February 23, 2023
Quanta Services Reports Fourth Quarter And Full-Year 2022 Results
Full-Year 2023 Guidance Reflects Solid Growth in Revenues and Opportunity for Double-Digit Growth in Net Income, Adjusted EBITDA, Cash Flow From Operations and Earnings Per Share
Fourth Quarter 2022 Results Include:
- Consolidated Revenues of $4.42 Billion*
- GAAP Diluted EPS of $1.10 and Adjusted Diluted EPS of $1.68*
- Net Income Attributable to Common Stock of $162.6 Million
- Adjusted EBITDA of $449.9 Million*
- Cash Flow from Operations of $583.1 Million and Strong Free Cash Flow
- Year-End Remaining Performance Obligations of $8.80 Billion*
- and Total Backlog of $24.09 Billion*
Full-Year 2022 Results Include:
- Consolidated Revenues of $17.07 Billion*
- GAAP Diluted EPS of $3.32 and Adjusted Diluted EPS of $6.34*
- Net Income Attributable to Common Stock of $491.2 Million*
- Adjusted EBITDA of $1.68 Billion*
- Cash Flow from Operations of $1.13 Billion*
- and Strong Free Cash Flow
*= Record quarterly or record fourth quarter or full year result
Quanta Services, Inc. (NYSE: PWR) today announced results for the three and twelve months ended December 31, 2022. Revenues in the fourth quarter of 2022 were $4.42 billion compared to revenues of $3.92 billion in the fourth quarter of 2021, and net income attributable to common stock was $162.6 million, or $1.10 per diluted share, in the fourth quarter of 2022 compared to net income attributable to common stock of $104.8 million, or $0.71 per diluted share, in the fourth quarter of 2021. Adjusted diluted earnings per share attributable to common stock (a non-GAAP measure) was $1.68 for the fourth quarter of 2022 compared to $1.54 for the fourth quarter of 2021.
“Quanta delivered strong fourth quarter results and completed another year that generated record revenues, profits and backlog. Driven by the dedication and operational excellence of our world-class employees, we believe our 2022 results also demonstrate the benefit of our diversified portfolio of solutions, our repeatable and sustainable model and the successful execution of our strategic initiatives that are driving operational excellence and total cost solutions for our clients,” said Duke Austin, President and Chief Executive Officer of Quanta Services. “Our growing cash flow and strong financial profile, coupled with our visible, robust end-market dynamics, position us well to continue to deliver value for our stakeholders. “Our 2023 expectations reflect the opportunity for continued growth in revenues, adjusted EBITDA, adjusted earnings per share and cash flow. Further, we are increasingly excited and confident about the opportunity to drive multi-year revenue and double-digit earnings per share growth. As evidenced by our record backlog and the other recent highlights we announced this morning, demand is strong for our infrastructure solutions that support our customers’ energy-transition initiatives and increase reliability, safety, efficiency and connectivity through modernization. For many years Quanta has incrementally invested in and developed industry-leading safety and training for our employees, which has made us an employer of choice in our industry and supports our future growth and success. We believe our scope and scale, dedication to innovation of our solutions and passion for supporting the success of our clients, positions us well to capitalize on the energy transition across our portfolio of services for years to come.”
Certain items impacted Quanta’s results for 2022 and 2021 and are reflected as adjustments
in the calculation of Quanta’s adjusted diluted earnings per share attributable to common stock (a non-GAAP 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 one acquisition during 2022 and ten acquisitions during 2021, 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 2022 and 2021, see the footnotes accompanying tables presenting Supplemental Segment Data and reconciliations of
adjusted EBITDA and adjusted diluted earnings per share attributable to common stock (non-GAAP measures) to their comparable GAAP financial measures.
