QUANTA SERVICES REPORTS SECOND QUARTER 2023 RESULTS
- Record quarterly revenues of $5.05 billion, a 19% increase from Q2 2022
- Net income of $165.9 million, a significant improvement from Q2 2022
- Adjusted diluted EPS of $1.65, up from $1.55 in Q2 2022
- Raised full-year 2023 revenue, adjusted EBITDA, and EPS expectations, reflecting strong demand for services
- None.
Second Quarter Consolidated Revenues of
Second Quarter GAAP Diluted EPS of
Net Income Attributable to Common Stock of
Remaining Performance Obligations of
Raising Full-Year 2023 Revenue, Adjusted EBITDA and EPS Expectations
* = Record quarterly or record second quarter result
"Quanta generated record revenues in the second quarter, which exceeded
"As a result of our solid year-to-date results, as well as our expectations for increased activity and visibility for the remainder of this year, particularly for our Renewable Infrastructure Solutions segment, we are increasing our full-year 2023 financial expectations for revenue, adjusted EBITDA and adjusted EPS. We believe Quanta's financial strength positions us well to continue to drive stockholder value through organic growth and the opportunistic deployment of capital into acquisitions, while also continuing to return capital to our stockholders. We look forward to the remainder of 2023 and beyond, as we continue to execute strategic initiatives that position the company for multi-year profitable growth."
Certain items impacted Quanta's results for the three and six months ended June 30, 2023 and 2022 and are reflected as adjustments in the calculation of Quanta's adjusted diluted earnings per share attributable to common stock (a non-GAAP financial measure). These items are described in the accompanying tables reconciling adjusted diluted earnings per share attributable to common stock to GAAP diluted earnings per share attributable to common stock. Quanta completed three acquisitions during the first six months of 2023 and one acquisition during the full year 2022, and the results of the acquired businesses are included in Quanta's consolidated results from the respective acquisition dates. For further information on the items that impacted comparability of 2023 and 2022, see the footnotes in the accompanying tables presenting Supplemental Segment Data and reconciliations of EBITDA, adjusted EBITDA and adjusted diluted earnings per share attributable to common stock (non-GAAP financial measures) to their comparable GAAP financial measures.
RECENT HIGHLIGHT
- Named 2023 Top Solar Contractor by Solar Power World - In July 2023, Quanta announced that it was named the top solar infrastructure solutions provider in
the United States by Solar Power World, an achievement made possible by the collaborative work of three Quanta operating companies: Blattner Company, RP Construction Services and The Ryan Company. The combined expertise and efforts of the three companies installed more than two gigawatts of domestic solar generating capacity in 2022 alone – a new milestone of achievement in Top Solar Contractor history.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2023
Revenues in the six months ended June 30, 2023 were
FULL-YEAR 2023 OUTLOOK
The long-term outlook for Quanta's business is positive. However, weather, regulatory, permitting, supply chain challenges and other factors affecting project timing and execution have impacted, and may impact in the future, Quanta's financial results. Additionally, we continue to consider future uncertainty associated with overall challenges to the domestic and global economy, including inflation, increased interest rates and potential recessionary economic conditions. Quanta's financial outlook for revenues, margins and earnings reflects management's effort to align these uncertainties with the backlog (a non-GAAP financial measure) the Company is executing on and the opportunities expected to materialize during the remainder of 2023.
Prior to the Company's conference call, management will post a summary of Quanta's updated 2023 guidance expectations with additional commentary in the "News and Events" and "Financial Info" areas of the Investor Relations section of Quanta's website at http://investors.quantaservices.com.
The following forward-looking statements are based on current expectations, and actual results may differ materially, as described below in Cautionary Statement About Forward-Looking Statements and Information. For the full year ending December 31, 2023, Quanta now expects revenues to range between
NON-GAAP FINANCIAL MEASURES
The financial measures not prepared in conformity with generally accepted accounting principles in
Please see the accompanying tables for reconciliations of the following non-GAAP financial measures for Quanta's current and historical results and full-year 2023 expectations (as applicable): adjusted diluted earnings per share attributable to common stock to diluted earnings per share attributable to common stock; adjusted net income attributable to common stock, EBITDA and adjusted EBITDA to net income attributable to common stock; free cash flow to net cash provided by operating activities; and backlog to remaining performance obligations.
