QUANTA SERVICES REPORTS FOURTH QUARTER AND FULL-YEAR 2023 RESULTS
- Record revenues of $5.78 billion in Q4 2023 compared to $4.42 billion in Q4 2022
- Net income attributable to common stock of $210.9 million in Q4 2023
- Adjusted diluted EPS of $2.04 in Q4 2023
- Full-year 2024 guidance anticipates growth in revenues, adjusted EBITDA, earnings per share, and free cash flow
- Strong demand for energy-transition solutions and infrastructure modernization
- Positive outlook for continued growth and value creation
- None.
Insights
The reported financial results by Quanta Services, Inc. indicate a robust performance characterized by significant year-over-year growth. The key metrics such as consolidated revenues, net income and cash flow from operations have all shown an upward trend, with revenues jumping from $4.42 billion to $5.78 billion in the fourth quarter comparison and net income increasing from $162.6 million to $210.9 million in the same period. This performance is indicative of the company's operational efficiency and could be reflective of strong market demand for their services.
The adjusted EBITDA of $550.2 million and adjusted diluted EPS of $2.04, both represent improvements over the prior year, suggesting that the company's profitability is not solely reliant on revenue growth but also on effective cost management and possibly higher-margin services. The significant backlog of $30.11 billion is a positive indicator of future revenue, providing visibility and potentially reducing the volatility of future earnings. Investors typically view such a strong backlog as a sign of sustained demand for the company's offerings.
Looking forward, the guidance for 2024 with anticipated double-digit growth in key financial metrics could be viewed positively by the market, as it suggests continued confidence in the company's ability to grow and generate shareholder value. However, it is also important to consider the broader economic context, including interest rates and capital expenditure trends in the energy sector, which could impact the company's performance.
Quanta Services operates in the infrastructure solutions sector, which is currently experiencing tailwinds due to the energy transition and modernization of infrastructure. The company's focus on supporting energy-transition initiatives likely aligns with global trends towards sustainable energy sources and could be driving the increased demand for their services. This strategic positioning may enable Quanta to capitalize on the growing investment in renewable energy infrastructure and utility modernization, which are areas of significant government and private sector spending.
The company's emphasis on operational excellence and total cost solutions for clients is a competitive advantage in an industry where efficiency and cost-effectiveness are critical. The ability to offer value to stakeholders while maintaining a solid balance sheet and liquidity profile suggests financial prudence and an ability to invest in growth opportunities without compromising financial stability.
For investors and stakeholders, the company's performance and outlook could indicate resilience against economic downturns, given the essential nature of infrastructure services. However, it is important to monitor how external factors such as regulatory changes, commodity prices, or shifts in energy policy could influence the company's future performance and the infrastructure sector at large.
In the context of the broader economy, Quanta Services' financial results can be seen as a microcosm of the infrastructure sector's health. The company's strong performance and optimistic guidance are likely reflective of the broader economic investment in infrastructure, which tends to be less cyclical and more resilient to economic downturns. The energy transition is a significant economic shift that is driving investment in new infrastructure and Quanta's involvement in this area could be providing it with a stable flow of projects.
Additionally, the company's strong free cash flow is an indicator of financial health and provides it with the flexibility to invest in new projects, pay down debt, or return value to shareholders through dividends or share buybacks. The ability to generate cash is particularly important in uncertain economic times, as it provides a buffer against downturns and allows for strategic capital deployment.
It is also worth noting that infrastructure spending is often linked to government policy and economic stimulus, which can provide a boost to companies like Quanta during periods of economic recovery or slowdown. Investors should consider the potential impact of fiscal policy on the company's future growth prospects.
