HOUSTON, Nov. 5 /PRNewswire-FirstCall/ -- Quanta Services, Inc.
(NYSE: PWR) today announced results for the three and nine months ended
September 30, 2008. On August 30, 2007, Quanta completed the acquisition of
InfraSource Services, Inc. (InfraSource) through an all-stock merger.
Therefore, Quanta's results for the three and nine months ended September 30,
2008 are compared to its historical results for the three and nine months
ended September 30, 2007, which included only one month of results from
InfraSource.
Revenues in the third quarter of 2008 were $1.05 billion and income from
continuing operations was $54.9 million or $0.29 per diluted share. Revenues
in the third quarter of 2007 were $655.9 million and income from continuing
operations was $47.0 million, which includes the effect of $17.9 million of
tax benefits from the release of income tax contingencies. For the third
quarter of 2007, earnings per diluted share from continuing operations were
$0.30, which includes $0.11 per diluted share from the tax benefits described
above.
For the third quarter of 2008, cash earnings per diluted share from
continuing operations (a non-GAAP measure) were $0.32. For the third quarter
of 2007, cash earnings per diluted share from continuing operations, adjusted
to exclude the tax benefits described above (a non-GAAP measure), were $0.22.
Cash earnings per diluted share from continuing operations are before
amortization of intangible assets and non-cash compensation expense, both net
of tax. See the attached table for a reconciliation of non-GAAP measures to
the reported GAAP measures.
"As reflected in Quanta's revenue growth in the third quarter, many of our
customers continue to invest in infrastructure despite a challenging economic
environment," said John R. Colson, chairman and chief executive officer of
Quanta Services. "For the quarter, internal revenue growth was approximately
27 percent compared to the third quarter of 2007, pro forma to include
revenues from all acquisitions in both periods. We generated a record $115
million in emergency restoration revenues during the quarter, primarily as a
result of hurricane damage. Excluding emergency restoration revenues, we
produced solid internal revenue growth of 15 percent in the third quarter of
2008 versus the third quarter of 2007."
Revenues for the first nine months of 2008 were $2.86 billion compared to
$1.78 billion for the first nine months of 2007. For the first nine months of
2008, Quanta reported income from continuing operations of $119.6 million or
$0.64 per diluted share, compared to income from continuing operations of
$99.6 million or $0.70 per diluted share for the first nine months of last
year. The first nine months of 2007 were favorably impacted by $33.2 million
or $0.21 per diluted share in tax benefits primarily associated with the
release of tax contingencies. For additional information, see the attached
table for a reconciliation of non-GAAP measures to the reported GAAP measures.
RECENT HIGHLIGHTS -
-- Promoted James F. O'Neil to President and COO - Quanta recently
promoted James F. O'Neil to president and chief operating officer of the
company. In this new position, O'Neil, who joined Quanta in 1999, will
oversee the company's operations and strategic initiatives across the electric
power, natural gas, renewable energy, telecommunications, broadband cable and
wireless industries. Throughout his tenure at Quanta, O'Neil has had various
responsibilities: the company's renewable energy strategy; commercial and
industrial operations; internal audit; and its mergers and acquisitions
program, including oversight of the acquisition and integration of InfraSource
Services, Inc.
-- Secured Contract for Oklahoma Transmission Line - Quanta has been
awarded a contract by Oklahoma Gas and Electric for the construction of
approximately 120 miles of 345,000-volt transmission infrastructure just
outside of Oklahoma City. Under the contract, Quanta will provide all
installation services including foundation construction, structure
installation, aerial and ground construction and power line stringing. Work
is projected to begin in the fourth quarter of 2008 with completion estimated
in the fourth quarter of 2009.
-- Supported Emergency Restoration Efforts - In the third quarter of 2008,
Quanta deployed personnel to support utilities in restoring power and
communications in the aftermath of Hurricanes Edouard, Fay, Gustav and Ike.
Hurricane Ike alone impacted more than a dozen states and caused power outages
for more than 3 million power consumers across the states most heavily
impacted.
-- Redeemed 4.5 Percent Convertible Subordinated Notes - Following the
August 2008 issuance of Quanta's notice to redeem all of its outstanding 4.5%
Convertible Subordinated Notes, $269.8 million aggregate principal amount of
the notes, or 99.9%, converted to shares of Quanta Services common stock prior
to the redemption date in October 2008, resulting in the issuance of
approximately 24.2 million shares of Quanta's common stock. None of the 4.5%
Convertible Subordinated Notes remain outstanding.
OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
Quanta expects revenues for the fourth quarter of 2008 to range between
$875 million and $930 million and diluted earnings per share to be between
$0.18 and $0.20. Quanta expects cash earnings per diluted share for the
fourth quarter of 2008 to range from $0.21 to $0.23. Amortization of
intangibles and non-cash stock compensation expenses are forecasted to be
approximately $10.7 million for the fourth quarter of 2008. These estimates
include approximately $25 million of anticipated emergency restoration
revenues for the fourth quarter of 2008, compared to $54 million in emergency
restoration revenues earned in the fourth quarter of 2007.
Quanta Services has scheduled a conference call for Nov. 5, 2008, at 9:30
a.m. Eastern time. To participate in the call, dial (303) 262-2004 at least
10 minutes before the conference call begins and ask for the Quanta Services
conference call. Investors, analysts and the general public also will have
the opportunity to listen to the conference call over the Internet by visiting
the company's Web site at www.quantaservices.com. To listen to the call live
on the Web, please visit the Quanta Services Web site at least fifteen minutes
early to register, download and install any necessary audio software. For
those who cannot listen to the live webcast, an archive will be available
shortly after the call on the company's Web site. A replay will also be
available through Nov. 12, 2008 and may be accessed by calling (303) 590-3000
and using the pass code 11122061#. For more information, please contact Karen
Roan at DRG&E by calling (713) 529-6600.
The non-GAAP measures in this press release and the attached table are
provided to enable investors to evaluate performance excluding the effects of
certain items that management believes impact the comparability of operating
results between reporting periods. Reconciliations of other GAAP to non-GAAP
measures not included in this press release can be found on the company's Web
site at www.quantaservices.com in the "Financial News" section.
Quanta Services is a leading specialized contracting services company,
delivering infrastructure network solutions for the electric power, natural
gas, telecommunications and cable television industries. The company's
comprehensive services include designing, installing, repairing and
maintaining network infrastructure nationwide. Additionally, Quanta provides
point-to-point fiber optic telecommunications infrastructure and leasing in
select markets and offers related design, procurement, construction and
maintenance services. With operations throughout North America, Quanta has
the manpower, resources and expertise to complete projects that are local,
regional, national or international in scope.
Forward-Looking Statements
This press release (and oral statements regarding the subject matter of
this 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, projected revenues and earnings per share and other
projections of financial and operating results, capital expenditures, growth
and trends in particular markets, benefits of the Energy Policy Act of 2005
and renewable energy initiatives, statements relating to the business plans or
financial condition of utilities and our other customers, and Quanta's
strategies and plans, 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. Although Quanta's
management believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct. These statements can be affected by inaccurate
assumptions and by a variety of risks and uncertainties that are difficult to
predict or beyond our control, including, among others, quarterly variations
in operating results; adverse changes in economic and financial conditions,
including the recent volatility in the capital markets; trends in relevant
markets; the failure to realize expected synergies and benefits from the
merger with InfraSource Services, Inc., and other potential adverse impacts on
Quanta's business or its financial results as a result of the merger,
including unexpected costs or liabilities; delays, reductions in scope or
cancellations of existing projects, including as a result of capital
constraints that may impact our customers; our ability to compete for new
projects and for market share; dependence on fixed price contracts and the
potential to incur losses with respect to these contracts; estimates relating
to the use of percentage-of-completion accounting; the successful performance
and completion of contracts; the ability to generate internal growth;
potential failure of the Energy Policy Act of 2005 or renewable initiatives to
