EX-99.1 3 h07966exv99w1.txt PRESS RELEASE DATED AUGUST 6, 2003 EXHIBIT 99.1 [QUANTA SERVICES LOGO] PRESS RELEASE 03-08 FOR IMMEDIATE RELEASE Contacts: James Haddox, CFO Ken Dennard / kdennard@drg-e.com Reba Reid Lisa Elliott / lisae@drg-e.com Quanta Services, Inc. DRG&E / 713-529-6600 713-629-7600 QUANTA SERVICES REPORTS SECOND QUARTER RESULTS GAAP LOSS PER SHARE WAS $0.08 NON-GAAP ADJUSTED EARNINGS WERE $0.03 PER DILUTED SHARE HOUSTON - AUGUST 6, 2003 - Quanta Services, Inc. (NYSE:PWR) today announced results for the three and six months ended June 30, 2003. Results for the second quarter of 2003 versus management's previous estimates are as follows: o Revenues were $408.3 million compared to previous estimates of $380 to $420 million o Non-GAAP adjusted diluted earnings per share were $0.03 compared to previous estimates of $0.03 to $0.05 per diluted share o Adjustments recorded in the second quarter consisted of allowances for certain accounts and notes receivable in the amount of $19.0 million, related primarily to notes receivable from one customer Revenues in the second quarter of 2003 were $408.3 million, compared to revenues of $432.5 million in the second quarter of 2002. For the second quarter of 2003, GAAP net loss attributable to common stock was $9.8 million, or a loss per share of $0.08, compared to GAAP net loss attributable to common stock of $177.4 million, or a loss per share of $2.26, in last year's second quarter. "We are encouraged by the stabilization of our telecommunication revenues and are poised for growth when capital expenditures and maintenance funds flow from our utility and telecommunications customers," said John Colson, chairman and chief executive officer of Quanta Services. "While our markets appear to have stabilized, we have less visibility on the second half of the year based on the delay of awards from bid activity during the second quarter." This year's second quarter results include allowances for certain accounts and notes receivable in the amount of $19.0 million, related primarily to notes receivable from one customer. For the three months ended June 30, 2003, non-GAAP net income attributable to common stock adjusted for these allowances was $3.1 million, or $0.03 per diluted share. For the three months ended June 30, 2002, non-GAAP adjusted net income attributable to common stock was $2.2 million, or $0.03 per diluted share. The 2002 second quarter results include the impact of an interim non-cash SFAS No. 142 impairment charge of approximately $166.6 million. In addition, during the second quarter of 2002, the company recognized $5.9 million in expenses associated with a proxy contest with Aquila, Inc. and $17.0 million related to allowances for balances primarily related to certain customers that declared bankruptcy during the quarter. A reconciliation of the second quarter 2003 and 2002 GAAP net income (loss) attributable to common stock to non-GAAP net income (loss) attributable to common stock has been provided in the attached table. We are providing these non- GAAP measures to enable investors to evaluate quarterly performance absent large, customer- specific allowances and other items, and to perform additional comparisons of operating results. Revenues for the first six months of 2003 were $775.4 million, compared to $881.7 million for the first six months of 2002. For the first six months of 2003, the company reported a GAAP net loss attributable to common stock of $12.6 million, or a loss per diluted share of $0.13, compared to a GAAP net loss attributable to common stock of $612.8 million, or a loss per diluted share of $7.82 in the first half of last year. In addition to the previously discussed charges recorded in last year's second quarter, GAAP results for the first six months of 2002 include the impact of a cumulative effect of change in accounting principle in the amount of $445.4 million, net of tax, related to the adoption of SFAS No. 142 and $4.6 million of expenses associated with the proxy contest with Aquila incurred during the first quarter of 2002. OUTLOOK The following statements are based on current expectations. These statements are forward looking and actual results may differ materially. These statements do not include the potential impact of any business combinations, divestitures or financings that may be completed after the date of this press release. The company expects revenues for the third quarter of 2003 to be between $410 million and $430 million and diluted earning per share to be in the range of $0.04 to $0.07. For fiscal 2003, Quanta