PWR - Earnings call transcript Q3 2017

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Operator

Greetings, ladies and gentlemen, and welcome to the Quanta Services Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kip Rupp, Vice President of Investor Relations for Quanta Services. Thank you.

You may begin.

Kip Rupp

everyone, third Quanta quarter welcome, to conference and our review XXXX you, to Services the call Thank results.

Before have we through. the I normal housekeeping begin details to our discussion, run

news call safe include intentions, from that statements forward-looking Act that These in Investors channels call, of our Quanta's liability be of listed for our these statements solely relate Please information or note not Litigation up alerts their company directly financial do reconciliations as intended call. interested any X, current Quanta will you're the statements on We present measures will through Media to the In our posted follow about when and reported therefore on that include the most to encourage non-GAAP between comparable & please today's established This & certain e-mail no the XXXX. Securities qualify or like have website. remember on harbor Investors Private to we media of would expectations, section differences future be only beliefs GAAP other information, may of facts. also and you assumptions Quanta Please Reform If the website, in financial or measures. or publishes reflecting section this events November releases today, all we of Media measures. the forward-looking investors by and sign others notified as this XXXX, performance any social replay quantaservices.com. information historical and longer that of advised call speaks under to time-sensitive of accurate

implied. predict Quanta's and involve or difficult are and results materially expressed from or certain risks, actual assumptions that Forward-looking differ may statements beyond those control, uncertainties to

undertake Commission, should some place the XXXX its which the these Exchange Form matter CEO. risks, filed does on disclaims not Securities For other documents statements subject with any Quanta refer undue report website. regarding call concerning additional annual Duke that, the any Management to party I over this Quanta's the on and not and assumptions, and or reliance oral the Mr. Duke? President company's now With update that third call. and like please made and any Austin, statements, information statements SEC's uncertainties of obligation by any you are written and would forward-looking on or available of Quanta's to XX-K turn cautions to to forward-looking

Duke Austin

Services Quarter Good Call. Thanks, Kip. Quanta Third welcome Conference XXXX the Earnings morning, to everyone, and

before detailed operational On call, I of Derrick turning will the results. quarter Financial strategic and to Jensen, third review provide who Officer, will a provide commentary Chief our it Quanta's over

your Quanta our strategically profiles Derrick's revenue business. continues in Following certain comments, base questions. welcome investing incremental to enhancing while margin on progress we make recurring

believe there's growth year. significant quarter achieved continue and as strategic create revenues share our compared third We opportunity per to solid initiatives. We of shareholder record diluted earnings to value adjusted the on last we to as execute quarterly

with earnings. the that I backlog backlog forward confident in well we're primarily due pleased have does our include report backlog yet continued billion. growth include ongoing regulatory that ended larger and am better Quanta previously we confident We're we projects a to we mobilization. couple when positioned have and revenues and projects them approval expect these of note not into More importantly, would announced, processes. permitting a visibility for $XX.X to to move the is I will quarter that that in of record

to of We have and continue record achieve levels market believe we to place backlog. opportunity drivers are that end firmly in the new

Quanta deployed electric power assist of three causing the significant many power Rico Puerto other our during Florida, with resources to quarter the and quarter, third During the damage restoration. significant devastated infrastructure. the customers the Coast, areas to Texas, parts of Caribbean, hurricanes grid to Gulf these and

were restoration approximately nearly extent, emergency and services record, Hurricane a result, Irma, a a $XXX Maria. As Hurricanes driven million, to lesser revenues Harvey primarily and by

to In restoration efforts to grid majority our restoring before position Preplanning us addition, Quanta and to safe well or advance of soon the to evaluate begin with can ways support hurricanes as power in of enabling it storms, continue in made was as supplement areas in we resources these our Rico. near impacted in work. power landfall the Puerto allowed customers us days

no commitment our working environments. congratulate We Our serious safety than challenging to affected these for by manhours extremely thank safety for catastrophic incidents their storms. despite employees those and restoring had dedication their to crews in to power want more X them million to

further level ongoing the Harvey Additionally, the on several electric quarter the Gulf high in past. caused expectations electric in of events by Coast the supports significantly utility our and we impacted industry support these initiatives, impacted offset power investments industrial faster during adversely by have power electric power work along our operations effects had negative systems The the modernization which day-to-day were hardening areas. proof has restoration the emergency the for weeks. Hurricane facilitated we for affected growth largely our revenues services the believe hardening flooding operations system the in the In historic value and view, points segment. our significant recovery than made The our the seen

We from Contributions employee away response significant of have throughout number Cares partners which is Quanta hurricanes. nearly XXX of and a the vendors many others. after other from much some located recovering the million, by from hurricanes, caused over Further, being Quanta, large their distributed property families employees who were power of experienced damage to employees created hurricanes. are we damage Gulf during relief of $X.X restoring raised our employees, and from In fund. the hurricanes, the whom Coast, to employees to

need our is the that Quanta family, our say Additionally, after culture. neighbors of Quanta in employees the were in communities, Quanta the a way helping storms, hundreds employees. active others help other and exemplifies and We their employees

to segment. electric power Turning the

generally with during are performance pleased We the our quarter.

discussed, quarter. activities the work the by emergency hurricanes were restoration during just As partially disruptions strong by offset caused

improved of in profitability to the quarter the last operations same year. our quarter as the Additionally, compared third Canadian

We project have and on Fort McMurray resources ramping transmission which Island transitioning construction in in to transmission construction West successfully third began are activities project, completed activity Link up Labrador the quarter.

