10-QPeriod: Q1 FY2017

QUANTA SERVICES, INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 9, 2017For Securities:PWR

Summary

Quanta Services, Inc. (PWR) reported strong revenue growth in the first quarter of 2017, with a 27.1% increase year-over-year to $2.18 billion. This growth was primarily driven by a significant rebound in the Oil and Gas Infrastructure Services segment, which saw an 82.0% revenue increase due to renewed customer capital spending on larger pipeline projects. The company also demonstrated improved profitability, with gross profit increasing by 30.9% and operating income more than doubling to $75.1 million. The Electric Power Infrastructure Services segment also showed steady performance, with revenues up 2.7% and operating income rising 14.1%. Despite some challenges, such as weather delays on a natural gas transmission project, the company's overall financial health appears robust, supported by a strong backlog and ample liquidity through its credit facility.

Financial Highlights

51 data points
Beta

Revenue

$2.18B

12.2% Gross Margin

Net Income

$48.44M

2.2% Net Margin

EPS (Diluted)

$0.31

Total Assets

$5.54B

Cash & Equivalents

$106.51M

Free Cash Flow

-$50.73M

Financial Statements
Beta
Revenue$2.18B
Gross Profit$266.19M
SG&A Expenses$184.55M
Operating Income$75.07M
Interest Expense$3.96M
Net Income$48.44M
EPS (Basic)$0.31
Shares Outstanding (Basic)155.17M
Shares Outstanding (Diluted)155.17M

Key Highlights

  • 1Revenues increased significantly by 27.1% to $2.18 billion, driven by a strong performance in the Oil and Gas Infrastructure Services segment.
  • 2Operating income more than doubled, increasing to $75.1 million from $37.3 million in the prior year's comparable quarter.
  • 3Gross profit margin improved to 12.2% from 11.9% year-over-year, benefiting from higher-margin project contributions and a favorable revenue mix.
  • 4The Oil and Gas Infrastructure Services segment saw substantial revenue growth of 82.0% due to increased capital spending on pipeline projects.
  • 5The Electric Power Infrastructure Services segment maintained steady growth, with revenues up 2.7% and operating income up 14.1%.
  • 6The company's backlog remained strong, totaling $9.24 billion as of March 31, 2017, indicating robust future revenue potential.
  • 7Cash flow from operations turned negative year-over-year (-$3.8 million vs. $205.8 million), largely due to increased working capital needs from the surge in oil and gas projects and invoicing challenges on certain Canadian transmission projects.

Frequently Asked Questions

The primary driver of revenue growth was a significant increase in the Oil and Gas Infrastructure Services segment, which saw revenues rise by 82.0% to $958.7 million. This was attributed to renewed customer capital spending on larger pipeline transmission projects that moved into full construction.

Profitability improved significantly. Gross profit increased by 30.9% to $266.2 million, and operating income more than doubled to $75.1 million. The gross profit margin also improved to 12.2% from 11.9% in the prior year's quarter.

Quanta Services reports under two segments: Electric Power Infrastructure Services and Oil and Gas Infrastructure Services. The Electric Power segment showed steady growth with revenues up 2.7% to $1.22 billion and operating income up 14.1% to $99.7 million. The Oil and Gas segment experienced substantial growth, with revenues up 82.0% and operating income up significantly to $38.8 million.

The company encountered weather delays on a natural gas transmission project, leading to an increase in estimated project costs and the recognition of $16.5 million in losses for that project. Additionally, invoicing challenges and billing delays on two large electric transmission projects in Canada impacted working capital and days sales outstanding.