the first portion of the SunZia Wind
contract, which is included in backlog for the Renewable
Infrastructure Solutions segment. Subsequent to the end of the
third quarter, Quanta executed the remaining portion of the SunZia
Wind contract, which will be included in backlog for the Renewable
Infrastructure Solutions segment in the fourth quarter of 2023.
Quanta is performing various early-stage construction activities
for the SunZia project, including right-of-way and equipment yard
preparation and other activities.
- Published 2022 Sustainability Report - In September 2023, Quanta published its 2022
Sustainability Report, which provides additional information about
our sustainability strategy and how we measured our continued
progress in 2022 across four categories: Impact, Environmental,
Social and Governance. Titled "Building Momentum," the report
discusses Quanta's leading role in enabling the energy transition
and our vision to leave a measurable, sustainable legacy for our
planet by focusing on our customers, employees and communities.
Please visit https://sustainability.quantaservices.com to access
the microsite and report.
RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023
Revenues in the nine
months ended September 30, 2023 were $15.10 billion compared to revenues of
$12.66 billion in the nine months
ended September 30, 2022, and net income attributable to
common stock was $533.8 million, or
$3.59 per diluted share, in the nine
months ended September 30, 2023 compared to net income
attributable to common stock of $328.6
million, or $2.22 per diluted
share, in the nine months ended September 30, 2022. Adjusted
diluted earnings per share attributable to common stock was
$5.12 for the nine months ended
September 30, 2023 compared to $4.66 for the nine months ended
September 30, 2022.
FULL-YEAR 2023 OUTLOOK
The long-term outlook for
Quanta's business is positive. However, weather, regulatory,
permitting, supply chain challenges and other factors affecting
project timing and execution have impacted, and may impact in the
future, Quanta's financial results. Additionally, we continue to
consider future uncertainty associated with overall challenges to
the domestic and global economy, including inflation, increased
interest rates and potential recessionary economic conditions.
Quanta's financial outlook for revenues, margins and earnings
reflects management's effort to align these uncertainties with the
backlog (a non-GAAP financial measure) the Company is executing on
and the opportunities expected to materialize during the remainder
of 2023.
Prior to the Company's conference call, management will post a
summary of Quanta's updated 2023 guidance expectations with
additional commentary in the "News and Events" and "Financial Info"
areas of the Investor Relations section of Quanta's website at
http://investors.quantaservices.com.
The following forward-looking statements are based on current
expectations, and actual results may differ materially, as
described below in Cautionary Statement About Forward-Looking
Statements and Information. For the full year ending
December 31, 2023, Quanta now expects
revenues to range between $20.1
billion and $20.4 billion and
net income attributable to common stock to range between
$729 million and $759 million. Quanta also now expects diluted
earnings per share attributable to common stock to range between
$4.90 and $5.10 and adjusted diluted earnings per share
attributable to common stock to range between $7.00 and $7.20.
Quanta now expects EBITDA to range between $1.74 billion and $1.79
billion and adjusted EBITDA to range between $1.91 billion and $1.95
billion. Additionally, for the full year ending December 31, 2023, Quanta continues to expect net
cash attributable to operating activities to range between
$1.20 billion and $1.40 billion and free cash flow (a non-GAAP
financial measure) to range between $800
million and $1.00 billion.
NON-GAAP FINANCIAL MEASURES
The financial measures not
prepared in conformity with generally accepted accounting
principles in the United States
(GAAP) that are utilized 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, financial measures prepared in conformity with
GAAP.
Please see the accompanying tables for reconciliations of the
following non-GAAP financial measures for Quanta's current and
historical results and full-year 2023 expectations (as applicable):
adjusted diluted earnings per share attributable to common stock to
diluted earnings per share attributable to common stock; adjusted
net income attributable to common stock, EBITDA and adjusted EBITDA
to net income attributable to common stock; free cash flow to net
cash provided by operating activities; and backlog to remaining
performance obligations.
CONFERENCE CALL INFORMATION
Quanta Services has
scheduled a conference call for 9:00 a.m.
Eastern Time on November 2, 2023, which will also be
broadcast live over the Internet. Quanta will utilize a slide
presentation to accompany its prepared remarks, which will be
viewable through the webcast and will also be available in the
"News and Events" and "Financial Info" areas of the Investor
Relations section of Quanta's website prior to the start of the
call. 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 Third Quarter Earnings
Conference Call or visit the Investor Relations 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 November 8, 2023 by dialing 1-877-660-6853 and
referencing the conference ID 13736216. For more information,
please contact Kip Rupp, Vice
President - Investor Relations at Quanta Services, at 713-341-7260
or investors@quantaservices.com.
FOLLOW QUANTA IR ON SOCIAL MEDIA
Investors and others
should note that while Quanta announces material financial
information and makes other public disclosures of information
regarding Quanta through U.S. Securities and Exchange Commission
(SEC) filings, press releases and public conference calls, it also
utilizes social media to communicate this information. It is
possible that the information Quanta posts on social media could be
deemed material. Accordingly, Quanta encourages investors, the
media and others interested in our company to follow Quanta, and
review the information it posts, on the social media channels
listed in the Investor Relations section of the Quanta Services
website.
ABOUT QUANTA SERVICES
Quanta Services is an industry
leader in providing specialized infrastructure solutions to the
utility, renewable energy, communications, pipeline, and energy
industries. Quanta's comprehensive services include designing,
installing, repairing and maintaining energy and communications
infrastructure. With operations throughout the United States, Canada, 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.
