Quanta (PWR) Beats on Q3 Earnings & Revenues, Updates View

Quanta Services Inc. PWR reported impressive results for third-quarter 2022. Adjusted earnings and revenues surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis reflecting the benefits of portfolio strategy and strategic capital deployment.

Notably, earnings beat the consensus mark in the trailing 10 quarters, whereas revenues surpassed the same in seven out of 10 consecutive quarters.

The stock has moved down 3.9% on Nov 3, post its earnings release.

Looking forward, Duke Austin, president and CEO of Quanta, stated, “We are increasingly excited and confident about the opportunity to drive multi-year revenue and double-digit earnings per share growth by continuing to support the long term programmatic spend of our customers and capitalizing on the energy transition across our portfolio of services, which we believe has been enhanced by the passage of the Inflation Reduction Act of 2022. Quanta is investing in the future to meet the needs of our customers and capitalize on the visible opportunities ahead of us. We look forward to a strong finish in 2022 and expect significant backlog growth as we enter 2023, which supports our expectations for profitable growth next year.”

Quanta Services, Inc. Price, Consensus and EPS Surprise

Quanta Services, Inc. Price, Consensus and EPS Surprise

Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote

Detailed Discussion

Quanta’s adjusted earnings of $1.77 per share came in line with the consensus estimate and increased 19.6% from the year-ago quarter’s $1.48. The upside was backed by revenue growth across the segments, record total backlog and solid and safe project execution.
 
Total revenues of $4.46 billion also surpassed the consensus mark of $4.38 billion by 1.8% and increased 33% year over year.

The operating margin for the quarter fell 100 basis points (bps) to 6.4% from a year-ago figure of 7.4%. Adjusted EBITDA of $467.4 million improved 27.4% from $366.9 million in the year-ago quarter.

The company reported a 12-month backlog of $12.43 billion and a total backlog of $20.87 billion at September-end. At December 2021-end, the 12-month backlog came in at $11.31 billion, and the total backlog was $19.27 billion. The reported metrics were also up from third-quarter 2021 end respective figures of $9.76 billion and $17.02 billion.

Segment Details

Quanta reports results under three reportable segments: Electric Power Infrastructure Solutions segment, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.

Revenues from Electric Power Infrastructure Solutions totaled $2.28 billion, increasing 14.3% year over year. The operating margin contracted 140 bps to 11.2%. The segment’s 12-month backlog was $7.19 billion, up from $6.11 billion a year ago. The total backlog of $12.98 billion increased from $11.49 billion reported in the prior-year quarter.

Revenues from Renewable Energy Infrastructure Solutions totaled $978.8 million, up 195.1% year over year. Operating margins contracted 170 bps to 9.1%. The segment’s 12-month backlog was $2.38 billion, up from $1.01 million a year ago. The total backlog of $3.03 billion increased from $1.24 billion reported in the year-ago period.

Within the Underground Utility and Infrastructure Solutions segment, revenues rose 17% from the prior-year quarter’s levels to $1.2 billion. The operating margin of 8.5% was up 180 bps from 6.7% reported in the prior-year quarter. Segment’s 12-month backlog totaled $2.86 billion, up from $2.64 billion a year ago. The total backlog increased to $4.86 billion from $4.29 billion in the prior-year quarter.

Liquidity

As of Sep 30, 2022, Quanta had cash and cash equivalents of $215.4 million, down from $229.1 million at the 2021-end. The company’s long-term debt (net of current maturities) amounted to $3.89 billion, up from $3.72 billion as of Dec 31, 2021.

Net cash provided by operating activities was $343.4 million in the third quarter, up from $17.9 million a year ago. The free cash flow for the third quarter came in at $255.6 million versus the negative free cash flow of $40.1 million reported in the year-ago period.

2022 Guidance Updated

Quanta now expects revenues between $16.8 billion and $17.0 billion versus the prior projection of $16.6-17.0 billion. The Zacks Consensus Estimate for the said metric is currently pegged at $16.83 billion.

The company expects adjusted (non-GAAP) earnings between $6.15 and $6.39 versus $6.10-$6.44 expected earlier. The Zacks Consensus Estimate is currently pegged at $6.26 per share.

Adjusted EBITDA is now projected within $1.65-$1.70 billion versus $1.64-$1.71 billion expected earlier. Quanta’s full-year non-GAAP free cash flow projection is expected between $600 million and $700 million versus $550-$750 million expected earlier.

Zacks Rank & Some Recent Construction Releases

Quanta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EMCOR Group, Inc. EME reported third-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year.

Given the solid momentum of the business activity amid a challenging macroeconomic environment, the company has lifted its revenues and earnings per share guidance for 2022.

United Rentals, Inc. URI reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.

URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.

Vulcan Materials Company VMC reported third-quarter 2022 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. The nation’s largest producer of construction aggregates has been witnessing consistent growth in aggregates unit profitability, solid contributions from acquisitions, and a positive pricing environment, despite ongoing volatility in the macro environment and slowdown in single-family residential demand. However, higher diesel fuel costs and inflationary pressures for many other parts and supplies weighed on the bottom line.

For 2022, VMC now anticipates adjusted EBITDA in the range of $1.64-$1.68 billion versus $1.60-$1.70 billion expected earlier.

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