PWR - Earnings call transcript Q1 2018

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Operator

Greetings, ladies and gentlemen, and welcome to the Quanta Services First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. . It is now my pleasure to introduce your host, Mr. Rupp. Kip you sir, begin. may you, Thank

Kip A. Rupp

quarter welcome Thank & first press Media the be first Services section of at to earnings you, release in conference quantaservices.com. Investors our a and quarter issued call. Quanta we can website everyone This the which results, our announcing found morning

the Safe discuss this of a of call statements the facts. by in call. Investors that time-sensitive This speaks established or Media section do not posted replay be Reform statements the summary or or will Private outlook longer of any X, have relate morning our we today, future Securities XXXX intended accurate historical on commentary may expectations, or information you of XXXX, Quanta's this and this website. information Please only beliefs as all from under and current remember our include Harbor about as XXXX. These no Additionally, any events to call Litigation liability are of forward-looking of that assumptions, the reported we intentions, Act reflecting include to will May that advised solely qualify & therefore performance,

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

SEC's, along which the release today, Quanta's, assumptions, filed to the Form documents and available refer issued please cautionary Securities on and the information additional the and Annual its in these some other Exchange concerning our included uncertainties, For Commission, or on XX-K, company's with Report press website. risks, of language are XXXX with

of third-party to any forward-looking undue earnings these reliance present statements made GAAP this any not Quanta are per we by regarding directly most oral backlog, measures statements and written measures Reconciliations comparable disclaims certain in in the earnings to diluted financial should subject any non-GAAP of statements share, also call. undertake release. call, our and including that such matter and adjusted You EBITDA. Please their place financial will update does measures note or today's included on not obligation

Lastly, for information, through be & quantaservices.com. to alerts Quanta the and sign-up Media like please you notified publishes news e-mail other section Investors releases if would of when

We turn media IR Duke in others channels encourage Quanta also investors interested Austin, would company website. our I the and follow and Duke? to our over With on the call on Mr. CEO. like to Quanta's that, to social listed now Quanta Services and President

Earl C. Austin, Jr.

call. morning, XXXX Quanta Kip. Services to everyone, quarter and the earnings Thanks, Good first welcome conference

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

we we with comments, a results. Derrick's pleased welcome year off your are start, is to questions. Following and good This our

supports our billion record of for for quarter backlog for had respectively. First $X.XX, quarter we and GAAP, and expectations backlog in of $X.XX and per total billion, adjusted with were bodes believe a We which this record the $XX.X and XX-month revenues and diluted were record segments approximately well consolidated earnings multiyear $X.X our year each growth. for share ended opportunities

raised a for XXXX. in in expectations safely share As year strengthening confidence our our per results, our solid earnings ability we and quarter and of markets execute, result to revenue have first full

perspective. Canada quarter, execution the Our and both pleased we in performance from our and Electric top strong execution across well was our driven Power executed first are The with season. through by margin winter a operations line operations, particularly solid in the

how on is offset storms. services projects Oil operations, weather these Quanta's by can work Additionally, results. This several our example overall Power, and and conditions adverse This work Electric we services the both emergency severe Gas to from performed of in restoration events mitigate to geographic storms. quarter for during and caused winter diverse risk response helped first presence a severe good

including we positive projects. making strengthening project Line and gas, at base an and cycle. the aimed market a Note Catcher number initiatives, the transmission The are believe We levels. of renewables is outlook the remain and our to high at an in aging robust for continue Electric of for backlog. proposal markets several closer strong. other multiyear, favorable We remain market more larger provide generation of is liability, grid for have for positive user with parts gas, Tie long-term our and low power increasing, is and larger demand greater Electric place for to end regulatory large the it's opportunities we of substation and and some to and are will business. continue and continue base transmission to work should what to in natural getting increase, improving mix to modernization, activity in and increasing projects, regulation grow and to of distribution drivers well Generation should remain work customers' natural manufacturing end stages time. maintenance States, near construction. Catcher budgets such for as The United business reform is we because our and and work Wind have in and is capital of transmission in our continue believe replacement that multiyear large for Wind and of increase upper to Power as our projects power, of not creating as Demand active, medium shifting country. are the multiyear segment MSA larger are activity business projects industrial progress impact demand industrial believe certain spurring Long-term The do abundance opportunities prices plans which yield earlier tax expansion policy infrastructure, our a Small the

in are industry. solutions believe comprehensive programs We are able to unmatched turnkey the provide capital these multiyear we for that

solutions opportunities, which believe potential we uniquely to in are As said past, provide and size these rarely experienced. the has the our industry we have positioned scope for we are

last As This many within communications received of we you segment, been U.S. our continue initiative United and operations our has Power market. communication year and momentum. re-entered Electric to communications services States know, by operations well our are infrastructure gain customers, our

broadband XG the anticipate of and support the was Texas. year, a wireless farther quarter, during We For company and a large XXXX. first example, completion the of the is Tier for deployment selected for services. developing this customer's throughout delivery project end beginning high-speed later telecommunications Quanta services existing with in deployment by this the to turnkey and by designed networks, anticipated X engineering market XG construction This

operating margins the in and track year with quarter, U.S. high-single we levels. expect communications income to operating to income we our expectation believe Importantly, profitable with digit achieving this be our exit second on remain

operations. to pipeline natural We segment. Canadian our integrity, and and than gas Oil primarily generated expected greater by our Turning the distribution, revenues Gas during driven quarter,

