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.
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