01—Abstract
Summary
Summary of the 10-K filed February 28, 2018. Cited figures are marked; the original filing is the authoritative source.
Quanta Services, Inc. (PWR) reported strong revenue growth in its 2017 10-K filing, with total revenues reaching $9.47 billiona, a 23.7% increase year-over-year.
This growth was driven by a significant expansion in its Oil and Gas Infrastructure Services segment, largely due to increased capital spending by customers on midstream gas pipeline transmission projects, and a solid performance in the Electric Power Infrastructure Services segment, bolstered by electric transmission projects and emergency restoration services. The company highlighted increased operating income across both segments, with the Electric Power segment showing robust margin expansion. Despite a notable goodwill impairment charge impacting the Oil and Gas segment, Quanta demonstrated operational resilience and strategic execution.
The company also reported healthy liquidity and access to credit facilities, positioning it to fund ongoing operations and future growth initiatives. Investors should note the company's strategic acquisitions, ongoing commitment to training and workforce development, and its positive long-term outlook for infrastructure spending across its key markets.
02—Key points
Key Highlights
- Total revenues increased by 23.7% to $9.47 billion in 2017, driven by strong performance in both Electric Power Infrastructure Services and Oil and Gas Infrastructure Services segments.
- Operating income increased by 18.1% to $378.8 million, reflecting improved project execution and higher volumes.
- The Electric Power Infrastructure Services segment saw revenues grow by 15.4% to $5.60 billion, with operating income increasing by 30.9% to $518.1 million and margins improving to 9.3%.
- The Oil and Gas Infrastructure Services segment experienced significant revenue growth of 38.1% to $3.87 billion, driven by midstream gas pipeline transmission projects, although operating margins slightly decreased to 4.8% due to various project-related costs.
- Quanta completed several strategic acquisitions in 2017, including Stronghold, Ltd., which significantly contributed to the Oil and Gas segment's growth.
- The company reported a goodwill impairment charge of $57.0 million in the fourth quarter of 2017, primarily impacting two reporting units within the Oil and Gas Infrastructure Services Division.
- As of December 31, 2017, Quanta had $138.3 million in cash and cash equivalents and $1.38 billion in working capital, with $728.3 million available under its senior secured revolving credit facility, indicating strong liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Quanta Services kept $0.03.
- Revenue$9.47B100.0%
- Cost of revenue−$8.22B86.9%
- Gross profit$1.24B13.1%
- Operating costs−$863.0M9.1%
- Operating income$378.8M4.0%
- Interest, other & tax−$60.6M0.6%
- Net income$318.2M3.4%
Where FY2017 revenue went
$9.47B- Cost of revenue: $8.22B, 87% of revenue
- Net income: $318.2M, 3.4% of revenue
- SG&A: $777.9M, 8.2% of revenue
- Other operating costs: $85.1M, 0.9% of revenue
- Interest, other & tax: $60.6M, 0.6% of revenue
Kept 3.4% as net incomeNet income $318.2M · 3.4%Other operating costs $85.1M · 0.9%Interest, other & tax $60.6M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 28, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $9.47B$7.65B | +23.7% |
| Cost of Revenue | $8.22B$6.64B | +23.9% |
| Gross Profit | $1.24B$1.01B | +22.5% |
| SG&A Expenses | $777.92M$653.34M | +19.1% |
| Operating Income | $378.85M$320.81M | +18.1% |
| Interest Expense | $20.95M$14.89M | +40.7% |
| Net Income | $318.23M$198.38M | +60.4% |
| EPS (Basic) | $2.02$1.26 | +60.3% |
| EPS (Diluted) | $2.00$1.26 | +58.7% |
| Shares Outstanding (Basic) | 156.12M157.29M | −0.7% |
| Shares Outstanding (Diluted) | 157.16M157.29M | −0.1% |
05—Questions
Frequently Asked Questions
What was Quanta's revenue and net income performance in 2017?
Quanta reported a significant increase in revenues, reaching $9.47 billion in 2017, up 23.7% from $7.65 billion in 2016. Net income attributable to common stock was $315.0 million in 2017, compared to $198.4 million in 2016. Diluted earnings per share from continuing operations were $2.00 in 2017, up from $1.26 in 2016.
Which segment drove revenue growth, and what were the margin trends?
The Oil and Gas Infrastructure Services segment was the primary driver of revenue growth, increasing by 38.1% to $3.87 billion, largely due to increased customer spending on midstream gas pipeline transmission projects. The Electric Power Infrastructure Services segment also showed robust growth, with revenues up 15.4% to $5.60 billion. Electric Power segment margins improved to 9.3%, while Oil and Gas segment margins slightly decreased to 4.8%.
Did Quanta make any significant acquisitions or divestitures in 2017?
Yes, Quanta made several strategic acquisitions in 2017. Most notably, it acquired Stronghold, Ltd., which specializes in high-pressure and critical-path solutions for the downstream and midstream energy markets. The company also acquired a communications infrastructure services contractor and an electrical and communications contractor. No significant divestitures were mentioned for 2017.
What is the company's outlook for 2018, and what are the key risks?
Quanta expressed a positive long-term outlook, believing both its Electric Power and Oil and Gas segments are entering a renewed multi-year up-cycle driven by infrastructure spending needs. Key risks include the cyclical nature of the oil and gas industry, potential project delays due to regulatory or weather issues, labor shortages for skilled positions like linemen, and competition. The company is focused on long-term profitable growth and capitalizing on infrastructure trends.
06—Continue