Cautionary Statement About Forward-Looking Statements and
Information
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, margins, cash flows, liquidity,
weighted average shares outstanding, capital expenditures, interest
rates and tax rates, as well as other projections of operating
results and GAAP and non-GAAP financial results, including EBITDA,
adjusted EBITDA and backlog; expectations regarding Quanta's
business or financial outlook; expectations regarding
opportunities, technological developments, competitive positioning,
future economic and regulatory conditions and other trends in
particular markets or industries, including with respect to
Quanta's increased operations in the renewable energy market and
the transition to a reduced-carbon economy; expectations regarding
Quanta's plans and strategies; the business plans or financial
condition of Quanta's customers, including with respect to the
transition to a reduced-carbon economy; the potential benefits
from, and future financial and operational performance of, acquired
businesses and investments, including the acquisition of PTT;
beliefs and assumptions about the collectability of receivables;
the expected value of contracts or intended contracts with
customers, as well as the expected timing, scope, services, term or
results of any awarded or expected projects; possible recovery of
pending or contemplated insurance claims, change orders and claims
asserted against customers or third parties; the development of and
opportunities with respect to future projects, including renewable
energy projects and other projects designed to support transition
to a reduced-carbon economy, electrical grid modernization, upgrade
and hardening projects, and larger transmission and pipeline
projects; expectations regarding the future availability and price
of materials and equipment necessary for the performance of
Quanta's business and Quanta's ability to implement strategies
designed to manage the availability or price of such materials and
equipment; the expected impact of global and domestic economic
conditions on Quanta's business, financial condition, results of
operations, cash flows, liquidity and demand for our services,
including inflation, interest rates and recessionary economic
conditions and commodity prices and production volumes; the
expected impact of changes or potential changes to climate and the
physical and transition risks associated with climate change and
the transition to a reduced-carbon economy; future capital
allocation initiatives, including the amount and timing of, and
strategies with respect to, any future acquisitions, investments,
cash dividends, repurchases of equity or debt securities or
repayments of other outstanding debt; the impact of existing or
potential legislation or regulation; potential opportunities that
may be indicated by bidding activity or discussions with customers;
the future demand for, availability of and costs related to labor
resources in the industries Quanta serves; the expected recognition
and realization of remaining performance obligations and backlog;
expectations regarding the outcome of pending or threatened legal
proceedings, as well as the collection of amounts awarded in legal
proceedings; and expectations regarding Quanta's ability to reduce
its debt and maintain its current credit ratings; 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. These
forward-looking statements are not guarantees of future
performance; rather they involve or rely on a number of risks,
uncertainties, and assumptions that are difficult to predict or are
beyond our control, and reflect management's beliefs and
assumptions based on information available at the time the
statements are made. We caution you that actual outcomes and
results may differ materially from what is expressed, implied or
forecasted by our forward-looking statements and that any or all of
our forward-looking statements may turn out to be inaccurate or
incorrect. Forward-looking statements can be affected by inaccurate
assumptions and by known or unknown risks and uncertainties
including, among others, market, industry, economic, financial or
political conditions that are outside of the control of Quanta,
including economic, energy, infrastructure and environmental
policies and plans that are adopted or proposed by the U.S. federal
and state governments or other governments in territories or
countries in which Quanta operates, inflation, interest rates,
recessionary economic conditions, deterioration of global or
specific trade relationships and geopolitical conflicts and
political unrest; quarterly variations in operating and financial
results, liquidity, financial condition, cash flows, capital
requirements and reinvestment opportunities; trends and growth
opportunities in relevant markets, including Quanta's ability to
obtain future project awards; delays, deferrals, reductions in
scope or cancellations of anticipated, pending or existing projects
as a result of, among other things, supply chain or production
disruptions and other logistical challenges, weather, regulatory or
permitting issues, environmental processes, project performance
issues, claimed force majeure events, protests or other political
activity, legal challenges, inflationary pressure, reductions or
eliminations in governmental funding or customer capital
constraints; the effect of commodity prices and production volumes,
which have been and may continue to be affected by inflationary
pressure, on Quanta's operations and growth opportunities and on
customers' capital programs and demand for Quanta's services; the
successful negotiation, execution, performance and completion of
anticipated, pending and existing contracts; events arising from
operational hazards, including, among others, wildfires and
explosions, that can arise due to the nature of Quanta's services
and the conditions in which Quanta operates and can be due to the
failure of infrastructure on which Quanta has performed services
and result in significant liabilities that may be exacerbated in
certain geographies and locations; unexpected costs, liabilities,
fines or penalties that may arise from legal proceedings, indemnity
obligations, reimbursement obligations associated with letters of
credit or bonds, multiemployer pension plans or other claims or
actions asserted against Quanta, including amounts not covered by,
or in excess of the coverage under, third-party insurance;
potential unavailability or cancellation of third-party insurance
coverage, as well as the exclusion of coverage for certain losses,
potential increases in premiums for coverage deemed beneficial to
Quanta, or the unavailability of coverage deemed beneficial to
Quanta at reasonable and competitive rates (e.g., coverage for
wildfire events); damage to Quanta's brand or reputation, as well
as potential costs, liabilities, fines and penalties, arising as a
result of cybersecurity breaches, environmental and occupational
health and safety matters, corporate scandal, failure to
successfully perform or negative publicity regarding a high-profile
project, involvement in a catastrophic event (e.g., fire,
explosion) or other negative incidents; disruptions in, or failure
to adequately protect, Quanta's information technology systems;
Quanta's dependence on suppliers, subcontractors, equipment
manufacturers and other third-parties, and the impact of, among
other things, inflationary pressure, regulatory, supply chain and
logistical challenges on these third parties; estimates and
assumptions relating to financial results, remaining performance
obligations and backlog; Quanta's inability to attract, the
potential shortage of and increased costs with respect to skilled
employees, as well as Quanta's inability to retain or attract key
personnel and qualified employees; Quanta's dependence on fixed
price contracts and the potential to incur losses with respect to
these contracts; cancellation provisions within contracts and the
risk that contracts expire and are not renewed or are replaced on
less favorable terms; 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; adverse weather
conditions, natural disasters and other emergencies, including
wildfires, pandemics, hurricanes, tropical storms, floods, debris
flows, earthquakes and other geological- and weather-related
hazards; the impact of climate change; Quanta's ability to generate
internal growth; competition in Quanta's business, including the
ability to effectively compete for new projects and market share,
as well as technological advancements and market developments that
could reduce demand for Quanta's services; the failure of existing
or potential legislative actions and initiatives to result in
increased demand for Quanta's services or budgetary or other
constraints that may reduce or eliminate tax incentives or
government funding for projects, including renewable energy
projects, which may result in project delays or cancellations;
unavailability of, or increased prices for, materials, equipment
and consumables (such as fuel) used in Quanta's or its customers'
businesses, including as a result of inflation, supply chain or
production disruptions, governmental regulations on sourcing, the
imposition of tariffs, duties, taxes or other assessments, and
other changes in U.S. trade relationships with foreign countries;
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 or harm to its
reputation as a result of acts or omissions by partners; the
inability or refusal of customers or third-party contractors to pay
for services, which could result in the inability to collect our
outstanding receivables, failure to recover amounts billed to, or
avoidance of certain payments received from, customers in
bankruptcy or failure to recover on change orders or contract
claims; risks associated with operating in international markets
and U.S. territories, including instability of governments,
significant currency exchange fluctuations, and compliance with
unfamiliar legal and labor systems and cultural practices, the U.S.
