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Quanta (PWR) Q2 Earnings Miss Estimates, 2024 Guidance Raised
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Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2024, wherein adjusted earnings missed the Zacks Consensus Estimate, but revenues surpassed the same. Both metrics increased on a year-over-year basis.
However, shares of this leading national provider of specialty contracting services fell 1.3% in the pre-market trading session on Aug 1.
Quanta's performance in the second quarter marks a strong base for the rest of 2024, characterized by impressive growth across key metrics. Moreover, the company has raised its 2024 guidance for major metrics, owing to the expected contributions from its recent acquisition of CEI.
Detailed Discussion
Quanta’s adjusted earnings per share (EPS) of $1.90 missed the consensus estimate of $1.93 by 1.6% but increased 15.2% from the year-ago quarter’s $1.65.
Quanta Services, Inc. Price, Consensus and EPS Surprise
Total revenues of $5.59 billion surpassed the consensus mark of $5.51 billion by 1.5% and increased 10.8% year over year. The growth was supported by robust demand for its services, propelled by customers' multi-year initiatives aimed at modernizing and fortifying utility infrastructure, expanding renewable energy generation and transmission infrastructure, and transitioning toward a low-carbon economy.
The operating margin for the quarter remained stable at 5.5% from a year ago. Adjusted EBITDA of $523.2 million improved 10.8% from the year-ago quarter.
The company reported a 12-month backlog of $16.62 billion and a total backlog of $31.31 billion at the end of June. This compares with the December 2023-end’s 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. At June 2023-end, the 12-month backlog stood at $15.64 billion and a total backlog at $27.2 billion.
Segment Details
The company reports results under three segments — Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
Revenues from Electric Power Infrastructure Solutions totaled $2.45 billion, which grew 1.5% year over year. The growth was mainly driven by base business activity from utility grid modernization, grid security and system hardening initiatives, sound execution and effective resource management across the electric power and communications operations. Also, emergency restoration contributions of approximately $94 million and businesses acquired in the past year added $65 million to total revenues.
The operating margin improved 70 basis points (bps) to 10.8%. The segment’s 12-month backlog was $7.85 billion, down from $8.36 billion at 2023-end but up from $7.53 billion in the year-ago quarter. The total backlog was $17.17 billion compared with $15.5 billion at 2023-end and $13.58 billion at June 2023-end.
Revenues from Renewable Energy Infrastructure Solutions totaled $2.03 million, up 46.4% year over year. This was driven by increased renewable generation project activity, including solar, wind and battery storage projects, as well as high-voltage electric transmission and substation services. Operating margins remained on par from the prior year’s reading of 8% due to better overall execution in the field despite headwinds from challenging projects.
The segment’s 12-month backlog was $5.61 billion, up from $5.17 billion at June 2023-end but down from $5.63 billion at 2023-end. The total backlog of $7.84 billion increased from $7.01 billion at June 2023-end but decreased from $8.13 billion at 2023-end.
Within the Underground Utility and Infrastructure Solutions segment, revenues declined 11% from the prior-year quarter’s levels to $1.11 billion. Businesses acquired in the past 12 months contributed $55 million to quarterly revenues. The operating margin of 7.4% was down 120 bps from the prior-year quarter due to the mix of work during the quarter.
Segment’s 12-month backlog totaled $3.16 billion, up from $2.94 billion at June 2023-end but down from $3.24 billion at 2023-end. The total backlog decreased to $6.31 billion from $6.48 billion at 2023-end and from $6.6 billion at June 2023-end.
Liquidity
As of Jun 30, 2024, Quanta had cash and cash equivalents of $518.1 million, down from $1.29 billion at 2023-end. The company’s long-term debt (net of current maturities) amounted to $2.97 billion, down from $3.66 billion as of Dec 31, 2023. As of Jun 30, 2024, PWR had total liquidity of approximately $2.8 billion and a debt-to-EBITDA ratio of 1.8x.
Post second quarter, the company utilized its borrowings under the existing commercial paper program and a new $400 million short-term loan facility to partially finance the acquisition of CEI. This resulted in a post-transaction debt-to-EBITDA ratio of approximately 2.2x.
Net cash provided by operating activities was $391.3 million in the second quarter, up from $127.4 million a year ago. Free cash flow (FCF) in the quarter was $258.6 million compared with $46.3 million reported in the year-ago quarter.
2024 Guidance Updated
Quanta now expects revenues between $23.5 billion and $24.1 billion compared with the prior projection of $22.5 billion-$23 billion. The company reported revenues of $20.9 billion in 2023.
The company now expects adjusted EPS in the range of $8.32-$8.87 versus the prior projection of $8.15-$8.65. Adjusted EBITDA is now projected to be between $2.21 and $2.33 billion compared with the earlier projection of $2.13-$2.25 billion. In 2023, PWR reported adjusted EPS of $7.16 and adjusted EBITDA of $1.95 billion.