now expects revenues of $1.55 billion to $1.65 billion, non-GAAP earnings per share, adjusted for the allowances recorded in the second quarter, to range between $0.08 to $0.12, and GAAP earnings to range between $0.02 loss per share to $0.02 earnings per diluted share. Colson commented, "The current delays of bids and contract awards have led us to modify our earnings estimates for the remainder of the year." Quanta Services has scheduled a conference call for Wednesday, August 6, 2003, at 10:00 a.m. EDT. To participate in the call, dial (212) 329-1451 at least ten minutes before the 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 live call on the web, please visit the Quanta Services web site at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live call, a telephonic replay will be available through August 13, 2003, and may be accessed by calling (303) 590-3000 using pass code 547655. For more information, please contact Karen Roan at DRG&E at 713-529-6600 or email karen@drg-e.com . Quanta Services, Inc. is a leading provider of specialized contracting services, delivering end-to-end network solutions for electric power, gas, telecommunications and cable television industries. The company's comprehensive services include designing, installing, repairing and maintaining network infrastructure nationwide. This press release contains various forward-looking statements and information, including management's expectations of revenues and earnings per share that are based on management's belief as well as assumptions made by and information currently available to management. Although Quanta's management believes that the expectations reflected in such forwardlooking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions including, among other matters, future growth in electric utility and telecommunications outsourcing, the ability of Quanta to effectively integrate the operations of our companies, access to sufficient funding, compliance with financial covenants, dependence on fixed price contracts, cancellation provisions in contracts and departure of key personnel, as well as general risks related to the industries in which Quanta operates. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. For a discussion of the risks, investors are urged to refer to Quanta's reports filed under the Securities Exchange Act of 1934. - Tables to follow - [QUANTA SERVICES LOGO] QUANTA SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (IN THOUSANDS, EXCEPT PER SHARE INFORMATION) (UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30, ----------------------------- ----------------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Revenues $ 408,302 $ 432,522 $ 775,431 $ 881,742 Cost of services 354,784 384,362 684,156 757,895 --------- --------- --------- --------- Gross profit 53,518 48,160 91,275 123,847 Selling, general & administrative Expenses 57,229 53,548 95,993 99,585 Non-cash stock compensation expense 878 63 1,084 126 Proxy costs -- 5,878 -- 10,498 Goodwill impairment -- 166,580 -- 166,580 --------- --------- --------- --------- Loss from operations (4,589) (177,909) (5,802) (152,942) Interest expense (8,138) (8,035) (16,102) (15,889) Other income (expense), net (326) 1,183 (110) 1,618 --------- --------- --------- --------- Loss before taxes (13,053) (184,761) (22,014) (167,213) Benefit for taxes (3,218) (7,564) (7,336) (282) --------- --------- --------- --------- Loss before cumulative effect of change in accounting principle (9,835) (177,197) (14,678) (166,931) Cumulative effect of change in accounting principle, net of tax -- -- -- 445,422 --------- --------- --------- --------- Net loss (9,835) (177,197) (14,678) (612,353) Dividends on preferred stock, net of forfeitures -- 232 (2,109) 464 --------- --------- --------- --------- Net loss attributable to common stock $ (9,835) $(177,429) $ (12,569) $(612,817) ========= ========= ========= ========= Basic and diluted loss per share before cumulative effect of change in accounting principle $ (0.08) $ (2.26) $ (0.13) $ (2.13) Cumulative effect of change in accounting principle, net of tax $ -- $ -- $ -- $ (5.69) --------- --------- --------- --------- Basic and diluted loss per share $ (0.08) $ (2.26) $ (0.13) $ (7.82) ========= ========= ========= ========= Shares used in computing earnings per share Basic 115,799 78,272 114,176 78,269 ========= ========= ========= ========= Diluted 115,799 78,272 114,176 78,269 ========= ========= ========= =========
[QUANTA SERVICES LOGO] QUANTA SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands)