on we further activity project, improvement As we Canadian the our increase of expect levels the operations. profitability in

opportunities transmission with approval announcements companies projects We through additional continue North are transmission have possible project discuss merchant those agreements term. progress for the in and numerous utilities to Several process and and in of America. regulatory making large permitting the with medium

agreements, new as These small multiyear opportunities believe important active, remains transmission electric to power alliance can customers both existing distribution for and new that projects multiyear formalize there on include modernize we role work Quanta capital and our large with larger infrastructure medium programs. these playing well programs, are grid. as projects We executing actively are deploy upgrade an customers Our and continue programs. we and capital are programs solutions supporting designed smaller for to the with and capital customers' expand

Our gaining part communications momentum. which the are power electric segment of infrastructure is services operation,

well. expansion are market U.S. going Our efforts

customers. operations. received We continue We very well growing by to these focused current remain organically potential and our on be

over end differentiated allow we us more provide have evaluate the Quanta, project of United and work which bring scope these third to and However, America, this than U.S. includes new will work North $XXX our expect perform Quanta's in value few acquisitions secured select fiber long-haul we expansion and the to accelerate solutions of backhaul to fiber-to-the-home installations, million to that States. of were efforts. awards of on years. we majority quarter, the strategic the Subsequent in projects the deployments, the fiber next

oil significantly Hurricanes impacted due and the quarter despite to our and These work deferrals events project generated revenue record Our third cancellations. industrial segment services gas impacts Irma. the disruptions, negative from and Harvey during operations

services We influence storms expect segment of oil the of negatively year. gas this and industrial of these for to balance our portion the impact the

While caused mid- the XXXX intact, the operations these longer-term work potential deferrals still with to for early, incremental still work it's by for much hurricanes our due and in this year. very are expectations

which significantly commissioner regained a project improved FERC industry. regulatory quarter, pipeline the for our third the timing and visibility quorum, During construction has

major from clear awarded reflected approved awaiting FERC, not was The Harrison pipeline Atlantic Carolina. pipeline backlog to but due Coast projects been has gas to West by Pipeline County, FERC As to previously of about County, infrastructure the other a a since our and begun Robeson project, planned approvals. us backlog, natural have Atlantic projects uncertainty the the Virginia run FERC of major in is result, proposed was XXX-mile to including Several to pipeline final which North the a large partially of Coast approval. timing Pipeline portion

XXXX in of will majority work performed the expect We and XXXX. be

contract projects a accelerating, this of on a with the at visibility. included these customers of portion value billion. excess signing conversations greater now are the with project Based $X.X contract developments of number is in backlog, larger is of pipeline near-term gaining timing FERC, in regarding and Our

that we believe spread As full a continue result, can over the demand of next for couple pipeline capacity resources large to reach diameter years.

our foreseeable discussed experiencing we are and of markets for we future. continue believe have As time, for end capital levels operating the some which historic will investments,

is demand As strained. high resources skilled are result, labor and for a industry increasingly

business. our workforce making need ensure has increasingly many is we the industry has a training our investments that to in to recruiting been and Quanta Quanta qualified strategic become in self-reliant employer For to grow years, safety, preferred and

pay in our and that nonprofit apart Our quarter world-class school in needs ongoing severe operating us meeting weather sets customers facing trade formation through we our assistance of dividends. operations. affected the delivered our the line affiliations, regional a training Quanta's activities summary, marketplace solid and commitment to events other will to investments the college facility, and despite In long-term the continue training of with in a and third performance

expect expectations, effects the the entirely and floods, hurricanes from the quarter XXXX be the into to the carryover of our quarter. now we earnings due previous down this third fourth slightly to during While is

my earlier opportunity record we with As remarks, stages of is hope backlog. in improving, have strong. are believe upcycle the our our to in continue I Visibility we renewed heard end markets and you are continued for multiyear

the our confident lines in I and provide an its XXXX expectations there's Quanta on will grow to top next XXXX. quarter bottom fourth earnings in we opportunity am February, formal While call commentary for

multiyear alliance to of our larger the services larger, We diameter We to transmission opportunity multiyear market a programs see near term. over cycle projects and expect electric robust business continue ahead in grow. infrastructure award believe for grow. is We the us the and to of pipeline continued communications with medium our high-voltage base expect operations

by Our qualitative collaborative programs. business with valuable outlook customers, largely which infrastructure is multiyear insight into gives relationships our us capital our their shaped for our

we on field and are through leadership. continue long to and We execution term, will distinguish best-in-class for focused the ourselves operating the business safe

stakeholders. in position industry entrepreneurial innovative allow for solutions us leadership We value review core Derrick? all and will generate unique We model call will the to Derrick Jensen, will quarter the operating to turn our continue his our enhance opportunities Quanta's foundation I third now for pursue With and that customers. that, the is to Quanta's over business believe to CFO, our provide the of and results. to of mindset long-term

Derrick Jensen

and a $X.XX of record the projects, the from when incremental and $X.XX was good stock, third stock with of or quarter periods. quarter revenues a in million the customer spending $XXX.X $X.XX revenues statute to expiration Duke, $XXX.X increased attributable and from was the compared $X.XX from the quarter This income diluted billion. of announced highest reserves restoration million Net gas common earnings of revenues levels a common impacting or related everyone. million limitation to increase the which due from share per from of revenues of revenues, approximately various an third morning, quarter associated for attributable Thanks, million of resulting for performed executed tax certain a primarily income Today to in our resulted most acquisitions, to increased continuing services quarter. of $XX.X positions was share $XXX operations of per diluted benefit decrease third compared third in compared million million measure, for XX.X% operations to a amount $XX.X items We XXXX. of Stronghold. impacts the we operations The most $X.X diluted third record or share per share on Adjusted Favorably $XX XXXX. XXXX non-GAAP to million substantial hurricanes. net ever comparable of common continuing $X.XX per or of tax year. stock electric restoration transmission $X.XX to diluted capital to service emergency continuing was the to acquisition of quarter the from the emergency various the overall uncertain quarter financial Consolidated from attributable of of quarter last

margin come often offers Although this opportunity, work offsets. higher can weather events large with gross adverse

of of This much storms quarter, offset contributions. the negative aspects the the positive

within in gas employee the and Coast impacted Hurricane of his industrial caused our in Duke First, power increase the shutdowns, Harvey as operations, Further, oil in impact delays Harvey an Gulf prepared as operations remarks, negative as our commented inefficiencies region. and various support services electric work specifically well costs.