Full-Year 2024 Guidance Reflects Solid Growth in Revenues and Opportunity for Double-Digit Growth in Net Income, Adjusted EBITDA, Cash Flow From Operations and Earnings Per Share
Fourth Quarter 2023 Results Include:
- Consolidated Revenues of
$5.78 Billion - GAAP Diluted EPS of
$1.42 $2.04 - Net Income Attributable to Common Stock of
$210.9 Million - Adjusted EBITDA of
$550.2 Million - Cash Flow From Operations of
$1.00 Billion - Year-End Remaining Performance Obligations of
$13.89 Billion $30.11 Billion
Full-Year 2023 Results Include:
- Consolidated Revenues of
$20.88 Billion - GAAP Diluted EPS of
$5.00 $7.16 - Net Income Attributable to Common Stock of
$744.7 Million - Adjusted EBITDA of
$1.95 Billion - Cash Flow From Operations of
$1.58 Billion
* = Record quarterly or record fourth quarter or full year result
"Quanta's strong fourth quarter completed a year of robust, profitable growth that delivered record revenues, profits and cash flow, while we also maintained a solid balance sheet and liquidity profile that positions us well to deploy capital into opportunities that we believe are value-creating and additive to our multiyear organic growth strategies. I want to thank and recognize our family of Quanta employees, whose hard work and commitment to excellence delivered another year of strong results and notable achievements. Quanta continues to perform at a high level, which we believe demonstrates the capability of our repeatable and sustainable model and the successful execution of our strategic initiatives to drive operational excellence, total cost solutions for our clients and value for our stakeholders," said Duke Austin, President and Chief Executive Officer of Quanta Services.
"Our 2024 expectations reflect the opportunity for continued growth in revenues and double-digit growth in adjusted EBITDA, adjusted earnings per share and free cash flow. Demand is strong for our solutions that support our customers' energy-transition initiatives and that increase reliability, safety, efficiency and connectivity of infrastructure assets through modernization, and we are increasingly excited and confident about the opportunity to drive multi-year revenue and double-digit earnings per share growth. We continue to believe our portfolio approach is a strategic advantage that helps us manage risks and shift resources across service lines and geographies, which we believe will become increasingly important as the energy transition accelerates, and positions us well to allocate resources to the opportunities we find most economically attractive and achieve operating efficiencies and consistent financial results."
Certain items that impacted Quanta's results for the three and twelve months ended December 31, 2023 and 2022 are reflected as adjustments in the calculation of Quanta's adjusted net income attributable to common stock, adjusted diluted earnings per share attributable to common stock and adjusted EBITDA (non-GAAP financial measures). 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 five acquisitions during 2023 and one acquisition during 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, adjusted net income attributable to common stock and adjusted diluted earnings per share attributable to common stock (non-GAAP financial measures) to their comparable GAAP financial measures.
RECENT HIGHLIGHTS
- Capital Deployment - In January 2024, Quanta acquired two businesses in
the United States , including a business that provides specialty environmental solutions to industrial companies and a business that specializes in testing, manufacturing and distributing safety equipment and supplies, for aggregate consideration of approximately$424.7 million $499.7 million $0.09 $0.36 13% increase from Quanta's prior quarterly cash dividend paid in October 2023.
RESULTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
Revenues in the year ended December 31, 2023 were
FULL-YEAR 2024 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 the Company is executing on and the opportunities expected to materialize during 2024.
Prior to the Company's conference call, management will post a summary of Quanta's 2024 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, 2024, Quanta 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 2024 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.
EARNINGS CONFERENCE CALL AND SUPPLEMENTAL MATERIALS INFORMATION
Quanta Services has scheduled a conference call for 9:00 a.m. Eastern Time on February 22, 2024, which will also be broadcast live over the Internet. 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 Fourth Quarter and Full-Year 2023 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 February 29, 2024 by dialing 1-877-660-6853 and referencing the conference ID 13743880.
