Quanta Services(PWR) - 2024 Q3 - Quarterly Results

Financial Highlights & Outlook This section details the company's robust Q3 and YTD 2024 financial performance and updated full-year outlook Third Quarter 2024 Financial Performance Quanta Services achieved record Q3 2024 results, with strong double-digit growth in key metrics and record backlog Q3 2024 vs. Q3 2023 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $6.49 billion | $5.62 billion | +15.5% | | Net Income (attributable to common stock) | $293.2 million | $272.8 million | +7.5% | | GAAP Diluted EPS | $1.95 | $1.83 | +6.6% | | Adjusted Diluted EPS | $2.72 | $2.24 | +21.4% | | Adjusted EBITDA | $682.8 million | $592.5 million | +15.2% | Backlog and Cash Flow Highlights (as of Q3 2024) | Metric | Value | Note | | :--- | :--- | :--- | | Total Backlog | $34.0 billion | Record level | | Remaining Performance Obligations | $15.6 billion | Record level | | Year-to-Date Cash Flow From Operations | $1.37 billion | Record level | | Year-to-Date Free Cash Flow | $979.3 million | Record level | Nine Months 2024 Financial Performance For the first nine months of 2024, Quanta demonstrated sustained strong growth across key financial metrics Nine Months Ended Sep 30, 2024 vs. 2023 | Metric | Nine Months 2024 | Nine Months 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $17.12 billion | $15.10 billion | +13.4% | | Net Income (attributable to common stock) | $599.7 million | $533.8 million | +12.3% | | GAAP Diluted EPS | $4.00 | $3.59 | +11.4% | | Adjusted Diluted EPS | $6.03 | $5.12 | +17.8% | Full-Year 2024 Outlook The company raised its full-year 2024 guidance, reflecting confidence in performance despite various uncertainties - Management raised the mid-point of its full-year 2024 adjusted earnings per share expectations[1] Updated Full-Year 2024 Guidance | Metric | Expected Range | | :--- | :--- | | Revenues | $23.5 billion - $23.9 billion | | Net Income (attributable to common stock) | $853 million - $899 million | | Diluted EPS (GAAP) | $5.68 - $5.99 | | Adjusted Diluted EPS (Non-GAAP) | $8.50 - $8.80 | | Adjusted EBITDA (Non-GAAP) | $2.25 billion - $2.32 billion | | Free Cash Flow (Non-GAAP) | $1.30 billion - $1.50 billion | - The financial outlook accounts for uncertainties related to weather, project timing, supply chain challenges, inflation, and interest rates[8] Business Operations and Strategy This section outlines management's strategic direction, recent acquisitions, and initiatives for future growth Management Commentary CEO Duke Austin highlighted consistent profitable growth, successful integration, and confidence in future double-digit EPS - The CEO attributes the double-digit growth to the power of Quanta's portfolio, sound execution, strong service demand, and an expanding addressable market[2] - The integration of Cupertino Electric is progressing well, with positive customer response to the company's comprehensive electrical infrastructure solutions for the technology and data center industry[3] - Quanta is positioned at the nexus of the utility, renewable energy, and technology industries, and expects to achieve another year of double-digit earnings per share growth in 2025[3] Recent Highlights & Strategic Initiatives Quanta pursued strategic growth initiatives, including key acquisitions and a strategic investment - In July 2024, Quanta completed the acquisition of Cupertino Electric (CEI), a premier electrical infrastructure solutions provider for technology, renewable, and commercial industries[6] - In September 2024, the company acquired a New York-based manufacturer of medium-voltage, liquid-filled power transformers[4] - In August 2024, Quanta made a strategic minority investment in Hybar LLC, a technologically advanced scrap metal recycling steel rebar mill[5] - The company published its 2023 Sustainability Report, titled "Forging the Future," outlining its role in the energy transition and its goal to reduce the carbon intensity of its operations[6] Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated statements of operations and balance sheets, detailing financial position Condensed Consolidated Statements of Operations The income statement reflects strong revenue and operating income growth for Q3 and YTD despite higher costs Q3 Statement of Operations Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenues | $6,493,167 | $5,620,822 | | Gross Profit | $1,012,570 | $847,324 | | Operating Income | $431,161 | $400,329 | | Net Income Attributable to Common Stock | $293,185 | $272,836 | Nine Months Statement of Operations Highlights (in thousands) | Line Item | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Revenues | $17,119,373 | $15,098,258 | | Gross Profit | $2,447,395 | $2,144,618 | | Operating Income | $893,745 | $805,462 | | Net Income Attributable to Common Stock | $599,704 | $533,781 | Condensed Consolidated Balance Sheets The balance sheet reflects significant asset growth as of Sep 30, 2024, driven by acquisitions and increased liabilities Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $8,046,049 | $7,676,897 | | Goodwill | $5,282,170 | $4,045,905 | | Other Intangible Assets, net | $1,966,689 | $1,362,412 | | Total Assets | $18,866,300 | $16,237,225 | | Total Current Liabilities | $6,525,338 | $5,213,116 | | Long-Term Debt, net | $4,131,843 | $3,663,504 | | Total Liabilities | $11,777,275 | $9,953,870 | | Total Equity | $7,089,025 | $6,283,355 | Segment and Backlog Information This section details financial performance by segment and analyzes the company's record backlog and RPO Segment Performance Q3 2024 segment performance shows strong Renewable Energy growth, stable Electric Power, and Underground Utility decline Q3 2024 vs. Q3 2023 Segment Revenues (in thousands) | Segment | Q3 2024 Revenue | Q3 2023 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Electric Power Infrastructure Solutions | $2,982,032 | $2,489,547 | +19.8% | | Renewable Energy Infrastructure Solutions | $2,251,855 | $1,746,636 | +28.9% | | Underground Utility and Infrastructure Solutions | $1,259,280 | $1,384,639 | -9.1% | Q3 2024 vs. Q3 2023 Segment Operating Income & Margin (in thousands) | Segment | Q3 2024 Op. Income | Q3 2024 Op. Margin | Q3 2023 Op. Income | Q3 2023 Op. Margin | | :--- | :--- | :--- | :--- | :--- | | Electric Power Infrastructure Solutions | $354,505 | 11.9% | $296,176 | 11.9% | | Renewable Energy Infrastructure Solutions | $221,509 | 9.8% | $151,389 | 8.7% | | Underground Utility and Infrastructure Solutions | $93,956 | 7.5% | $123,764 | 8.9% | Remaining Performance Obligations and Backlog Total backlog reached a record level as of Sep 30, 2024, driven by key segment growth and increased RPO - Backlog is a non-GAAP measure that includes RPO plus estimated orders under master service agreements (MSAs) and certain non-fixed price contracts, which management uses to forecast future capital needs and operating trends[28] Total Backlog Comparison (in thousands) | Date | 12-Month Backlog | Total Backlog | | :--- | :--- | :--- | | Sep 30, 2024 | $19,126,176 | $33,964,290 | | Dec 31, 2023 | $17,230,947 | $30,108,419 | | Sep 30, 2023 | $17,018,416 | $30,095,546 | Total Remaining Performance Obligations (RPO) Comparison (in thousands) | Date | 12-Month RPO | Total RPO | | :--- | :--- | :--- | | Sep 30, 2024 | $10,669,139 | $15,609,530 | | Dec 31, 2023 | $9,291,994 | $13,894,255 | | Sep 30, 2023 | $9,549,517 | $13,561,666 | Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of non-GAAP financial measures to comparable GAAP measures Reconciliation of Adjusted Net Income and Adjusted Diluted EPS (Historical) This section reconciles historical GAAP to non-GAAP earnings, adjusting for non-recurring and non-cash items Q3 2024 Reconciliation of GAAP to Adjusted Diluted EPS | Description | Per Share Amount | | :--- | :--- | | Diluted EPS (GAAP) | $1.95 | | Amortization of intangible assets | $0.73 | | Non-cash stock-based compensation | $0.25 | | Income tax impact of adjustments | ($0.27) | | Other adjustments (Acquisition costs, etc.) | $0.06 | | Adjusted Diluted EPS (Non-GAAP) | $2.72 | Reconciliation of EBITDA and Adjusted EBITDA (Historical) This section reconciles historical GAAP Net Income to Adjusted EBITDA, adding back interest, taxes, D&A, and other adjustments Q3 2024 Reconciliation to Adjusted EBITDA (in thousands) | Description | Q3 2024 | | :--- | :--- | | Net Income Attributable to Common Stock (GAAP) | $293,185 | | Interest, Taxes, Depreciation & Amortization | $342,599 | | EBITDA | $634,104 | | Non-cash stock-based compensation | $38,234 | | Acquisition and integration costs | $7,053 | | Other adjustments | $3,448 | | Adjusted EBITDA (Non-GAAP) | $682,839 | Reconciliation of Free Cash Flow (Historical) This section details the reconciliation of historical free cash flow from operating activities less capital expenditures Free Cash Flow Reconciliation (in thousands) | Description | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $739,914 | $1,369,181 | | Less: Net capital expenditures | (200,444) | (389,863) | | Free Cash Flow | $539,470 | $979,318 | Reconciliation of Full-Year 2024 Guidance (Non-GAAP) This section provides a comprehensive reconciliation of the company's full-year 2024 guidance to non-GAAP measures FY 2024 Guidance Reconciliation: GAAP EPS to Adjusted EPS | Description | Low Range | High Range | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $5.68 | $5.99 | | Amortization of intangible assets | $2.55 | $2.55 | | Non-cash stock-based compensation | $1.02 | $1.02 | | Income tax impact of adjustments | ($0.98) | ($0.99) | | Other adjustments | $0.23 | $0.23 | | Adjusted Diluted EPS (Non-GAAP) | $8.50 | $8.80 | FY 2024 Guidance Reconciliation: Net Income to Adjusted EBITDA (in thousands) | Description | Low Range | High Range | | :--- | :--- | :--- | | Net Income (GAAP) | $853,100 | $898,500 | | EBITDA | $2,062,300 | $2,130,300 | | Adjusted EBITDA (Non-GAAP) | $2,247,900 | $2,315,900 | FY 2024 Guidance Reconciliation: Free Cash Flow (in thousands) | Description | Low Range | High Range | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,775,000 | $2,000,000 | | Free Cash Flow | $1,300,000 | $1,500,000 |