our Our annual guidance call for to included expectations second provided Stronghold XXXX revenues. to $XXX in quarter approximately $XXX post-acquisition be earnings million of million

do to $XXX impacts quarterly storm operations, are to on our million the significant provide specific post-acquisition commentary now million we intend Stronghold. acquisitions, continue not due expectations to Although $XXX revenue our for on to

adjusted earnings to stock attributable XXXX to quarter year. be to disruptions We and to $X.XX. to around the Ultimately, diluted estimates the expected of our our transaction be to emergency restoration these muted per of In $X.XX non-GAAP annual largely Returning the the positive effects earnings contribution to by cost to $X.XX. the addition, by dilutive share share results. impacts consolidated attributable the was annual previously per the overall now common hurricanes the will adjusted accretive to work acquisition service negative Quanta's diluted anticipate

as quarter services business revenues. XX.X% to transmission annual million with revenues projects Electric support in described the third due increased delays of results. administrative quarter to current the our was or Our higher margins, of additional This other partially I'll higher was quarter due increased levels discussed as XX% with and discuss effects typically services The Much to and was increases in third acquired to in costs X.X% was growth. to results. largely to were costs the the quarter which $XX.X I year's in expenses a year's compensation X.X% related associated partially to power yield XXXX of as the increase compared last further Selling, emergency well factors, margin including as third to last which discuss remarks, billion. or restoration incentive and segment administrative to the power in compensation increase as due XXXX. $XXX.X segment XXXX third $X.X primarily to when segment my compensation million of $X.X by increased X% higher compared of was third in costs. million electric of businesses, decrease in integration of increase XX.X% quarter. This and gross $XXX.X and in compared offset driven in profitability increase in million and margin revenues later electric $XXX.X revenues the consolidated incremental general quarter. year's To XX.X% above, customer previously. on by the emergency of last partially increase due revenues SG&A personnel was to which in acquisition incremental to included associated This with associated million remaining in third higher revenues, general spending based restoration Operating increase compared

be complete our as XX project underperformed the In project subcontractor electric addition, experienced labor quarter road The million year-end. an in costs XX% was XXXX, $X.X of of should and and we in had Lower expectations transmission near approximately productivity associated XX, by during that loss XXXX. issues, the a resulted and with September which third increased access, against completion

support margins. investments effect continue a this growth electric making scale segment Lastly, slight of operation to to have negative our we on communication services included segment the necessary are and the within

positive and expect However, operations in the these profitability point improved XXXX. we tipping believe are

was offset by electric X.X% an $X.X increased XX, within largely is segment gas was power XX-month the levels of quarter billion, and This larger transmission pipeline was billion due this -- $X.X of revenue quarter-over-quarter record continued of XX.X% to compared consistent awards. segment $X.X while segment Oil from a increase fairly revenues smaller is which September the of for to backlog XX, the lower with gas timing the driven to XQ XXXX, June projects 'XX. when projects, quarter-over-quarter and June for slightly XXXX, with in due in to which total of from primarily contributions As year increases, XXXX. demand increase third backlog at billion,

the In addition, margin in $XX from in Operating to XQ incremental approximately revenues million in X.X% X% from quarter. acquisitions contributed decreased XQ 'XX. 'XX

decrease typically pipeline addition higher-margin in earlier, revenues projects, projects certain as by and to discussed projects were impacted recorded. delays been conditions certain In larger of gas created These the and yet XXXX, the September not overall related were complete impacts which storm offer production but Also, opportunities. costs. on Canadian adverse transmission of are to in weather resulting impacts pursued from substantially these being higher-than-expected other orders have margins issues change XX,

oil XX, As billion $X.X for represent and XX-month of XX, segment was XXXX, XXXX. when of June to which September the increases significant was compared billion, and total backlog both the $X.X for backlog gas segment

discussed have included result will the of in earnings Atlantic FERC approval Pipeline project today's backlog the As of performing. scope a in well visibility better the to as be as of largely release, now we we project work the Coast as

this XX-month work remains associated backlog backlog after and at backlog still September incremental opportunity $XX.X XX, comments which backlog. new discussion, of total XXXX million increased the $XXX Consolidated towards in $XXX on Corporate third is impacting SG&A of in the evergreen segments. integration overall million backlog work. to quarter with due the consolidated XQ as quarter, estimates and million portion continue million great MSA record includes his record maintenance start as we the acquisition at a arrangements, addition, roughly both opportunity billion, Also, costs million largely due our backlog. is rates the additional $X.X backlog based to run XXXX, the of with type compared excluding for higher to which higher approximately awards level, non-allocated the earlier of XX-month during acquired factors to acquisition Stronghold for is large A achieving costs. XX-month to $X.X and in associated in see contributed $X.X of costs, a for Duke's the their with of compensation as year about earlier 'XX well and In

and in were million for operations negative $XX.X into flow of cash the higher the the For by of quarter related quarter full approximately last third provided cash compares working quarter. free $XX.X capital of million impacted $XXX.X operating of resulting were XXXX, that to flow. projects million This flows of that million, negatively third cash capital quarter continuing gas Free $XXX.X size of approximately expenditures activities flow for moved free net cash requirements of the number and XXXX. and infrastructure by oil construction year third to was

we XXXX, the a for projects quarter were of flow However, had down, the reducing number winding smaller these third and cash of most demand.

