[QUANTA SERVICES LOGO] PRESS RELEASE
FOR IMMEDIATE RELEASE
04-02
Contacts: James Haddox, CFO Ken Dennard / ksdennard@drg-e.com
Reba Reid Lisa Elliott / lelliott@drg-e.com
713-629-7600 DRG&E / 713-529-6600
QUANTA SERVICES REPORTS FOURTH QUARTER RESULTS
REVENUES WERE $431.3 MILLION
GAAP LOSS PER SHARE WAS $0.23
NON-GAAP EARNINGS EXCLUDING CHARGES WERE $0.04 PER DILUTED SHARE
HOUSTON - FEBRUARY 26, 2004 - Quanta Services, Inc. (NYSE: PWR) today announced
results for the three and twelve months ended December 31, 2003.
Revenues in the fourth quarter of 2003 were $431.3 million, compared to
revenues of $432.8 million in the fourth quarter of 2002. For the fourth quarter
of 2003, GAAP net loss attributable to common stock was $25.7 million, or a loss
per share of $0.23 compared to GAAP net loss attributable to common stock of
$6.7 million, or a loss per share of $0.10 in last year's fourth quarter.
This year's fourth quarter results include a $35.1 million charge
comprised of make-whole pre-payment premiums, the write-off of deferred
financing costs and other related costs due to the early extinguishment of debt;
a $6.5 million goodwill impairment charge associated with the closure of an
operating unit; and a $2.9 million charge as a result of the disposition of an
investment in a fiber network, all on a pre-tax basis. For the three months
ended December 31, 2003, non-GAAP net income attributable to common stock
adjusted for these charges was $4.4 million, or $0.04 per diluted share. For the
three months ended December 31, 2002, non-GAAP net income attributable to common
stock was $4.8 million, or $0.06 per diluted share. A reconciliation of the
fourth 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. These non-GAAP measures are provided to enable investors to
evaluate our quarterly performance excluding the effects of certain items that
we believe impact the comparability of our results between reporting periods.
"Our $117 million in cash flow from operations less capital
expenditures of $36 million yielded free cash flow of $81 million for the year,
excluding debt extinguishment costs. Our free cash flow, combined with the
refinancing completed in the fourth quarter, resulted in approximately $200
million in cash on our balance sheet as of today - ensuring our future ability
- more -
to grow," said John Colson, chairman and chief executive officer of Quanta
Services. "In addition to the operational improvements we made this year, we
favorably refinanced our debt which will yield annual net interest savings of
approximately $8 million. In 2004 we will continue to propel Quanta toward its
full potential as capital spending, the regulatory process and the general
economy progress."
Revenues for the twelve months of 2003 were $1.64 billion, compared to
$1.75 billion for the twelve months of 2002. For the twelve months of 2003, the
company reported a GAAP net loss attributable to common stock of $32.9 million,
or a loss per share of $0.30, compared to a GAAP net loss attributable to common
stock of $628.1 million, or a loss per share of $9.98 for the year 2002.
In addition to the previously discussed charges recorded in the fourth
quarter of 2003, GAAP results for 2003 were impacted by allowances for certain
accounts and notes receivable in the amount of $19.0 million, related primarily
to notes receivable from one customer.
OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
Quanta expects revenue for the first quarter of 2004 to range from $340
million to $360 million, and a loss per share of approximately $0.04 to $0.07
due to normal business seasonality and start-up and development costs associated
with an initiative to pursue government contracts. Quanta expects revenue for
2004 to range from $1.6 billion to $1.7 billion and diluted earnings per share
of approximately $0.20 to $0.30.
Quanta Services has scheduled a conference call for February 26, 2004,
at 9:30 a.m. Eastern Time. To participate in the call, dial (303) 262-2050 at
least 10 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 web site 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.
- more -
For those who cannot listen to the live web cast, an archive will be
available shortly after the call on the company's web site at
www.quantaservices.com. A replay will be available through March 4, 2004, and
may be accessed by calling (303) 590-3000 and using passcode 571359. For more
information, please contact Karen Roan at DRG&E by calling (713) 529-6600.
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, operating
margins and growth in certain markets that are based on management's belief as
well as assumptions made by and information currently available to management.
