01—Abstract
Summary
Summary of the 10-K filed March 1, 2011. Cited figures are marked; the original filing is the authoritative source.
Quanta Services, Inc. reported robust revenue growth in 2010, driven significantly by the acquisition of Price Gregory Services, Inc. The company's Electric Power Infrastructure Services segment remains its largest, contributing 52%a of total revenue, followed by Natural Gas and Pipeline Infrastructure Services at 36%.
Strategic acquisitions, including Valard Construction LP, demonstrate Quanta's focus on expanding its capabilities, particularly in Canada. Despite an improving economic environment, Quanta continues to navigate challenges such as project timing, weather impacts, and competitive pricing, which affected margins in certain segments.
The company maintains a strong financial position with significant working capital and an available credit facility, positioning it to pursue future growth opportunities through organic expansion and potential acquisitions. Investors should monitor the company's ability to manage project execution and adapt to evolving industry trends.
02—Key points
Key Highlights
- Total revenues increased by 18.5% to $3.93 billion in 2010, primarily due to the acquisition of Price Gregory Services, Inc.
- The Electric Power Infrastructure Services segment generated $2.05 billion in revenue (52% of total), while the Natural Gas and Pipeline Infrastructure Services segment contributed $1.40 billion (36%).
- Acquired Valard Construction LP in October 2010 to expand electric power infrastructure capabilities in Canada.
- Gross margin decreased to 16.1% in 2010 from 17.9% in 2009, impacted by lower margins in electric power, natural gas, and telecommunications services, partially offset by improved fiber optic licensing margins.
- Selling, general, and administrative expenses as a percentage of revenue decreased to 8.6% in 2010 from 9.4% in 2009 due to higher revenues.
- The company redeemed all outstanding 3.75% convertible subordinated notes in May 2010.
- As of December 31, 2010, Quanta had $539.2 million in cash and cash equivalents and $298.0 million available under its credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Quanta Services kept $0.04.
- Revenue$3.63B100.0%
- Cost of revenue−$3.04B83.8%
- Gross profit$589.5M16.2%
- Operating costs−$345.5M9.5%
- Operating income$244.0M6.7%
- Interest, other & tax−$90.8M2.5%
- Net income$153.2M4.2%
Where FY2010 revenue went
$3.63B- Cost of revenue: $3.04B, 84% of revenue
- Net income: $153.2M, 4.2% of revenue
- SG&A: $307.9M, 8.5% of revenue
- Other operating costs: $37.7M, 1.0% of revenue
- Interest, other & tax: $90.8M, 2.5% of revenue
Kept 4.2% as net incomeNet income $153.2M · 4.2%Other operating costs $37.7M · 1.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 1, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $3.63B$3.32B | +9.4% |
| Gross Profit | $589.52M$593.49M | −0.7% |
| SG&A Expenses | $307.88M$312.41M | −1.5% |
| Operating Income | $243.99M$242.12M | +0.8% |
| Interest Expense | $4.90M$11.27M | −56.5% |
| Net Income | $153.18M$162.16M | −5.5% |
| EPS (Basic) | $0.73$0.81 | −9.9% |
| EPS (Diluted) | $0.72$0.81 | −11.1% |
| Shares Outstanding (Basic) | 210.05M200.73M | +4.6% |
| Shares Outstanding (Diluted) | 211.80M201.31M | +5.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Quanta Services' revenue growth in 2010?
Quanta Services' revenue growth in 2010 was primarily driven by the acquisition of Price Gregory Services, Inc., which significantly boosted the Natural Gas and Pipeline Infrastructure Services segment. Additionally, contributions from Valard Construction LP, acquired in late 2010, and continued network expansion in the Fiber Optic Licensing segment also contributed to the overall increase.
How did the acquisitions impact the company's financial performance?
The acquisitions of Price Gregory and Valard were key strategic moves to expand Quanta's service offerings and geographic reach. While these acquisitions contributed to revenue growth, they also led to increased selling, general, and administrative expenses related to integration. The company reported a loss on early extinguishment of debt related to refinancing activities, but overall, the acquisitions are viewed as positive steps for long-term growth.
What challenges did Quanta Services face in 2010, and how did they affect profitability?
Quanta Services faced challenges including project timing, adverse weather conditions, and competitive pricing, which led to lower gross margins in several key segments (Electric Power, Natural Gas and Pipeline, and Telecommunications). Despite these pressures, the company managed SG&A expenses as a percentage of revenue due to higher overall revenues, and the Fiber Optic Licensing segment showed strong performance.
What is the company's outlook for 2011 and beyond?
Quanta Services anticipates continued improvement in its core markets, with expected growth in electric transmission, gas transmission, telecommunications, renewables, and fiber licensing. The company expects increased utility spending on infrastructure upgrades and anticipates leveraging its strong market position to capitalize on these opportunities. However, ongoing economic and regulatory uncertainties may impact the timing and scope of some projects.
06—Continue