PWR - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Quanta Services Second Quarter 2019 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, VP, Investor Relations.

Kip Rupp

Thank you, and welcome, everyone, to the Quanta Services Second Quarter 2019 Earnings Conference Call. quantaservices.com, a be announcing & and found of website issued results, second Media commentary we summary our can a discuss which in at that morning, we press XXXX this our release quarter section of will This our with morning. outlook along the Investors any August time-sensitive that therefore, of you're and information call of information Please accurate XXXX, no replay on remember be speaks only that any call. X, this reported as may longer of today, this advised as

This include or that safe assumptions Act intentions, statements will not do facts. Securities by forward-looking call all qualify statements to expectations, performance Reform under harbor the or solely relate intended beliefs the of Litigation current established include Quanta's to XXXX. about These from historical future liability reflecting or Private events

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

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

place matter the undertake or not oral regarding made call. reliance any should statements statements party undue and disclaims this not statements, subject written any You any obligation on such Quanta does forward-looking and to update of by third

cash of measures in present directly in today's call, financial earnings EPS, are Please most and backlog, diluted certain comparable and measures flow. release. these our measures that financial including also historical Reconciliations note included their GAAP we free forecasted to will adjusted non-GAAP EBITDA

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

our website. others IR on media Quanta on investors and interested company our encourage social also channels Quanta Services and listed We in to follow

I Mr. that, call President would over to Duke? With turn to Quanta's the Austin, CEO. Duke now like and

Earl Austin

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

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

Following morning, welcome quarter our revenues, consolidated your questions. segment we Derrick's reported Power highest record revenue. comments, well we quarterly This as Electric second ever as

backlog XXXX. continues morning. level growth that to at the in $XX by backlog of primarily quarter record XX% billion opportunity our well and X.X backlog for year spending. Our end and to our expectations we bodes than the of time billion achieve first to noteworthy the is only more of driven we incremental $XX.X reported years, record for for have the And multiyear we in It grown this this programmatic be growth,

quantifying the significant to backlog for We our not pipeline believe and see difficulty over backlog transmission specifics coming new and electric are from programs the the multiyear, there of opportunity projects. current scope reflected we to timing. fire is hardening coming larger multibillion-dollar that due in quarters add XXXX and XXXX of several Also,

subsidiary that our them fiber-optic in certain strategic agency last our conference commentary, quarter. second in subsequent earnings awarded discussed touch for conference concession provide and that in took my investor under had government an I networks and we dispute we regarding Before the constructing projects to I charge Peruvian the the previously been at with On operational call on arrangement. Peru wanted webcasts, Quanta the

the wrongfully totaling alleged to agency and liquidated of the $XXX press million called our we release entitled believe payment that discussed Peruvian project the for the As that this performance and damages. morning, contracts were is terminated, amount were governmental in wrongfully not bonds

the with build bonds, will proceeds and government agency Quanta's paid possess had contracts which incurred after by government, occur received year-end, in the by the power of the and the That has is the actions date construction approximately for before believe the projects agency Quanta million provided the returning the Peruvian of and $XXX unfair of their money more the an of fiber million abuse contracts. that We As subsidiary to Peruvian termination the required payments. of $XXX cost of unjust expected project and under the and enrichment. as-completed project as have it to that to had them calling represents approximately treatment customer, contract from means prior bond the that and the

filed to work related to completed and vigorously Peruvian future for intends the for has subsidiary maintenance assets. income and to these well matters, as as payment for and lost claims arbitration Our relating operation pursue of its claims

Quanta's markets and in performing well primary opportunities. are strong, multiyear end growth operations have

strong activity from relevant markets we be opportunities on While we based opportunities our our for opportunities quarter incident in also Furthermore, To operations. markets originally our existing we select American entered profile. had evaluating favorable strategy North core Latin offerings. risk/reward and attractive with margins to [indiscernible] that and our other continued service in those to which another attractive Latin an margin must in robust our for American customers, end, are Quanta this improvements primary year-over-year support American distracts all base business

Turning broader our results. to operating

both during well half Our this revenue the the of perspectives. performed year from have margin Electric operations and Power first

customers. business to year, primarily operations maintaining driven We expect this our programs increase the while OpEx electric the double-digit base of growing broad CapEx our half margins, and through during supporting also by second strength revenues utility of

last weather events has hardening initiatives. Several large, storm the States multibillion-dollar devastating and X years hurricanes severe over multiyear spared in United the and other

significant is required. decade than However, additional there more investment of a

signed into that the plans for and legislation hardening steel Florida concrete to utilities will example, in recently State XX-year undergrounding For more of create requires call that structures.