Selected for Ready Wyoming Transmission Project- In January 2023, Quanta was selected by Black Hills Corporation’s Cheyenne Light, Fuel and Power to provide EPC solutions for the Ready Wyoming Project. Quanta’s scope of work for the project consists of the management and construction of approximately 260 miles of 230 kV and 115 kV transmission infrastructure and six new and expanded substations in Wyoming and western Nebraska. Construction is planned to start this year with final completion expected by the end of 2025. Quanta expects to include the estimated revenue from this project in its remaining performance obligations and backlog for the Electric Power Solutions segment in the first quarter of 2023. Selected for Waasigan Transmission Line Project -In December 2022, Quanta was selected by Hydro One to provide EPC solutions for the proposed Waasigan Transmission Line project in northwestern Ontario, consisting of a new double-circuit and single-circuit 230 kV transmission line. Quanta expects to begin construction in late 2024, with completion expected in 2026. The estimated revenue from this project is included in remaining performance obligations and backlog for the Electric Power Infrastructure Solutions segment as of December 31, 2022.
Selected for Colorado’s Power Pathway Transmission Project -In December 2022, Quanta announced that it was selected by Xcel Energy as its prime constructor to manage all construction activities for Colorado’s Power Pathway high-voltage electric transmission project in Colorado. Quanta’s scope of work on the project consists of the construction of approximately 610 miles of 345 kV transmission
infrastructure, consisting of up to six segments and spanning more than a dozen counties, primarily in eastern Colorado, and includes the installation of four new substations and the expansion of four existing substations. Certain segments of the project are expected to be completed in 2025, with other segments expected to be completed in 2026 and 2027. Preconstruction activities have begun and construction on the first segment is scheduled to begin in mid-2023. Quanta included the estimated revenue for the project in remaining performance obligations and backlog for the Renewable Energy Infrastructure Solutions segment as of December 31, 2022. Capital Deployment – In January 2023, Quanta acquired three businesses that primarily enhance Quanta’s ability to deliver comprehensive infrastructure solutions to utility and renewable energy customers in the United States for aggregate consideration of approximately $588.5 million, subject to certain post-closing adjustments. During the fourth quarter of 2022, Quanta also repurchased 86,319 shares of its outstanding common stock in the open market for $11.4 million, and for the year ended December 31, 2022, Quanta repurchased 1,060,997 shares of its
outstanding common stock in the open market for $127.7 million. Quanta currently has authorization under its existing stock repurchase program to acquire an additional $345.1 million of its common stock. Additionally, in December 2022, Quanta’s Board of Directors declared a quarterly cash dividend to stockholders of $0.08 per share, or a rate of $0.32 per share on an annualized basis, which represents a 14% increase from Quanta’s prior quarterly cash dividend paid in October 2022.
RESULTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
Revenues in the year ended December 31, 2022 were $17.07 billion compared to revenues of $12.98 billion in the year ended December 31, 2021, and net income attributable to common stock was $491.2 million, or $3.32 per diluted share, in the year ended December 31, 2022 compared to net income attributable to common stock of $486.0 million, or $3.34 per diluted share, in the year ended December 31, 2021. Adjusted diluted earnings per share attributable to common stock (a non-GAAP measure) was $6.34 for the year ended December 31, 2022 compared to $4.91 for the year ended December 31, 2021.
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 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 measure) the Company is executing on and the opportunities expected to materialize during 2023.
Prior to the Company’s conference call, management will post a summary of Quanta’s 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 expects revenues to range between $18.40 billion and $18.90 billion, net income attributable to common stock to range between $692 million and $766 million and diluted earnings per share attributable to common stock to range between $4.67 and $5.17. Quanta expects adjusted diluted earnings per share attributable to common stock (a non-GAAP financial measure) to range between $6.75 and $7.25, EBITDA (a non-GAAP financial measure) to range between $1.69 billion and $1.81 billion, and adjusted EBITDA (a non-GAAP financial measure) to range between $1.82 billion and $1.94 billion. Additionally, for the full year ending December 31, 2023, Quanta expects net cash attributable to operating activities to range between $1.15 billion and $1.40 billion and free cash flow (a non-GAAP financial measure) to range between $750 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 (a non-GAAP financial measure) to diluted earnings per share attributable to common stock; adjusted net income attributable to common stock, EBITDA and adjusted EBITDA (non-GAAP financial measures) to net income attributable to common stock; free cash flow (a non-GAAP financial measure) to net cash provided by operating activities; and backlog (a non-GAAP financial measure) to remaining performance obligations.