Foreign Corrupt Practices Act and other applicable anti-bribery and
anti-corruption laws, and complex U.S. and foreign tax regulations
and international treaties; inability to successfully identify,
complete, integrate and realize synergies from acquisitions,
including the inability to retain key personnel from acquired
businesses; the potential adverse impact of acquisitions and
investments, including the potential increase in risks already
existing in Quanta's operations, poor performance or decline in
value of acquired businesses or investments and unexpected costs or
liabilities that may arise from acquisitions or investments; the
adverse impact of impairments of goodwill, other intangible assets,
receivables, long-lived assets or investments; difficulties arising
from Quanta's decentralized management structure; the
impact of the unionized portion of Quanta's workforce on its
operations; inability to access sufficient funding to finance
desired growth and operations, including the ability to access
capital markets on favorable terms, as well as fluctuations in the
price and trading volume of Quanta's common stock, debt covenant
compliance, interest rate fluctuations, a downgrade in our credit
ratings and other factors affecting financing and investing
activities; the ability to obtain bonds, letters of credit and
other project security; risks related to the implementation of new
information technology systems; new or changed tax laws, treaties
or regulations or the inability to realize deferred tax assets; and
other risks and uncertainties detailed in Quanta's Annual Report on
Form 10-K for the year ended December 31,
2022, Quanta's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2023,
June 30, 2023 and September 30, 2023 (when filed) and any other
documents that Quanta files with the 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
Quanta'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.
Quanta Services,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
For the Three and
Nine Months Ended
|
September 30,
2023 and 2022
|
(In thousands, except
per share information)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
$
5,620,822
|
|
$
4,459,757
|
|
$
15,098,258
|
|
$
12,657,285
|
Cost of
services
|
4,773,498
|
|
3,770,927
|
|
12,953,640
|
|
10,795,694
|
Gross
profit
|
847,324
|
|
688,830
|
|
2,144,618
|
|
1,861,591
|
Equity in earnings of
integral unconsolidated affiliates
|
11,707
|
|
10,633
|
|
30,697
|
|
44,350
|
Selling, general and
administrative expenses
|
(386,538)
|
|
(347,449)
|
|
(1,155,261)
|
|
(995,581)
|
Amortization of
intangible assets
|
(71,361)
|
|
(67,147)
|
|
(213,789)
|
|
(290,843)
|
Asset impairment
charges
|
—
|
|
—
|
|
—
|
|
(2,800)
|
Change in fair value of
contingent consideration liabilities
|
(803)
|
|
1,924
|
|
(803)
|
|
(4,054)
|
Operating
income
|
400,329
|
|
286,791
|
|
805,462
|
|
612,663
|
Interest and other
financing expenses
|
(47,531)
|
|
(33,566)
|
|
(137,413)
|
|
(86,933)
|
Interest
income
|
1,993
|
|
436
|
|
4,957
|
|
727
|
Other (expense) income,
net
|
(3,744)
|
|
(24,455)
|
|
7,541
|
|
(68,255)
|
Income before income
taxes
|
351,047
|
|
229,206
|
|
680,547
|
|
458,202
|
Provision for income
taxes
|
77,522
|
|
72,890
|
|
143,468
|
|
120,698
|
Net income
|
273,525
|
|
156,316
|
|
537,079
|
|
337,504
|
Less: Net income
attributable to non-controlling interests
|
689
|
|
360
|
|
3,298
|
|
8,887
|
Net income
attributable to common stock
|
$ 272,836
|
|
$ 155,956
|
|
$ 533,781
|
|
$ 328,617
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to common stock:
|
|
|
|
|
|
|
|
Basic
|
$
1.88
|
|
$
1.09
|
|
$
3.68
|
|
$
2.29
|
Diluted
|
$
1.83
|
|
$
1.06
|
|
$
3.59
|
|
$
2.22
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per share:
|
|
|
|
|
|
|
|
Weighted average basic
shares outstanding
|
145,455
|
|
143,353
|
|
145,118
|
|
143,581
|
Weighted average
diluted shares outstanding
|
148,792
|
|
147,678
|
|
148,749
|
|
148,096
|
Quanta Services,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
305,355
|
|
$
428,505
|
Accounts receivable,
net
|
4,332,499
|
|
3,674,525
|
Contract
assets
|
1,584,623
|
|
1,080,206
|
Inventories
|
163,879
|
|
103,265
|
Prepaid expenses and
other current assets
|
349,011
|
|
249,569
|
Total current
assets
|
6,735,367
|
|
5,536,070
|
PROPERTY AND EQUIPMENT,
net
|
2,290,327
|
|
2,030,464
|
OPERATING LEASE
RIGHT-OF-USE ASSETS
|
249,592
|
|
229,691
|
OTHER ASSETS,
net
|
650,586
|
|
622,736
|
OTHER INTANGIBLE
ASSETS, net
|
1,362,078
|
|
1,458,631
|
GOODWILL
|
3,900,499
|
|
3,586,745
|
Total
assets
|
$
15,188,449
|
|
$
13,464,337
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current maturities of
long-term debt
|
$
44,570
|
|
$
37,495
|
Current portion of
operating lease liabilities
|
77,648
|
|
74,052
|
Accounts payable and
accrued expenses
|
2,969,093
|
|
2,153,129
|
Contract
liabilities
|
1,100,928
|
|
1,141,518
|
Total current
liabilities
|
4,192,239
|
|
3,406,194
|
LONG-TERM DEBT, net of
current maturities
|
3,937,348
|
|
3,692,432
|
OPERATING LEASE
LIABILITIES, net of current portion
|
188,137
|
|
171,512
|
DEFERRED INCOME
TAXES
|
264,378
|
|
227,861
|
INSURANCE AND OTHER
NON-CURRENT LIABILITIES
|
610,496
|
|
567,519
|
Total
liabilities
|
9,192,598
|
|
8,065,518
|
TOTAL STOCKHOLDERS'
EQUITY
|
5,987,311
|
|
5,383,464
|
NON-CONTROLLING
INTERESTS
|
8,540
|
|
15,355
|
TOTAL EQUITY
|
5,995,851
|
|
5,398,819
|
Total liabilities and
equity
|
$
15,188,449
|
|
$
13,464,337
|
Quanta Services, Inc. and
Subsidiaries
Supplemental Segment Data
For the
Three and Nine Months Ended
September 30, 2023 and 2022
(In
thousands, except percentages)
(Unaudited)
Segment Results
Quanta reports its results under three reportable segments: (1)
Electric Power Infrastructure Solutions, (2) Renewable Energy
Infrastructure Solutions and (3) Underground Utility and
Infrastructure Solutions. The following table sets forth segment
revenues, segment operating income (loss) and operating margins for
the periods indicated. Operating margins are calculated by dividing
operating income by revenues.