Our industrial the services performed year. and Coast the impact they last from operations Hurricane nicely quarter, Harvey well are on recovering severe Gulf during of the

our is the caused XXXX by for track within operating and would operating segment without with we Overall, end winter quarter we services were the on our exceeded seasonally prior in the of calls. quarter believe this several storms. believe high on a for conditions discussed range the operations achieve and previously have income margins to pleased First industrial range large the quarter, financial operations, adverse targets their are have We discussed their we performance. are

midstream earnings year. opportunity downstream begun Oil expect see MSAs, supporting and grow due we which scheduled customer We on We industrial pipeline segment move management, to work for continue larger construction we are comfortable infrastructure, projects XX projects. of and the projects United forward. of or the about activity timing have to drilling, pipeline gas across over budgets, feel we midstream of engineering. be portfolio Further, of through utilized of believe could in second fully for weather, the in quarter, increase year, the quarter our third fourth We States the several oil gas for the the and optimistic the Gas our and business opportunity incrementally years, in to and our pipeline distribution, larger commencement our capacity the release as services, early Since on call, our pipeline horizontal the lower natural end and pipeline includes Canada starts to moving spread projects. by operations, and construction market of coming with for our in improved this directional logistics improvement integrity, natural base quarter

beyond. see a forward, overall opportunity in Looking we and XXXX also pipeline market robust for

petroleum of export booked and export Canada well Utica for gas industrial transmission well Quanta. recently would for in earnings Furthermore, benefit growing experience facilities turnkey and mainlines LNG-driven the will multiple We're that of from capture production couple announced Marcellus service our EPC and massive us experience to I of pipeline a natural our in driven also United and we opportunities development our this gas morning from by and believe into opportunity we an and to opportunities release market in years provides industry Oklahoma region States good placed natural example Appalachian to and and will note midstream Shales our seeing is LNG increased are provide processing power and the access, operations. America power providing The industries in LNG such North require over services the amounts high-voltage decades opportunities. grow markets. of the substation next the These to position in activity. electric As are operations pipeline project positioned these and development built

gas increasing in outstripping Additionally, available pipeline production oil and Texas is capacity. natural

pipeline various market. and stages West West building Texas of and actively from infrastructure Texas move a are are in to in midstream to of projects gas and We number permitting there oil development

pipeline pursuing have over manner. focused Gas service stable building diversifying said, diversity, earnings provider cycles and started the deliberate approach is confidence mitigate Quanta's and risk. believe geographic, execution, We timing raised are Oil has Quanta of revenues per across that and larger our That the as these in expect in infrastructure share scope investment. year. base-orientated to through profile solutions result diversifying geographies business, will other and risk ability geographic time believe midstream our services, and majority many quarter a off In doing on unique our a and which capabilities are a time. actively our well capabilities and customer, more of very consistent and and less Texas us pipeline of mainline project, we and the results, We cycles companies, to its of markets an both and have opportunities. we in solid strategically construction-led business so This including designed Quanta in competitively in other apart portfolio to grow diversity set a we scale markets us in safely and are is operations and is our various and on lines projects. this aspects to whose be weather segments strong result as and We summary, space and permitting, full over expectations. first profitability of year end position has dependent year strengthening our revenue execute, services

While opportunities for multiyear have regulatory markets positive project view and end we challenges have and continue believe growth. our a to our remain, on we permitting multiyear strengthened

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

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

Derrick A. Jensen

two attributable Thanks, XX% quarter Duke, we revenues Net record billion, common everyone. was $X.XX and XXXX. increase good net to diluted stock first per increase the $X.XX the compared and per million, associated or XXXX. of attributable to calculation earnings of to during non-GAAP as stock to million million per morning, as attributable share and the the impacting project was with measure, projects of common million first share revenues $X.XX acquisitions the XX.X% were $X.X of Power of share the Electric stock, costs of Canada. or $X.XX sub-segments or $XX.X Power to compared performance electric partially share Adjusted stock tax across to of income first the acquisition diluted adjustments common to an electric increased integration large income diluted A favorable net quarter $XX.X $X.X per first XXXX quarter quarter compared services. XXXX. earnings to announced completed Today all of due of first diluted attributable to to per due associated primarily $X.XX when near common customer primarily to reflected compared quarter or with billion in first diluted adjusted quarter was $X.XX progress on quarter. transmission double-digit the with spending XXXX $X.XX our quarter in our growth and double-digit for and a Negatively share transmission for larger a Electric in higher of

a project the higher Power margins This was as were as while the from experienced income favorable contingencies incremental X.X% services higher have X% $XX emergency previously in compared million to increase XXXX service restoration quarter, we slightly which through in $XX more electric we to to currency incremental electric Canada, rates quarter our segment approximately due Also executed project to quarter the during Operating higher Power Electric of negative contributing mentioned companies. $XX.X million of well operations. the addition, in related in and in our favorable included largely was transmission margin acquired million operating In winter established in Electric infrastructure the restoration revenues to segment and foreign transmission seasonality revenues, in services increased segment revenues proportion non-U.S. revenues. Aggregate are due XXXX. to first of the exchange operations, which weather communications quarter. currently including approximately the in within for revenues, emergency first as

the our Effective during rest dilutive XXXX, operating adopted quarter, operations Power margins guidance. the fourth the year, the effect expect for We for Without communications January communications aggregate X.X%. margins first new through operations the with of performance revenue sequentially improving X, quarter. profitable of would've we recognition the Electric exceeded the

of for obligations anticipate new not as the disclosures. recognition under this interim end the significant Pursuant performance the do each our new any period, guidance of contracts to to contracts, disclose, requires guidance, of changes we of amount customers. the annual and revenue the our we number While required with aggregate to pattern a of remaining are

performance expected yet yet estimate contracts fixed firm under not for remaining of management's to work realized or represent revenues Our price begun. from completed, orders consolidated not be which obligations has

XX to subsequent XX, remaining were recognized As $X.XX of XX% in be to billion, estimated March XXXX. obligations is to be March XXXX, our approximately performance which the expected of months XX,

a of backlog, obligations for of a the of which separate remaining performance remaining measure Our a reconciliation Please see our GAAP our quarter. continues have non-GAAP historical been the as historical our is backlog included data obligations presentation first as to be component supplemental performance section a which release today's measure. now of to earnings

