01—Abstract
Summary
Summary of the 10-K filed March 2, 2015. Cited figures are marked; the original filing is the authoritative source.
Quanta Services, Inc. reported robust revenue growth of 20.4% in 2014, reaching $7.85 billiona, driven by strong performance in both its Electric Power and Oil & Gas Infrastructure Services segments.
The company saw increased demand across transmission, distribution, and power generation projects, alongside significant contributions from acquired businesses. Despite this revenue growth, gross profit margins slightly decreased to 15.7%b from 16.2% in the prior year, attributed to challenging weather conditions, particularly in Canada and northern U.S. regions, and lower margins on certain power generation projects.
Selling, general, and administrative expenses saw a notable increase, primarily due to significant charges related to a long-term contract receivable and an arbitration decision, impacting overall profitability. The company ended the year with a strong balance sheet, including working capital of $1.42 billionc and $190.5 million in cash and cash equivalents, while also continuing its strategic acquisition and share repurchase programs.
02—Key points
Key Highlights
- Reported consolidated revenues of $7.85 billion for the year ended December 31, 2014, a 20.4% increase from $6.52 billion in 2013, driven by growth in both Electric Power and Oil & Gas Infrastructure Services segments.
- Electric Power Infrastructure Services segment revenues increased by 16.9% to $5.24 billion, supported by increased capital spending from customers and contributions from acquisitions.
- Oil & Gas Infrastructure Services segment revenues grew by 30.8% to $2.44 billion, largely due to contributions from acquired companies and increased customer capital spending.
- Gross profit margin declined slightly to 15.7% from 16.2% in the prior year, impacted by adverse weather and lower margins on certain projects.
- Selling, general, and administrative expenses increased significantly by 44.1% to $722.0 million, primarily due to provisions for a long-term contract receivable and an arbitration decision.
- The company reported net income attributable to common stock of $296.7 million, or $1.35 per diluted share, compared to $401.9 million, or $1.87 per diluted share, in the prior year.
- Backlog at December 31, 2014, stood at $9.76 billion, an increase from $8.73 billion in the prior year, indicating strong future revenue potential.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Quanta Services kept $0.04.
- Revenue$7.75B100.0%
- Cost of revenue−$6.58B84.9%
- Gross profit$1.17B15.1%
- Operating costs−$739.7M9.5%
- Operating income$429.1M5.5%
- Interest, other & tax−$132.3M1.7%
- Net income$296.7M3.8%
Where FY2014 revenue went
$7.75B- Cost of revenue: $6.58B, 85% of revenue
- Net income: $296.7M, 3.8% of revenue
- SG&A: $705.5M, 9.1% of revenue
- Interest, other & tax: $132.3M, 1.7% of revenue
Kept 3.8% as net incomeNet income $296.7M · 3.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed March 2, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $7.75B$6.41B | +20.8% |
| Gross Profit | $1.17B$986.93M | +18.4% |
| SG&A Expenses | $705.48M$485.07M | +45.4% |
| Operating Income | $429.06M$476.00M | −9.9% |
| Interest Expense | $4.76M$2.67M | +78.6% |
| Net Income | $296.71M$401.92M | −26.2% |
| EPS (Basic) | $1.35$1.87 | −27.8% |
| EPS (Diluted) | $1.35$1.87 | −27.8% |
| Shares Outstanding (Basic) | 219.67M214.93M | +2.2% |
| Shares Outstanding (Diluted) | 219.69M214.98M | +2.2% |
05—Questions
Frequently Asked Questions
What were Quanta Services' primary revenue drivers in 2014?
Quanta Services experienced significant revenue growth in 2014, primarily driven by its Electric Power Infrastructure Services segment ($5.24 billion, up 16.9%) and its Oil & Gas Infrastructure Services segment ($2.44 billion, up 30.8%). The growth was fueled by increased capital spending from customers on transmission, distribution, and power generation projects, as well as the inclusion of revenues from nine strategic acquisitions completed during the year.
What impacted Quanta's profitability in 2014?
While revenue increased substantially, Quanta's profitability was impacted by a decline in gross profit margin to 15.7% (from 16.2% in 2013) due to adverse weather conditions and lower margins on certain power generation projects. Additionally, Selling, General, and Administrative (SG&A) expenses rose significantly by 44.1% to $722.0 million. This increase was primarily due to a $102.5 million provision for a long-term contract receivable related to an arbitration proceeding and a $38.8 million expense from an arbitration decision on a separate contract dispute.
How did acquisitions contribute to Quanta's performance in 2014?
Quanta completed nine acquisitions in 2014 across its Electric Power and Oil & Gas segments, both domestically and internationally. These acquisitions contributed approximately $225 million in revenues to the Electric Power segment and $500 million to the Oil & Gas segment, playing a key role in the company's overall revenue growth. The company also invested $262.2 million in acquisitions during the year.
What is the outlook for Quanta's key business segments based on this filing?
The company expects continued growth opportunities, particularly in the Electric Power segment, driven by the aging North American electric grid requiring significant upgrades and maintenance, and by renewable energy mandates. In the Oil & Gas segment, growth is anticipated from the development of unconventional shale formations and oil sands, despite near-term uncertainty due to declining oil prices. The company also sees long-term potential in pipeline integrity services and offshore energy markets.
What was the company's financial position at the end of 2014?
Quanta Services maintained a strong financial position at the end of 2014. Key figures include $1.42 billion in working capital, $190.5 million in cash and cash equivalents, and $72.5 million in long-term debt, net of current maturities. The company also had $919.5 million available under its $1.325 billion senior secured revolving credit facility.
06—Continue