Exhibit 99.1
|
PRESS RELEASE |
FOR IMMEDIATE RELEASE
11-09
Contacts:
|
James Haddox, CFO | Kip Rupp / krupp@drg-l.com | ||
| Reba Reid | DRG&L | |||
| Quanta Services, Inc. | 404-880-9276 | |||
| 713-629-7600 |
QUANTA SERVICES REPORTS 2011 FIRST QUARTER RESULTS
ANNOUNCES $100 MILLION STOCK REPURCHASE PROGRAM
ANNOUNCES $100 MILLION STOCK REPURCHASE PROGRAM
HOUSTON — May 4, 2011 — Quanta Services, Inc. (NYSE: PWR) today announced results for the three
months ended March 31, 2011. Revenues in the first quarter of 2011 were $849.0 million compared to
revenues of $748.3 million in the first quarter of 2010. For the first quarter of 2011, net loss
attributable to common stock was $17.6 million or a loss of $0.08 per diluted share. Net income
attributable to common stock for the first quarter of 2010 was $23.7 million or $0.11 per diluted
share. Adjusted diluted earnings (loss) per share (a non-GAAP measure) resulted in a loss of $0.05
for the first quarter of 2011 compared to earnings of $0.15 for the first quarter of 2010. Adjusted
diluted earnings (loss) per share is GAAP diluted earnings per share before the impact of
amortization of intangible assets, non-cash interest expense and non-cash compensation expense, all
net of tax. See the attached table for a reconciliation of non-GAAP measures to the reported GAAP
measures.
“During the first quarter, our operations were negatively impacted by four major project delays
caused by government permitting issues. Also, we experienced excessive project costs resulting
from the unusually burdensome application of certain regulations, compounded by adverse weather
conditions,” said John R. Colson, chairman and chief executive officer of Quanta Services. “We are
currently negotiating change orders and claims exceeding $60 million in response to these and other
circumstances. Although none of these change orders or claims were reflected in our first quarter
results, we expect positive contributions to future earnings as these negotiations progress.
Looking forward, we believe that several of the regulatory challenges will be overcome in the
second half of the year, bringing increased activity to our electric power and telecommunications
segments.”
As previously announced, Quanta completed the acquisition of Valard Construction on Oct. 25, 2010.
Therefore, these reported results include Valard in the first quarter of 2011 and are compared to
the pre-acquisition historical results of Quanta for the three months ended March 31, 2010.
On May 3, 2011, Quanta’s board of directors approved a stock repurchase program authorizing Quanta
to purchase, from time to time, up to $100 million of its outstanding common stock. These
repurchases may be made in open market transactions, in privately negotiated transactions,
including block purchases, or otherwise, at management’s discretion based on market and business
conditions, applicable legal requirements and other factors. This program, which will be effective
on May 9, 2011, does not obligate Quanta to acquire any specific amount of common stock and will
continue until otherwise modified or terminated by Quanta’s board of directors at any time at its
sole discretion and without notice. The stock repurchase program will be funded with cash on hand.
“This repurchase program reflects our optimism in the long-term future of Quanta. We have generated
substantial free cash flow over the last several years and have one of the strongest balance sheets
in our industry,” Colson continued. “We believe this repurchase program allows us to retain the
flexibility to fund our growth strategy while enhancing stockholder returns.”
RECENT HIGHLIGHTS
| • | James F. O’Neil, III, to Become Chief Executive Officer — In March, Quanta announced that James F. O’Neil, III, current president and chief operating officer of Quanta, will become president and chief executive officer on May 19. John R. Colson, current chairman and chief executive officer, will assume the role of executive chairman of the board of Quanta. Colson will remain actively involved with the company, working with O’Neil and the executive team on strategic acquisitions and investments, international expansion and the long-term direction of the company. | ||
| • | Secured Contract for New Jersey Solar Facility — Lincoln Renewable Energy (LRE), a developer of U.S. solar and wind power projects, has awarded a contract to The Ryan Company (Ryan), a Quanta Services company, for the construction of the ten-megawatt New Jersey Oak Solar Facility in Cumberland County. Quanta Renewable Energy Services, another Quanta Services company, and Ryan will provide comprehensive engineering, procurement and construction services on this project. Following project completion, Ryan will operate and maintain the facility under a five-year contract with LRE. Construction is projected to begin in June with an estimated project completion date of December 2011. |
OUTLOOK
The industries Quanta serves continue to operate in challenging business environments, with
regulatory and permitting issues, economic conditions and constraints on spending creating
uncertainty. Management cannot predict the timing or extent of the impact that this challenging
environment may have on demand for Quanta’s services, particularly in the near term. The following
forward-looking statements are based on current expectations, and actual results may differ
materially.
