Quanta Services(PWR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Quanta Services' unaudited condensed consolidated financial statements and related notes for the period ended June 30, 2025 Condensed Consolidated Financial Statements Total assets increased to $19.89 billion by June 30, 2025, with Q2 2025 revenues reaching $6.77 billion and net income $229.3 million, while operating cash flow decreased to $538.9 million for the first six months Financial Position (in billions) | Financial Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $8.18B | $7.85B | | Total Assets | $19.89B | $18.68B | | Total Current Liabilities | $5.98B | $6.03B | | Total Liabilities | $12.02B | $11.35B | | Total Equity | $7.87B | $7.33B | Consolidated Results of Operations (in millions/billions, except per share) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6.77B | $5.59B | $13.01B | $10.63B | | Gross Profit | $1.01B | $811.33M | $1.84B | $1.43B | | Operating Income | $370.28M | $307.23M | $609.36M | $462.58M | | Net Income Attributable to Common Stock | $229.25M | $188.16M | $373.51M | $306.52M | | Diluted EPS | $1.52 | $1.26 | $2.47 | $2.05 | Consolidated Cash Flows (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $538.91M | $629.27M | | Net Cash Used in Investing Activities | ($980.55M) | ($589.26M) | | Net Cash Provided by (Used in) Financing Activities | $186.75M | ($806.30M) | | Net Decrease in Cash | ($233.26M) | ($773.29M) | Notes to Condensed Consolidated Financial Statements These notes detail Quanta's accounting policies, including revenue recognition, segment reporting changes, significant acquisitions, debt obligations, equity transactions, and legal contingencies like the Silverado Wildfire matter - Beginning in Q1 2025, Quanta changed its reportable segments to Electric Infrastructure Solutions and Underground Utility and Infrastructure Solutions, with prior period amounts recast to conform to this new structure[54] - During the first six months of 2025, Quanta acquired four businesses for approximately $599.3 million in cash and 515,822 shares of common stock valued at $161.6 million[65] - Quanta is involved in litigation related to the 2020 Silverado Fire, with subsidiaries asked for defense and indemnification by Southern California Edison, but no accrual has been recorded as insurance coverage is believed to be adequate[120][122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 financial performance, highlighting increased demand in Electric and Underground & Infrastructure segments, consolidated and segment results, non-GAAP measures, and liquidity, driven by grid modernization and acquisitions Results of Operations Q2 2025 consolidated revenues increased 21.1% to $6.77 billion, with gross profit up 24.2% to $1.01 billion and operating income growing 20.5% to $370.3 million, reflecting strong performance across segments Consolidated Results for Q2 (in millions/billions) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6.77B | $5.59B | $1.18B | 21.1% | | Gross Profit | $1.01B | $811.33M | $196.24M | 24.2% | | Operating Income | $370.28M | $307.23M | $63.05M | 20.5% | | Net Income Attributable to Common Stock | $229.25M | $188.16M | $41.09M | 21.8% | Consolidated Results for H1 (in millions/billions) | Metric | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $13.01B | $10.63B | $2.38B | 22.4% | | Gross Profit | $1.84B | $1.43B | $406.79M | 28.4% | | Operating Income | $609.36M | $462.58M | $146.78M | 31.7% | | Net Income Attributable to Common Stock | $373.51M | $306.52M | $66.99M | 21.9% | Segment Results Q2 2025 saw the Electric segment's revenue grow 21.6% to $5.46 billion and operating income rise 29.5% to $552.6 million, while the Underground and Infrastructure segment's revenue increased 18.7% to $1.31 billion Segment Performance (Q2 2025 vs Q2 2024) | Segment | Revenue | Operating Income | | :--- | :--- | :--- | | Electric | $5.46B (+21.6%) | $552.6M (+29.5%) | | Underground and Infrastructure | $1.31B (+18.7%) | $90.7M (+11.2%) | - The Electric segment's revenue growth was primarily due to approximately $750 million from acquired businesses and increased service demand[173] - The Underground and Infrastructure segment's revenue growth was driven by about $105 million from acquisitions and higher service demand[175] Non-GAAP Financial Measures Non-GAAP measures show Q2 2025 Adjusted EBITDA at $668.8 million, up from $523.2 million in Q2 2024, and total backlog increased to $35.84 billion by June 30, 2025, reflecting strong project awards and acquisitions Non-GAAP Performance Metrics (in millions/billions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Common Stock | $229.25M | $188.16M | $373.51M | $306.52M | | EBITDA | $589.39M | $475.21M | $1.04B | $817.12M | | Adjusted EBITDA | $668.76M | $523.23M | $1.17B | $910.48M | Backlog (in billions) | Backlog | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Remaining Performance Obligations | $19.16B | $16.76B | | Total Backlog | $35.84B | $34.54B | Liquidity and Capital Resources As of June 30, 2025, Quanta's total liquidity was $2.64 billion, with key cash uses in H1 2025 including $586.1 million for acquisitions and $273.1 million for capital expenditures, while operating cash flow decreased to $538.9 million Total Liquidity (in millions/billions) | Liquidity Component | June 30, 2025 | | :--- | :--- | | Available commitments for revolving loans, etc. | $2.13B | | Cash and cash equivalents | $509.46M | | Total Liquidity | $2.64B | - Key uses of cash in H1 2025 included $586.1 million for acquisitions, $273.1 million for capital expenditures, and $134.6 million for common stock repurchases[206][209] - Days Sales Outstanding (DSO) improved to 62 days as of June 30, 2025, from 68 days a year prior, indicating faster conversion of revenues to cash[205] - Subsequent to quarter end, in July 2025, Quanta used $700.0 million from its commercial paper program and revolving credit facility to finance the cash portion of the Dynamic Systems acquisition[194] Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes occurred in market risk disclosures during H1 2025, with primary exposures remaining in interest rates and foreign currency exchange rates - There were no material changes to the company's market risk profile, with primary exposures remaining in interest rates and currency exchange rates[213] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with ongoing integration of four acquired businesses into internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[217] - The company is in the process of integrating four businesses acquired in H1 2025 into its overall internal control over financial reporting[218] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, with detailed information available in Note 13 of the financial statements - The company is subject to various lawsuits and claims in the ordinary course of business; for specific details, refer to Note 13 of the Notes to Condensed Consolidated Financial Statements[223] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K have occurred as of the filing date - As of the filing date, there have been no material changes to the risk factors described in the 2024 Annual Report[225] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, Quanta issued 257,357 unregistered shares valued at $86.0 million for acquisitions and repurchased 67,172 shares for $16.0 million, with $365.1 million remaining for future repurchases - In Q2 2025, the company issued 257,357 unregistered shares of common stock valued at $86.0 million as part of acquisition and contingent consideration settlements[227] Stock Repurchase Program Activity | Period | Shares Repurchased | Average Price Paid | Program Availability (in millions) | | :--- | :--- | :--- | :--- | | April 1 - 30, 2025 | 67,172 | $238.00 | $365.10M | | May 1 - 31, 2025 | 0 | N/A | $365.10M | | June 1 - 30, 2025 | 0 | N/A | $365.10M | Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - During the three months ended June 30, 2025, no director or officer of Quanta adopted or terminated an insider trading arrangement under Rule 10b5-1[235]