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 existing and acquired companies, 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. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended
December 31, 2003 and 2002
(In thousands, except per share information)
<Table>
<Caption>
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------ ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Revenues $ 431,289 $ 432,756 $ 1,642,853 $ 1,750,713
Cost of services 377,677 374,098 1,442,958 1,513,940
------------ ------------ ------------ ------------
Gross profit 53,612 58,658 199,895 236,773
Selling, general & administrative expenses 40,909 46,769 176,872 225,725
Goodwill impairment 6,452 -- 6,452 166,580
------------ ------------ ------------ ------------
Income (loss) from operations 6,251 11,889 16,571 (155,532)
Interest expense (7,640) (10,170) (31,822) (35,866)
Loss on early extinguishment of debt (35,055) -- (35,055) --
Other, net (2,835) (2,390) (2,763) (2,446)
------------ ------------ ------------ ------------
Income (loss) before taxes (39,279) (671) (53,069) (193,844)
Provision (benefit) for taxes (13,569) (1,784) (18,080) (19,710)
------------ ------------ ------------ ------------
Income (loss) before cumulative effect of
change in accounting principle (25,710) 1,113 (34,989) (174,134)
Cumulative effect of change in
accounting principle, net of tax -- -- -- 445,422
------------ ------------ ------------ ------------
Net income (loss) (25,710) 1,113 (34,989) (619,556)
Dividends (forfeitures) on preferred stock -- (709) (2,109) (11)
Non-cash beneficial conversion charge -- 8,508 -- 8,508
------------ ------------ ------------ ------------
Net income (loss) attributable to
common stock $ (25,710) $ (6,686) $ (32,880) $ (628,053)
============ ============ ============ ============
Basic earnings (loss) per share before
cumulative effect of change in
accounting principle $ (0.23) $ (0.10) $ (0.30) $ (2.90)
Cumulative effect of change in
accounting principle, net of tax -- -- -- (7.08)
------------ ------------ ------------ ------------
Basic earnings (loss) per share $ (0.23) $ (0.10) $ (0.30) $ (9.98)
============ ============ ============ ============
Diluted earnings (loss) per share before
cumulative effect of change in
accounting principle $ (0.23) $ (0.10) $ (0.30) $ (2.90)
Cumulative effect of change in
accounting principle, net of tax -- -- -- (7.08)
------------ ------------ ------------ ------------
Diluted earnings (loss) per share $ (0.23) $ (0.10) $ (0.30) $ (9.98)
============ ============ ============ ============
Shares used in computing earnings per share:
Basic 113,450 68,868 110,906 62,957
------------ ------------ ------------ ------------
Diluted 113,450 68,868 110,906 62,957
------------ ------------ ------------ ------------
</Table>
(QUANTA SERVICES LOGO) QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<Table>
<Caption>
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 179,626 $ 27,901
Accounts receivable, net 364,844 367,057
Costs and estimated earnings in excess of
billings on uncompleted contracts 45,473 54,749
Inventories 23,809 25,646
Prepaid expenses and other current assets 62,341 54,144
------------ ------------
Total current assets 676,093 529,497
PROPERTY AND EQUIPMENT, net 341,542 369,568
ACCOUNTS AND NOTES RECEIVABLE, net 34,327 50,900
OTHER ASSETS, net 25,591 19,250
GOODWILL AND OTHER INTANGIBLES, net 388,882 395,597
------------ ------------
Total assets $ 1,466,435 $ 1,364,812
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,034 $ 6,652
Accounts payable and accrued expenses 175,445 189,080
Billings in excess of costs and estimated
earnings on uncompleted contracts 18,911 16,409
------------ ------------
Total current liabilities 199,390 212,141
LONG-TERM DEBT, net of current maturities 58,051 213,167
CONVERTIBLE SUBORDINATED NOTES 442,500 172,500
DEFERRED INCOME TAXES AND OTHER NON-CURRENT
LIABILITIES 103,362 82,411
------------ ------------
TOTAL LIABILITIES 803,303 680,219
------------ ------------
REDEEMABLE COMMON STOCK -- 72,922
STOCKHOLDERS' EQUITY 663,132 611,671
------------ ------------
Total liabilities and stockholders' equity $ 1,466,435 $ 1,364,812
============ ============
</Table>
(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
this 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. These non-GAAP measures are provided to enable investors to
evaluate our quarterly performance excluding the effects of certain items that
we believe impact the comparability of our results between reporting periods.
<Table>
<Caption>
THREE MONTHS ENDED
DECEMBER 31, 2003
------------------------------------
Net income Diluted
(loss) earnings
attributable to (loss)
common stock per share
--------------- ---------------
As Reported GAAP Basis $ (25,710) $ (0.23)
After tax impact of non-GAAP adjustments:
Loss on early extinguishment of debt (a) 23,742 0.21
Goodwill impairment (b) 4,369 0.04
Loss on sale of investment (c) 1,994 0.02
--------------- ---------------
Non-GAAP (e) $ 4,395 $ 0.04
=============== ===============
</Table>
(a) Charges incurred as a result of various refinancings,
including a pre-tax make-whole payment of $31.2 million as
part of the retirement of the senior secured notes.
(b) Represents a goodwill impairment charge due to the closure of
one of our operating units.
(c) Charge incurred due to the disposition of an investment in a
fiber network.
(QUANTA SERVICES LOGO) QUANTA SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
(In thousands, except per share information)
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED
DECEMBER 31, 2002
------------------------------------
Net income
(loss) Diluted
attributable to earnings (loss)
common stock per share
--------------- ---------------
As Reported GAAP Basis $ (6,686) $ (0.10)
After tax impact of non-GAAP adjustments:
Costs incurred associated with equity issuance to
First Reserve 1,688 0.02
Credit facility amendment costs 988 0.01
Severance costs (a) 1,112 0.01
Forgiveness of accrued dividends (b) (781) (0.01)
Non-cash beneficial conversion charge (c) 8,508 0.10
Impact of change in share count (d) -- 0.03
--------------- ---------------
Non-GAAP $ 4,829 $ 0.06
=============== ===============
</Table>
(a) Charges incurred associated with efforts made during the
quarter to reduce and consolidate overhead.
(b) Represents the impact of the forgiveness by First Reserve of
accrued dividends on the Series A Preferred Stock dividend it
purchased from Aquila.
(c) The company incurred a non-cash beneficial conversion charge
of $8.5 million associated with the issuance of equity to
First Reserve.
(d) Represents the adjustment to include shares which had been
excluded as they were antidilutive when considering the as
reported GAAP loss.
####