Quanta expects revenues for the second quarter of 2011 to range between $925 million and $975
million and diluted earnings per share to be $0.14 to $0.16. Quanta expects adjusted diluted
earnings per share (a non-GAAP measure) for the second quarter of 2011 to be $0.18 to $0.20. This
non-GAAP measure is calculated on the same basis as the historical adjusted diluted earnings (loss)
per share presented in this release. Amortization of intangibles and non-cash stock compensation
expense are forecasted to be approximately $13.2 million for the second quarter of 2011.
Quanta expects revenues for full year 2011 to range between $4.1 billion and $4.4 billion. After
taking into consideration Quanta’s first quarter results, the company has modified its annual
outlook and now estimates diluted earnings per share for the full year 2011 to be between $0.65 and
$0.80. Quanta expects adjusted diluted earnings per share for the full year 2011 to range from
$0.80 to $0.95. Amortization of intangibles and
non-cash stock compensation expense are forecasted to be approximately $50 million for the full
year 2011.
Quanta Services has scheduled a conference call for May 4, 2011, at 9:00 a.m. Eastern time. To
participate in the call, dial (480) 629-9773 at least ten minutes before the conference call begins
and ask for the Quanta Services conference call. Investors, analysts and the general public will
also have the opportunity to listen to the conference call over the Internet by visiting the
company’s website at www.quantaservices.com. To listen to the call live on the Web, please visit
the Quanta Services website 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 website at www.quantaservices.com. A replay will
also be available through May 11, 2011, and may be accessed at (303) 590-3030, using the pass code
4437101#. For more information, please contact Kip Rupp at DRG&L by calling (404) 880-9276 or email
krupp@drg-l.com.
The non-GAAP measures in this press release and on the company’s website are provided to enable
investors, analysts and management to evaluate Quanta’s performance excluding the effects of
certain items that management believes impact the comparability of operating results between
reporting periods. In addition, management believes these measures are useful in comparing Quanta’s
operating results with those of its competitors. These measures should be used as an addition to,
and not in lieu of, results prepared in conformity with GAAP. Reconciliations of other GAAP to
non-GAAP measures not included in this press release can be found on the company’s website at
www.quantaservices.com in the “Investors & Media” section.
Quanta Services is a leading specialized contracting services company, delivering infrastructure
solutions for the electric power, natural gas and pipeline and telecommunication industries. The
company’s comprehensive services include designing, installing, repairing and maintaining network
infrastructure. Additionally, Quanta licenses point-to-point fiber optic telecommunications
infrastructure 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
and capital expenditures; growth or opportunities in particular markets; the expected value of, and
the scope, services, term and results of any related projects awarded under, agreements for
services to be provided by Quanta; the impact of renewable energy initiatives, the economic
stimulus package and other existing or potential legislative actions on future spending by
customers; potential opportunities that may be indicated by bidding activity; the potential benefit
from acquisitions; statements relating to the business plans or financial condition of our
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, including as a result
of weather, site conditions, project schedules, regulatory and environmental restrictions, bidding
and spending patterns and other factors that may affect the timing or productivity on projects;
adverse economic and financial conditions, including weakness in the capital markets; trends and
growth opportunities in relevant markets; delays, reductions in scope or cancellations of existing
or pending projects, including as a result of weather, regulatory or environmental processes or
capital constraints that may impact our customers; 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 negotiation, execution, performance and