CONFERENCE CALL INFORMATION
Quanta Services has scheduled a conference call for 9:00 a.m. Eastern Time on August 3, 2023, which will also be broadcast live over the Internet. Quanta will utilize a slide presentation to accompany its prepared remarks, which will be viewable through the webcast and will also be available in the "News and Events" and "Financial Info" areas of the Investor Relations section of Quanta's website prior to the start of the call. To participate in the call, dial 1-201-689-8345 or 1-877-407-8291 at least 10 minutes before the conference call begins and ask for the Quanta Services Second Quarter Earnings Conference Call or visit the Investor Relations section of the Quanta Services website at http://investors.quantaservices.com to access the Internet broadcast. Please allow at least 15 minutes to register and download and install any necessary audio software. For those who cannot participate live, shortly following the call a digital recording will be available on the Company's website and a telephonic replay will be available through August 10, 2023 by dialing 1-877-660-6853 and referencing the conference ID 13736215. For more information, please contact Kip Rupp, Vice President - Investor Relations at Quanta Services, at 713-341-7260 or investors@quantaservices.com.
FOLLOW QUANTA IR ON SOCIAL MEDIA
Investors and others should note that while Quanta announces material financial information and makes other public disclosures of information regarding Quanta through
ABOUT QUANTA SERVICES
Quanta Services is an industry leader in providing specialized infrastructure solutions to the utility, renewable energy, communications, pipeline, and energy industries. Quanta's comprehensive services include designing, installing, repairing and maintaining energy and communications infrastructure. With operations throughout
Cautionary Statement About Forward-Looking Statements and Information
This press release (and oral statements regarding the subject matter of this press release, including those made on the conference call and webcast announced herein) contains forward-looking statements intended to qualify for the "safe harbor" from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements relating to projected revenues, net income, earnings per share, margins, cash flows, liquidity, weighted average shares outstanding, capital expenditures, interest rates and tax rates, as well as other projections of operating results and GAAP and non-GAAP financial results, including EBITDA, adjusted EBITDA and backlog; expectations regarding Quanta's business or financial outlook; expectations regarding opportunities, technological developments, competitive positioning, future economic and regulatory conditions and other trends in particular markets or industries, including with respect to Quanta's increased operations in the renewable energy market and the transition to a reduced-carbon economy; expectations regarding Quanta's plans and strategies; the business plans or financial condition of Quanta's customers, including with respect to the transition to a reduced-carbon economy; the potential benefits from, and future financial and operational performance of, acquired businesses and investments; beliefs and assumptions about the collectability of receivables; the expected value of contracts or intended contracts with customers, as well as the expected timing, scope, services, term or results of any awarded or expected projects; possible recovery of pending or contemplated insurance claims, change orders and claims asserted against customers or third parties; the development of and opportunities with respect to future projects, including renewable energy projects and other projects designed to support transition to a reduced-carbon economy, electrical grid modernization, upgrade and hardening projects, and larger transmission and pipeline projects; expectations regarding the future availability and price of materials and equipment necessary for the performance of Quanta's business; the expected impact of global and domestic economic conditions on Quanta's business, financial condition, results of operations, cash flows, liquidity and demand for our services, including inflation, interest rates and recessionary economic conditions and commodity prices and production volumes; the expected impact of changes or potential changes to climate and the physical and transition risks associated with climate change and the transition to a reduced-carbon economy; future capital allocation initiatives, including the amount and timing of, and strategies with respect to, any future acquisitions, investments, cash dividends, repurchases of equity or debt securities or repayments of other outstanding debt; the impact of existing or potential legislation or regulation; potential opportunities that may be indicated by bidding activity or discussions with customers; the future demand for, availability of and costs related to labor resources in the industries Quanta serves; the expected recognition and realization of remaining performance obligations