approximately was strength billion, the market $XXX.X end timing segment increases and in quarter-over-quarter opportunities XX% diameter the of was stronger was XX, months due referenced in and projects. when an of the to higher segment As capital productivity. to overall million larger in operating backlog XX, primarily to March these to decrease March XXXX. decreased were to typically are which was weather margin XQ to acquisition of Last until this Gas XXXX XXXX. projects the and increase which begin for which revenues severe income due decreases Partially projects, experienced Oil we believe second decrease margins. activities Electric $XXX lower yield to an this segment XX pipeline for as This previously and the large Stronghold. a resource revenues negatively by expected in compared a X% This and the of on diameter not offsetting margin of was certain spending larger diameter which which our primarily construction year, backlog compared on of XXXX, his $X.X reflect XQ drivers lower XXXX. as XXXX. the quarter. when record million to impact utilization lower Operating These where the Duke result, which, in Power compared customers due projects, pipeline non-GAAP of was contributed were as due to incrementally comments. decreased segment, our to had revenues XQ the projects $X.X by reduced discussed continued fourth spending proportion pipeline Total ongoing billion, increase in incremental reduced in We X.X% compared impacted also XX.X% quarter, from several pipeline was XX% construction year, larger of to XQ

within margin an with overall certain on gas of services the these segment emergency negatively operating various that points. estimated restoration XXX mobilized production and impacted contributed much as as the Power we impact same projects crews oil positively Electric the segment to storms basis Although to quarter,

As quarter. Gas of XX.X% was compared XX, of when the for backlog first XX.X% XX, XXXX, segment an compared to December year's increase for of and was and Total an backlog of to which compared XXXX March $X.X increase XX, first X.X% billion, XX Oil at was which when non-GAAP of this last XXXX when year's December quarter. backlog last billion, month total an and at increase was to when XX to $X.X month segment backlog an compared XX% increase

to expect non-allocated of $XX.X opportunity our costs to the million remain continue first due higher awards in to Corporate acquisition-related $X.X costs. see and increased in the backlog levels XQ additional We for million strong. XXXX XXXX and can as primarily compared quarter

litigation increases due we involving quarter disposition resolved reduced to higher that prior support last a in forfeiture to we in In operations amortization million addition, the offset personnel business $X.X associated first well higher of matter These associated Also, stock-based of partially year. increases lower certain related $X.X compensation intangible and our communications higher in growth rates. in million as as $X.X costs expense annual compensation-related to assets. million had costs there were by expense with were increased compensation with

performance, a XXXX. the quarter of quarter of our was when Consolidated revenues consolidated of year. to result operating XX% increased first comparable million or the quarter compared As first in last the to segment $XXX.X income

million. a grew or adjusted measure, million $XXX.X XX% non-GAAP to However, EBITDA, $XX.X

related lower negative million due flow and Oil XXXX. DSOs at in was quarter of last were of million days March improvements capital free at XXXX quarter activities days year-end compared for days projects. ongoing for capital Gas and $XX XX cash negative XX in flow. XX Investing working net by This of first year's Infrastructure For to requirements first activities million XX, The the million provided end to $XX.X at to the XXXX, cash the the quarter. $XX.X and levels of partially net XXXX operating under acquisitions, which lower expenditures of net were for $XX first included credit the first resulting of cash flows $XX first XXXX million our of compares million were $XXX.X quarter primarily free activities quarter was utilized used of repurchases. financing facility, share for to of included cash and of borrowings

us in our We liquidity and bank credit quarter, the March At stock of repurchase million our million. $XXX.X authorization Approximately in million million million had for common of total outstanding XXXX, unused. we borrowings of During had $XX XX, of leaving remains current $XXX with $XXX our in under and $XXX $XXX million million outstanding, repurchased we shares cash. X XXXX. we million credit had of XX, as letters March facility, $XXX guarantees

remainder Power visibility solid contemplates to than Power this higher Turning growing full be to the our margins The into will see $X segment quarter $X.XX we Due in rising level the $XX.XX XXXX. quarter, billion XXXX range expect of the the quarter to revenues the the first be performance, are the Electric billion. operating and We in markets to revenues revenue double-digits quarters. year's revenues guidance. second the highest margins the our of third revenue forecasted revenues and of the with to year, quarter in for in now billion billion. being sequential slightly believe segment $X.X Due comparable consolidated segment to flat to potentially quarter, increasing end in we lowest and Electric first between range to in our improved last increased and quarter second year We guidance. fourth quarter, to strengthening third to be fourth the

overall XX%, We be expect segment our to with segment for Electric XXXX X.X% Power operating margins. to communications range between and to slightly margins continuing operations the dilutive our

expectations discussion. year-end from guidance Oil Gas unchanged the Our are segment for and our

segment We see of for continue to the to to revenues possibility grow XXXX, the relative high-end XX% the range.

slightly margins will between for the and by the Oil margins segment anticipate X.X% and working the second be share quarter, $XX higher expense for higher due seasonal improve million, the We X.X% approximately expect quarters, We requirements the and the partially as interest a operating in and attributable Gas support levels, debt to activity year fourth to levels. in first revenue decline year capital year. followed quarter. in anticipate to increased as to We revenues third repurchase well during

have previously $XX year. our of of expected from As the now better expense have on we for in line portion to million we primarily between production and line item expect those investments, the $XX we item to of range which on other activity than projects, certain a deferral discussed, the due million expense the construction includes projects other profit

now million million between and adjusted operating year. around the These $XXX are year. for $XXX XXX XX% the effective income full $XXX tax year for activity quarter, EBITDA $XXX of for to net the be to XXXX. projecting between million XXXX the assuming ranges shares the first million are and and average million we Due XX.X% for rate in We share between weighted repurchase our in outstanding and result

$X.XX between share range per for Electric associated non-GAAP performance, $X.XX, our our the increasing year $X.XX. earnings common is strengthening due of view guidance but to adjusted GAAP quarter are This attributable diluted of to with first for the diluted segment. annual to our and Power quarters also $X.XX our be third and per increase earnings partly in stock anticipate to fourth between and and the share be We

We measures our calculations positioned focus growth in historical and are of we similar for details. our to strong to presented financial per the our share on our opportunities please to strategic for formal reflect believe now Q&A. review balance expected summary Our results the for estimated adjusted our website We earnings basis diluted and our on expectation year a the continue outlook to our non-GAAP release, additional forecasted to and feel concludes and for are maintaining presentation, on continue we and sheet open operationally line execute will ability well commitment initiatives. financially This our and flexibility. the Operator? on

Operator

Thank we you. will be conducting Ladies now gentleman, session. and a question-and-answer

comes Our Noelle Dilts line with of the question. your Stifel. with Please first question from proceed

Noelle Christine Dilts

Good you'll sure congratulations Hi, this today, I'm hear thanks. lot morning. quarter. And really a nice a on but

first... my So

Earl C. Austin, Jr.