result in increased spending on the electrical power transmission
infrastructure; the ability to attract skilled labor and retention of key
personnel and qualified employees; potential shortage of skilled employees;
growth outpacing infrastructure; the ability to successfully identify,
complete and integrate acquisitions; the adverse impact of goodwill or other
intangible asset impairments; estimates and assumptions in determining
financial results and backlog; unexpected costs or liabilities that may arise
from lawsuits or indemnity claims related to the services Quanta performs;
liabilities for claims that are self-insured or for claims that Quanta's
casualty insurance carrier fails to pay; potential liabilities relating to
occupational health and safety matters; risks associated with Quanta's dark
fiber leasing business, including regulatory changes and the potential
inability to realize a return on capital investments; cancellation provisions
within contracts and the risk that contracts are not renewed or are replaced
on less favorable terms; the ability to realize backlog; the inability of
customers to pay for services; beliefs and assumptions about the
collectibility of receivables; the ability to obtain performance bonds; the
impact of a unionized workforce on operations and the ability to complete
future acquisitions; the ability to continue to meet the requirements of the
Sarbanes-Oxley Act of 2002; potential exposure to environmental liabilities;
risks associated with operating in international markets; requirements
relating to governmental regulation and changes thereto; rapid technological
and structural changes that could reduce the demand for services; the cost of
borrowing, availability of credit, debt covenant compliance, interest rate
fluctuations and other factors affecting financing and investment activities;
the potential conversion of Quanta's outstanding convertible subordinated
notes; and other risks detailed in Quanta's Annual Report on Form 10-K for the
year ended December 31, 2007, Quanta's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2008 and June 30, 2008 and any other documents of
Quanta filed with the Securities and Exchange Commission (SEC). Should one or
more of these risks materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expressed or implied
in any forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which are current only as of
this date. Quanta does not undertake and expressly disclaims any obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. For a discussion of these risks,
uncertainties and assumptions, investors are urged to refer to Quanta's
documents filed with the SEC that are available through the company's web site
at www.quantaservices.com or through the SEC's Electronic Data Gathering and
Analysis Retrieval System (EDGAR) at www.sec.gov.
Contacts: James Haddox, CFO Ken Dennard / ksdennard@drg-e.com
Reba Reid Kip Rupp / krupp@drg-e.com
Quanta Services Inc. DRG&E
713-629-7600 713-529-6600
- Tables to follow -
Quanta Services, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2008 and 2007
(In thousands, except per share information)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues $1,053,355 $655,865 $2,858,679 $1,777,044
Cost of services
(including
depreciation) 867,789 540,812 2,390,546 1,499,172
Gross profit 185,566 115,053 468,133 277,872
Selling, general &
administrative expenses 80,126 59,816 227,134 155,793
Amortization of
intangible assets 8,998 4,868 29,464 6,332
Operating income 96,442 50,369 211,535 115,747
Interest expense (5,223) (5,165) (15,642) (16,261)
Interest income 2,022 5,389 8,105 15,341
Loss on early
extinguishment of debt (2) (11) (2) (11)
Other income (expense), net (74) (702) 408 (591)
Income from continuing
operations before income
tax provision 93,165 49,880 204,404 114,225
Provision for income taxes 38,307 2,930 84,776 14,626
Income from continuing
operations 54,858 46,950 119,628 99,599
Income from discontinued
operation - 2,371 - 2,791
Net income $54,858 $49,321 $119,628 $102,390
Basic earnings per share:
Income from continuing
operations $0.32 $0.34 $0.70 $0.80
Income from discontinued
operation - 0.02 - 0.02
Net Income $0.32 $0.36 $0.70 $0.82
Weighted average basic
shares outstanding 171,693 136,279 170,938 124,362
Diluted earnings per share:
Income from continuing
operations $ 0.29 $0.30 $0.64 $0.70
Income from discontinued
operation - 0.01 - 0.02
Net Income $0.29 $0.31 $0.64 $0.72
Weighted average diluted
shares outstanding 203,131 167,869 202,292 155,828
The calculation of earnings per share is provided in the following table.