and backlog; expectations regarding the outcome of pending or threatened legal proceedings, as well as the collection of amounts awarded in legal proceedings; and expectations regarding Quanta's ability to reduce its debt and maintain its current credit ratings; as well as statements reflecting expectations, intentions, assumptions or beliefs about future events, and other statements that do not relate strictly to historical or current facts. These forward-looking statements are not guarantees of future performance; rather they involve or rely on a number of risks, uncertainties, and assumptions that are difficult to predict or are beyond our control, and reflect management's beliefs and assumptions based on information available at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements and that any or all of our forward-looking statements may turn out to be inaccurate or incorrect. Forward-looking statements can be affected by inaccurate assumptions and by known or unknown risks and uncertainties including, among others, market, industry, economic, financial or political conditions that are outside of the control of Quanta, including economic, energy, infrastructure and environmental policies and plans that are adopted or proposed by the
Quanta Services, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the Three and Six Months Ended June 30, 2023 and 2022 (In thousands, except per share information) (Unaudited) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
Revenues | $ 5,048,610 | $ 4,232,003 | $ 9,477,436 | $ 8,197,528 | ||||||||||
Cost of services | 4,324,511 | 3,607,413 | 8,180,142 | 7,024,767 | ||||||||||
Gross profit | 724,099 | 624,590 | 1,297,294 | 1,172,761 | ||||||||||
Equity in earnings of integral unconsolidated affiliates | 9,370 | 18,565 | 18,990 | 33,717 | ||||||||||
Selling, general and administrative expenses | (384,171) | (323,245) | (768,723) | (648,132) | ||||||||||
Amortization of intangible assets | (70,025) | (107,945) | (142,428) | (223,696) | ||||||||||
Asset impairment charges | — | (2,800) | — | (2,800) | ||||||||||
Change in fair value of contingent consideration liabilities | — | (809) | — | (5,978) | ||||||||||
Operating income | 279,273 | 208,356 | 405,133 | 325,872 | ||||||||||
Interest and other financing expenses | (48,189) | (28,639) | (89,882) | (53,367) | ||||||||||
Interest income | 1,448 | 222 | 2,964 | 291 | ||||||||||
Other income (expense), net | 3,419 | (42,527) | 11,285 | (43,800) | ||||||||||
Income before income taxes | 235,951 | 137,412 | 329,500 | 228,996 | ||||||||||
Provision for income taxes | 69,367 | 41,252 | 65,946 | 47,808 | ||||||||||
Net income | 166,584 | 96,160 | 263,554 | 181,188 | ||||||||||
Less: Net income attributable to non-controlling interests | 685 | 8,140 | 2,609 | 8,527 | ||||||||||
Net income attributable to common stock | $ 165,899 | $ 88,020 | $ 260,945 | $ 172,661 | ||||||||||
Earnings per share attributable to common stock: | ||||||||||||||
Basic | $ 1.14 | $ 0.61 | $ 1.80 | $ 1.20 | ||||||||||
Diluted | $ 1.12 | $ 0.59 | $ 1.75 | $ 1.16 | ||||||||||
Shares used in computing earnings per share: | ||||||||||||||
Weighted average basic shares outstanding | 145,422 | 143,851 | 144,947 | 143,697 | ||||||||||
Weighted average diluted shares outstanding | 148,773 | 148,211 | 148,717 | 148,327 |
Quanta Services, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | ||||||
June 30, | December 31, | |||||
2023 | 2022 | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ 361,966 | $ 428,505 | ||||
Accounts receivable, net | 4,075,206 | 3,674,525 | ||||
Contract assets | 1,357,233 | 1,080,206 | ||||
Inventories | 156,505 | 103,265 | ||||
Prepaid expenses and other current assets | 371,482 | 249,569 | ||||
Total current assets | 6,322,392 | 5,536,070 | ||||
PROPERTY AND EQUIPMENT, net | 2,233,610 | 2,030,464 | ||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 241,814 | 229,691 | ||||
OTHER ASSETS, net | 633,569 | 622,736 | ||||
OTHER INTANGIBLE ASSETS, net | 1,424,366 | 1,458,631 | ||||
GOODWILL | 3,885,099 | 3,586,745 | ||||
Total assets | $ 14,740,850 | $ 13,464,337 | ||||
LIABILITIES AND EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Current maturities of long-term debt | $ 41,249 | $ 37,495 | ||||
Current portion of operating lease liabilities | 76,648 | 74,052 | ||||
Accounts payable and accrued expenses | 2,516,908 | 2,153,129 | ||||
Contract liabilities | 1,128,864 | 1,141,518 | ||||
Total current liabilities | 3,763,669 | 3,406,194 | ||||
LONG-TERM DEBT, net of current maturities | 4,216,522 | 3,692,432 | ||||
OPERATING LEASE LIABILITIES, net of current portion | 181,705 | 171,512 | ||||
DEFERRED INCOME TAXES | 254,953 | 227,861 | ||||
INSURANCE AND OTHER NON-CURRENT LIABILITIES | 595,022 | 567,519 | ||||
Total liabilities | 9,011,871 | 8,065,518 | ||||
TOTAL STOCKHOLDERS' EQUITY | 5,720,933 | 5,383,464 | ||||
NON-CONTROLLING INTERESTS | 8,046 | 15,355 | ||||
TOTAL EQUITY | 5,728,979 | 5,398,819 | ||||
Total liabilities and equity | $ 14,740,850 | $ 13,464,337 |
Quanta Services, Inc. and Subsidiaries
Supplemental Segment Data