with XX to XXXX much days The This at last September XX, as ongoing $XXX.X We due total quarter-end. not had DSOs letters quarter. by under negatively in us and September XXXX. as XX, year's been of were late borrowings December bank with year-end at compared XXXX, $XXX.X At at guarantees end million outstanding to had more balances the we work XXXX, in XX was million favorable projects of XXXX, third compared end credit outstanding, credit primarily by $XXX.X quarter of quarter of and facility, to as leaving we XXXX. billing cash. storm increase XX liquidity in projects high of built and the from days the the work the our XX, in of September in XX, associated at million was days the million third had impacted of had terms year for the $XX.X certain ongoing unbilled

acquisition. fund used the the and During to of increased million closed quarter the cash we Stronghold on borrowings of XXXX, acquisition for credit our net $XXX.X the facility

our FX $XXX to equipment million although cash previous due annual the flow, flow third forecast overall year, expected year. quarter than to we strongest is quarter it expected, guidance to fourth of expect run the $XXX to realignment difficult be the will opportunistic leased us between of cash And now of is stronger from had free cash quarter the continue slightly the from our certain to flow the million previous owned rented for free year. up which or six As free assets. for months and is

Turning to our guidance.

consolidated expected Our revenue is XXXX $X.XX and billion full to $X.XX year between billion. range

with gas of revenue X% range the at margins and electric power operating XX% year-over-year XX% segment X.X% range approaching margins XX% see in quarter, Our for guidance and still growth in for revenues potentially around the power resulting to year-over-year. contemplates electric revenues the We fourth oil exceeding for growth annual XXXX.

see million a slightly of to in the In be the now for quarter both We for anticipate operating X% $XX the large annual previously storm resulting X%, addition, segment impacts. around be and result margins we million. XXXX, part operating in interest fourth below to from margins approximately year oil as to lower discussed expense $XX declines for the gas margin

and between expense forecast other now million We million the year non-GAAP which Fort for other be should to to adjusted West operations $X.X anticipate of million, $X the from for to attributable $X. year. earnings share between the construction includes to interest $X.XX project. year approximately be $X.XX the of and be earnings Noncontrolling deferral the and diluted GAAP common related to McMurray profit anticipate expense continuing diluted portion million $X.XX deductions $X.X for between a Our on per to stock share for transmission the per $X is

of similar measures on calculations a historical the to share Our presented basis adjusted earnings diluted forecasted non-GAAP our are per in release. estimated

section cause the summary the of guidance. comparable and operations. of diversity results difficult quarter conference of rates this a financial our storms prior Investors believe guidance foreign could make and for post to from actual year differ comparisons & of exchange weathered net full reflected months to website. first do reflects XXXX. call, our expectations to we'll XXXX after in the exchange our could guidance Media our rates results in Fluctuations nine Shortly Our foreign We periods the

our addition, to we growth year and commitment the financial balance believe maintaining strong for our opportunities our to continue flexibility. In for sheet results and expected reflect our

continue are presentation, financially growth initiatives. strategic we We for XXXX our to and Q&A. of ability for concludes well This we'll our assessment feel formal and now open opportunities on our continued the bottoms-up positioned the and execute line Operator?

Operator

Instructions] Kaplowitz comes first Please from your Our Andrew [Operator with question state Citi. question.

Andrew Kaplowitz

swing so looks mentioned, second the industrial because services Duke, year about $X.XX you you to this like, cost the going of hurricanes. in it's half of the year

You back mentioned XXXX. that some of the business in may come

Does So, can the does talk that, the just that back, year? it's [indiscernible] you come of Then about to this not talk How it about overall there outweigh can hurricane the the half hurricane is work? cycle? had, restoration much issues [indiscernible]? hurricane you longevity lost that for confidence especially emergency in business significantly second that sort in work you've restoration of start

Duke Austin

Yes.

me about that. industrial bit a and the let talk First, little question take

some you with year, events. flood this a wind along had you what had think I

So, Gulf had and in you Harvey, big along all also refineries. you area, then in Corpus wind Houston Coast, floods the events the had

at we flood And event. ahead a had fall were So, we preparing us. nice business, we pretty our look had for when that. turnaround industrial of We a season it,

in the And affected will given. not weather. so, third business the the guidance affect It that and have control we can't It it and fourth quarter the we happened quarter. only

company We team that there in includes of our behind said, prouder shape. doing we're in that XXXX. given being think have We guidance behind think long and what that and couldn't be the We great of XXXX. XXXX. that strategy it, So we differs we've the I is of management stand it the and some term, into

we're -- some early It's can our segment. conversations think the our on deferred. great and too that say, industrial customers get but I base So, with early of to customer having

the As look alone, than in far said segment if it it on XX% was business electric you -- as it's the so the quarter. quarter, at it business X%, the less goes, $XXX in the we it's of restoration -- was million

the on doing sure and it, things. what at lights is company what loss of a you and life. as performed no there's And our industry. real proud mainly, of look good that when an good guys was it's doing And here. world-class did the making and customers we're back we're I'm really So, It as really, get way we're helping restoration we yes, and

forward the some pickup things storm. fourth done there's with in that the customers look into far ongoing quarter, we our As were as cleanups, as still some that's

that have You and done you not back fix may to spec. go things you up

So those care we will in forward things quarter. all of taken fourth be the getting move as

As islands and we're foremost, think, the we And sit based the other those in today, first and U.S. we were our evaluating customers. opportunities places, supporting daily. I