CONFERENCE CALL INFORMATION
Quanta Services has scheduled a conference call for 9:00 a.m. Eastern Time on February 23, 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 Fourth Quarter and Full-Year 2022 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 March 3, 2023 by dialing 1-877-660-6853 and referencing the conference ID 13736212. For more information, please contact Kip Rupp, Vice President – Investor Relations at Quanta Services, at 713-341-7260 or firstname.lastname@example.org.
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, EBITDA, margins, cash flows, liquidity, weighted average shares outstanding, capital expenditures, interest rates, tax rates and other operating results and GAAP and non-GAAP financial results; 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 potential benefits from, and future financial and operational performance of, acquired businesses and investments, including Blattner Holding Company and its operating subsidiaries (collectively, Blattner) and Quanta’s investment in LUMA Energy, LLC; possible recovery of pending or contemplated insurance claims, change orders and claims asserted against customers or third parties; expectations regarding the outcome of pending or threatened legal proceedings, as well as the collection of amounts awarded in legal proceedings; beliefs and assumptions about the collectability of receivables; the business plans or financial condition of Quanta’s customers, including with respect to the transition to a reduced-carbon economy; the potential impact of commodity prices and production volumes on Quanta’s business, financial condition, results of operations, cash flows and demand for Quanta’s services; expected recognition and realization of remaining performance obligations and backlog; the future demand for, availability of and costs related to labor resources in the industries Quanta serves; 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 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; 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 our business; the expected impact of global and domestic economic conditions on our business, financial condition, results of operations, cash flows and liquidity, including inflation, interest rates and recessionary economic conditions; 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; the impact of existing or potential legislation or regulation including the Inflation Reduction Act; potential opportunities that may be indicated by bidding activity or discussions with customers; and expectations regarding our ability to reduce our debt and maintain our 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 as a result of, among other things, 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; fluctuations in the amount of work customers assign to Quanta; delays, deferrals, reductions in scope or cancellations of anticipated, pending or existing projects as a result of, among other things, supply chain 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 on Quanta’s operations and growth opportunities and on customer 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 and other obligations or other claims or actions asserted against Quanta, including amounts not covered by, or in excess of the coverage under, third-party insurance; the outcome of pending or threatened legal proceedings; 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 cyber-security 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 inflationary pressure, regulatory, supply chain and logistical challenges on these third parties; Quanta’s ability to attract, the potential shortage of and increased costs with respect to skilled labor, 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, including as a result of inaccurate estimates of project costs or inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project; estimates and assumptions relating to financial results, remaining performance obligations and backlog; inability to successfully complete remaining performance obligations or realize backlog; 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; the future development of natural resources; the failure of existing or potential legislative actions and initiatives to result in demand for Quanta’s services; 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 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; 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 or harm to its reputation as a result of 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 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; technological advancements and other market developments that could reduce the demand for Quanta’s services; 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; risks associated with operating in international markets and U.S. territories, including instability of governments, currency exchange fluctuations, and compliance with unfamiliar legal and labor systems and business practices, the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery and anti-corruption laws, complex tax regulations and international treaties; inability to successfully identify, complete, integrate and realize synergies from acquisitions or 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; significant fluctuations in foreign currency exchange rates; new or changed tax laws, treaties or regulations; inability to realize deferred tax assets; and other risks and uncertainties detailed in Quanta’s Annual Report on Form 10-K for the years ended December 31, 2021 and December 31, 2022 (when filed), Quanta’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022 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.
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SOURCE Quanta Services, Inc.