As noted in its prior press release announcing its Fourth Quarter and Full-Year 2023 conference call schedule and details, the company is updating its earnings call format and supplemental materials. To that end, Quanta has posted its Fourth Quarter and Full-Year 2023 Operational and Financial Commentary, as well as all other supplemental earnings call materials, in the Investor Relations section of the Quanta Services website. While management intends to make brief introductory remarks during the earnings call, the Operational and Financial Commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community. 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; expectations regarding Quanta's plans and strategies, including with respect to supply chain solutions and expanded or new services offerings; 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 the 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 and Quanta's ability to implement strategies designed to manage the availability or price of such materials and equipment; the expected impact of global and domestic economic or political 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 Twelve Months Ended December 31, 2023 and 2022 (In thousands, except per share information) (Unaudited) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues | $ 5,783,948 | $ 4,416,618 | $ 20,882,206 | $ 17,073,903 | |||
Cost of services | 4,991,480 | 3,749,054 | 17,945,120 | 14,544,748 | |||
Gross profit | 792,468 | 667,564 | 2,937,086 | 2,529,155 | |||
Equity in earnings of integral unconsolidated affiliates | 10,912 | 8,116 | 41,609 | 52,466 | |||
Selling, general and administrative expenses | (399,876) | (341,130) | (1,555,137) | (1,336,711) | |||
Amortization of intangible assets | (75,225) | (63,130) | (289,014) | (353,973) | |||
Asset impairment charges | — | (11,657) | — | (14,457) | |||
Change in fair value of contingent consideration liabilities | (5,765) | (368) | (6,568) | (4,422) | |||
Operating income | 322,514 | 259,395 | 1,127,976 | 872,058 | |||
Interest and other financing expenses | (49,500) | (37,430) | (186,913) | (124,363) | |||
Interest income | 5,873 | 1,879 | 10,830 | 2,606 | |||
Other income (expense), net | 10,522 | 21,840 | 18,063 | (46,415) | |||
Income before income taxes | 289,409 | 245,684 | 969,956 | 703,886 | |||
Provision for income taxes | 75,799 | 71,545 | 219,267 | 192,243 | |||
Net income | 213,610 | 174,139 | 750,689 | 511,643 | |||
Less: Net income attributable to non-controlling interests | 2,702 | 11,567 | 6,000 | 20,454 | |||
Net income attributable to common stock | $ 210,908 | $ 162,572 | $ 744,689 | $ 491,189 | |||
Earnings per share attributable to common stock: | |||||||
Basic | $ 1.45 | $ 1.14 | $ 5.13 | $ 3.42 | |||
Diluted | $ 1.42 | $ 1.10 | $ 5.00 | $ 3.32 | |||
Shares used in computing earnings per share: | |||||||
Weighted average basic shares outstanding | 145,530 | 143,214 | 145,222 | 143,488 | |||
Weighted average diluted shares outstanding | 148,906 | 147,539 | 148,823 | 147,992 | |||
Quanta Services, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | |||
December 31, | |||
2023 | 2022 | ||
ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 1,290,248 | $ 428,505 | |
Accounts receivable, net | 4,410,829 | 3,674,525 | |
Contract assets | 1,413,057 | 1,080,206 | |
Inventories | 175,658 | 103,265 | |
Prepaid expenses and other current assets | 387,105 | 249,569 | |
Total current assets | 7,676,897 | 5,536,070 | |
PROPERTY AND EQUIPMENT, net | 2,336,943 | 2,030,464 | |
OPERATING LEASE RIGHT-OF-USE ASSETS | 249,443 | 229,691 | |
OTHER ASSETS, net | 565,625 | 622,736 | |
OTHER INTANGIBLE ASSETS, net | 1,362,412 | 1,458,631 | |
GOODWILL | 4,045,905 | 3,586,745 | |
Total assets | $ 16,237,225 | $ 13,464,337 | |
LIABILITIES AND EQUITY | |||
CURRENT LIABILITIES: | |||
Current maturities of long-term debt | $ 535,202 | $ 37,495 | |
Current portion of operating lease liabilities | 77,995 | 74,052 | |
Accounts payable and accrued expenses | 3,061,242 | 2,153,129 | |
Contract liabilities | 1,538,677 | 1,141,518 | |
Total current liabilities | 5,213,116 | 3,406,194 | |
LONG-TERM DEBT, net of current maturities | 3,663,504 | 3,692,432 | |
OPERATING LEASE LIABILITIES, net of current portion | 186,996 | 171,512 | |
DEFERRED INCOME TAXES | 254,004 | 227,861 | |
INSURANCE AND OTHER NON-CURRENT LIABILITIES | 636,250 | 567,519 | |
Total liabilities | 9,953,870 | 8,065,518 | |
TOTAL STOCKHOLDERS' EQUITY | 6,272,241 | 5,383,464 | |
NON-CONTROLLING INTERESTS | 11,114 | 15,355 | |
TOTAL EQUITY | 6,283,355 | 5,398,819 | |
Total liabilities and equity | $ 16,237,225 | $ 13,464,337 | |
Quanta Services, Inc. and Subsidiaries
Supplemental Segment Data