Thank you, Noelle.

Noelle Christine Dilts

a you takes question, get have uncommitted now? to I guidance just the us it to you of thinking right a look sense you high-end work give well at can little more. in execute My of on that really terms what into of to there have you it the wanted When about of kind work? just is bit just the first guidance, Or dig

Earl C. Austin, Jr.

Yeah, Noelle.

the I think macro and we've markets, we see that a from than you you and we've really they're quarter guidance as belt, at haven't our strengthening. see all changed other under had our the way year the the looked fact standpoint,

diameter we as Also pipe. that's higher end, us our Canadian the on the of winter In front our degree midpoint some So see, of uncommitted. well. we starting We're it gives a the just have large high to us gas in there. there season still on confidence

get us that of progress through other that see season, we and the us side see visibility we into the year. it'll better as So to allow

end lies, the that's of is in the So the where high backside year.

Noelle Christine Dilts

some you the hurricane, Okay. well continued give disruption? what are as sense of particular some Stronghold, with that seeing still some you about there. like performing? it see us to there, what some you so recovery that's in think maybe in performed one sub-businesses you – how just a sounds a And to Great. a drive that competitor associated That's relates helped it market then And couple helpful. nice had is of performed the of Can disruption was guys talk

Earl C. Austin, Jr.

Yes.

felt exactly the get company necessary, a They bought like thought what know, that's we performed we would and the did. pleased. was thought. extremely we And case. the acquisition, we bought You Stronghold we year-over-year like performed maintenance And exactly we're that we

lots seeing in see the that that We're also opportunities impacts that may market, others of We space. not see.

rest for fantastic pleased of with for long-term in. how the that the way So, and management believe the and matter. extremely is downstream continue The opportunities performed and they to our perform team we're come they'll just

Noelle Christine Dilts

Thanks.

Operator

Thank you.

next line of with comes Alan from question. question Citi. Our Please your with proceed the Fleming

Alan Fleming

Hi. Good morning.

Earl C. Austin, Jr.

Good morning.

Alan Fleming

like can for years. you in nine better. I full Power Electric know what is there the it guidance were starting several we XQ out about or executing year, well. in some we've know seems margin work maybe storm you're your there, your but the think year guidance help this and you in us at strong, little Duke, understand The a least was percent seen did the highest

year, XX% least mid- also Fort so digits? continuing at do in XX% of be big McMurray high-single where projects to you you why have ramp, closer business maybe You to to wouldn't growing, to the midpoint your like base this is of year a to able range

Earl C. Austin, Jr.

larger do projects segment we're that Derrick market. bidding more We the the seeing larger we're Again, the reports business said we in double-digits projects, Yeah, pull-in all along impact Power this year we that. the market, and what those on continue we which such. we'll you through But telecom verbal it macro such. from we've will give we it to though Electric and need that, if see like that we be now, higher be, storms would it have than like think can see. goes there, from some And and commitments

in to end We sit. we to where that and like something we So, guidance. like end have was go, margin the don't more upward it our creates Catcher guidance. Wind If to upward

on the Derrick let telecom. comment So I'll

Derrick A. Jensen

but quarter, point, Duke digit year to with. the in to dilutive mean, think we said part dilutive guidance has of An range that. get putting had that's is in we everything high-single digit in To higher we individual larger is It the I When the when the a you're Yeah, effect you lower a I previous that periods, as his is, execution, Electric telecom overall saw of range end transmission here as some of year compared the to upper so larger our additional to be Power. the year projects. for into the of point. this the of effect we'll levels past, single contribution agree first in margin and at point

executing only years it those here projects. on, past, X as executing XX. on XXXX, In three As of we're today, stands many we've for larger to as been couple or a

the So drag underutilized that's absorption. some we we have an bit that we'll are on as or margin whether so additional said, And to think a for projects. think U.S. that then little there's extent we got deployment the so there, that that's the there there's that the we there have, still Duke as growth bring I still lastly, extent large for better mean, equipment, of look G&A, and of to you've Canada, and dynamics is expansion growth resources coming from we have of and opportunity amount about forward

Alan Fleming

concern is on follow-up the change about large been projects policy. color. in Oil delays recent Yeah. pipeline there's Obviously good some with My in FERC and That's Gas.

demystify for mainline continued the enough is, over there's least help on you or do at next you term? You Oil Gas, two? can but near over medium is the you your So growth year what backlog skepticism know think in to visibility what for us think and the visibility pipe

Earl C. Austin, Jr.

the projects there, Yeah, this there. the is see opportunities out are Duke. so We

LNG You takeaways. have your

lot takes we're gas. well which visibility the They see starting use of to Texas so as pipe. of some as You're to and amount tremendous LNG Canada, market, see a in starting a Louisiana in in

line disallows ruling We it where on the on recently FERC tax are seeing benefit. MLPs a FERC the

is the for It's that not sure there. or two build sure be most they and to necessary to It that our looking it. from that it's to venues. provisions to whatever are So information rates out can FERC. or pipe a ironed new. at build their out I they'll believe to they're doing, Either new they till of noisy FERC, their markets really assess do I it make viewpoint dissolving that changed, it's the continue continue pipe customers make build do but and new may they're think there MLPs, to get these market for quarter

Operator

Thank you.

Capital line Afzal proceed the your from Markets. with with of comes question KeyBanc Tahira next question. Please Our

Tahira Afzal

folks. mix Congrats yourself. I quarter, for and the on win assume the Hi, shift pipeline

Earl C. Austin, Jr.

Yeah. we're happy We about so got a proud it, pipeline Oklahoma. the We're of award. good in

Tahira Afzal

Yeah.