June 30, December 31, 2003 2002 ---------- ---------- ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 86,115 $ 27,901 Accounts receivable, net 352,021 367,057 Costs and estimated earnings in excess of billings on uncompleted contracts 55,492 54,749 Inventories 26,838 25,646 Prepaid expenses and other current assets 30,064 54,144 ---------- ---------- Total current assets 550,530 529,497 PROPERTY AND EQUIPMENT, net 350,707 369,568 ACCOUNTS AND NOTES RECEIVABLE, net 35,477 50,900 OTHER ASSETS, net 28,495 19,250 GOODWILL AND OTHER INTANGIBLES, net 395,465 395,597 ---------- ---------- Total assets $1,360,674 $1,364,812 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 6,261 $ 6,652 Accounts payable and accrued expenses 178,401 189,080 Billings in excess of costs and estimated earnings on uncompleted contracts 15,295 16,409 ---------- ---------- Total current liabilities 199,957 212,141 LONG-TERM DEBT, net of current maturities 211,947 213,167 CONVERTIBLE SUBORDINATED NOTES 172,500 172,500 DEFERRED INCOME TAXES AND OTHER NON-CURRENT LIABILITIES 97,450 82,411 ---------- ---------- TOTAL LIABILITIES 681,854 680,219 ---------- ---------- REDEEMABLE COMMON STOCK -- 72,922 STOCKHOLDERS' EQUITY 678,820 611,671 ---------- ---------- Total liabilities and stockholders' equity $1,360,674 $1,364,812 ========== ==========
[QUANTA SERVICES LOGO] QUANTA SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Earnings (In thousands, except per share information) (Unaudited) Presented below are reconciliations between certain GAAP and non- GAAP measures. The non-GAAP measures are based upon our unaudited consolidated statements of operations for the periods shown, with certain adjustments. Quanta is providing the non-GAAP information to supplement the results provided in accordance with GAAP and it should not be considered superior to, or as a substitute for, the comparable GAAP measures. However, Quanta believes certain non-GAAP measures provide meaningful insight into the company's ongoing economic performance and therefore uses the non-GAAP information internally to evaluate and manage Quanta's operations. Quanta has chosen to provide this supplemental non-GAAP information to investors to enable them to perform additional comparisons of operating results and as a means to emphasize the results of ongoing operations absent large, customer-specific allowances and other items.
THREE MONTHS ENDED JUNE 30, 2003 -------------------------------------------------------- NON-GAAP GAAP ADJUSTMENTS NON-GAAP --------- ----------- -------- Income (loss) before taxes $ (13,053) $19,014(a) $ 5,961 Provision (benefit) for taxes (3,218) 6,079 2,861(b) --------- ------- -------- Net income (loss) (9,835) 12,935 3,100 Dividends on preferred stock -- -- -- --------- ------- -------- Net income (loss) attributable to common stock $ (9,835) $12,935 $ 3,100 ========= ======= ======== Shares used in computing basic and diluted earnings per share 115,799 115,799 ========= ======== Diluted earnings (loss) per share $ (0.08) $ 0.03 ========= ========
(a) Represents the charge for allowance on certain accounts and notes receivable related primarily to one customer. (b) A 48.0% effective tax rate was assumed for the above presentation of net income before charges. This rate represents the estimated effective tax rate for 2003 had the above second quarter charges not been incurred.
THREE MONTHS ENDED JUNE 30, 2002 -------------------------------------------------------- NON-GAAP GAAP ADJUSTMENTS NON-GAAP --------- ----------- -------- Income (loss) before taxes $(184,761) $189,441(a) $ 4,680 Provision (benefit) for taxes (7,564) 9,810 2,246(b) --------- -------- ------- Net income (loss) (177,197) 179,631 2,434 Dividends on preferred stock 232 -- 232 --------- -------- ------- Net income (loss) attributable to common stock $(177,429) $179,631 $ 2,202 ========= ======== ======= Shares used in computing basic and diluted earnings per share 78,272 78,272 ========= ======= Diluted earnings (loss) per share $ (2.26) $ 0.03 ========= =======
(a) Includes a goodwill impairment charge of $166.6 million, charges of $5.9 million associated with a proxy contest with Aquila, Inc. and charges of $17.0 million related to allowances for balances primarily related to certain customers that declared bankruptcy during the quarter ended June 30, 2002. (b) A 48.0% effective tax rate was assumed for the above presentation of net income before charges. This rate represents the estimated effective tax rate for 2002 had the above second quarter charges not been incurred. # # #