For the Three and Six Months Ended
June 30, 2023 and 2022
(In thousands, except percentages)
(Unaudited)
Segment Results
Quanta reports its results under three reportable segments: (1) Electric Power Infrastructure Solutions, (2) Renewable Energy Infrastructure Solutions and (3) Underground Utility and Infrastructure Solutions. The following table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated. Operating margins are calculated by dividing operating income by revenues.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues: | |||||||||||||||
Electric Power Infrastructure Solutions | 47.9 % | 52.0 % | 50.1 % | 52.9 % | |||||||||||
Renewable Energy Infrastructure Solutions | 1,389,368 | 27.5 | 924,236 | 21.8 | 2,397,668 | 25.3 | 1,799,868 | 22.0 | |||||||
Underground Utility and Infrastructure Solutions | 1,243,988 | 24.6 | 1,108,337 | 26.2 | 2,328,477 | 24.6 | 2,059,533 | 25.1 | |||||||
Consolidated revenues | 100.0 % | 100.0 % | 100.0 % | 100.0 % | |||||||||||
Operating income (loss): | |||||||||||||||
Electric Power Infrastructure Solutions (a) | 244,017 | 10.1 % | 232,150 | 10.6 % | 459,166 | 9.7 % | 435,569 | 10.0 % | |||||||
Renewable Energy Infrastructure Solutions | 110,487 | 8.0 % | 81,687 | 8.8 % | 146,143 | 6.1 % | 151,629 | 8.4 % | |||||||
Underground Utility and Infrastructure Solutions | 107,207 | 8.6 % | 89,943 | 8.1 % | 168,780 | 7.2 % | 138,118 | 6.7 % | |||||||
Corporate and Non-Allocated Costs (b) | (182,438) | (3.6) % | (195,424) | (4.6) % | (368,956) | (3.9) % | (399,444) | (4.9) % | |||||||
Consolidated operating income | $ 279,273 | 5.5 % | $ 208,356 | 4.9 % | $ 405,133 | 4.3 % | $ 325,872 | 4.0 % |
(a) Included in Electric Power Infrastructure Solutions operating income was equity in earnings of integral unconsolidated affiliates of |
(b) Included in corporate and non-allocated costs was amortization expense of |
Quanta Services, Inc. and Subsidiaries
Supplemental Data
(In thousands)
(Unaudited)
Remaining Performance Obligations and Backlog (a non-GAAP financial measure)
Quanta's remaining performance obligations represent management's estimate of consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work has not yet begun, which includes estimated revenues attributable to consolidated joint ventures and variable interest entities, revenues from funded and unfunded portions of government contracts to the extent they are reasonably expected to be realized, and revenues from change orders and claims to the extent management believes they will be earned and are probable of collection.
Quanta has also historically disclosed its backlog, a measure commonly used in its industry but not recognized under GAAP. Quanta believes this measure enables management to more effectively forecast its future capital needs and results and better identify future operating trends that may not otherwise be apparent. Quanta believes this measure is also useful for investors in forecasting Quanta's future results and comparing Quanta to its competitors. Quanta's remaining performance obligations, as described above, are a component of its backlog calculation, which also includes estimated orders under master service agreements (MSAs), including estimated renewals, and non-fixed price contracts expected to be completed within one year. Quanta's methodology for determining backlog may not be comparable to the methodologies used by other companies.
The following table reconciles Quanta's total remaining performance obligations to total backlog by reportable segment, along with estimates of amounts expected to be realized within 12 months:
June 30, 2023 | December 31, 2022 | June 30, 2022 | ||||||||||
12 Month | Total | 12 Month | Total | 12 Month | Total | |||||||
Electric Power Infrastructure Solutions | ||||||||||||
Remaining performance obligations | $ 2,584,140 | $ 4,128,988 | $ 2,124,820 | $ 3,033,472 | $ 2,149,469 | $ 2,779,227 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 4,948,080 | 9,454,858 | 5,415,427 | 10,049,435 | 4,230,888 | 8,945,444 | ||||||
Backlog | $ 7,532,220 | $ 13,583,846 | $ 7,540,247 | $ 13,082,907 | $ 6,380,357 | $ 11,724,671 | ||||||
Renewable Energy Infrastructure Solutions | ||||||||||||
Remaining performance obligations | $ 5,048,636 | $ 6,801,436 | $ 3,183,568 | $ 4,638,115 | $ 2,299,898 | $ 2,911,835 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 118,333 | 206,102 | 57,555 | 84,094 | 52,345 | 90,553 | ||||||
Backlog | $ 5,166,969 | $ 7,007,538 | $ 3,241,123 | $ 4,722,209 | $ 2,352,243 | $ 3,002,388 | ||||||
Underground Utility and Infrastructure Solutions | ||||||||||||
Remaining performance obligations | $ 1,184,061 | $ 1,546,395 | $ 1,038,543 | $ 1,129,837 | $ 1,023,556 | $ 1,229,157 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 1,755,797 | 5,057,435 | 1,973,982 | 5,158,814 | 1,820,560 | 3,894,014 | ||||||
Backlog | $ 2,939,858 | $ 6,603,830 | $ 3,012,525 | $ 6,288,651 | $ 2,844,116 | $ 5,123,171 | ||||||
Total | ||||||||||||
Remaining performance obligations | $ 8,816,837 | $ 12,476,819 | $ 6,346,931 | $ 8,801,424 | $ 5,472,923 | $ 6,920,219 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 6,822,210 | 14,718,395 | 7,446,964 | 15,292,343 | 6,103,793 | 12,930,011 | ||||||