So, some seems on like a coming It to Duke, big side. granular, pipes LNG more there's the to just tied forward. little pretty pipe get

a GasLink Canada build-out perhaps Your there? were build-out to Canada, getting generally comments about? assume you Is broader the driving your solid Coastal the that seems LNG really what's leading that Or in now (sic) larger, little enthusiasm which would on excited interesting. is more a you're

Earl C. Austin, Jr.

Tahira. Yeah,

there's a if look I out it, multitude projects at you of think large there.

Canada. You have Coastal, sitting Keystone have there, Enbridge sitting Line the have X that LNG there, you TransCanada and out have you in out have exports feed both lines you

we're beyond lines midstream certainly out us those that short our at, feed that, so lines and that of of mean shelves into are is pipes, a we're lot that a something feeder of market. I in it those that around all But edges looking interest lot those on. lines the larger takes So also

So in we're We cycle a see we elongate. past would together. the of – us all the that export, kind you of bunch seeing said saw though, if come LNG

pipelines So I companies that said, also the macro us all somewhat any pipe. of like really the on like being we portfolio of more markets. diameter enthusiastic we're I that, the about old have. longevity That delivering our of how get larger

being general, market has never been that greater. all said, I company power our earnings our ability macro of and think just and our the So in

all strengthen, I it Our say enough on can't our segments. to of continuing and markets are

Tahira Afzal

Got it.

quarter is And you then, a guidance the Duke. confidence for Okay, to you rare a clearly as so it's first And sign quarter, to that. strong in obviously, the to raise that, follow-up guys really guess the support of I have.

Catcher pronounced guidance other? Wind of the rest the would both is the of the outside opportunities they look, them. raises But opportunities? seems, one are you forward, Going as for what Or in there are more versus you upside segments? are one potentially equal say Catcher, for Wind year obviously, of in It

Earl C. Austin, Jr.

Yeah.

at long looking it we're Tahira, term. think, I

it, at look it you $XX.X today, you say just look our and backlog's you billion. So if at

Tahira Afzal

Right.

Earl C. Austin, Jr.

be awards other the and $X depending Catcher backlog see excess we today. whatever (XX:XX) that beyond. we may at Wind quarters quarter possibly we on on proceed that next look sitting in it the billion to We're of verbally be could They're in how and

that So being extremely said, the markets are strong.

that we've year of lot and see XX% the business of continues That's growing utilities the that now the and us we're these grow. CapEx, layer to Our outer that that larger the strengthen years on to and XX% base larger confidence The this to really of a projects it, so business the give projects driving to what's the included. starting base is strength about OpEx talked of top continue business, of single-digits. in

Tahira Afzal

Thank it. you, Duke. Got

Earl C. Austin, Jr.

Yes.

Operator

you. Thank

of Our question. with Duncan next question proceed Matt from Please the comes Stephens, line Inc. with your

Matt Duncan

guys. morning, Good Hey.

quarter. Let me add on congratulations my great a

Earl C. Austin, Jr.

you. Thank

Matt Duncan

kind every and tone certainly large So, your in I you're be the of guidance if on correctly, to rest segment walked rapidly. are fully dollars diameter with you guidance And in down the you're make I Those revenue of quarter when but didn't small third piece large spreads rising end business, sense second by you the pipe Oil that things the around and is be then the Duke, guidance going through the seem specifically, utilized what seeing shales together assumes for and don't look in of early your to of lot remember saying just positive. or Gas the business, growing demand to through but diameter a your quarter. the you're that that more of year-over-year change seems

talked You that. about

growth in seeing and also Stronghold out that performance market. You're good of

just bit to and a So Is baked guide that really up? with help the Gas to can you range take this little Oil us assumptions in the take it are and does what and else something as get we're large that missing? to there of it Or make is second need these the we're end on jobs? we as the diameter sure to on track quarter simple

Earl C. Austin, Jr.

Yeah. more is our a see to inverse inverse where with Trail going season's spreads year somewhat starting our had to half more getting to Matt, you're segment and give year early. that starting I visibility that large more get able Gas you're of back We're mean, with now. to I It's so we first this think last this little Sabal our year they're normal the on we're starting quarter of the see or to year, construction comfortable where all in construction. bit

West I've And kind a Gas see that of We'll about guidance how the the just but visibility be we but in and type get the I run. upper business we on are take get those get guide more by pipe work. we that There's the drive will side. in in at We of and areas. to any look think past it cautious – other said a adjustment We contingencies. end I next on able there, of think the it, to big really it, started, work our starting bunch on quarter Virginia should as we'll on end we're the get rates but with risk of it be different which Gas we it season productivity work and in visible to can start our more of

stages take you the of piece. started. board. the in just So large in of early the the strengthening early our season's We as company, across pipe portfolio just guidance, general, Gas we're diameter the we're and a gave But out,

Matt Duncan

Yeah.

Okay.

question second So on and then front. that

off getting pretty I a Stronghold. smart like about you're was start. to a any sounds year me, acquisition. for It really You don't good talked credit is what, to the think

So demand does industrial first your it can outlook for services like? business? general quarter? look the And year-over-year that just us then update business, on give an that in for you How did What grow the much that on in downstream business.

Earl C. Austin, Jr.

there sure. Matt, is the demand I think for

what to said, it had and They stand here. as the the a million that target for far them which million, we'll a the by today. is $XXX for As quarter, good quarter seasonally first as year $XXX we've their sits big own

sit. So as about from these in certainly do refiners, as we're necessary excited a we where well pretty What market. the service standpoint downstream is they

continues company share. are to take market So Others the issues. having

team. get really We people, superintendents, get to revenue be. It's first Gas management what to it choice. things, business. We'll business bought. first segment. would in If quarter. with we it. like really the the weather continue great shines. that But we start of I us allows forward I a diversify in think thought got we forward get may quarter, some We we our diameter you different as base to large It in the Employer whatever move the pipe of move we of see piece kind some and even that that

Matt Duncan

clear, it be year-over-year? To up much how was

Derrick A. Jensen

Yeah. as When a you're been commented growth. that historically that I'd into both of double-digit at – they've quarter. the years annual as its XXXX, What double-digit coming for compound XXXX that say run look well growth is, year, five, seeing looking the had we're is at We rate dynamic, you double-digit. six revenues, rate same

Matt Duncan

guys. Okay. again. Thanks, Congrats

Earl C. Austin, Jr.

