Quanta Services(US:PWR)2021-08-05 22:10Financial Performance - Consolidated revenues increased by 19.7%, or $493.6 million, to $3.00 billion for the three months ended June 30, 2021, compared to $2.51 billion for the same period in 2020[179]. - Operating income rose by 43.2%, or $48.7 million, to $161.7 million, with net income attributable to common stock increasing by 58.3%, or $43.1 million, to $117.0 million[179]. - EBITDA increased by 35.3%, or $66.4 million, to $254.4 million, while adjusted EBITDA rose by 31.3%, or $67.1 million, to $281.3 million[179]. - Revenues for the three months ended June 30, 2021, increased by $493.6 million (19.7%) to $2,999.8 million compared to $2,506.2 million in the same period of 2020[215]. - Gross profit for the three months ended June 30, 2021, rose by $92.4 million (26.0%) to $447.7 million, driven by increased revenues and improved utilization[217]. - Net income attributable to common stock for the three months ended June 30, 2021, increased by $43.1 million (58.3%) to $117.0 million compared to $73.9 million in the same period of 2020[215]. - Consolidated revenues for the six months ended June 30, 2021, increased by $433.1 million (8.2%) to $5,703.4 million compared to $5,270.3 million in the same period of 2020[229]. - Net income for the six months ended June 30, 2021, increased by $94.0 million (80.8%) to $210.3 million compared to $116.3 million in the same period of 2020[229]. - Consolidated operating income for the six months ended June 30, 2021, increased by 42.2% to $275.4 million compared to $193.7 million in 2020[251]. - EBITDA for the six months ended June 30, 2021, was $455.2 million, up from $328.4 million in 2020, while adjusted EBITDA increased to $501.5 million from $376.9 million[262]. Market Conditions - Utilities are investing significantly in electric power delivery systems, with multi-year, multi-billion dollar grid modernization programs driving demand for services[189]. - Demand for electricity in North America is expected to grow long-term, with increasing electrification trends and renewable energy generation facilities anticipated[191]. - The overall energy market conditions have negatively impacted services to downstream industrial energy customers, leading to a decline in global demand for refined products during 2020 and into 2021[195]. - Revenues related to larger pipeline projects have significantly declined due to regulatory delays and market challenges, with a notable example being a terminated 600-mile natural gas pipeline project in 2020[196]. - Natural gas is expected to remain a preferred fuel for power generation in North America, positioning the U.S. as a competitive player in the global LNG export market[198]. - Regulatory and permitting delays have created uncertainty and negatively impacted customer spending, particularly for larger electric transmission and pipeline projects[199]. Operational Strategy - The company has reoriented its communications service offerings to focus on the North American market, exiting Latin American operations to improve profitability[192]. - The company is focusing on underground utility and infrastructure solutions, which are driven by regulated utility spending and provide greater business sustainability[197]. - The company is addressing long-term labor resource needs through strategic partnerships and training initiatives, as demand for skilled labor may outpace supply[201]. - Potential acquisition and investment opportunities exist due to the fragmented nature of the industry, aimed at broadening the customer base and expanding geographic operations[203]. Financial Management - The company expects capital expenditures for 2021 to be approximately $325 million, maintaining capital discipline amid market dynamics[184]. - As of June 30, 2021, total available commitments under the senior credit facility and cash and cash equivalents amounted to $2.1 billion, providing sufficient liquidity for ongoing operations[271]. - The company anticipates that cash flows from operations and existing borrowing capacity will be sufficient to fund ongoing operating needs and strategic investments throughout 2021[268]. - The company repurchased 314,000 shares of common stock for $29.4 million during the three months ended June 30, 2021, and has an additional $489.6 million authorized for repurchases through June 30, 2023[283]. - The company issued $1.00 billion in senior notes in September 2020, with a maturity date of October 1, 2030, and an interest payment of $14.5 million due semi-annually[286]. Tax and Regulatory Matters - The effective tax rate for the three months ended June 30, 2021, was 25.6%, down from 30.6% in the same period of 2020, primarily due to changes in the mix of earnings across jurisdictions[226]. - The effective tax rate for the six months ended June 30, 2021, was 20.6%, down from 29.7% in 2020, primarily due to an $18.4 million tax benefit from equity incentive awards[239]. - The total amount of unrecognized tax benefits relating to uncertain tax positions was $39.1 million as of June 30, 2021, with a potential decrease of up to $13.3 million expected within the next 12 months[307]. Cash Flow and Working Capital - Net cash provided by operating activities for the six months ended June 30, 2021, was $314.6 million, compared to $725.0 million in 2020, indicating a decrease in cash flow generation[272]. - Net cash provided by operating activities for the six months ended June 30, 2021, was negatively impacted by increased working capital requirements, particularly due to two larger electric transmission projects in Canada[274]. - Days sales outstanding (DSO) as of June 30, 2021, was 83 days, slightly higher than 82 days on June 30, 2020, primarily due to increased working capital needs[276]. - Net cash used in investing activities for the six months ended June 30, 2021, included $158.4 million in capital expenditures and $114.3 million for equity and other investments[277]. Performance Obligations and Backlog - Remaining performance obligations increased by 11.1%, or $441.8 million, to $4.43 billion as of June 30, 2021, compared to $3.99 billion as of December 31, 2020[179]. - Total backlog increased by 12.2%, or $1.85 billion, to $16.98 billion as of June 30, 2021, compared to $15.13 billion as of December 31, 2020[179]. - MSAs accounted for 64% of the estimated 12-month backlog as of June 30, 2021, indicating a stable revenue stream from long-term contracts[266]. - Total remaining performance obligations as of June 30, 2021, were $3.4 billion, with a total backlog of $9.0 billion, indicating strong future revenue potential[267].