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Quanta Services Inc. (PWR - Free Report) reported impressive earnings for third-quarter 2021. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Revenues also improved from a year ago but missed the consensus mark.
The stock fell 1.6% in the pre-market trading session on Nov 4, post its earnings release.
The company has been witnessing weather, regulatory, permitting, project timing and execution challenges. These factors are likely to impact its future results as well. Despite these headwinds, the company raised its revenues, adjusted earnings and adjusted EBITDA guidance for 2021.
Detailed Discussion
Quanta reported adjusted earnings of $1.48 per share, which surpassed the consensus estimate of $1.47 by 0.7% and increased 5.7% from the year-ago profit level of $1.40. The upside was backed by record revenues and strong margins from the Electric Power Infrastructure Solutions segment owing to solid and safe execution, high utilization as well as record levels of emergency response activity.
Quanta Services, Inc. Price, Consensus and EPS Surprise
Total revenues of $3.35 billion missed the consensus mark of $3.43 billion by 2.2% but increased 10.9% year over year.
Operating margin for the quarter fell 60 basis points (bps) from a year ago to 7.4%. Adjusted EBITDA of $366.9 million, however, improved 3.8% from $353.3 million a year ago.
The company reported 12-month backlog of $9.76 billion and total backlog of $17.02 billion at September-end. At September 2020-end, 12-month backlog came in at $8.14 billion and total backlog was $15.07 billion. The reported metrics were also up from 2020-end respective figures of $8.27 billion and $15.13 billion.
Segment Details
It reports results under two reportable segments: Electric Power Infrastructure Solutions segment (accounting for 69.4% of revenues), and Underground Utility and Infrastructure Solutions (30.6%).
Revenues from Electric Power Infrastructure Solutions totaled $2.33 billion, increasing 10.5% year over year. Operating margins, however, contracted 30 bps to 12.4%. The segment’s 12-month backlog was $7.12 billion, up from $5.95 billion a year ago. Total backlog of $12.73 billion also grew from $10.8 billion reported in the prior-year quarter.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 12.3% from the prior-year quarter to $1.02 billion. Yet, operating margin of 6.7% contracted 170 bps year over year. Segment’s 12-month backlog totaled $2.64 billion, up from $2.2 billion a year ago. Total backlog grew to $4.29 billion from $4.28 billion in the prior year.
Liquidity
As of Sep 30, 2021, Quanta had cash and cash equivalents of $1.7 billion, significantly up from $184.6 million at 2020-end. The company’s long-term debt (net of current maturities) amounted to $2.93 billion, up from $1.17 billion as of Dec 31, 2020.
Net cash provided by operating activities was $17.9 million for the quarter compared with $114.9 million a year ago. Free cash flow for the quarter came in at negative $40.1 million against $70 million reported in third-quarter 2020.
2021 Guidance Updated
Quanta now expects revenues between $12.55 billion and $12.85 billion versus earlier expectation of $12.20-$12.45 billion.
It expects adjusted earnings between $4.62 and $4.87 versus $4.32-$4.68 per share projected earlier. Adjusted EBITDA is projected within $1.21-$1.26 billion versus prior projection of $1.13-$1.21 billion. Meanwhile, Quanta’s full-year non-GAAP free cash flow projection has been reduced to $350-$500 million from $350-$500 million expected earlier.
KBR, Inc. (KBR - Free Report) reported impressive third-quarter 2021 results — wherein earnings and revenues topped the Zacks Consensus Estimate — and raised its full-year view. The company benefited from solid Government Solutions organic growth and strong execution across the business.
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Quanta (PWR) Q3 Earnings Top, Up Y/Y, Margin Down, Stock Falls
Quanta Services Inc. (PWR - Free Report) reported impressive earnings for third-quarter 2021. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Revenues also improved from a year ago but missed the consensus mark.
The stock fell 1.6% in the pre-market trading session on Nov 4, post its earnings release.
The company has been witnessing weather, regulatory, permitting, project timing and execution challenges. These factors are likely to impact its future results as well. Despite these headwinds, the company raised its revenues, adjusted earnings and adjusted EBITDA guidance for 2021.
Detailed Discussion
Quanta reported adjusted earnings of $1.48 per share, which surpassed the consensus estimate of $1.47 by 0.7% and increased 5.7% from the year-ago profit level of $1.40. The upside was backed by record revenues and strong margins from the Electric Power Infrastructure Solutions segment owing to solid and safe execution, high utilization as well as record levels of emergency response activity.
Quanta Services, Inc. Price, Consensus and EPS Surprise
Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote
Total revenues of $3.35 billion missed the consensus mark of $3.43 billion by 2.2% but increased 10.9% year over year.
Operating margin for the quarter fell 60 basis points (bps) from a year ago to 7.4%. Adjusted EBITDA of $366.9 million, however, improved 3.8% from $353.3 million a year ago.
The company reported 12-month backlog of $9.76 billion and total backlog of $17.02 billion at September-end. At September 2020-end, 12-month backlog came in at $8.14 billion and total backlog was $15.07 billion. The reported metrics were also up from 2020-end respective figures of $8.27 billion and $15.13 billion.
Segment Details
It reports results under two reportable segments: Electric Power Infrastructure Solutions segment (accounting for 69.4% of revenues), and Underground Utility and Infrastructure Solutions (30.6%).
Revenues from Electric Power Infrastructure Solutions totaled $2.33 billion, increasing 10.5% year over year. Operating margins, however, contracted 30 bps to 12.4%. The segment’s 12-month backlog was $7.12 billion, up from $5.95 billion a year ago. Total backlog of $12.73 billion also grew from $10.8 billion reported in the prior-year quarter.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 12.3% from the prior-year quarter to $1.02 billion. Yet, operating margin of 6.7% contracted 170 bps year over year. Segment’s 12-month backlog totaled $2.64 billion, up from $2.2 billion a year ago. Total backlog grew to $4.29 billion from $4.28 billion in the prior year.
Liquidity
As of Sep 30, 2021, Quanta had cash and cash equivalents of $1.7 billion, significantly up from $184.6 million at 2020-end. The company’s long-term debt (net of current maturities) amounted to $2.93 billion, up from $1.17 billion as of Dec 31, 2020.
Net cash provided by operating activities was $17.9 million for the quarter compared with $114.9 million a year ago. Free cash flow for the quarter came in at negative $40.1 million against $70 million reported in third-quarter 2020.
2021 Guidance Updated
Quanta now expects revenues between $12.55 billion and $12.85 billion versus earlier expectation of $12.20-$12.45 billion.
It expects adjusted earnings between $4.62 and $4.87 versus $4.32-$4.68 per share projected earlier. Adjusted EBITDA is projected within $1.21-$1.26 billion versus prior projection of $1.13-$1.21 billion. Meanwhile, Quanta’s full-year non-GAAP free cash flow projection has been reduced to $350-$500 million from $350-$500 million expected earlier.
Zacks Rank & Peer Release
Quanta — which shares space with Jacobs Engineering Group Inc. (J - Free Report) and AECOM (ACM - Free Report) in the Zacks Engineering - R and D Services industry — currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR, Inc. (KBR - Free Report) reported impressive third-quarter 2021 results — wherein earnings and revenues topped the Zacks Consensus Estimate — and raised its full-year view. The company benefited from solid Government Solutions organic growth and strong execution across the business.