Quanta Services, Inc. and Subsidiaries
Calculation of Earnings Per Share
For the Three and Nine Months Ended September 30, 2008 and 2007
(In thousands, except per share information)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Income for basic earnings
per share:
From continuing
operations $54,858 $46,950 $119,628 $99,599
From discontinued
operation - 2,371 - 2,791
Net income $54,858 $49,321 $119,628 $102,390
Weighted average shares
outstanding for basic
earnings per share 171,693 136,279 170,938 124,362
Basic earnings per share:
From continuing operations $0.32 $0.34 $0.70 $0.80
From discontinued operation - 0.02 - 0.02
Net income $0.32 $0.36 $0.70 $0.82
Income for diluted earnings
per share:
Income from continuing
operations $54,858 $46,950 $119,628 $99,599
Effect of convertible
subordinated notes
under the "if-converted"
method - interest
expense addback, net
of taxes 3,181 3,198 9,578 9,596
Income from continuing
operations for diluted
earnings per share 58,039 50,148 129,206 109,195
Income from discontinued
operation - 2,371 - 2,791
Net income for diluted
earnings per share $58,039 $52,519 $129,206 $111,986
Calculation of weighted
average shares for
diluted earnings per
share:
Weighted average shares
outstanding for basic
earnings per share 171,693 136,279 170,938 124,362
Effect of dilutive stock
options and restricted
stock 801 939 709 815
Effect of convertible
subordinated notes under
the "if-converted"
method - weighted
convertible shares
issuable 30,637 30,651 30,645 30,651
Weighted average shares
outstanding for diluted
earnings per share 203,131 167,869 202,292 155,828
Diluted earnings per share:
From continuing operations $0.29 $0.30 $0.64 $0.70
From discontinued operation - 0.01 - 0.02
Net income $0.29 $0.31 $0.64 $0.72
Quanta Services, Inc. and Subsidiaries
Non-GAAP Financial Measures
For the Three and Nine Months Ended September 30, 2008 and 2007
(In thousands, except per share information)
(Unaudited)
Reconciliation of GAAP Earnings per Diluted Share to
Cash Earnings and Adjusted Cash Earnings per Diluted Share
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
As reported income from
continuing operations $54,858 $46,950 $119,628 $99,599
Adjustments:
Impact of tax contingency
releases - (17,886)(a) - (33,224)(b)
Adjusted income from
continuing operations 54,858 29,064 119,628 66,375
Non-cash stock-based
compensation, net of tax 2,466 1,504 7,565 3,712
Amortization of intangible
assets, net of tax 5,489 2,970 17,973 3,863
Adjusted income from
continuing operations for
calculation of cash
earnings and adjusted
cash earnings per diluted
share $62,813 $33,538 $145,166 $73,950
From continuing operations:
As reported earnings per
diluted share(c) $0.29 $0.30 $0.64 $0.70
As adjusted earnings per
diluted share(c) $0.29 $0.19(a) $0.64 $0.49(b)
Cash earnings and adjusted
cash earnings per diluted
share(c) $0.32 $0.22(a) $0.76 $0.54(b)
(a) Reflects the elimination of tax benefits primarily associated with the
expiration of various federal and state tax statutes of limitations during the
third quarter of 2007.
(b) Reflects the elimination of tax benefits primarily associated with the
settlement of a multi-year audit by the Internal Revenue Service in the first
quarter of 2007 in addition to the elimination of tax benefits recorded in the
third quarter of 2007 described in (a) above.
(c) As a result of applying the if-converted method for calculating
diluted earnings per share, weighted average shares used in the above
calculations have been adjusted assuming conversion of Quanta's convertible
subordinated notes, and net income has been adjusted for an addback of related
interest expense, net of tax.
The non-GAAP measures in this press release are provided to enable
investors to evaluate quarterly performance excluding the effects of items
that management believes impact the comparability of operating results between
periods.
Quanta Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2008 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $266,429 $407,081
Accounts receivable, net 958,931 719,672
Costs and estimated earnings in excess of
billings on uncompleted contracts 71,492 72,424
Inventories 26,335 25,920
Prepaid expenses and other current assets 59,595 79,665
Total current assets 1,382,782 1,304,762
PROPERTY AND EQUIPMENT, net 640,079 532,285
OTHER ASSETS, net 35,772 42,992
INTANGIBLE ASSETS, net 144,262 152,695
GOODWILL 1,359,674 1,355,098
Total assets $3,562,569 $3,387,832
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $268,847 $271,011
Accounts payable and accrued expenses 459,989 420,815
Billings in excess of costs and estimated
earnings on uncompleted contracts 51,514 65,603
Total current liabilities 780,350 757,429
CONVERTIBLE SUBORDINATED NOTES 143,750 143,750
DEFERRED INCOME TAXES AND OTHER
NON-CURRENT LIABILITIES 298,997 301,510
Total liabilities 1,223,097 1,202,689
STOCKHOLDERS' EQUITY 2,339,472 2,185,143
Total liabilities and stockholders' equity $3,562,569 $3,387,832