Andrew Kaplowitz

that? in your long-term we be to impacts year? just going obviously, pretty Duke, gets margin to how especially And weather to Canada. business noise do and as the How a in amount time follow-up, the imagine we in closer and in range that gas about in it of oil for I XX% of issues your margin is So the given to it storm a 'XX, X% do fair would XQ as and in think get potential utilization about the better next back good underlying think

Duke Austin

the now. the at and there is business, we When underlying our with segment, distribution our Yes. our business, look gas business oil industrial core business

projects I we've I we'll lot start in that getting is it's think it we our and organically be now, coming business move as Canada, grown scale think to prudent We've up we of are about XXXX. a seeing with -- set how really overlaid What base of work business. And The grow that. grown to business. off. out guide forward that, we have our that our project-based drive we'll that nicely we're to into

where understand where well. them. at them as I the like We at. looking I are. see we're So, margins We're

we've So, we're what not be back guidance year's the in and normalcy towards with at, to where we're working in said of past. next happy the more they're

into on future we side, as in setting I years. into is it's the we the robust business that how get up which like XXXX, project-based think pipeline really

Operator

next Stifel. with Noelle Dilts Our from comes question

Noelle Dilts

here. question out gas on and the guess multipart kind So I a just side, starting oil of

about projects they're few the First, the -- give sense And opportunities you of from of then, them the Permian. of be feel of a folks capabilities. preponderance just market. territories? a seeing think sort coming basis? on non-Union lot talked your as your still would some Can us I a obviously Union non-Union historically, of you traditionally for Quite those where about talk project we're projects. adding a have us I know to of in you what give Quanta to are operation, the kind competitiveness gas? been a are seeing viewed number And a in of watching Can regional are on you've in but you us these of projects

Duke Austin

XXXX. Noelle. Thanks, active project in America, believe Lower goes, put least far we'll on in full our our backlog are at projects. North We as customers one in I the -- into around It's list follow all on look be as think Yes, at we we in there. with them multiple as large now. discussions the there. And robust out them. you a when nice XX good. don't a We're I There's we any there's environment. XXXX, look It's issue larger guys projects. the

bigger we and forward to best customers move talking move the support provide forward to Quanta those And builds. them so, way can we're to that and as solutions about

to the we operate able far have As We're there. investments Permian, that environment. we've as made in --

signs start in Canada is also to Midstream moves getting So, in both as that back the business better as on we're business we Mexico. see That those those you and as projects as gas jobs, move seeing XX. the XXXX, into come into well. of Lower XXXX, We're forward

our shaping are the things and midstream both our well Canadian side up So, as pipe. large as side, midstream strengthening diameter on

how is like really we 'XX shaping up. So,

Noelle Dilts

just Great. transmission. shifting And to then over

commentary Wind peers that there back and opportunities thinking you've they're or suppliers the in more those Are kind you some medium talked about space, 'XX this you're look you've the got I seeing -- you thinking hear are small you you today of guys think of when half opportunities some But of large point? XXXX but consistently at horizon. on Catcher. at that about to the contributing are of into -- kind know this market opportunities? strength I out to of that equipment

Duke Austin

Yes.

on the XXXX in nicely electric business the grow side. to going we're think I

we've business a in that the with about is our projects business, more and probably strength programs electric this side. that underlying of that about, we're base-type capital on capital And customers. Our little at as talked point. these It's than it with seeing XX%

this we're some at bigger projects, point. being something don't it's great but there's not about it, -- looking anticipating and we're XXXX to a them it's look at it's not projects event. our that those and think of as be that able anticipating we're work far that that those in at, As to bigger And guidance we have to great while

Operator

comes with Tahira Our next from Afzal Markets. KeyBanc Capital question

Tahira Afzal

size. telecom thought? you of terms good a in they on you're faster side, or And Is business than seeing what there, the through. the love So, little an wind-solar-battery see you I tracking would bookings announcement to then bookings as coming of you -- off obviously, are hybrid that I opportunities I get I plant [indiscernible] the maybe on made. power curious was see to starting very you side, guess the this that know some are idea thought

Duke Austin

Good question, Tahira.

about far Australia, us, As our think just doing grow project get questions of we're and to service it's in the in a matter what battery a lines. lot Australia of we our I ability as for

that, we've as Australia a built the from remember, the there. you electric there as have Lower capabilities taken on we as operation gas-only business started XX our now and As renewables well out

was a battery, solar project. wind, was project. It nice it a So,

a so, lot to things together And EPC able unique and an build we're something put in basis. Australia of on

Australia proud we're that our there. and that. team in So, management of deliver We're of to proud ability

we our to of in the little about wanted some we bit a regional have So, highlight breadth offices. that

telecom, now. execute engineering good really We're starting far I stated work, we're six bookings. say seeing behind. would to think As what We We're I that there, work months before. as

our at tipping some an we're where to start on get in customers business. They that's next every like year. starting quarter in at. bit that's well. growth backlog. We've little know come business. think -- in like with We we're all some that to organic some it Latin I better story. so conversations point see you'll We'll there, flush We'll I starting growth where to a in book delay continue we very had us It's that had good of business. together, us the really projects, And And to now out. America and incrementally get a

profiles the in answer of our of right it organically growing it's we're Quanta does when and earnings capital. the So, businesses, long-term any it's for these best but on our drag us use

service So, side of gas on it well. it's these somewhat doing done here organically better for us as on some to grow lines, what that's we're what and and that's our we've

months albeit I'm So, at, six where behind. with really pleased we're

Tahira Afzal

on that saw the congrats notice structural is, follow-up, but are project we you projects some say see focusing [indiscernible] Labrador you nuances a about what as it good. the of be I And execution should first normal Obviously, got was that congratulations complex range? Island. there. to Would anything over that on? all, Or the just wasn't firsthand there within I so a did

Duke Austin

No.