Yes. Thanks.

Operator

you. Thank

the L. question probably Cook I of two question. - Credit Jamie And morning. next quarter. nice that line The to guys Day. do achieve at Suisse. are your How think Jamie long-term Analyst guess guys to already clearly from Cook exceeding with longer term. questions, timeline your Hi. you more you the (USA) medium proceed Please target laid comes Our Good Credit XX% out the LLC with about expectation. Suisse Securities margin that revenues

of dilutive XXXX? isn't total about what too opportunity business think that need does to on this so margins? need communications question my get we do the digit side, to remainder talked How to we do And do that? do year. think about in then you mid-single how And the the to we about in margins So there? And second be the the what revenue opportunity revenue

Earl C. Austin, Jr.

from lines strengthening. are really, Jamie, our standpoint, all the Yeah. business

goals Analyst is talked EBITDA $XX and standpoint, EBITDA billion So about an when of on margin that kind our billion $X We laid of line. kind stay from line, behind the billion to Day, we we getting we and billion was the $X closer top a we to the of know the at from We're got work out bottom still profile. those and $XX goals.

We're how It's telecom this business. side, we we're down some we've there. getting margins. also in have We're a out And much on pulls growing I these at offices, segment be strength underneath So we the growth some double-digits distribution talked talked in Electric we getting think look that getting about that. business about gas those in that, of we'll consolidating investments as that some made seeing of distribution. we our year; the

enhance every companies of So are strength move as need think think look to I forward. I but gives which a all portfolio us our at to businesses starting you as do those – we whole Quanta portfolio, great

storm in quarter get storm. one this it a impact seen we have and bit, this but segment a of a a where You've you little may division hit one get storm or

portfolio whole power growth labor, way company it's big a in we're for And of to providing earnings you trajectory on on XX,XXX you we're skilled we that the Jamie of allows think specialized and and sit growth solutions a or moving to there, that'll the that the companies company that put spot, years XX,XXX and but... plus I the running portfolio, over here we're out in Okay. Securities our it as L. term. But a it's segment little Not Credit versus segment that that the the the using LLC So or how the the get Cook put long have? forward. in five - three the the (USA) matter, that's Suisse doing

Earl C. Austin, Jr.

timeframe. guidance, come we've mean year's projects billion; opportunity the larger we $X Stronghold I billion. get LLC high and give to year. to is the We already Suisse I'm even I'd I it's L. to not Cook there the I at Securities set $X the this high out $XX billion. to at need can't to our execute need end, Credit We the get get the get obviously, a billion can Take $XX contingencies. at $XX mean, in through we billion to three it (USA) billion? some Well, - certainly see $X But to Jamie Okay. mean stretch, end saying in.

Earl C. Austin, Jr.

growth the to out the past in the is which base XX% on you control, we'll the take of that digits base projects, that can't the high-single XX% which in if large said the see We we on business. growth We've business. business, the

verbally that I Catcher to said you're So take projects Credit can't growth or whatever exactly you LNTP are be, going in tell get LLC L. fall. if Okay. where $X of the - or Wind That's Securities Suisse back queue. another I on from just may rate, large or billion (USA) at that an sitting it I'll Thank least. Cook Jamie helpful. very so you. you backlog,

Operator

you. Thank

Our Fisher comes question. from line the next question proceed of your Steven Please with UBS. with

Steven Fisher

trying lot the you to what to electric I'm go what's in morning. next months if the Catcher don't last transmission Wondering XX that book noticeable the a need over long XX kind of could a becomes have of the and before there. project get of you sense about really large segment can how project has mix Good just Thanks. the in it months? transmission talk you you large been of burn revenues of really Wind Electric it a type over before

Derrick A. Jensen

Power. we've Power for for XX% Electric with the in now been range business Steve, for at running quite some to probably – base Electric XX% time Yeah,

in this contribution anticipate business still base range, forward you continued XX% contributions awards XX% time early Duke's continuing projects The project in that to commentary, projects. that of really would to see from I yet that with kind to As can so transmission be year, we range range But to and have to we that's for that see to through, from have same mid-XXXX. something to of larger additional opportunities I XX% look it's in to XX% anticipate we call larger run would the it, going XXXX, total today overall. next

Steven Fisher

Great. plans you've what are year. not that or backlog? there. of I not, the what you amount mentioned for incurred small the it guidance And more but sure if mean, add this Okay. to future in how wondering full and see M&A costs you strategy just I embedded relative your to then, M&A did And acquisitions your is what much kind have so already,

Derrick A. Jensen

a two mean, $XX And Canada, Gas, which overall we go-forward call Oil Northwest a was power component the are think the basis, and at Remember across strategically (sic) I that on actually to and a do small was a then to opportunities opportunistic so. fairly Lineman from or backlog ways quarter there and one to explore smaller portfolio. are we Australia. overall first College company electric add Electric to for then around Power, M&A that – it of M&A relative that looking continue out is that We other yet the be million the nominal, to continue number backlog. was acquisitions, the to U.S., of one still looking there

Steven Fisher

you. Thank Okay.

Operator

Thank you.

Please from Our Chad with Dillard your question. with Deutsche proceed line of next question comes Bank. the

Chad Dillard

morning, guys. Good Hi.

Derrick A. Jensen

Good morning.

Earl C. Austin, Jr.

Good morning.

Chad Dillard

for and change it After fourth help through period, So but like steps $X.XX guidance that billion. for it the quarter, to XQ? guidance in me understand your now about Oil the down your billion time was implied XQ $X.X looks Gas

So that to understand what's reading just wanted driving correctly. is, if I'm that weakness

Derrick A. Jensen

Yeah, second the saying the quarter looking and I think beginning we're themselves. today, year here as guidance really We're that to that mobilizing as unchanged. remains really on project it of stands of our the forward the individual

low the had which originally the the was maybe associated work, looking the were was from but headwind the bit continuing of So we projects. here little expectations expectations first dilution say to as remain that a than at, through with that. just of quarter revenue The standpoint margin work that in offset storm same. and well I would the We our higher as revenue high

for second, a I – we So, beginning still And remaining year. quarter here from visibility unchanged are – effectively, today, lot to of as and dynamics confidence of narrowing we'll perspective, the think the better a we as range. when to us second expectations as we'll the as third our fourth the stand to the have quarter get well on

Chad Dillard

Got it.