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure
Solutions
|
$ 2,489,547
|
|
44.3 %
|
|
$ 2,282,332
|
|
51.2 %
|
|
$ 7,240,838
|
|
48.0 %
|
|
$ 6,620,459
|
|
52.3 %
|
Renewable Energy
Infrastructure
Solutions
|
1,746,636
|
|
31.1
|
|
978,779
|
|
21.9
|
|
4,144,304
|
|
27.4
|
|
2,778,647
|
|
22.0
|
Underground
Utility and
Infrastructure Solutions
|
1,384,639
|
|
24.6
|
|
1,198,646
|
|
26.9
|
|
3,713,116
|
|
24.6
|
|
3,258,179
|
|
25.7
|
Consolidated
revenues
|
$ 5,620,822
|
|
100.0 %
|
|
$ 4,459,757
|
|
100.0 %
|
|
$
15,098,258
|
|
100.0 %
|
|
$
12,657,285
|
|
100.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure
Solutions (a)
|
296,176
|
|
11.9 %
|
|
255,457
|
|
11.2 %
|
|
755,342
|
|
10.4 %
|
|
691,026
|
|
10.4 %
|
Renewable Energy
Infrastructure
Solutions
|
151,389
|
|
8.7 %
|
|
88,885
|
|
9.1 %
|
|
297,532
|
|
7.2 %
|
|
240,514
|
|
8.7 %
|
Underground
Utility and
Infrastructure Solutions
|
123,764
|
|
8.9 %
|
|
101,351
|
|
8.5 %
|
|
292,544
|
|
7.9 %
|
|
239,469
|
|
7.3 %
|
Corporate and
Non-Allocated
Costs
(b)
|
(171,000)
|
|
(3.0) %
|
|
(158,902)
|
|
(3.6) %
|
|
(539,956)
|
|
(3.6) %
|
|
(558,346)
|
|
(4.4) %
|
Consolidated
operating income
|
$
400,329
|
|
7.1 %
|
|
$
286,791
|
|
6.4 %
|
|
$
805,462
|
|
5.3 %
|
|
$
612,663
|
|
4.8 %
|
|
(a) Included in
Electric Power Infrastructure Solutions operating income was equity
in earnings of integral unconsolidated affiliates of $11.7 million
and $10.6 million for the three months ended September 30,
2023 and 2022, and $30.7 million and $44.4 million for the nine
months ended September 30, 2023 and 2022.
|
(b) Included in
corporate and non-allocated costs was amortization expense of $71.4
million and $67.1 million for the three months ended
September 30, 2023 and 2022, and $213.8 million and $290.8
million for the nine months ended September 30, 2023 and 2022;
and acquisition and integration costs of $4.2 million and $13.4
million for the three months ended September 30, 2023 and 2022
and $26.3 million and $42.7 million for the nine months ended
September 30, 2023 and 2022.
|
Quanta Services, Inc. and
Subsidiaries
Supplemental Data
(In
thousands)
(Unaudited)
Remaining Performance Obligations and Backlog (a non-GAAP
financial measure)
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 under fixed
price contracts not yet completed or for which work has not yet
begun, which includes 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 be realized, and
revenues from change orders and claims to the extent management
believes they will be earned and are probable of collection.
Quanta has also historically disclosed its backlog, a measure
commonly used in its industry but not recognized under GAAP. Quanta
believes this measure enables management to more effectively
forecast its future capital needs and results and better identify
future operating trends that may not otherwise be apparent. Quanta
believes this measure is also useful for investors in forecasting
Quanta's future results and comparing Quanta to its competitors.
