10-QPeriod: Q1 FY2010

QUANTA SERVICES, INC. Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 10, 2010For Securities:PWR

Summary

Quanta Services, Inc. (PWR) reported total revenues of $748.3 million for the first quarter ended March 31, 2010, a slight increase of 1.3% compared to the same period in the prior year. The company experienced mixed segment performance, with growth in Natural Gas and Pipeline Infrastructure Services (up 69.6% driven by the Price Gregory acquisition) and Fiber Optic Licensing (up 28.7%). However, the Electric Power Infrastructure Services segment saw a notable decline of 14.6% in revenue, primarily due to reduced customer capital spending and adverse weather conditions. Net income attributable to common stock rose to $23.7 million from $21.4 million year-over-year, representing a 3.2% net profit margin, up from 2.9%. The company highlighted strong liquidity with $659.8 million in cash and cash equivalents and a $1.1 billion working capital position, though it announced plans to redeem its 3.75% convertible subordinated notes on May 14, 2010, for approximately $146.1 million. Management anticipates improving economic conditions will drive increased demand for services in the latter half of 2010, particularly in transmission infrastructure and natural gas services.

Financial Highlights

48 data points
Beta

Revenue

$748.28M

17.3% Gross Margin

Net Income

$23.74M

3.2% Net Margin

EPS (Diluted)

$0.11

Total Assets

$4.05B

Cash & Equivalents

$659.82M

Free Cash Flow

-$40.17M

Financial Statements
Beta
Revenue$748.28M
Gross Profit$129.14M
SG&A Expenses$81.00M
Operating Income$42.29M
Interest Expense$2.86M
Net Income$23.74M
EPS (Basic)$0.11
EPS (Diluted)$0.11
Shares Outstanding (Basic)208.67M
Shares Outstanding (Diluted)210.34M

Key Highlights

  • 1Total revenues for Q1 2010 were $748.3 million, a 1.3% increase year-over-year.
  • 2Net income attributable to common stock increased to $23.7 million from $21.4 million in Q1 2009.
  • 3The Natural Gas and Pipeline Infrastructure Services segment revenue surged 69.6%, largely due to the acquisition of Price Gregory.
  • 4The Electric Power Infrastructure Services segment experienced a revenue decline of 14.6% due to reduced customer spending and weather impacts.
  • 5The company maintained strong liquidity with $659.8 million in cash and cash equivalents as of March 31, 2010.
  • 6Quanta Services announced the redemption of its $143.8 million in 3.75% convertible subordinated notes scheduled for May 14, 2010.
  • 7Management expects improving economic conditions to boost demand for services in the second half of 2010.

Frequently Asked Questions

Revenue growth was primarily driven by the Natural Gas and Pipeline Infrastructure Services segment, which saw a significant increase due to the acquisition of Price Gregory, and the Fiber Optic Licensing segment, which experienced growth from network expansion. The Telecommunications Infrastructure Services segment also saw a modest increase due to long-haul fiber installation projects.

The Electric Power Infrastructure Services segment's revenue decreased by 14.6% due to a combination of factors. These included reduced capital spending by customers, substantial rainfall and snowfall during the quarter that caused project delays, and a decrease in revenue from both electric power distribution and transmission services.

Quanta Services reported strong liquidity with $659.8 million in cash and cash equivalents and $1.1 billion in working capital as of March 31, 2010. The company announced plans to redeem all of its outstanding 3.75% convertible subordinated notes, totaling approximately $143.8 million in principal, on May 14, 2010, which is expected to be funded by cash on hand. Management anticipates that existing cash, borrowing capacity under its credit facility, and future cash flows will be sufficient to meet its obligations and growth plans.

Management anticipates improving economic conditions will lead to increased demand for its services in the latter half of 2010. Key areas of expected growth include transmission infrastructure upgrades in the electric power sector, continued development in the natural gas industry, and potential broadband deployment projects in telecommunications. The company remains optimistic about long-term opportunities despite current economic challenges.