(QUANTA SERVICES LOGO) PRESS RELEASE
FOR IMMEDIATE RELEASE
03-16
Contacts: James Haddox, CFO Ken Dennard / ksdennard@drg-e.com
Reba Reid Lisa Elliott / lelliott@drg-e.com
Quanta Services, Inc. DRG&E
713-629-7600 713-529-6600
QUANTA SERVICES REPORTS THIRD QUARTER RESULTS
REFINANCED DEBT & REDUCED INTEREST EXPENSE
SECURES $100 MILLION IN NEW CONTRACTS
HOUSTON - NOVEMBER 13, 2003 - Quanta Services, Inc. (NYSE:PWR) today announced
results for the three and nine months ended September 30, 2003.
Revenues in the third quarter of 2003 were $436.1 million, compared to
revenues of $436.2 million in the third quarter of 2002. For the third quarter
of 2003, net income attributable to common stock was $5.4 million, or $0.05 per
diluted share, compared to a net loss attributable to common stock of $8.6
million, or a loss per share of $0.14 in last year's third quarter. Last year's
third quarter results include the impact of a pretax charge of $31.0 million to
provide allowances for certain accounts.
"Our performance in the third quarter was in line with our expectations
and we continue to see our customers' financial position improve," said John
Colson, chairman and chief executive officer of Quanta Services. "Quanta remains
well positioned to partner with its customers to address their emerging needs --
from the pressure being placed on utilities to address the state of the
transmission grid to increased interest in fiber-to-the-home initiatives by
various telecommunications companies, municipalities and utilities."
Revenues for the first nine months of 2003 were $1.21 billion, compared
to $1.32 billion for the first nine months of 2002. For the first nine months of
2003, after considering the impact of a pretax charge of $19.0 million for
allowances recorded for certain accounts in the second quarter, the company
reported a net loss attributable to common stock of $7.2 million, or a loss per
share of $0.06, compared to a net loss attributable to common stock of $621.4
million, or a loss per share of $10.19 in the first nine months of last year.
- more -
The prior year results include the effect of charges of $48.0 million
to provide allowances for certain accounts, $10.5 million in proxy defense
costs, the impact of an interim non-cash SFAS No. 142 impairment charge of
approximately $166.6 million and a cumulative effect of change in accounting
principle in the amount of $445.4 million, net of tax, also related to the
adoption of SFAS No. 142.
RECENT HIGHLIGHTS
o SECURED TWO MAJOR PROJECTS VALUED AT APPROXIMATELY $100 MILLION - Quanta
has been awarded two major projects with combined revenues of approximately
$100 million over 18 months. Quanta will construct a 90-mile, 765,000-volt
transmission line for American Electric Power (NYSE: AEP) that will help
reinforce the transmission system serving western Virginia and southern
West Virginia. Tennessee Valley Authority has selected Quanta for
construction and modification services on TVA's transmission and substation
infrastructure through a five-year contract.
o COMPLETED OFFERING OF $270 MILLION OF CONVERTIBLE SUBORDINATED DEBENTURES -
In the fourth quarter of 2003, Quanta completed an offering of $270 million
of Convertible Subordinated Debentures due in 2023 through a private
placement. The company used the net proceeds of the offering to repay a
portion of its senior secured notes and associated make-whole prepayment
premiums.
o AMENDED CREDIT FACILITY - Quanta has amended its existing facility in the
fourth quarter of 2003 to convert it into a fully funded $60 million term
loan and letter of credit facility of up to $120.0 million and extended its
maturity to January 1, 2005. The term loan was used to repay a portion of
Quanta's senior secured notes and associated make-whole prepayment
premiums.
o REDUCED INTEREST EXPENSE - As a result of the above refinancing efforts and
the repayment of the company's senior secured notes, interest expense in
future years will be reduced by approximately $8 million per year.
o SUPPORTED NINE UTILITIES IN RESTORATION EFFORTS - Quanta provided more than
1,500 people over the span of 3 weeks in an effort to restore power to the
areas affected by Hurricane Isabel. Quanta crews supported six different
utilities in this initiative. Additionally, Quanta provided 350 people to
help three major utilities recover from the massive fires affecting
California in late October and early November.
-- more --
OUTLOOK
The following statements are based on current expectations. These
statements are forward looking, and actual results may differ materially.
Quanta expects revenues for the fourth quarter of 2003 to range from
$380 million to $410 million. Loss per share for the quarter is expected to
range from $0.16 to $0.19 due to the make-whole prepayment premium associated
with the repayment of the senior secured notes and write-off of deferred
financing costs for debt refinanced in the fourth quarter which are expected to
total approximately $35 million and have a negative after-tax effect of
approximately $0.21 in the fourth quarter. Non-GAAP diluted earnings per share
before the above-mentioned costs are expected to be between $0.02 and $.05.