Quanta's remaining performance obligations, as described above, are
a component of its 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 total backlog by reportable segment,
along with estimates of amounts expected to be realized within 12
months:
|
|
September 30,
2023
|
|
December 31,
2022
|
|
September 30,
2022
|
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
Electric Power
Infrastructure Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
$
2,693,352
|
|
$
4,383,055
|
|
$
2,124,820
|
|
$
3,033,472
|
|
$
2,207,737
|
|
$
2,854,847
|
Estimated orders under
MSAs and
short-term, non-fixed price contracts
|
|
5,302,341
|
|
11,036,307
|
|
5,415,427
|
|
10,049,435
|
|
4,987,105
|
|
10,126,733
|
Backlog
|
|
$
7,995,693
|
|
$
15,419,362
|
|
$
7,540,247
|
|
$
13,082,907
|
|
$
7,194,842
|
|
$
12,981,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewable Energy
Infrastructure Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
$
5,712,436
|
|
$
7,713,988
|
|
$
3,183,568
|
|
$
4,638,115
|
|
$
2,305,314
|
|
$
2,917,067
|
Estimated orders under
MSAs and
short-term, non-fixed price contracts
|
|
112,534
|
|
201,851
|
|
57,555
|
|
84,094
|
|
70,150
|
|
116,922
|
Backlog
|
|
$
5,824,970
|
|
$
7,915,839
|
|
$
3,241,123
|
|
$
4,722,209
|
|
$
2,375,464
|
|
$
3,033,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underground Utility and
Infrastructure Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
$
1,143,729
|
|
$
1,464,623
|
|
$
1,038,543
|
|
$
1,129,837
|
|
$
899,476
|
|
$
1,062,252
|
Estimated orders under
MSAs and
short-term, non-fixed price contracts
|
|
2,054,024
|
|
5,295,722
|
|
1,973,982
|
|
5,158,814
|
|
1,958,278
|
|
3,796,809
|
Backlog
|
|
$
3,197,753
|
|
$
6,760,345
|
|
$
3,012,525
|
|
$
6,288,651
|
|
$
2,857,754
|
|
$
4,859,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
$
9,549,517
|
|
$
13,561,666
|
|
$
6,346,931
|
|
$
8,801,424
|
|
$
5,412,527
|
|
$
6,834,166
|
Estimated orders under
MSAs and
short-term, non-fixed price contracts
|
|
7,468,899
|
|
16,533,880
|
|
7,446,964
|
|
15,292,343
|
|
7,015,533
|
|
14,040,464
|
Backlog
|
|
$
17,018,416
|
|
$
30,095,546
|
|
$
13,793,895
|
|
$
24,093,767
|
|
$
12,428,060
|
|
$
20,874,630
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Adjusted Net Income and
Adjusted Diluted Earnings
Per Share
Attributable to Common Stock
For the Three and Nine
Months Ended
September 30,
2023 and 2022
(In thousands, except per share information)
(Unaudited)
The following table presents the reconciliations of the non-GAAP
financial measures of adjusted net income attributable to common
stock to net income attributable to common stock and adjusted
diluted earnings per share attributable to common stock to diluted
earnings per share attributable to common stock for the three and
nine months ended September 30, 2023
and 2022. These reconciliations are 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 and diluted
earnings per share attributable to common stock enables it and
Quanta's investors to more effectively evaluate Quanta's operations
period over period and better identify operating trends that may
not otherwise be apparent due to, among other reasons, the variable
nature of these items period over period. In addition, management
believes these measures may be useful for investors in comparing
our operating results with other companies that may be viewed as
our peers. However, these non-GAAP measures should not be
considered as alternatives to net income attributable to common
stock and diluted earnings per share attributable to common stock
or other measures of performance that are derived in accordance
with GAAP.
As to certain of the items in the table: (i) non-cash
stock-based compensation expense varies from period to period due
to acquisition activity, changes in the estimated fair value of
performance-based awards, forfeiture rates, accelerated vesting and
amounts granted; (ii) amortization of intangible assets and
amortization included in equity in earnings are impacted by
Quanta's acquisition activities and investments in integral
unconsolidated affiliates, and therefore can vary from period to
period; (iii) acquisition and integration costs vary from period to
period depending on the level of Quanta's acquisition activity;
(iv) change in fair value of contingent consideration liabilities
varies from period to period depending on, among other things, the
performance in post-acquisition periods of certain acquired
businesses and the effect of present value accretion on fair value
calculations; (v) equity in (earnings) losses of non-integral
unconsolidated affiliates varies from period to period depending on
the activity and financial performance of such affiliates, the
operations of which are not operationally integral to Quanta; (vi)
mark-to-market adjustments on Quanta's investment in a publicly
traded company vary from period to period based on fluctuations in
the market price of such company's common stock; (vii) gains and
losses on the sales of investments vary from period to period
depending on activity; and (viii) asset impairment charges vary
from period to period depending on economic and other factors.
Beginning with the period ended December
31, 2022, adjusted net income attributable to common stock
and adjusted diluted earnings per share attributable to common
stock exclude the impact of amortization included in equity in
earnings of integral unconsolidated affiliates. As described
further above, management believes that excluding the impact of
this item allows Quanta's investors and management to more
effectively evaluate Quanta's operations between periods and
identify operating trends. As a result of these changes, the
calculation of adjusted net income attributable to common stock and
adjusted diluted earnings per share attributable to common stock
for the three and nine months ended September 30, 2022 have been recast to conform to
the current presentation.
Because adjusted net income attributable to common stock and
adjusted diluted earnings per share attributable to common stock,
as defined, exclude some, but not all, items that affect net income
attributable to common stock and diluted earnings per share
attributable to common stock, they may not be comparable to
similarly titled measures of other companies. The most comparable
GAAP financial measures, net income attributable to common stock
and diluted earnings per share attributable to common stock, and
information reconciling the GAAP and non-GAAP financial measures,
are included in the table to follow.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Reconciliation of
adjusted net income attributable to common stock:
|
|
|
|
|
|
|
|
Net income attributable
to common stock (GAAP as reported)
|
$
272,836
|
|
$
155,956
|
|
$
533,781
|
|
$
328,617
|
Acquisition and
integration costs (a)
|
4,166
|
|
13,401
|
|
26,338
|
|
42,723
|
Asset impairment
charges
|
—
|
|
—
|
|
—
|
|
2,800
|
Change in fair value
of contingent consideration liabilities
|
803
|
|
(1,924)
|
|
803
|
|
4,054
|
Equity in losses
(earnings) of non-integral unconsolidated affiliates
|
966
|
|
(2,944)
|
|
(1,119)
|
|
(17,893)
|
Loss from
mark-to-market adjustment on investment (b)
|
—
|
|
26,462
|
|
—
|
|
76,509
|
Gains on sales of
investments
|
—
|
|
—
|
|
(1,496)
|
|
(6,696)
|
Income tax impact of
adjustments (c)
|
(24,206)
|
|
788
|
|
(28,426)
|
|
(13,109)
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