completion of pending and existing contracts; the ability to generate internal growth; the ability
to effectively compete for new projects and market share; the failure of renewable energy
initiatives, the economic stimulus package or other existing or potential legislative actions to
result in increased demand for Quanta’s services; 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; potential additional risk exposure resulting from any unavailability or
cancellation of third party insurance coverage; cancellation provisions within contracts and the
risk that contracts are not renewed or are replaced on less favorable terms; our failure to comply
with the terms of our contracts, which may result in unexcused delays, warranty claims, damages or
contract terminations; the effect of natural gas and oil prices on Quanta’s operations and growth
opportunities; the inability of customers to pay for services; the failure to recover on payment
claims against project owners or to obtain adequate compensation for customer-requested change
orders; the failure of our customers to comply with regulatory requirements applicable to their
projects, including those related to awards of stimulus funds, potentially resulting in project
delays or cancellations; budgetary or other constraints that may reduce or eliminate government
funding of projects, including stimulus projects, which may result in project delays or
cancellations in whole or in part; the ability to attract skilled labor and retain key personnel
and qualified employees; potential shortage of skilled employees; estimates and assumptions in
determining financial results and backlog; the ability to realize backlog; risks associated with
operating in international markets; the ability to successfully identify and complete acquisitions,
to effectively integrate acquired businesses and their operations, and to realize potential
synergies, such as cross-selling opportunities, from acquisitions; the potential adverse impact
resulting from uncertainty surrounding acquisitions, including the ability to retain key personnel
from the acquired businesses and the potential increase in risks already existing in Quanta’s
operations; the adverse impact of goodwill or
other intangible asset impairments; growth outpacing
infrastructure; requirements relating to governmental regulation and changes thereto; inability to
enforce our intellectual property rights or the obsolescence of such rights; risks associated with
the implementation of an information technology solution; the impact of a unionized workforce on
operations and the ability
to complete future acquisitions; liabilities associated with union plans, including underfunding of
liabilities; potential liabilities relating to occupational health and safety matters; the
potential that participation in joint ventures exposes us to liability and/or harm to our
reputation for actions or omissions by our partners; risks associated with our dependence on
suppliers, subcontractors and equipment manufacturers and their ability to perform their
obligations; risks associated with Quanta’s fiber optic licensing business, including regulatory
changes and the potential inability to realize a return on capital investments; beliefs and
assumptions about the collectability of receivables; the cost of borrowing, availability of credit,
fluctuations in the price and volume of Quanta’s common stock, debt covenant compliance, interest
rate fluctuations and other factors affecting financing and investment activities; the ability to
access sufficient funding to finance desired growth and operations; the ability to obtain
performance bonds; the ability to continue to meet the requirements of the Sarbanes-Oxley Act of
2002; potential exposure to environmental liabilities; rapid technological and structural changes
that could reduce the demand for services; the potential impact of incurring additional healthcare
costs arising from federal healthcare reform, and other risks detailed in Quanta’s Annual Report on
Form 10-K for the year ended Dec. 31, 2010 and any other documents that Quanta files 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 website at
www.quantaservices.com or through the SEC’s
Electronic Data Gathering and Analysis Retrieval System
(EDGAR) at www.sec.gov.