Backlog | $ 15,639,047 | $ 27,195,214 | $ 13,793,895 | $ 24,093,767 | $ 11,576,716 | $ 19,850,230 |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and
Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Three and Six Months Ended
June 30, 2023 and 2022
(In thousands, except per share information)
(Unaudited)
The following table presents the reconciliations of the non-GAAP financial measures of adjusted net income attributable to common stock to net income attributable to common stock and adjusted diluted earnings per share attributable to common stock to diluted earnings per share attributable to common stock for the three and six months ended June 30, 2023 and 2022. These reconciliations are intended to provide useful information to investors and analysts as they evaluate Quanta's performance. Management believes that the exclusion of certain items from net income attributable to common stock and diluted earnings per share attributable to common stock enables it and Quanta's investors to more effectively evaluate Quanta's operations period over period and better identify operating trends that may not otherwise be apparent. However, these non-GAAP measures should not be considered as alternatives to net income attributable to common stock and diluted earnings per share attributable to common stock or other measures of performance that are derived in accordance with GAAP.
As to certain of the items in the table: (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) amortization of intangible assets and amortization included in equity in earnings are impacted by Quanta's acquisition activities and investments in integral unconsolidated affiliates, and therefore can vary from period to period; (iii) acquisition and integration costs vary from period to period depending on the level of Quanta's acquisition activity; (iv) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations; (v) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to Quanta; (vi) unrealized mark-to-market adjustments on Quanta's investment in a publicly traded company vary from period to period based on fluctuations in the market price of such company's common stock; (vii) gains and losses on the sales of investments vary from period to period depending on activity; and (viii) asset impairment charges vary from period to period depending on economic and other factors.
Beginning with the period ended December 31, 2022, adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock exclude the impact of amortization included in equity in earnings of integral unconsolidated affiliates. As described further above, management believes that excluding the impact of this item allows Quanta's investors and management to more effectively evaluate Quanta's operations between periods and identify operating trends. As a result of these changes, the calculation of adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock for the three and six months ended June 30, 2022 have been recast to conform to the current presentation.
Because adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock, as defined, exclude some, but not all, items that affect net income attributable to common stock and diluted earnings per share attributable to common stock, they may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measures, net income attributable to common stock and diluted earnings per share attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included in the table to follow.
Quanta Services, Inc. and Subsidiaries Adjusted Diluted Earnings Per Share June 30, 2023 and 2022 | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
Reconciliation of adjusted net income attributable to common stock: | ||||||||||||||
Net income attributable to common stock (GAAP as reported) | $ 165,899 | $ 88,020 | $ 260,945 | $ 172,661 | ||||||||||
Adjustments: | ||||||||||||||
Acquisition and integration costs (a) | 2,284 | 14,191 | 22,172 | 29,322 | ||||||||||
Asset impairment charges | — | 2,800 | — | 2,800 | ||||||||||
Change in fair value of contingent consideration liabilities | — | 809 | — | 5,978 | ||||||||||
Equity in earnings of non-integral unconsolidated affiliates | (468) | (9,611) | (2,085) | (14,949) | ||||||||||
Unrealized loss from mark-to-market adjustment on investment (b) | — | 41,654 | — | 50,047 | ||||||||||
Gains on sales of investments | (674) | — | (1,496) | (6,696) | ||||||||||
Income tax impact of adjustments (c) | (257) | (9,566) | (4,220) | (13,897) | ||||||||||
Adjusted net income attributable to common stock before certain non-cash adjustments | 166,784 | 128,297 | 275,316 | 225,266 | ||||||||||
Non-cash stock-based compensation | 34,607 | 28,090 | 62,058 | 51,082 | ||||||||||
Amortization of intangible assets | 70,025 | 107,945 | 142,428 | 223,696 | ||||||||||
Amortization included in equity in earnings of integral unconsolidated affiliates | 1,465 | 474 | 3,261 | 947 | ||||||||||
Income tax impact of non-cash adjustments (c) | (27,613) | (35,522) | (54,070) | (71,749) | ||||||||||