254,565
|
|
191,739
|
|
529,881
|
|
417,005
|
Non-cash stock-based
compensation
|
32,600
|
|
26,648
|
|
94,658
|
|
77,730
|
Amortization of
intangible assets
|
71,361
|
|
67,147
|
|
213,789
|
|
290,843
|
Amortization included
in equity in earnings of integral unconsolidated
affiliates
|
1,465
|
|
473
|
|
4,726
|
|
1,420
|
Income tax impact of
non-cash adjustments (c)
|
(27,439)
|
|
(24,541)
|
|
(81,509)
|
|
(96,290)
|
Adjusted net income
attributable to common stock (d)
|
$
332,552
|
|
$
261,466
|
|
$
761,545
|
|
$
690,708
|
|
|
|
|
|
|
|
|
Reconciliation of
adjusted diluted earnings per share:
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to common stock (GAAP as reported)
|
$
1.83
|
|
$
1.06
|
|
$
3.59
|
|
$
2.22
|
Acquisition and
integration costs (a)
|
0.03
|
|
0.09
|
|
0.18
|
|
0.29
|
Asset impairment
charges
|
—
|
|
—
|
|
—
|
|
0.02
|
Change in fair value
of contingent consideration liabilities
|
0.01
|
|
(0.01)
|
|
0.01
|
|
0.03
|
Equity in losses
(earnings) of non-integral unconsolidated affiliates
|
0.01
|
|
(0.02)
|
|
(0.01)
|
|
(0.12)
|
Loss from
mark-to-market adjustment on investment (b)
|
—
|
|
0.18
|
|
—
|
|
0.52
|
Gains on sales of
investments
|
—
|
|
—
|
|
(0.01)
|
|
(0.05)
|
Income tax impact of
adjustments (c)
|
(0.17)
|
|
—
|
|
(0.20)
|
|
(0.09)
|
Adjusted diluted
earnings per share before certain non-cash adjustments
|
1.71
|
|
1.30
|
|
3.56
|
|
2.82
|
Non-cash stock-based
compensation
|
0.22
|
|
0.18
|
|
0.64
|
|
0.52
|
Amortization of
intangible assets
|
0.48
|
|
0.45
|
|
1.44
|
|
1.96
|
Amortization included
in equity in earnings of integral unconsolidated
affiliates
|
0.01
|
|
—
|
|
0.03
|
|
0.01
|
Income tax impact of
non-cash adjustments (c)
|
(0.18)
|
|
(0.16)
|
|
(0.55)
|
|
(0.65)
|
Adjusted diluted
earnings per share (d)
|
$
2.24
|
|
$
1.77
|
|
$
5.12
|
|
$
4.66
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding for diluted and adjusted diluted earnings per
share
|
148,792
|
|
147,678
|
|
148,749
|
|
148,096
|
|
(a) The amounts for the
three and nine months ended September 30, 2022 include, among
other things, expenses associated with change of control payments
as a result of Quanta's acquisition of Blattner Holding Company and
its operating subsidiaries (Blattner).
|
(b) The amounts for the
three and nine months ended September 30, 2022 are losses
related to the fair value remeasurement of Quanta's common stock
investment in Starry Group Holdings, Inc. (Starry), a broadband
technology provider.
|
(c) The income tax
impact of adjustments that are subject to tax is determined using
the incremental statutory tax rates of the jurisdictions to which
each adjustment relates for the respective periods. The amount for
the three and nine months ended September 30, 2023 includes
the release of a $22.7 million valuation allowance recognized
during the year ended December 31, 2022 on the loss from
mark-to-market adjustment on Starry, as described in (b)
above.
|
(d) As described above,
adjusted net income attributable to common stock and adjusted
diluted earnings per share attributable to common stock for the
three and nine months ended September 30, 2022 have been
recast to conform to the current period presentation.
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
EBITDA and Adjusted EBITDA
For the
Three and Nine Months Ended
September 30, 2023 and 2022
(In
thousands)
(Unaudited)
The following table presents reconciliations of the non-GAAP
financial measures of EBITDA and adjusted EBITDA to net income
attributable to common stock for the three and nine months ended
September 30, 2023 and 2022. These
reconciliations are intended to provide useful information to
investors and analysts as they evaluate Quanta's performance.
EBITDA is defined as earnings before interest and other financing
expenses, taxes, depreciation and amortization, and adjusted EBITDA
is defined as EBITDA adjusted for certain other items as described
below. These measures should not be considered as an alternative to
net income attributable to common stock or other financial 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 and Quanta's investors to
more effectively evaluate Quanta's operations period over period
and to identify operating trends that might not be apparent due to,
among other reasons, the variable nature of these items period over
period. In addition, management believes these measures may be
useful for investors in comparing our operating results with other
companies that may be viewed as our peers.
As to certain of the items below: (i) non-cash stock-based
compensation expense varies from period to period due to
acquisition activity, changes in the estimated fair value of
performance-based awards, forfeiture rates, accelerated vesting and
amounts granted; (ii) acquisition and integration costs vary from
period to period depending on the level of Quanta's acquisition
activity; (iii) equity in (earnings) losses of non-integral
unconsolidated affiliates varies from period to period depending on
the activity and financial performance of such affiliates, the
operations of which are not operationally integral to Quanta; (iv)
mark-to-market adjustments on Quanta's investment in a publicly
traded company vary from period to period based on fluctuations in
the market price of such company's common stock; (v) gains and
losses on the sales of investments vary from period to period
depending on activity; (vi) change in fair value of contingent
consideration liabilities varies from period to period depending
on, among other things, the performance in post-acquisition periods
of certain acquired businesses and the effect of present value
accretion on fair value calculations; and (vi) asset impairment
charges can vary from period to period depending on economic and
other factors. Because 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
attributable to common stock (GAAP as reported)
|
$
272,836
|
|
$
155,956
|
|
$
533,781
|
|
$
328,617
|
Interest and other
financing expenses
|
47,531
|
|
33,566
|
|
137,413
|
|
86,933
|
Interest
income
|
(1,993)
|
|
(436)
|
|
(4,957)
|
|
(727)
|
Provision for income
taxes
|
77,522
|
|
72,890
|
|
143,468
|
|
120,698
|
Depreciation
expense
|
81,488
|
|
73,507
|
|
239,746
|
|
218,420
|
Amortization of
intangible assets
|
71,361
|
|
67,147
|
|
213,789
|
|
290,843
|
Interest, income taxes,
depreciation and amortization included in equity in earnings of
integral unconsolidated affiliates
|
5,256
|
|
3,165
|
|
14,538
|
|
11,005
|
EBITDA
|
554,001
|
|
405,795
|
|
1,277,778
|
|
1,055,789
|
Non-cash stock-based
compensation
|
32,600
|
|
26,648
|
|
94,658
|
|
77,730
|
Acquisition and
integration costs (a)
|
4,166
|
|
13,401
|
|
26,338
|
|
42,723
|
Equity in losses
(earnings) of non-integral unconsolidated affiliates
|
966
|
|
(2,944)
|
|
(1,119)
|
|
(17,893)
|
Loss from
mark-to-market adjustment on investment (b)
|
—
|
|
26,462
|
|
—
|
|
76,509
|
Gains on sales of
investments
|
—
|
|
—
|
|
(1,496)
|
|
(6,696)
|
Asset impairment
charges
|
—
|
|
—
|
|
—
|
|
2,800
|
Change in fair value of
contingent consideration liabilities
|
803
|
|
(1,924)
|
|
803
|
|
4,054
|
Adjusted
EBITDA
|
$
592,536
|
|
$
467,438
|
|
$
1,396,962
|
|
$
1,235,016
|
|
(a) The amounts for the
three and nine months ended September 30, 2022 include, among
other things, expenses associated with change of control payments
as a result of the acquisition of Blattner.