For the Three and Twelve Months Ended
December 31, 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 December 31, | Twelve Months Ended December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues: | |||||||||||||||
Electric Power Infrastructure Solutions | 42.5 % | 52.6 % | $ 9,696,897 | 46.5 % | $ 8,940,276 | 52.4 % | |||||||||
Renewable Energy Infrastructure Solutions | 2,025,997 | 35.0 | 999,913 | 22.6 | 6,170,301 | 29.5 | 3,778,560 | 22.1 | |||||||
Underground Utility and Infrastructure Solutions | 1,301,892 | 22.5 | 1,096,888 | 24.8 | 5,015,008 | 24.0 | 4,355,067 | 25.5 | |||||||
Consolidated revenues | 100.0 % | 100.0 % | $ 20,882,206 | 100.0 % | $ 17,073,903 | 100.0 % | |||||||||
Operating income (loss): | |||||||||||||||
Electric Power Infrastructure Solutions (a) | $ 258,008 | 10.5 % | $ 267,772 | 11.5 % | $ 1,013,350 | 10.5 % | $ 958,798 | 10.7 % | |||||||
Renewable Energy Infrastructure Solutions (b) | 179,676 | 8.9 % | 63,794 | 6.4 % | 477,208 | 7.7 % | 304,308 | 8.1 % | |||||||
Underground Utility and Infrastructure Solutions | 85,433 | 6.6 % | 78,074 | 7.1 % | 377,977 | 7.5 % | 317,543 | 7.3 % | |||||||
Corporate and Non-Allocated Costs (c) | (200,603) | (3.5) % | (150,245) | (3.4) % | (740,559) | (3.5) % | (708,591) | (4.2) % | |||||||
Consolidated operating income | $ 322,514 | 5.6 % | $ 259,395 | 5.9 % | $ 1,127,976 | 5.4 % | $ 872,058 | 5.1 % | |||||||
(a) Included in operating income for the Electric Power Infrastructure Solutions segment was equity in earnings of integral unconsolidated affiliates of |
(b) Included in operating income for the Renewable Energy Infrastructure Solutions segment for the three and twelve months ended December 31, 2022 were |
(c) 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. The following table shows dollars in thousands.
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||
12 Month | Total | 12 Month | Total | 12 Month | Total | |||||||
Electric Power Infrastructure Solutions | ||||||||||||
Remaining performance obligations | $ 2,762,608 | $ 4,505,830 | $ 2,693,352 | $ 4,383,055 | $ 2,124,820 | $ 3,033,472 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 5,597,732 | 10,995,198 | 5,302,341 | 11,036,307 | 5,415,427 | 10,049,435 | ||||||
Backlog | 8,360,340 | 15,501,028 | 7,995,693 | 15,419,362 | 7,540,247 | 13,082,907 | ||||||
Renewable Energy Infrastructure Solutions | ||||||||||||
Remaining performance obligations | 5,512,159 | 8,005,368 | 5,712,436 | 7,713,988 | 3,183,568 | 4,638,115 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 118,770 | 119,634 | 112,534 | 201,851 | 57,555 | 84,094 | ||||||
Backlog | 5,630,929 | 8,125,002 | 5,824,970 | 7,915,839 | 3,241,123 | 4,722,209 | ||||||
Underground Utility and Infrastructure Solutions | ||||||||||||
Remaining performance obligations | 1,017,227 | 1,383,057 | 1,143,729 | 1,464,623 | 1,038,543 | 1,129,837 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 2,222,451 | 5,099,332 | 2,054,024 | 5,295,722 | 1,973,982 | 5,158,814 | ||||||
Backlog | 3,239,678 | 6,482,389 | 3,197,753 | 6,760,345 | 3,012,525 | 6,288,651 | ||||||
Total | ||||||||||||
Remaining performance obligations | 9,291,994 | 13,894,255 | 9,549,517 | 13,561,666 | 6,346,931 | 8,801,424 | ||||||
Estimated orders under MSAs and short-term, non-fixed price contracts | 7,938,953 | 16,214,164 | 7,468,899 | 16,533,880 | 7,446,964 | 15,292,343 | ||||||
Backlog | $ 17,230,947 | $ 30,108,419 | $ 17,018,416 | $ 30,095,546 | $ 13,793,895 | $ 24,093,767 | ||||||
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 Twelve Months Ended
December 31, 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 twelve months ended December 31, 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 due to, among other reasons, the variable nature of these items period over period. In addition, management believes these measures may be useful for investors in comparing our operating results with other companies that may be viewed as our peers. 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 and complexity of Quanta's acquisition activity; (iv) change in fair value of contingent consideration liabilities varies from period to period depending on, among other things, 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) mark-to-market adjustments on Quanta's investment in a publicly traded company varied 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; (viii) asset impairment charges vary from period to period depending on economic and other factors; and (ix) income tax contingency releases vary period to period and depend on the level of reserves for uncertain tax positions and the expiration dates under various federal and state statute of limitations periods.