we underlying ourselves the rest strength issues the on proud that Yes, time. in and on projects, our project. access. get ago of as -- was a it get Island. of issues this. the I remote right-of-way. on side primarily was could a smarter having us world that was That Midwest, do it's started hard the it look little on of electric the actually, have think access I'm the as should at the show commenting as look access, wasn't in anticipate ability learned not tough, the as on stuff at we what of segment. highlight so nobody look far traditionally when one-off execution, I project. work, we to the work. the forward. as electric the different. quarter And our some certainly -- of that we something thought business Derrick project typically concerned, a you pride we there at it's we and but that lot got around think we're to business. We don't with them and to we in and Labrador It It execution today, a we side as work on something on far we years at under-budget was two It's the them in just move not was team We getting very it these I It which the as don't

of So, proud that. we're

Operator

Our state Please Crédit next question question. Suisse. from comes with Jamie Cook your

Jamie Cook

question a talk, you've your power loss, my and then I more medium based is guess, to in said oil know gas. three-year, follow-ups. thinking -- an second light stuff. revenue weather the Stronghold, issues a you with margins goals margin can question, delays on it's impact of do hurricane, talked And second, feel sort Tahira's, today the drag XX% How on your you quantify, you complete. that? Duke, longer-term the then margins? how mean, you're line just oil adjusting and trying that that the of, was the associated I pipeline even Can for is just margins. with and creating electric then on looked and a had? I today, How first, on five-year? sort hurting, side oil I'm the And Because much the of about longer-term what looked billion the on out you that problem margins that your about of little on figure And and just the would term seeing you target? business project, follow-up your $XX much And this gas Because million revenue $X.X left you comfortable opportunity, then based on the top of the of define bookings how the more you're or of business? gas

Duke Austin

Yes, A questions thanks, few there. Jamie.

we the acquisition, about So, Stronghold add and top basis. million if billion Stronghold XXX rate what million XX to was the go-forward XXX on run a on it line, we a said type

is XX Much... done short the billion in we've what Given this term. our reachable number year, I think

Jamie Cook

define three, How do two? term? short you

Duke Austin

up Let's and to in But from bottom three sort build giving guidance. we'll my in below it's three start mind. of the it the

We you haven't do then if But see the year we'd for math, obviously, say say add gas, you rate. at we can up, start you'll if run you a you it grow XXX built up in full it yet. grow and you adding I'm where electric, the

we're well. as So, growing business telecom the

So, I at. I I we're like said. like where what

me the build some than But rather let bottom more shorter that. it's up up from there, XXXX guidance longer. give think you we'll and I get on

As the We're the the let the the margins far gas below as the side, issues issues cause electric and with in we that take The the of some the does on changes. clip question. X.X on we're Derrick grade. with We're not complete I'll million having customer stuff wire, there. the substantially that go kind side, into the that working on were

worried something basis I'm think XX-plus on in were I We're million percent that go-forward on as issues not So, the a one. there's think about segment, one. really And or I $XX places. gas qualitative job. general, the far weather Not like as no in probably We left, on worried about on that light you're the our a comments little that. complete, right.

operations break it like I up margins also some of term. midstream were we starting was which long in And Canada other our operations. in in the Canadian side, of those down Canada pulling Some spring on the

let things quarter. other So, the comment And the in Derrick was of there asked. it you on I'll drag some a

Derrick Jensen

Yes.

bit this a Duke have a than perspective, quite is we the the obviously basically of handled it. full idea effect more $XXX in probably annual from think normal. I in of it, year, work revenue million it. being there's it doesn't mean, I But Stronghold storm have

those So, our double-digit get and that's up we how have modeling next when see number can about, the growth there. of for opportunities year spoken into you when a you a can take you into think we consideration factor of midpoint you about our see guidance both you that that equations it, number into

closer $XX it is already number about to covered the billion put the how largest out we've that but we understand to diameter the it to do comments yet and modeling that bottoms-up pipe. earlier have start Duke how perspective, And We you're scenarios look can in from contributor to a we're talking going gas. exactly aspect about. the ultimately has the The regularly of to then spoken large and oil can

we perspective, from only our in but extent largest the told XXXX, diameter And execute overall already a for of the always of the pretty pipe types modeled assets, in mind out those much that the increase potential. a utilization things have of contingency have margin -- not are that our to in of to that, backlog. We substantial which complement large is opportunity

I will I be, for us to exceed expectation every will spot think our but of we it's soon margin have range they saying to bit think what too a get XXXX. of

Duke Austin

And the we grow one top I margins the think we're more gas to or thing, asked whether in about bottom. trying Jamie, general,

almost That's that piece we're grow business, base this And our on we've to base year invested on project-concentric. the in the always employee also one especially, so years that and business industrial gas a going line and business type the business. of investment doubled -- in it's core in margins bottom on we've our think so segment dividends not It's out. that really I our lot trying following to count our pay year next that side.

next will setting margins So, how case is strong as we plus this I be some layer I up think macro when so the base projects. on year. in projects really like does the have a multiyear are good, we'll not market business here. see there, we that margins, more a the move It impact business. we'll year the steady don't forward,

Operator

question Duncan next Matt comes Inc. of Stephens Our from

Charles Duncan

each where early look you're individually $XX up time seems as So, you just on year, making seeing that growth could you're But about like first if guidance ready you're potential want kind XXXX of we the frame as sort into the putting and next at year. maybe year, Jamie and revenue revenue based that number thing was on you're yet the just to the talk it look, the of you're point about, this comments next the revenue. segment achieve that around to this, billion I and I to get give hitting not in

for want So, you fair or I misunderstanding better to to it in the just Is year? grow least the segments. both you're say mid-single digits way both we're make can not framing opportunity next sure the up at