I the definitely towards Okay. more my pipeline be the more of center as shifting open tracker, look Permian, which gravity is at And shop. to tends

capacity the backlog materializes as that? open actually remind LNG (XX:XX), your pipeline under think exiting And you you'll flat grow then in scale XXXX, for at more can construction that spreads or you least like shop will how it a us do large XXXX? XXXX in phase of phase a XXXX maybe have kind So, or more when be think revenue with opportunity, about be an you think you do many business? you do it a how even of you award like lastly, can Also, keep mainline

Derrick A. Jensen

Yeah.

So lot there, can you activity. union spreads, But we of that run both larger just those in a couple diameter and the Texas large we pipes Permian, again, activity non-union on can diameter our work. on do in non-union, do of with see a pipe non-union

are are as lumpy, So, We mainline. the you large yes, we there seeing that. The see opportunities in do the know. projects

So, into just will fill they lumpy look again, we It backhaul, be and a at how it. back it? can progress, go when we

know tell through So us those to how don't come certainly that maintain in. just you we can't RFQ, It There's RFI type the – come I that'll exactly level opportunity into XXXX. for when timeframes. projects

robustness seeing we're for and Appalachian. as come really kind the diameter about, for – talked work, this It midstream back And certainly and us it's hit not LNG takeaway So your what we've allows as exactly easy great in Texas. business of work and it it broad-based. when opportunities capacity and that also when the you will market, they'll business you But be difficult get Canada, comes to the It's And backlog. impacts discussions in. give midstream beyond. to with of XXXX even. customers export, big having our that's And the we're

mountains in pipe of the West talking You're through Virginia. XX-inch coming XX,

work for good that's So us.

come as we're you'll so to back And start well. that that pleased see

export. plays our sands. there out So liquids LNG for coming as of fill certainly oil shell are up the these pipes big well, The

And term. pretty excited that so long market we're about

Chad Dillard

Great. Thanks, guys.

Operator

you. Thank

of with Thompson your comes Our next the line Davis. Thalhimer question from question. Please Adam proceed with

Adam Robert Thalhimer

long you When's utilized time the last morning, Good spreads? guys. were Hey. Nice oil fully your with haul quarter. and gas

Earl C. Austin, Jr.

one that Yeah. in multitude we can you do different a projects I things. difficult we do becomes can mean, of I – year, think because two

But finite Rockies the our are. terrain, through by can this number depending that just capable where I of on work region, have we'll of U.S., not any in when we That at where to And in hey, Appalachian work our third point. that regions, the said, a mountainous certainly at, So don't you're means, or kind tough, capacity in at being rough Depending spreads on you think sure down at through booking capacity, of it's in even so. only the it's from when on difficult. the are the areas. ever we're mountain and certain be the believe I'm say, on on projects the there's project, turning standpoint, in we're quarter. spreads, work I the depends

Adam Robert Thalhimer

Okay. the and telecom an your comment just struck on as won, interesting And curious to as about cities for that if a see That prepared that backlog continuing to from Yeah. me the segment? then additional follow-up, wanted there's in ask remarks. side, city build I if you grabs you up

Earl C. Austin, Jr.

the it's sure labor could we work and more more customers said for quickly our standpoint, do. perform. that and so the curriculum new most an able as backlog. that double the the backlog, making It would deploy put as book in deliver. made that say craft we something starting could acquisition. organic daily, and for we and part, Yes We about rapidly. and is ability can us possible could and enough for can't labor quickly skilled skilled markets, field have does people there. and striving field value an like depends standpoint We them much get them yes. I were Northwest from opportunity and create to us, we concerned it our matter the growth book possible to as from how in I to that certainly really that organic I'm to our field those Lineman our do with we We telecom take and from we're guys, fairly think the And the expensively least on qualified, that get we're We how for craft more training is we (sic) performance acquisition. a and

how there. we going quickly do, deploy how opportunities the very are be cautious we're good. market's we So to and about The but certainly

Adam Robert Thalhimer

Good to hear. Thanks, guys.

Operator

you. Thank

from W. Please Our proceed Robert line Wittmann of your next with Baird. (sic) comes question. with question Andy

Andrew John Wittmann

Hey, guys. question. taking for Thanks my

it the it I quarter, the had think electric And but that any market with guys look tightening is for wasn't as seeing one and transmission through and kind is as here with on of in have market the market. good results I the just I XXXX? bookings. or in are other you forward? capacity And the to you has looks backdrop, in Duke, two competitors here strong like that you move do good terms that the the also on today you're had wondering, awards there you any taking it pricing just as was today really public implications that

Earl C. Austin, Jr.

utilization No. it The for us. a said our it'll amount and of how and we return bear certain it's market We've past, utilization in and over. over and well equipment, it's about can resources. there. said fully the about really utilize people, then I've The market's

of elongation, early they stages. these we're can't of (XX:XX) mean segments – I talk If to continue the the these we're in CapEx, the I at very XX cycles. grow. and in very OpEx you and all in about low exponentially the XX-year this spends all look being and about upward early least flat. cycle We growth that it's an regions very modernization. at grid We're most are replacement, without Electric negative matter the business doing for part stages for most

like on make our start load and but top to sit happy industrial provide you larger sense we there. of we any this, with continue we're and projects as transmission solutions see that things real these growth, customers to where to type of So creates layers that

team management enough from are job the a can't have standpoint. the and fantastic where in field guys sit. a Our I about doing we say performance we there

certainly is there outlook strong. long-term Our

Andrew John Wittmann

Great. Thank you.

Operator

you. Thank

Company. with & from comes question Rygiel Alex question. next Please proceed the of Our your with line FBR

Alex Rygiel

Thank Nice quarter, you. gentlemen.

Earl C. Austin, Jr.