Adjusted net income attributable to common stock (d) | $ 245,268 | $ 229,284 | $ 428,993 | $ 429,242 | ||||||||||
Weighted average shares: | ||||||||||||||
Weighted average shares outstanding for diluted and adjusted diluted earnings per share | 148,773 | 148,211 | 148,717 | 148,327 | ||||||||||
Earnings per share attributable to common stock: | ||||||||||||||
Diluted earnings per share attributable to common stock | $ 1.12 | $ 0.59 | $ 1.75 | $ 1.16 | ||||||||||
Adjusted diluted earnings per share attributable to common stock (d) | $ 1.65 | $ 1.55 | $ 2.88 | $ 2.89 |
(a) The amounts for the three and six months ended June 30, 2022 include, among other things, expenses associated with change of control payments as a result of Quanta's acquisition of Blattner Holding Company and its operating subsidiaries (Blattner). |
(b) The amounts for the three and six months ended June 30, 2022 are unrealized losses related to the fair value remeasurement of Quanta's common stock investment in Starry Group Holdings, Inc., a broadband technology provider. |
(c) The income tax impact of adjustments that are subject to tax is determined using the incremental statutory tax rates of the jurisdictions to which each adjustment relates for the respective periods. |
(d) As described above, adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock for the three and six months ended June 30, 2022 have been recast to conform to the current period presentation. |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
For the Three and Six Months Ended
June 30, 2023 and 2022
(In thousands)
(Unaudited)
The following table presents reconciliations of the non-GAAP financial measures of EBITDA and adjusted EBITDA to net income attributable to common stock for the three and six months ended June 30, 2023 and 2022. These reconciliations are intended to provide useful information to investors and analysts as they evaluate Quanta's performance. EBITDA is defined as earnings before interest and other financing expenses, taxes, depreciation and amortization, and adjusted EBITDA is defined as EBITDA adjusted for certain other items as described below. These measures should not be considered as an alternative to net income attributable to common stock or other financial measures of performance that are derived in accordance with GAAP. Management believes that the exclusion of these items from net income attributable to common stock enables it and Quanta's investors to more effectively evaluate Quanta's operations period over period and to identify operating trends that might not be apparent when including the excluded items.
As to certain of the items below: (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition and integration costs vary from period to period depending on the level of Quanta's acquisition activity; (iii) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to Quanta; (iv) unrealized mark-to-market adjustments on Quanta's investment in a publicly traded company vary from period to period based on fluctuations in the market price of such company's common stock; (v) gains and losses on the sales of investments vary from period to period depending on activity; (vi) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations; and (vi) asset impairment charges can vary from period to period depending on economic and other factors. Because EBITDA and adjusted EBITDA, as defined, exclude some, but not all, items that affect net income attributable to common stock, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income attributable to common stock (GAAP as reported) | $ 165,899 | $ 88,020 | $ 260,945 | $ 172,661 | |||
Interest and other financing expenses | 48,189 | 28,639 | 89,882 | 53,367 | |||
Interest income | (1,448) | (222) | (2,964) | (291) | |||
Provision for income taxes | 69,367 | 41,252 | 65,946 | 47,808 | |||
Depreciation expense | 79,876 | 73,959 | 158,258 | 144,913 | |||
Amortization of intangible assets | 70,025 | 107,945 | 142,428 | 223,696 | |||
Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates | 4,412 | 4,579 | 9,282 | 7,840 | |||
EBITDA | 436,320 | 344,172 | 723,777 | 649,994 | |||
Non-cash stock-based compensation | 34,607 | 28,090 | 62,058 | 51,082 | |||
Acquisition and integration costs (a) | 2,284 | 14,191 | 22,172 | 29,322 | |||
Equity in earnings of non-integral unconsolidated affiliates | (468) | (9,611) | (2,085) | (14,949) | |||
Unrealized loss from mark-to-market adjustment on investment (b) | — | 41,654 | — | 50,047 | |||
Gains on sales of investments (c) | (674) | — | (1,496) | (6,696) | |||
Asset impairment charges | — | 2,800 | — | 2,800 | |||
Change in fair value of contingent consideration liabilities | — | 809 | — | 5,978 | |||
Adjusted EBITDA | $ 472,069 | $ 422,105 | $ 804,426 | $ 767,578 |
(a) The amounts for the three and six months ended June 30, 2022 include, among other things, expenses associated with change of control payments as a result of the acquisition of Blattner. |