Quanta Services has scheduled a conference call for Thursday, November
13, 2003, at 9:30 A.M. EST. To participate in the call, dial (303) 262-2050 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 call live 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
November 20, 2003, and may be accessed by calling (303) 590-3000 using pass code
558947. For more information, please contact Karen Roan at DRG&E at 713-529-6600
or email kcroan@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, earnings per share, contract
amounts and growth in certain markets that are based on management's belief as
well as assumptions made by and information currently available to management.
We are providing certain forward looking non-GAAP measures to enable investors
to evaluate quarterly performance absent unusual items and to perform additional
comparisons of operating results. Although the company believes that the
expectations reflected in such forward-looking 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 the electric utility and
telecommunications industries, and the ability of Quanta to successfully
implement cost saving measures and to effectively integrate the operations of
Quanta's subsidiaries, 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
the Company's reports filed under the Securities Exchange Act of 1934.
- Tables to follow -
(QUANTA SERVICES LOGO) QUANTA SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2003 AND 2002
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED)
<Table>
<Caption>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues $ 436,133 $ 436,215 $ 1,211,564 $ 1,317,957
Cost of services 381,125 381,947 1,065,281 1,139,842
------------ ------------ ------------ ------------
Gross profit 55,008 54,268 146,283 178,115
Selling, general & administrative expenses 38,886 68,747 135,963 178,956
Goodwill impairment -- -- -- 166,580
------------ ------------ ------------ ------------
Income (loss) from operations 16,122 (14,479) 10,320 (167,421)
Interest expense (8,080) (9,807) (24,182) (25,696)
Other, net 182 (1,674) 72 (56)
------------ ------------ ------------ ------------
Income (loss) before taxes 8,224 (25,960) (13,790) (193,173)
Provision (benefit) for taxes 2,825 (17,644) (4,511) (17,926)
------------ ------------ ------------ ------------
Income (loss) before cumulative
effect of change in accounting
principle 5,399 (8,316) (9,279) (175,247)
Cumulative effect of change in
accounting principle, net of tax -- -- -- 445,422
------------ ------------ ------------ ------------
Net income (loss) 5,399 (8,316) (9,279) (620,669)
Dividends (forfeitures) on preferred
stock, net -- 234 (2,109) 698
------------ ------------ ------------ ------------
Net income (loss) attributable to
common stock $ 5,399 $ (8,550) $ (7,170) $ (621,367)
============ ============ ============ ============
Basic earnings (loss)
per share before cumulative
effect of change in accounting
principle $ 0.05 $ (0.14) $ (0.06) $ (2.89)
Cumulative effect of change in
accounting principle, net of tax -- -- -- (7.30)
------------ ------------ ------------ ------------
Basic earnings (loss)
per share $ 0.05 $ (0.14) $ (0.06) $ (10.19)
============ ============ ============ ============
Diluted earnings (loss)
per share before cumulative
effect of change in accounting
principle $ 0.05 $ (0.14) $ (0.06) $ (2.89)
Cumulative effect of change in
accounting principle, net of tax $ -- $ -- $ -- $ (7.30)
------------ ------------ ------------ ------------
Diluted earnings (loss)
per share $ 0.05 $ (0.14) $ (0.06) $ (10.19)
============ ============ ============ ============
Shares used in computing
earnings (loss) per share
Basic 116,567 60,808 112,484 60,964
============ ============ ============ ============
Diluted 116,645 60,808 112,484 60,964
============ ============ ============ ============
</Table>
(QUANTA SERVICES LOGO) QUANTA SERVICES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 77,827 $ 27,901
Accounts receivable, net 388,630 367,057
Costs and estimated earnings in excess of
billings on uncompleted contracts 53,460 54,749
Inventories 25,665 25,646
Prepaid expenses and other current assets 40,145 54,144
------------ ------------
Total current assets 585,727 529,497
PROPERTY AND EQUIPMENT, net 346,022 369,568
ACCOUNTS AND NOTES RECEIVABLE, net 35,689 50,900
OTHER ASSETS, net 24,428 19,250
GOODWILL AND OTHER INTANGIBLES, net 395,400 395,597
------------ ------------
Total assets $ 1,387,266 $ 1,364,812
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,144 $ 6,652
Accounts payable and accrued expenses 188,772 189,080
Billings in excess of costs and estimated
earnings on uncompleted contracts 19,994 16,409
------------ ------------
Total current liabilities 213,910 212,141
LONG-TERM DEBT, net of current maturities 211,535 213,167
CONVERTIBLE SUBORDINATED NOTES 172,500 172,500
DEFERRED INCOME TAXES AND OTHER NON-
CURRENT LIABILITIES 102,517 82,411
------------ ------------
Total liabilities 700,462 680,219
------------ ------------
REDEEMABLE COMMON STOCK -- 72,922
STOCKHOLDERS' EQUITY 686,804 611,671
------------ ------------
Total liabilities and stockholders' equity $ 1,387,266 $ 1,364,812
============ ============
</Table>
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