|
(b) The amounts for the
three and nine months ended September 30, 2022 are losses
related to the fair value remeasurement of Quanta's common stock
investment in Starry.
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Free Cash Flow
and Other
Non-GAAP Definitions
For the Three and Nine Months
Ended
September 30,
2023 and 2022
(In thousands)
(Unaudited)
Reconciliation of Free Cash Flow:
The following table presents a reconciliation of the non-GAAP
financial measure of free cash flow to net cash provided by
operating activities for the three and nine months ended
September 30, 2023 and 2022. This
reconciliation 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 cash flow is defined as net cash provided by
operating activities less net capital expenditures. Net capital
expenditures is defined as capital expenditures less proceeds from
the sale of property and equipment and from insurance settlements
related to property and equipment. Management believes that free
cash flow provides useful information to Quanta's investors because
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
this measure for capital allocation purposes as it is viewed as a
measure of cash available to fund debt payments, acquire
businesses, repurchase common stock and debt securities, declare
and pay dividends and transact other investing and financing
activities. However, this measure should not be considered as an
alternative to net cash provided by operating activities or other
measures of performance that are derived in accordance with GAAP.
The most comparable GAAP financial measure, net cash provided by
operating activities, and information reconciling the GAAP and
non-GAAP financial measures, are included below.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
406,592
|
|
$
343,362
|
|
$
572,414
|
|
$
547,183
|
Less: Net capital
expenditures:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(139,800)
|
|
(105,958)
|
|
(325,397)
|
|
(337,469)
|
Cash proceeds from
sale of property and equipment and related
insurance settlements
|
13,020
|
|
18,217
|
|
47,983
|
|
43,603
|
Net
capital expenditures
|
(126,780)
|
|
(87,741)
|
|
(277,414)
|
|
(293,866)
|
Free Cash
Flow
|
$
279,812
|
|
$
255,621
|
|
$
295,000
|
|
$
253,317
|
Other Non-GAAP Definitions:
Days Sales Outstanding:
Days Sales Outstanding is
calculated as 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.
Total Liquidity:
Total liquidity includes Quanta's
cash and cash equivalents and availability under Quanta's senior
credit facility. Available commitments for revolving loans under
the senior credit facility must be maintained in order to provide
credit support for notes issued under the commercial paper program,
and therefore such notes effectively reduce the available borrowing
capacity under the senior credit facility.
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Estimated Adjusted Net Income
and
Adjusted Diluted Earnings Per
Share
Attributable to Common Stock
For the Full
Year 2023
(In thousands, except per share information)
(Unaudited)
The following table presents reconciliations of the non-GAAP
financial measure of estimated adjusted net income attributable to
common stock to estimated net income attributable to common stock
and the non-GAAP financial measure of estimated adjusted diluted
earnings per share attributable to common stock to estimated
diluted earnings per share attributable to common stock for the
full year ending December 31, 2023.
These reconciliations are intended to provide useful information to
investors and analysts as they evaluate Quanta's expected future
performance. Management believes that the exclusion of certain
items from net income attributable to common stock and diluted
earnings per share attributable to common stock enables it and
Quanta's investors to more effectively evaluate Quanta's operations
period over period and better identify operating trends that may
not otherwise be apparent due to, among other reasons, the variable
nature of these items period over period. In addition, management
believes these measures may be useful for investors in comparing
our operating results with other companies that may be viewed as
our peers. However, these non-GAAP measures should not be
considered as alternatives to net income attributable to common
stock and diluted earnings per share attributable to common stock
or other measures of performance that are derived in accordance
with GAAP. As to certain of the items below: (i) non-cash
stock-based compensation expense may vary from period to period due
to acquisition activity, changes in the estimated fair value of
performance-based awards, forfeiture rates, accelerated vesting and
amounts granted; (ii) amortization of intangible assets and
amortization included in equity in earnings are impacted by
Quanta's acquisition activities and investments in integral
unconsolidated affiliates, and therefore can vary from period to
period; (iii) acquisition and integration costs vary period to
period depending on the level of Quanta's acquisition activity;
(iv) equity in (earnings) losses of non-integral unconsolidated
affiliates varies from period to period depending on the activity
and financial performance of such affiliates, the operations of
which are not operationally integral to Quanta; and (v) gains and
losses on the sales of investments vary from period to period
depending on activity.