Alex. you, Thank

Alex Rygiel

Derrick, big next so can or you from couple and today of margin to standpoint either how upside over frame the standpoint your that revenue the of relative think business of years. Canada peak business to is remind of a that we what us about what portion the past is maybe revenue can coming help a out is

Derrick A. Jensen

Yeah.

really the to fact stands, the as peak, acquire at to telecom probably because in whether and on runs Of years still and pretty look to I oil across about Gas. past hard through to XX% consistent Oil ago it same It is of of we continued presence answer acquisitions. in Canada it's XX% that's the running As range. or or necessarily you do Relative it. that, where over mix that's gas years Electric we the been of have ago, the Five that five mean we've much as Canada. companies an in didn't today lot

ago. years sure not provide I'm any are today than can So they five ultimate really I'd that. than other contributions I were say larger color

Going for that in continue forward, we And Power Canada what also see in Oil U.S. comparable Canada. growth opportunities Electric in to tell to and we opportunities project you see Gas. continue and large to both see I'd pipe we

to say So it's year and growth. in would you the a XX% part range. year I'd it the I comparable growing see after double-digit that maybe of with next might say U.S. that our business and

Earl C. Austin, Jr.

now have large dollar our (XX:XX) Canadian so. I in I you also it the past some the grows well. dollar the stays strengthens, think was I was on right in a in mean outlook. with I sits but we're so strengthen that. would too, there as certainly Canada that If that – a – market pipe it FX bit as that depressed large as U.S. the little our range, think would stronger, agree well

Alex Rygiel

I is process? then inflation, that And affecting you fuel can about is how that decision labor your and business and mean, bit got your broadly? materials secondly, talk a cost inflating; how your are obviously customers' inflation, margin little inflation you affecting

Derrick A. Jensen

– commodity all get that diameter projects. That's on side inflation, something rates It'll so side and kind I bouncy will things projects, the that. We're material And it these where wage like labor X%, like is closest Yeah, we we're larger to we I on don't move. certainly, mean, looking inflation like able the on of inflation. around keep account things things out. the in iron these bears. will the interest that Gas on take typically take taken watch Electric when That's what the you, X.X%, that. The forward market into

is So kind bit, We're but where the move fuel we're of We in seeing like only pretty we're thing at. shape. numbers not that'll any crazy a there. good

Alex Rygiel

And costs affected as some decision it higher; has it the obviously are of relates customers' their to going at all? process, it material

Derrick A. Jensen

tariff mean, of we year. struggling would that, around what everybody's I means, getting that steel this that – of means. that everybody's what everybody what have the No. announcement, not we've that says kind not – kind Certainly, seen kind and and on but of

general, the in it everybody regulation, tariff. tax in be or pretty adapting rebate is to stable and market's whether think I increases steel

as have we to coming long industry and it adapt. understand from a good out of regulatory understand As visibility what's aspect, the and it tends

Alex Rygiel

helpful. you. It's Thank

Earl C. Austin, Jr.

you. Thank

Operator

Thank you.

line Our Thielman Brent next proceed your question. with the question D.A. comes of Davidson. with from Please

Brent Edward Thielman

into million is $XX quick or Couple Good of we Did, wrap-up Would expense at morning. these think of to expect line questions. $XX year alleviate to that now Derrick, Thanks. previously the hold $XX next get sort million million. the to $XX of other million item, kind you I as levels?

Derrick A. Jensen

our I business said like. investments to past think strategic forward We've continue that's the that, of component the to other we of that and that a pursue, in we'll have types as go continue we investments.

or in right size whether that be of bit number have From to now, perspective, going expectation XXXX. that say. off into say So compared I'd – it to I'd I But it's it a that's be XXXX, XXXX think that level hard stands XXXX probably – that a as little there. a on I'd backing

Brent Edward Thielman

to got you you Okay. the you quite quarter work bit in up the But great storm business. could. And margins thought the Obviously, you versus positive lost? some margin work, net-net, Power on execute business quarter was in work of storm work. to that guess the benefit I me this on because questions. maybe a you of weren't wasn't clear little though It able the in lost some prior then following

Earl C. Austin, Jr.

Yes.

Derrick A. Jensen

storm the the it irons difficult positive But from some it's is way to standpoint of out And that's or because the definitely the not. whether to say, segment, margins. just it segment that more accretive

Earl C. Austin, Jr.

hard the find to exactly the for accretive we margins be just to contribution quarter. quantify what It's the do generally is. But to it

Derrick A. Jensen

are such. get hours guys of working the utilization utilization, more It's equipment, the to long out

Brent Edward Thielman

Great it. quarter. Got luck. Best Okay. of

Derrick A. Jensen

you. Thank

Operator

gentlemen, comments. floor to and turn to this time the back Ladies like closing I you. Thank at would for management

Earl C. Austin, Jr.

Yeah.

day First thank call. interest performing quarter I'd you. and like We to questions and Thank first call. our and work safely. the appreciate Services. certainly, future XXXX forward you, to them, thank in the in the for the ongoing Quanta thank work performing look guys in conference participating And we safely the your field. the in This everyone, They're every concludes

Operator

Thank you. Ladies and this concludes gentlemen, teleconference. today's

participation. You your for you may Thank lines this time. your at disconnect

Kip A. Rupp	Quanta Services, Inc.
Earl C. Austin, Jr.	Quanta Services, Inc.
Derrick A. Jensen	Quanta Services, Inc.
Noelle Christine Dilts	Stifel, Nicolaus & Co., Inc.
Alan Fleming	Citigroup Global Markets, Inc.
Tahira Afzal	KeyBanc Capital Markets, Inc.
Matt Duncan	Stephens, Inc.
Jamie L. Cook	Credit Suisse Securities (NYSE:USA) LLC
Steven Fisher	UBS Investment Research
Chad Dillard	Deutsche Bank Securities, Inc.
Adam Robert Thalhimer	Thompson Davis & Co., Inc.
Andrew John Wittmann	Robert W. Baird & Co., Inc.
Alex Rygiel	B. Riley FBR, Inc.
Brent Edward Thielman	D.A. Davidson & Co.

Quanta Services (PWR) 3 May 182018 Q1 Earnings call transcript