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 December 31, 2023 and 2022 | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Reconciliation of adjusted net income attributable to common stock: | |||||||
Net income attributable to common stock (GAAP as reported) | $ 210,908 | $ 162,572 | $ 744,689 | $ 491,189 | |||
Acquisition and integration costs (a) | 16,499 | 4,708 | 42,837 | 47,431 | |||
Asset impairment charges (b) | — | 11,657 | — | 14,457 | |||
Change in fair value of contingent consideration liabilities | 5,765 | 368 | 6,568 | 4,422 | |||
Equity in earnings of non-integral unconsolidated affiliates (c) | (144) | (2,440) | (1,263) | (20,333) | |||
Loss from mark-to-market adjustment on investment (d) | — | 14,991 | — | 91,500 | |||
Gains on sales of investments (e) | — | (15,526) | (1,496) | (22,222) | |||
Income tax impact of adjustments (f) | (5,128) | 7,632 | (33,554) | (5,477) | |||
Impact of income tax contingency releases (g) | (5,003) | (4,197) | (5,003) | (4,197) | |||
Adjusted net income attributable to common stock before certain non-cash adjustments | 222,897 | 179,765 | 752,778 | 596,770 | |||
Non-cash stock-based compensation | 32,104 | 27,870 | 126,762 | 105,600 | |||
Amortization of intangible assets | 75,225 | 63,130 | 289,014 | 353,973 | |||
Amortization included in equity in earnings of integral unconsolidated affiliates | 1,465 | 473 | 6,191 | 1,894 | |||
Income tax impact of non-cash adjustments (h) | (28,313) | (23,811) | (109,822) | (120,101) | |||
Adjusted net income attributable to common stock | $ 303,378 | $ 247,427 | $ 1,064,923 | $ 938,136 | |||
Reconciliation of adjusted diluted earnings per share: | |||||||
Diluted earnings per share attributable to common stock (GAAP as reported) | $ 1.42 | $ 1.10 | $ 5.00 | $ 3.32 | |||
Acquisition and integration costs (a) | 0.11 | 0.03 | 0.29 | 0.32 | |||
Asset impairment charges (b) | — | 0.08 | — | 0.10 | |||
Change in fair value of contingent consideration liabilities | 0.04 | — | 0.04 | 0.03 | |||
Equity in losses (earnings) of non-integral unconsolidated affiliates (c) | — | (0.02) | (0.01) | (0.14) | |||
Loss from mark-to-market adjustment on investment (d) | — | 0.10 | — | 0.62 | |||
Gains on sales of investments (e) | — | (0.11) | (0.01) | (0.15) | |||
Income tax impact of adjustments (f) | (0.04) | 0.07 | (0.22) | (0.04) | |||
Impact of income tax contingency releases (g) | (0.03) | (0.03) | (0.03) | (0.03) | |||
Adjusted diluted earnings per share before certain non-cash adjustments | 1.50 | 1.22 | 5.06 | 4.03 | |||
Non-cash stock-based compensation | 0.22 | 0.19 | 0.85 | 0.71 | |||
Amortization of intangible assets | 0.51 | 0.43 | 1.94 | 2.39 | |||
Amortization included in equity in earnings of integral unconsolidated affiliates | 0.01 | — | 0.04 | 0.01 | |||
Income tax impact of non-cash adjustments (h) | (0.20) | (0.16) | (0.73) | (0.80) | |||
Adjusted diluted earnings per share | $ 2.04 | $ 1.68 | $ 7.16 | $ 6.34 | |||
Weighted average shares outstanding for diluted and adjusted diluted earnings per share | 148,906 | 147,539 | 148,823 | 147,992 | |||
See notes to follow. |
(a) The amounts for the three and twelve months ended December 31, 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 twelve months ended December 31, 2022 include |
(c) The amount for the twelve months ended December 31, 2022 includes an |
(d) The amounts for the three and twelve months ended December 31, 2022 are losses related to the fair value remeasurement of Quanta's common stock investment in Starry Group Holdings, Inc (Starry), a broadband technology provider. |
(e) The amounts for the three months ended December 31, 2022 and the twelve months ended December 31, 2023 and 2022 relate to gains on sales of non-integral unconsolidated affiliates. |
(f) 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.The amount for the twelve months ended December 31, 2023 includes the release of a |