|
|
Quanta Services, Inc. and Subsidiaries Consolidated Statements of Operations For the Three Months Ended March 31, 2011 and 2010 (In thousands, except per share information) (Unaudited) |
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenues |
$ | 848,959 | $ | 748,283 | ||||
Cost of services (including depreciation) |
778,068 | 619,141 | ||||||
Gross profit |
70,891 | 129,142 | ||||||
Selling, general and administrative expenses |
91,541 | 81,004 | ||||||
Amortization of intangible assets |
6,266 | 5,848 | ||||||
Operating income (loss) |
(26,916 | ) | 42,290 | |||||
Interest expense |
(255 | ) | (2,864 | ) | ||||
Interest income |
286 | 369 | ||||||
Other income (expense), net |
(65 | ) | 371 | |||||
Income (loss) before income taxes |
(26,950 | ) | 40,166 | |||||
Provision (benefit) for income taxes |
(10,645 | ) | 16,066 | |||||
Net income (loss) |
(16,305 | ) | 24,100 | |||||
Less: Net income attributable to noncontrolling interests |
1,289 | 356 | ||||||
Net income (loss) attributable to common stock |
$ | (17,594 | ) | $ | 23,744 | |||
Earnings (loss) per share attributable to common stock: |
||||||||
Basic earnings (loss) per share |
$ | (0.08 | ) | $ | 0.11 | |||
Diluted earnings (loss) per share |
$ | (0.08 | ) | $ | 0.11 | |||
Weighted average shares used in computing earnings (loss) per share: |
||||||||
Basic |
214,167 | 208,673 | ||||||
Diluted |
214,167 | 210,342 | ||||||
|
|
Quanta Services, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 503,019 | $ | 539,221 | ||||
Accounts receivable, net |
767,126 | 766,387 | ||||||
Costs and estimated earnings in excess of billings on
uncompleted contracts |
110,939 | 135,475 | ||||||
Inventories |
53,091 | 51,754 | ||||||
Prepaid expenses and other current assets |
128,149 | 103,527 | ||||||
Total current assets |
1,562,324 | 1,596,364 | ||||||
PROPERTY AND EQUIPMENT, net |
910,530 | 900,768 | ||||||
OTHER ASSETS, net |
98,229 | 88,858 | ||||||
OTHER INTANGIBLE ASSETS, net |
189,086 | 194,067 | ||||||
GOODWILL |
1,564,393 | 1,561,155 | ||||||
Total assets |
$ | 4,324,562 | $ | 4,341,212 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Current maturities of long-term debt and notes payable |
$ | 1,156 | $ | 1,327 | ||||
Accounts payable and accrued expenses |
394,849 | 415,947 | ||||||
Billings in excess of costs and estimated earnings on
uncompleted contracts |
86,706 | 83,121 | ||||||
Total current liabilities |
482,711 | 500,395 | ||||||
DEFERRED INCOME TAXES AND OTHER
NON-CURRENT LIABILITIES |
482,073 | 473,898 | ||||||
Total liabilities |
964,784 | 974,293 | ||||||
TOTAL STOCKHOLDERS’ EQUITY |
3,357,125 | 3,365,555 | ||||||
NONCONTROLLING INTERESTS |
2,653 | 1,364 | ||||||
TOTAL EQUITY |
3,359,778 | 3,366,919 | ||||||
Total liabilities and equity |
$ | 4,324,562 | $ | 4,341,212 | ||||
|
|
Quanta Services, Inc. and Subsidiaries Supplemental Data For the Three Months Ended March 31, 2011 and 2010 (In thousands, except percentages) (Unaudited) |
Segment Results
We report our results under four reporting segments: (1) Electric Power Infrastructure
Services, (2) Natural Gas and Pipeline Infrastructure Services, (3) Telecommunications
Infrastructure Services and (4) Fiber Optic Licensing.
| Three Months Ended March 31, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
Revenues: |
||||||||||||||||
Electric Power |
$ | 566,461 | 66.7 | % | $ | 456,821 | 61.0 | % | ||||||||
Natural Gas and Pipeline |
176,823 | 20.8 | 188,934 | 25.3 | ||||||||||||
Telecommunications |
79,393 | 9.4 | 78,226 | 10.5 | ||||||||||||
Fiber Optic Licensing |
26,282 | 3.1 | 24,302 | 3.2 | ||||||||||||
Consolidated revenues |
$ | 848,959 | 100.0 | % | $ | 748,283 | 100.0 | % | ||||||||
Operating income (loss): |
||||||||||||||||
Electric Power |
$ | 31,318 | 5.5 | % | $ | 39,817 | 8.7 | % | ||||||||
Natural Gas and Pipeline |
(36,993 | ) | (20.9 | ) | 18,374 | 9.7 | ||||||||||
Telecommunications |
(3,612 | ) | (4.5 | ) | (800 | ) | (1.0 | ) | ||||||||
Fiber Optic Licensing |
12,035 | 45.8 | 12,119 | 49.9 | ||||||||||||
Corporate and Non-Allocated Costs |
(29,664 | ) | N/A | (27,220 | ) | N/A | ||||||||||
Consolidated operating income (loss) |
$ | (26,916 | ) | (3.2 | )% | $ | 42,290 | 5.7 | % | |||||||
Backlog
Backlog represents the amount of revenue that we expect to realize from work to be
performed in the future on uncompleted contracts, including new contractual arrangements on
which work has not yet begun. The backlog estimates include amounts under long-term maintenance
contracts or master service agreements (MSAs), in addition to construction contracts. We
estimate the amount of work to be disclosed as backlog as the estimate of future work to be
performed by using recurring historical trends inherent in the current MSAs, factoring in
seasonal demand and projecting customer needs based upon ongoing communications with the
customer. In many instances, our customers are not contractually committed to specific volumes
of services under our MSAs, and many of our contracts may be terminated with notice. There can
be no assurance as to our customers’ requirements or that our estimates are accurate. In
addition, many of our MSAs, as well as contracts for fiber optic licensing, are subject to
renewal options. For purposes of calculating backlog, we have included future renewal options
only to the extent that the renewals can reasonably be expected to occur.