(b) The amounts for the three and six months ended June 30, 2022 are unrealized losses related to the fair value remeasurement of Quanta's common stock investment in Starry Group Holdings, Inc., a broadband technology provider. |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Free (Negative Free) Cash Flow
and Other Non-GAAP Definitions
For the Three and Six Months Ended
June 30, 2023 and 2022
(In thousands)
(Unaudited)
Reconciliation of Free (Negative Free) Cash Flow:
The following table presents a reconciliation of the non-GAAP financial measure of free cash flow to net cash provided by operating activities for the three and six months ended June 30, 2023 and 2022. This reconciliation is intended to provide useful information to investors and analysts as they evaluate Quanta's ability to generate the cash required to maintain and potentially expand its business. Free cash flow is defined as net cash provided by operating activities less net capital expenditures. Net capital expenditures is defined as capital expenditures less proceeds from the sale of property and equipment and from insurance settlements related to property and equipment. Management believes that free cash flow provides useful information to Quanta's investors because free cash flow is viewed by management as an important indicator of how much cash is provided or used by routine business operations, including the impact of net capital expenditures. Management uses this measure for capital allocation purposes as it is viewed as a measure of cash available to fund debt payments, acquire businesses, repurchase common stock and debt securities, declare and pay dividends and transact other investing and financing activities. However, this measure should not be considered as an alternative to net cash provided by operating activities or other measures of performance that are derived in accordance with GAAP. The most comparable GAAP financial measure, net cash provided by operating activities, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net cash provided by operating activities | $ 127,413 | $ 118,731 | $ 165,822 | $ 203,821 | |||
Less: Net capital expenditures: | |||||||
Capital expenditures | (105,278) | (121,574) | (185,597) | (231,511) | |||
Cash proceeds from sale of property and equipment and related insurance settlements | 24,212 | 16,385 | 34,963 | 25,386 | |||
Net capital expenditures | (81,066) | (105,189) | (150,634) | (206,125) | |||
Free (Negative Free) Cash Flow | $ 46,347 | $ 13,542 | $ 15,188 | $ (2,304) |
Other Non-GAAP Definitions:
Days Sales Outstanding:
Days Sales Outstanding is calculated as the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets, less contract liabilities, and divided by average revenues per day during the quarter.
Total Liquidity:
Total liquidity includes Quanta's cash and cash equivalents and availability under Quanta's senior credit facility. Available commitments for revolving loans under the senior credit facility must be maintained in order to provide credit support for notes issued under the commercial paper program, and therefore such notes effectively reduce the available borrowing capacity under the senior credit facility.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated Adjusted Net Income and
Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Full Year 2023
(In thousands, except per share information)
(Unaudited)
The following table presents reconciliations of the non-GAAP financial measure of estimated adjusted net income attributable to common stock to estimated net income attributable to common stock and the non-GAAP financial measure of estimated adjusted diluted earnings per share attributable to common stock to estimated diluted earnings per share attributable to common stock for the full year ending December 31, 2023. These reconciliations are intended to provide useful information to investors and analysts as they evaluate Quanta's expected future performance. Management believes that the exclusion of certain items from net income attributable to common stock and diluted earnings per share attributable to common stock enables it and Quanta's investors to more effectively evaluate Quanta's operations period over period and better identify operating trends that may not otherwise be apparent. However, these non-GAAP measures should not be considered as alternatives to net income attributable to common stock and diluted earnings per share attributable to common stock or other measures of performance that are derived in accordance with GAAP. As to certain of the items below: (i) non-cash stock-based compensation expense may vary from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) amortization of intangible assets and amortization included in equity in earnings are impacted by Quanta's acquisition activities and investments in integral unconsolidated affiliates, and therefore can vary from period to period; (iii) acquisition and integration costs vary period to period depending on the level of Quanta's acquisition activity; (iv) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to Quanta; and (v) gains and losses on the sales of investments vary from period to period depending on activity.