(g) The amounts for the three and twelve months ended December 31, 2023 and 2022 are releases of tax contingencies upon expiration of certain statute of limitations periods. |
(h) 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
EBITDA and Adjusted EBITDA
For the Three and Twelve Months Ended
December 31, 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 twelve months ended December 31, 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 due to, among other reasons, the variable nature of these items period over period. In addition, management believes these measures may be useful for investors in comparing our operating results with other companies that may be viewed as our peers.
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 and complexity 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) mark-to-market adjustments on Quanta's investment in a publicly traded company varied 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) asset impairment charges can vary from period to period depending on economic and other factors; and (vii) change in fair value of contingent consideration liabilities varies from period to period depending on, among other things, the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations. 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.
Quanta Services, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures EBITDA and Adjusted EBITDA For the Three and Twelve Months Ended December 31, 2023 and 2022 (In thousands) (Unaudited) | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
December 31, | December 31, | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
Net income attributable to common stock (GAAP as reported) | $ 210,908 | $ 162,572 | $ 744,689 | $ 491,189 | |||||
Interest and other financing expenses | 49,500 | 37,430 | 186,913 | 124,363 | |||||
Interest income | (5,873) | (1,879) | (10,830) | (2,606) | |||||
Provision for income taxes | 75,799 | 71,545 | 219,267 | 192,243 | |||||
Depreciation expense | 85,040 | 72,227 | 324,786 | 290,647 | |||||
Amortization of intangible assets | 75,225 | 63,130 | 289,014 | 353,973 | |||||
Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates | 5,398 | 3,269 | 19,936 | 14,274 | |||||
EBITDA | 495,997 | 408,294 | 1,773,775 | 1,464,083 | |||||
Non-cash stock-based compensation | 32,104 | 27,870 | 126,762 | 105,600 | |||||
Acquisition and integration costs (a) | 16,499 | 4,708 | 42,837 | 47,431 | |||||
Equity in earnings of non-integral unconsolidated affiliates | (144) | (2,440) | (1,263) | (20,333) | |||||
Loss from mark-to-market adjustment on investment (b) | — | 14,991 | — | 91,500 | |||||
Gains on sales of investments (c) | — | (15,526) | (1,496) | (22,222) | |||||
Asset impairment charges (d) | — | 11,657 | — | 14,457 | |||||
Change in fair value of contingent consideration liabilities | 5,765 | 368 | 6,568 | 4,422 | |||||
Adjusted EBITDA | $ 550,221 | $ 449,922 | $ 1,947,183 | $ 1,684,938 | |||||
(a) The amounts for the three and nine months ended December 31, 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 twelve months ended December 31, 2022 are losses related to the fair value remeasurement of Quanta's common stock investment in Starry. |
(c) The amounts for the three months ended December 31, 2022 and the twelve months ended December 31, 2023 and 2022 include gains resulting from sales of non-integral unconsolidated affiliates. |
(d) The amounts for the three and twelve months ended December 31, 2022 include |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Free Cash Flow
and Other Non-GAAP Definitions
For the Three and Twelve Months Ended
December 31, 2023 and 2022
(In thousands)
(Unaudited)
Reconciliation of 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 twelve months ended December 31, 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. The following table shows dollars in thousands.