Quanta’s FCF is still projected to be in the range of $1.30-$1.70 billion.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
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Quanta (PWR) Q2 Earnings Miss Estimates, 2024 Guidance Raised
Quanta Services Inc. (PWR - Free Report) reported mixed results for second-quarter 2024, wherein adjusted earnings missed the Zacks Consensus Estimate, but revenues surpassed the same. Both metrics increased on a year-over-year basis.
However, shares of this leading national provider of specialty contracting services fell 1.3% in the pre-market trading session on Aug 1.
Quanta's performance in the second quarter marks a strong base for the rest of 2024, characterized by impressive growth across key metrics. Moreover, the company has raised its 2024 guidance for major metrics, owing to the expected contributions from its recent acquisition of CEI.
Detailed Discussion
Quanta’s adjusted earnings per share (EPS) of $1.90 missed the consensus estimate of $1.93 by 1.6% but increased 15.2% from the year-ago quarter’s $1.65.
Quanta Services, Inc. Price, Consensus and EPS Surprise
Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote
Total revenues of $5.59 billion surpassed the consensus mark of $5.51 billion by 1.5% and increased 10.8% year over year. The growth was supported by robust demand for its services, propelled by customers' multi-year initiatives aimed at modernizing and fortifying utility infrastructure, expanding renewable energy generation and transmission infrastructure, and transitioning toward a low-carbon economy.
The operating margin for the quarter remained stable at 5.5% from a year ago. Adjusted EBITDA of $523.2 million improved 10.8% from the year-ago quarter.
The company reported a 12-month backlog of $16.62 billion and a total backlog of $31.31 billion at the end of June. This compares with the December 2023-end’s 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. At June 2023-end, the 12-month backlog stood at $15.64 billion and a total backlog at $27.2 billion.
Segment Details
The company reports results under three segments — Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
Revenues from Electric Power Infrastructure Solutions totaled $2.45 billion, which grew 1.5% year over year. The growth was mainly driven by base business activity from utility grid modernization, grid security and system hardening initiatives, sound execution and effective resource management across the electric power and communications operations. Also, emergency restoration contributions of approximately $94 million and businesses acquired in the past year added $65 million to total revenues.
The operating margin improved 70 basis points (bps) to 10.8%. The segment’s 12-month backlog was $7.85 billion, down from $8.36 billion at 2023-end but up from $7.53 billion in the year-ago quarter. The total backlog was $17.17 billion compared with $15.5 billion at 2023-end and $13.58 billion at June 2023-end.
Revenues from Renewable Energy Infrastructure Solutions totaled $2.03 million, up 46.4% year over year. This was driven by increased renewable generation project activity, including solar, wind and battery storage projects, as well as high-voltage electric transmission and substation services. Operating margins remained on par from the prior year’s reading of 8% due to better overall execution in the field despite headwinds from challenging projects.
The segment’s 12-month backlog was $5.61 billion, up from $5.17 billion at June 2023-end but down from $5.63 billion at 2023-end. The total backlog of $7.84 billion increased from $7.01 billion at June 2023-end but decreased from $8.13 billion at 2023-end.
Within the Underground Utility and Infrastructure Solutions segment, revenues declined 11% from the prior-year quarter’s levels to $1.11 billion. Businesses acquired in the past 12 months contributed $55 million to quarterly revenues. The operating margin of 7.4% was down 120 bps from the prior-year quarter due to the mix of work during the quarter.
Segment’s 12-month backlog totaled $3.16 billion, up from $2.94 billion at June 2023-end but down from $3.24 billion at 2023-end. The total backlog decreased to $6.31 billion from $6.48 billion at 2023-end and from $6.6 billion at June 2023-end.
Liquidity
As of Jun 30, 2024, Quanta had cash and cash equivalents of $518.1 million, down from $1.29 billion at 2023-end. The company’s long-term debt (net of current maturities) amounted to $2.97 billion, down from $3.66 billion as of Dec 31, 2023. As of Jun 30, 2024, PWR had total liquidity of approximately $2.8 billion and a debt-to-EBITDA ratio of 1.8x.
Post second quarter, the company utilized its borrowings under the existing commercial paper program and a new $400 million short-term loan facility to partially finance the acquisition of CEI. This resulted in a post-transaction debt-to-EBITDA ratio of approximately 2.2x.
Net cash provided by operating activities was $391.3 million in the second quarter, up from $127.4 million a year ago. Free cash flow (FCF) in the quarter was $258.6 million compared with $46.3 million reported in the year-ago quarter.
2024 Guidance Updated
Quanta now expects revenues between $23.5 billion and $24.1 billion compared with the prior projection of $22.5 billion-$23 billion. The company reported revenues of $20.9 billion in 2023.
The company now expects adjusted EPS in the range of $8.32-$8.87 versus the prior projection of $8.15-$8.65. Adjusted EBITDA is now projected to be between $2.21 and $2.33 billion compared with the earlier projection of $2.13-$2.25 billion. In 2023, PWR reported adjusted EPS of $7.16 and adjusted EBITDA of $1.95 billion.
Quanta’s FCF is still projected to be in the range of $1.30-$1.70 billion.
Zacks Rank & 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.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.