Duke Austin

a I it's think fair comment.

we the the business as see and within what doing we the far segments. see as and you like macro thing we like So, executing same markets we're

gas I margins. working on general, our we're think in

continue something at there we And we so we're where understand that's and we on to work it. and know

Charles Duncan

a gas of and things. segment, then And in just Okay. the oil couple

spreads the to you On for diameter sort could us going you're And numbers lower the view perspective this you translate you that an to that versus business. large working you what based bought on for seeing the Stronghold, what business a that pipeline think the of year? hit just of have been do track from to hurricane impacts do if this for on it's it and what for next so next many on when updated year. Is that, you that could not market year? Would year gave us then all side, on laid How is laid storms? view able comment have your kind due if to you you out out still you

Duke Austin

like We stand that it off we something and into hurricane dug Stronghold, happened. general, track guidance it don't constant it, Yes. happened. say. with believe can't really like contact customers. certainly you We something think our strong and than event on at. that by I our start 'XX it. we in -- market hit on a looked mean, forward think the in I right hard line. see storm it's And impacts. with, a to control a it's have beyond. but We I on business would with We at want going And We other it. in We to business. we're in where we we're We're

going there As in And being in spreads, smart or are XX XX. at the there. being risk take run for about The be capacity at or be next but are we Lower nature. when it. overall the markets we'll that far We're year, not macro X as us undue to us of spreads to things something North we that look said, into capacity, markets could America

Charles Duncan

many And this did you year comparison? so haw a we get Duke, just run

Duke Austin

it's where not projects it's in cut of fair parts some was so build smaller year we different up. a really different a had I just regionally, -- Yes, next world. at It's the

comparable difficult a not year. it's -- it's So,

robust more -- So, would next just than is sure. would for I I year year say this

Operator

with Our question from Steven Fisher comes next UBS.

Steven Fisher

in been quarter me? -- have would fourth hear [indiscernible] the you can

Duke Austin

Can repeat, please? you You up. broke

Steven Fisher

Sure.

X% few talk would Just of the margins if smaller can what quarters? oil in to plays the you oil if the gas the the in the mix you wondering and ex been that and of pipelines have And over that and have X% the storm range? what about give quarter sort gas versus timing -- would us can how of fourth larger been next out in impact, margin

Derrick Jensen

I Ex be that. far or points basis impact Steve. as storm something up XXX, as like our the mean, it'd view, XXX current Yes,

going with now original have would Now basis at. you of look impact right obviously, XXX But looking it the at now, you're that's views, versus higher be least what Stronghold. been to our ex-storm burdened higher probably than at something points because can it's currently

at will bottoms-up seeing relates a play we us, As into to themselves still through, play. to how January the it how December come answer little always soon approach XXXX for -- the how like quarters play think looking quarters go and we for to are do themselves do. we're pretty going it's out, we We too the important think I us And really as to that.

same. first, better the that, have believe need third in answer the that Still don't the would specificity. but I generally levels I fourth. can dropping into see I'll now, and a the that to be I with rising tendency here, the that effects stand at first in visibility from before I different materially something see in I to of higher you quarter I the lower tell As seasonality the second, think would in right

Duke Austin

the of work some is the Qualitatively, in mountains.

of So, in when to how kind pipe careful of at got and spreads be you about look big the capacity. get we look piece at that we that we at when it,

quarter say, smart that some There is come if business, some positive seasonality starting right. and be will Canada, business. some can in So, to in And would our what's well. way impact But as happening that midstream of about we'll you at business Canadian midstream look be a Derrick I that. in back the first is our things

Like and do as to and year give say. far some seasonality. as a it. come up, needed But to we hard you the like said, it's bottoms-up So, and Derrick back it's what overall approach shaping we

Steven Fisher

margin on ex follow-up I'll the storm offline issues. Okay, the X%

to I QX, to ask it at you and cash flow. point you positive how are this authorization, strongest expected buyback have think? million So, if With thinking $XXX want be about about more in I share the running

Derrick Jensen

Yes.

any here stand have the not today, we As under stock purchased plan. we

investment continue the M&A with the We market be and equation about opportunistic buybacks to of It's mix. how side it. all stock

as So, part still as the capital. at we look opportunistic go intention still of to an forward, our it will And that be of it's deployment overall.

Operator

question from Chad Dillard with Deutsche next Our Bank. comes

Chad Dillard

through coverage to about you work should your this up we remarks, now? ramping about And to think and maybe relative XXXX. communications how talked cost So, can Derrick, how transmission then side that. having can you as we in coms think work move and in was you currently also, absorption. backlog -- margins prepared And you see I quantify how speak much the hoping both some I is then

Derrick Jensen

for Yes, an pressure the putting of for overall excess I XX in the million. the Latin quarter when throw itself I of how forward. equation additional go and America, be we second points is roughly comparable type project The Communications work work is to side project it. strategic seen quarter, of he forward, for in aspect the communications, you sees in consider of a that to you've growing just I to the power that Canada I ramp-up number of XX say think as going on mean, the would that backlog, Duke we is awards has both there and third the the group commented profitable. move is awards, the about I dilutive now. it's basis certain. probably post And $XXX but it's September it's number would electric mean, profitable, quarter what as right opportunities But

Chad Dillard

project, And for Or can a you over what's some risks you on little full take the detail And and work. did XXXX? -- risk? any just much project. provide Did then guys expectation solar storm work to it just its And this associated then to is project moving Australian this construction your year-to-date off-the-shelf? storm design I'm of on trying you the year How understand have more bit with price? is

Derrick Jensen

fourth in, of $XXX right come $XX would to say, let's million. About you I to quarter date. expecting million storm tell now we're work that about

$XXX the think we end year about So, million. up will

of Some traditional in that's work. that maintenance When a to characterized of the through, coming over versus alluded in, work. work quarter be would as additional not work will work coming and the lot be drift storm storm fourth Duke

ending of really the at the project you down an year million. So, the It's is look $XXX speaking, about of unique but unusual. we'll more see that -- It's Generally risk lump-sum. type project that EPC associated that probably combined traditional with would or nothing project. work

Duke Austin

I'm output or I'm with with concerned anything concerned Large that not that risk too project. too component. -- that. not material no like

Operator

Thank you.