Three Months Ended | Twelve Months Ended | |||||||
December 31, | December 31, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Net cash provided by operating activities (a) | $ 583,129 | |||||||
Less: Net capital expenditures: | ||||||||
Capital expenditures | (109,406) | (90,161) | (434,803) | (427,630) | ||||
Cash proceeds from sale of property and equipment and related insurance settlements | 21,364 | 20,520 | 69,347 | 64,123 | ||||
Net capital expenditures | (88,042) | (69,641) | (365,456) | (363,507) | ||||
Free Cash Flow | $ 915,496 | $ 513,488 | $ 766,805 | |||||
(a) Amounts for the three and twelve months ended December 31, 2022 include |
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 2024
(In thousands, except per share information)
(Unaudited)
The following table presents reconciliations of the non-GAAP financial measures of estimated adjusted net income attributable to common stock to estimated net income attributable to common stock and 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, 2024. 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 due to, among other reasons, the variable nature of these items period over period. In addition, management believes these measures may be useful for investors in comparing our operating results with other companies that may be viewed as our peers. 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; and (iii) acquisition and integration costs vary from period to period depending on the level and complexity of Quanta's acquisition 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, 2024 | |||
Reconciliation of estimated adjusted net income attributable to common stock: | |||
Net income attributable to common stock (as defined by GAAP) | $ 850,800 | $ 925,300 | |
Non-cash stock-based compensation | 138,600 | 138,600 | |
Amortization of intangible assets | 313,100 | 313,100 | |
Amortization included in equity in earnings of integral unconsolidated affiliates | 4,500 | 4,500 | |
Acquisition and integration costs | 6,400 | 6,400 | |
Income tax impact of adjustments (a) | (120,300) | (120,300) | |
Adjusted net income attributable to common stock | $ 1,193,100 | $ 1,267,600 | |
Reconciliation of adjusted diluted earnings per share: | |||
Diluted earnings per share attributable to common stock ( as defined by GAAP) | $ 5.71 | $ 6.21 | |
Non-cash stock-based compensation | 0.93 | 0.93 | |
Amortization of intangible assets | 2.10 | 2.10 | |
Amortization included in equity in earnings of integral unconsolidated affiliates | 0.03 | 0.03 | |
Acquisition and integration costs | 0.04 | 0.04 | |
Income tax impact of adjustments (a) | (0.81) | (0.81) | |
Adjusted net income attributable to common stock | $ 8.00 | $ 8.50 | |
Weighted average shares outstanding for diluted and adjusted diluted earnings per share attributable to common stock | 149,100 | 149,100 | |
(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 2024
(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, 2024. 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 due to, among other reasons, the variable nature of these items period over period. In addition, management believes these measures may be useful for investors in comparing our operating results with other companies that may be viewed as our peers.
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 and (ii) acquisition and integration costs vary from period to period depending on the level and complexity of Quanta's acquisition activity.
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, 2024 | |||
Net income attributable to common stock (as defined by GAAP) | $ 850,800 | $ 925,300 | |
Interest and other financing expenses, net | 143,000 | 149,000 | |
Provision for income taxes | 300,600 | 335,400 | |
Depreciation expense | 362,100 | 362,100 | |
Amortization of intangible assets | 313,100 | 313,100 | |
Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates | 23,700 | 23,700 | |
EBITDA | $ 1,993,300 | $ 2,108,600 | |
Non-cash stock-based compensation | 138,600 | 138,600 | |
Acquisition and integration costs | 6,400 | 6,400 | |
Adjusted EBITDA | $ 2,138,300 | $ 2,253,600 | |
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated Free Cash Flow
For the Full Year 2024
(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, 2024. 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, 2024 | |||
Net cash provided by operating activities | $ 1,750,000 | $ 2,150,000 | |
Less: Net capital expenditures | (450,000) | (450,000) | |
Free Cash Flow | $ 1,300,000 | $ 1,700,000 | |
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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