The following table presents our total backlog by reportable segment as of March 31, 2011 and
December 31, 2010 along with an estimate of the backlog amounts expected to be realized within
12 months of each balance sheet date:
| Backlog as of | ||||||||||||||||
| March 31, 2011 | December 31, 2010 | |||||||||||||||
| 12 Month | Total | 12 Month | Total | |||||||||||||
Electric Power |
$ | 1,883,151 | $ | 4,344,347 | $ | 1,798,284 | $ | 4,473,425 | ||||||||
Natural Gas and Pipeline |
668,664 | 1,257,073 | 743,970 | 1,026,937 | ||||||||||||
Telecommunications |
310,336 | 533,518 | 228,549 | 415,460 | ||||||||||||
Fiber Optic Licensing |
95,228 | 425,774 | 98,792 | 402,299 | ||||||||||||
Total |
$ | 2,957,379 | $ | 6,560,712 | $ | 2,869,595 | $ | 6,318,121 | ||||||||
|
|
Quanta Services, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures For the Three Months Ended March 31, 2011 and 2010 (In thousands, except per share information) (Unaudited) |
The non-GAAP measure of adjusted diluted earnings (loss) per share is provided to enable
investors to evaluate performance excluding the effects of items that management believes impact
the comparability of operating results between periods. More particularly, (i) amortization of
intangible assets is impacted by Quanta’s acquisition activity, which can cause these amounts to
vary from period-to-period; (ii) non-cash interest expense varies from period-to-period depending
on the amount of the convertible subordinated notes outstanding during the period; and (iii)
non-cash compensation expense may vary due to acquisition activity, factors influencing the
estimated fair value of performance-based awards, estimated forfeiture rates and amounts granted
during the period.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Adjusted diluted earnings (loss) per share: |
||||||||
Net income (loss) attributable to common stock (GAAP as reported) |
$ | (17,594 | ) | $ | 23,744 | |||
Adjustments: |
||||||||
Non-cash stock-based compensation, net of tax |
3,380 | 3,661 | ||||||
Non-cash interest expense, net of tax |
— | 739 | ||||||
Amortization of intangible assets, net of tax |
4,121 | 3,567 | ||||||
Adjusted net income (loss) attributable to common stock after certain
non-cash adjustments |
(10,093 | ) | 31,711 | |||||
Effect of convertible subordinated notes under the “if-
converted” method — interest expense addback, net of tax |
— | 949 | ||||||
Adjusted net income (loss) attributable to common stock for
adjusted diluted earnings (loss) per share |
$ | (10,093 | ) | $ | 32,660 | |||
Calculation of weighted average shares for adjusted
diluted earnings (loss) per share: |
||||||||
Weighted average shares outstanding for basic earnings (loss) per
share |
214,167 | 208,673 | ||||||
Effect of dilutive stock options |
— | (a) | 137 | |||||
Effect of shares held in escrow |
— | (a) | 1,532 | |||||
Effect of convertible subordinated notes under the “if
converted” method — weighted convertible shares issuable |
— | 6,414 | ||||||
Weighted average shares outstanding for adjusted diluted
earnings (loss) per share |
214,167 | 216,756 | ||||||
Adjusted diluted earnings (loss) per share |
$ | (0.05 | ) | $ | 0.15 | |||
| (a) | Potential common shares are excluded from the diluted loss per share computation in the quarter ended March 31, 2011 as their inclusion would be antidilutive. |