Because adjusted net income attributable to common stock and
adjusted diluted earnings per share attributable to common stock,
as defined, exclude some, but not all, items that affect net income
attributable to common stock and diluted earnings per share
attributable to common stock, they may not be comparable to
similarly titled measures of other companies. The most comparable
GAAP financial measures, net income attributable to common stock
and diluted earnings per share attributable to common stock, and
information reconciling the GAAP and non-GAAP financial measures,
are included below.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2023
|
Reconciliation of
estimated adjusted net income attributable to common
stock:
|
|
|
|
Net income attributable
to common stock (as defined by GAAP)
|
$
729,000
|
|
$
758,800
|
Non-cash stock-based
compensation
|
127,400
|
|
127,400
|
Amortization of
intangible assets
|
283,000
|
|
283,000
|
Amortization included
in equity in earnings of integral unconsolidated
affiliates
|
6,200
|
|
6,200
|
Acquisition and
integration costs
|
37,600
|
|
37,600
|
Change in fair value
of contingent consideration liabilities
|
800
|
|
800
|
Equity in earnings of
non-integral unconsolidated affiliates
|
(1,100)
|
|
(1,100)
|
Gains on sales of
investments
|
(1,500)
|
|
(1,500)
|
Income tax impact of
adjustments (a)
|
(139,700)
|
|
(139,700)
|
Adjusted net income
attributable to common stock
|
$
1,041,700
|
|
$
1,071,500
|
|
|
|
|
Reconciliation of
adjusted diluted earnings per share:
|
|
|
|
Diluted earnings per
share attributable to common stock ( as defined by GAAP)
|
$
4.90
|
|
$
5.10
|
Non-cash stock-based
compensation
|
0.86
|
|
0.86
|
Amortization of
intangible assets
|
1.90
|
|
1.90
|
Amortization included
in equity in earnings of integral unconsolidated
affiliates
|
0.04
|
|
0.04
|
Acquisition and
integration costs
|
0.25
|
|
0.25
|
Change in fair value
of contingent consideration liabilities
|
0.01
|
|
0.01
|
Equity in earnings of
non-integral unconsolidated affiliates
|
(0.01)
|
|
(0.01)
|
Gains on sales of
investments
|
(0.01)
|
|
(0.01)
|
Income tax impact of
adjustments (a)
|
(0.94)
|
|
(0.94)
|
Adjusted net income
attributable to common stock
|
$
7.00
|
|
$
7.20
|
|
|
|
|
Weighted average shares
outstanding for diluted and adjusted diluted earnings per share
attributable to common stock
|
148,800
|
|
148,800
|
|
(a) The amount for the
three and nine months ended September 30, 2023 includes the release
of a valuation allowance recognized during the year ended December
31, 2022 on the loss from mark-to-market adjustment on
Starry.
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Estimated EBITDA and Adjusted
EBITDA
For the Full Year 2023
(In thousands)
(Unaudited)
The following table presents the reconciliations of the non-GAAP
financial measures of estimated EBITDA and estimated adjusted
EBITDA to estimated net income attributable to common stock for the
full year ending December 31, 2023.
These reconciliations are intended to provide useful information to
investors and analysts as they evaluate Quanta's expected future
performance. EBITDA is defined as earnings before interest and
other financing expenses, taxes, depreciation and amortization, and
adjusted EBITDA is defined as EBITDA adjusted for certain other
items as described below. These measures should not be considered
as an alternative to net income attributable to common stock or
other financial 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
and Quanta's investors to more effectively evaluate Quanta's
operations period over period and to identify operating trends that
might not be apparent due to, among other reasons, the variable
nature of these items period over period. In addition, management
believes these measures may be useful for investors in comparing
our operating results with other companies that may be viewed as
our peers.
As to certain of the items below: (i) non-cash stock-based
compensation expense varies from period to period due to
acquisition activity, changes in the estimated fair value of
performance-based awards, forfeiture rates, accelerated vesting and
amounts granted; (ii) acquisition and integration costs vary from
period to period depending on the level of Quanta's acquisition
activity; (iii) gains and losses on the sales of investments vary
from period to period depending on activity; and (iv) equity in
(earnings) losses of non-integral unconsolidated affiliates varies
from period to period depending on the activity and financial
performance of such affiliates, the operations of which are not
operationally integral to Quanta.
Because 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
in the table to follow.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2023
|
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
729,000
|
|
$
758,800
|
Interest and other
financing expenses, net
|
168,000
|
|
171,000
|
Provision for income
taxes
|
222,700
|
|
238,200
|
Depreciation
expense
|
321,400
|
|
321,400
|
Amortization of
intangible assets
|
283,000
|
|
283,000
|
Interest, income taxes,
depreciation and amortization included in equity in earnings of
integral
unconsolidated affiliates
|
19,300
|
|
19,300
|
EBITDA
|
1,743,400
|
|
1,791,700
|
Non-cash stock-based
compensation
|
127,400
|
|
127,400
|
Acquisition and
integration costs
|
37,600
|
|
37,600
|
Change in fair value of
contingent consideration liabilities
|
800
|
|
800
|
Gains on sales of
investments
|
(1,500)
|
|
(1,500)
|
Equity in earnings of
non-integral unconsolidated affiliates
|
(1,100)
|
|
(1,100)
|
Adjusted
EBITDA
|
$
1,906,600
|
|
$
1,954,900
|
Quanta Services, Inc. and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Estimated Free Cash Flow
For the Full
Year 2023
(In thousands)
(Unaudited)
The following table presents a reconciliation of the non-GAAP
financial measure of estimated free cash flow to estimated net cash
provided by operating activities for the full year ending
December 31, 2023. This
reconciliation is intended to provide useful information to
investors and analysts as they evaluate Quanta's expectations
regarding its ability to generate the cash required to maintain and
potentially expand its business. Free cash flow is defined as net
cash provided by operating activities less net capital
expenditures. Net capital expenditures is defined as capital
expenditures less proceeds from the sale of property and equipment
and from insurance settlements related to property and equipment.
Management believes that free cash flow provides useful information
to Quanta's investors because 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 this measure for capital
allocation purposes as it is viewed as a measure of cash available
to fund debt payments, acquire businesses, repurchase common stock
and debt securities, declare and pay dividends and transact other
investing and financing activities. However, this measure should
not be considered as an alternative to net cash provided by
operating activities or other measures of performance that are
derived in accordance with GAAP. The most comparable GAAP financial
measure, net cash provided by operating activities, and information
reconciling the GAAP and non-GAAP financial measures, are included
below.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2023
|
Net cash provided by
operating activities
|
$
1,200,000
|
|
$
1,400,000
|
Less: Net capital
expenditures
|
(400,000)
|
|
(400,000)
|
Free Cash
Flow
|
$
800,000
|
|
$
1,000,000
|
Contacts:
|
Jayshree Desai,
CFO
|
Media – Liz
James
|
|
Kip Rupp, CFA, IRC -
Investors
|
FGS Global
|
|
Quanta Services,
Inc.
|
(281)
881-5170
|
|
(713)
629-7600
|
|
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SOURCE Quanta Services, Inc.