Because adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock, as defined, exclude some, but not all, items that affect net income attributable to common stock and diluted earnings per share attributable to common stock, they may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measures, net income attributable to common stock and diluted earnings per share attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Estimated Range | |||
Full Year Ending | |||
December 31, 2023 | |||
Reconciliation of estimated adjusted net income attributable to common stock: | |||
Net income attributable to common stock (as defined by GAAP) | $ 705,000 | $ 764,500 | |
Non-cash stock-based compensation | 123,900 | 123,900 | |
Amortization of intangible assets | 281,600 | 281,600 | |
Amortization included in equity in earnings of integral unconsolidated affiliates | 6,200 | 6,200 | |
Acquisition and integration costs | 23,300 | 23,300 | |
Equity in earnings of non-integral unconsolidated affiliates | (2,100) | (2,100) | |
Gains on sales of investments | (1,500) | (1,500) | |
Income tax impact of adjustments (a) | (111,600) | (111,600) | |
Adjusted net income attributable to common stock | $ 1,024,800 | $ 1,084,300 | |
Weighted average shares: | |||
Weighted average shares outstanding for diluted and adjusted diluted earnings per share attributable to common stock | 148,500 | 148,500 | |
Diluted earnings per share attributable to common stock and adjusted diluted earnings per share attributable to common stock: | |||
Diluted earnings per share attributable to common stock | $ 4.75 | $ 5.15 | |
Adjusted diluted earnings per share attributable to common stock | $ 6.90 | $ 7.30 |
(a) The income tax impact of adjustments that are subject to tax is determined using the incremental statutory tax rates of the jurisdictions to which each adjustment relates for the respective periods. |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated EBITDA and Adjusted EBITDA
For the Full Year 2023
(In thousands)
(Unaudited)
The following table presents the reconciliations of the non-GAAP financial measures of estimated EBITDA and estimated adjusted EBITDA to estimated net income attributable to common stock for the full year ending December 31, 2023. These reconciliations are intended to provide useful information to investors and analysts as they evaluate Quanta's expected future performance. EBITDA is defined as earnings before interest and other financing expenses, taxes, depreciation and amortization, and adjusted EBITDA is defined as EBITDA adjusted for certain other items as described below. These measures should not be considered as an alternative to net income attributable to common stock or other financial measures of performance that are derived in accordance with GAAP. Management believes that the exclusion of these items from net income attributable to common stock enables it and Quanta's investors to more effectively evaluate Quanta's operations period over period and to identify operating trends that might not be apparent when including the excluded items.
As to certain of the items below: (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition and integration costs vary from period to period depending on the level of Quanta's acquisition activity; (iii) gains and losses on the sales of investments vary from period to period depending on activity; and (iv) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to Quanta.
Because EBITDA and adjusted EBITDA, as defined, exclude some, but not all, items that affect net income attributable to common stock, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included in the table to follow.
Estimated Range | |||
Full Year Ending | |||
December 31, 2023 | |||
Net income attributable to common stock (as defined by GAAP) | $ 705,000 | $ 764,500 | |
Interest and other financing expenses, net | 160,000 | 164,000 | |
Provision for income taxes | 251,400 | 276,700 | |
Depreciation expense | 317,600 | 317,600 | |
Amortization of intangible assets | 281,600 | 281,600 | |
Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates | 18,200 | 18,200 | |
EBITDA | 1,733,800 | 1,822,600 | |
Non-cash stock-based compensation | 123,900 | 123,900 | |
Acquisition and integration costs | 23,300 | 23,300 | |
Gains on sales of investments | (1,500) | (1,500) | |
Equity in earnings of non-integral unconsolidated affiliates | (2,100) | (2,100) | |
Adjusted EBITDA | $ 1,877,400 | $ 1,966,200 |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated Free Cash Flow
For the Full Year 2023
(In thousands)
(Unaudited)
The following table presents a reconciliation of the non-GAAP financial measure of estimated free cash flow to estimated net cash provided by operating activities for the full year ending December 31, 2023. This reconciliation is intended to provide useful information to investors and analysts as they evaluate Quanta's expectations regarding its ability to generate the cash required to maintain and potentially expand its business. Free cash flow is defined as net cash provided by operating activities less net capital expenditures. Net capital expenditures is defined as capital expenditures less proceeds from the sale of property and equipment and from insurance settlements related to property and equipment. Management believes that free cash flow provides useful information to Quanta's investors because free cash flow is viewed by management as an important indicator of how much cash is provided or used by routine business operations, including the impact of net capital expenditures. Management uses this measure for capital allocation purposes as it is viewed as a measure of cash available to fund debt payments, acquire businesses, repurchase common stock and debt securities, declare and pay dividends and transact other investing and financing activities. However, this measure should not be considered as an alternative to net cash provided by operating activities or other measures of performance that are derived in accordance with GAAP. The most comparable GAAP financial measure, net cash provided by operating activities, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Estimated Range | |||
Full Year Ending | |||
December 31, 2023 | |||
Net cash provided by operating activities | $ 1,200,000 | $ 1,400,000 | |
Less: Net capital expenditures | (400,000) | (400,000) | |
Free Cash Flow | $ 800,000 | $ 1,000,000 |
Contacts: | Jayshree Desai, CFO | Media – Liz James | |
Kip Rupp, CFA, IRC - Investors | FGS Global | ||
Quanta Services, Inc. | 281) 881-5170 | ||
713) 629-7600 |
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SOURCE Quanta Services, Inc.
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