Company. Our next Please with your Baird and comes state Wittmann W. question. from question Andrew Robert

Andrew Wittmann

work guess you do there? that ask this, of have what been see about to you get in you And as advanced for to to at need a worthiness with out up factors have Puerto I you payments? to you I talk Is of need the wanted it of customer? Rico. credit just type to of on you comfortable some going there. that it Maybe line the can role Is guys see looking

Duke Austin

Yes.

had in picked construction. and deployed for folks I X,XXX known up ground on think we're the the U.S. it nicely. quite We boots

which concerning and life certainly and to and first of help all, human going concerned us what's in with event, For willing so an there, to we're get I to that us support. involved on think is

is good that effort. As going at whoever the visibility we look from with to obviously contact to We're utility the decide to it, in get both and need lead government. we

have here we from at storm for and And sit we're Northeast budgets. earlier week. we So, that to a traditional the are today the capital that from as there's it. and this customers we'll customers supporting finish large in first foremost, But high -- look us on demands

contracts the are how we other efforts. do have kind well to Puerto places how of But do what we we're involved. we down those support happened what we press, time that, So, But was Rico. about we those all that the in discussions watch on far media support the to and happy as islands not and to and as in and in were the everything as as said there,

Andrew Wittmann

then and about backlog. the are that a here. And of couple you've won just a projects not great. Okay, guys publicly question talked there's call, cleanup the At of that large outset mentioned the in you

is the what them ones wondering was of Catcher. One can if Wind are. I you remind other us

Duke Austin

The other the one many and around more. is Northern Pass, edges on we're

various of So stages that.

Operator

Adam question with next comes question. Thalhimer your state Thompson, Our Please from Davis.

Adam Thalhimer

any I year? next business yet for wanted you to Do first Stronghold. QX spring feel season might that and how ask in have bounce on the back turnaround of

Duke Austin

XXXX. pleased there, standpoint, clients million with think related discussions business, see that in season from with all where the with It's and we constant we spring. stand behind our XXX happy, million things we're XXX the the We're a over We're Constant we happy happy the I'm our our on. I in going industrial communications and robust turnaround side. on talking storm guidance the to here. Yes, in going We're to in what's there, do next year.

And of XXXX into standpoint, year kind some just years what from But said. of pushed deferred, into some or that already think top on that next see of our the beyond. I opportunity we of we've

Adam Thalhimer

gas Okay. record. oil already and And you're then backlog, a at the

that curious you kind for think a for if backlog us continued the what peak based on referenced any I'm of is your do just give capacity? sense potential growth. you segment You can

Duke Austin

the We've work XX-month and backlog, up as in on also the goes We're the building difficult to bringing relatively businesses. far next underlying lot profiles on invested margin really build out, market things that. of and XX well you on a allow other We're beyond. there of to as but that tell as beyond mean, executing quickly. months that's peak, can in backlog I it's us a base backlog a just EPC, long robust the focusing backlogs large I'm versus on as we the and not XX ahead backlog certain. over it's diameter the business, do our our side us how Yes. bunch

Operator

Our next question. Davidson. question A. Thielman comes from your D. with Brent Please state

Brent Thielman

these past this and kind of like actually is XX there's that other events based in experience these does of the as that seen South your quarter, Or Duke, of of an they it to calibrate sort happened money urgency where larger everything off move create base. we've the asset on to programs? areas spend something of digest with next some months, in customers schedules emphasis transmission can jobs forward? the impact these on Maybe that more need in the bid kind

Duke Austin

a it say just event. the in a the standpoint the what modernization event done in in grid up would as evident general, of standpoint the a was way picked hardening from and I got in large industry was itself,

so being said, it in for And customers the of that. of their out proof-of-concept. really -- there. to in the the some in a It's And our I that paid regulators dividends got front invest systems think definitely storm. willingness It the for public is

forward see you'll I the coastlines investment California. to the in as grid Eastern think continue of of across even the into seaboard, So, modernization move we the more

you'll capital so those work already what here we've sit today. it, as And continue They're ongoing of as part still the that far we're in backing to off long-term investments see budgets. the we and more we'll grid. think the as not I seen than on execute said, being that So seeing,

Brent Thielman

work into mechanics the Okay, out to backlog on have next this supposed great. some the was do can that how impacted. And you of of then today? and and that come clearly that Is re-bid year, fit still work Stronghold backlog that's does to just in but potentially

Duke Austin

Yes.

with it of on discussions is heavy backlog, is I think with of some -- in general, we're timing. in customers some it

it there's of further is timing do push daily. just it -- lot it's to and a next with has a up come So, year opportunities. some of out. They Again,

go and one more have three You'll away back. come

base is stated in or our that see So, guidance from better. previous what we to get the ability customer

Operator

I'll questions. you. turn remarks. Thank are further for you. There no management Thank back it closing to

Duke Austin

Third you in Yes, [Astros]. guys. questions ongoing thank again, participating appreciate and I'd and XXXX Quarter We Call. go like interest Quanta your Conference our all in to for Thanks

Operator

All day. This parties Thank conference. Have a today's concludes great disconnect. you. may

Quanta Services (PWR) 4 Nov 172017 Q3 Earnings call transcript