investment invest to billion XX hardening. projects between billion years. expects over distribution billion in In this billion $XX.X and one of $X and said utility undergrounding to billion customers capital $X includes XXXX, transmission which opportunity the represents result, next he $XX.X billion near that that through incremental the XX for to term, laterals to of a has $XX believes As our distribution the a $XX storm

storm hardening proxy, States investment. hardening more for initiatives the just beginning. could or United tens are remained of in fire X Using the decades require believe a of active of and we Western the It as dollars billions initiatives

strategic in state. this which Utility Earlier fire utilities of XXXX in Commission California wildfire $X Public file billion California detailed wildfires preventing reducing near safety the risk the year, term, their the X major aimed incremental required at the future plans, to investments approximately and

large the early stages. utilities end are programs in multiyear working currently are that to still hardening with We multiple fire believe and these

industrial transmission of We load and electric projects areas, imminent. of States, are seeing areas due these being centers, the larger to the data United also as such planned Permian production LNG of is certain We larger export, projects growth by some believe Basin. award hydrocarbon facilities driven the in

construction begin the this to Line Project expect project, and medium-sized we in secured Additionally, Canada on year. Tie later have recently transmission East-West both electric

continue Our show to XXXX. improvements U.S. over communication operations

the adjusted telecom fiber and elimination million associated have primarily We of our engineering XXXX year and Peruvian projects. expectation full the $XXX slightly some delays with permitting revenues revenue to to domestic million, from on canceled due $XXX project around

we a operating However, as this upper to exit mid-single-digit year. achieve with on of margins still margins the year the income single year, full basis we as expect charge, digit

fiber XG being closer Our backhaul densification customers in fiber to for initiatives deployed fiber and expansion are broadband customer, continues, their are rural additional ongoing. is wireless markets pushing network

resources. on increasingly We is as deployed utility and also XG continue Quanta require both is lining companies solutions believe to to infrastructure system, to will distribution provide the positioned uniquely which wireless electric carriers significant electric

a role in technologies plays of the carbon the lower and future. the critical Quanta footprint economy, facilitating

adoption. new lines and power. and lower transmission, economy greater substations of the to power for grid be accommodate generation and The requires Our shift modified to continues be tie levels move emissions intermittent existing must greater through to upgraded towards renewables built

services, Implementation is autonomous needs. adoption as XG, technologies designed all require meet infrastructure, not to and new of widespread of and in grid power electric vehicles, today new power and the and those vehicles such

infrastructure active support to We discussions can them that are these key helping them execute Quanta and strategies. to required technologies arenas, is help go-to-market these in in their how understand players the with

play of not understood our technologies well the We will continue increasingly economy to the believe of stakeholders. role future. is and It in many by the Quanta of

pipeline more and industrial revenue year XX% of half the first compared more the has in income segment first than Our this last to increased operating year. than and of double as the half

move Demand for modernization into the and expect and is stronger As growing services on year, customers as those we system safety half execute continued momentum. the initiatives. utility business of base we multi-decade profitability seasonally growth second

that distribution We opportunities. opportunity and and operations growth States and to margin our Northeastern United expand other scale in also gas accretive markets further provide attractive see select the

operations projects active pipeline are larger midstream that are well. and performing our Additionally, on several transmission construction pipeline in

and to opportunities We believe expand repeatable We sustainable higher evaluate industrial margins, continue gain operations our a with stream. result and as and scale and strategically diversity. pipeline segment will a cyclicality to earnings be less the we

is topic environment. our frequent business recessionary A we investment late in conversation how community of perform the a of think might with

could expansion want hypothetical, profile. about cannot decline of the customers slowing nor in of are and we of our predict current softness not concerned margin said, characteristics recession a any are that normal, duration recession. the we Given business, base our seeing or duration, any GDP are while still stress cycle, the down revenues, grow our business largely recession indicating current of they us our that we believe I in to magnitude while economic That to a future we moderate that or economic maintaining

inherent strategy Over through including economic risk our to the in we have years, on executed our diversification. mitigate risk business,

believe diverse of We recession. a dynamics expanding made customer largely mitigate low and diversification presence investments we concentration, have services. and and diverse the customer strategy a and impact base of strategic with have geographic diverse a a industry to We line broad favorable our

be of are been utility are have by to and have the Overall, dynamics visible resilient in markets spending. than that forward. XX% customers Utilities we approved our regulated necessary are and multiyear majority believe More move driven by should derived economic regulators driven that our are of by longer-term, that softness. from programs revenues to investment revenues

It flat our project significantly Electric in XXXX late This growing revenues grown and of business revenue Power at growth which rate. operations. with activity at have faster occurred worth affected larger CAGR Canadian with collapse is the base reduced XXXX, that a in oil revenues prices environment noting segment our demand, electricity adversely and an X% since XXXX, a

collapse segment period, consistently and pipeline of increased despite challenges energy economy. which in we Our the that an base operations. XXXX industry-driven oil have is industrial through late significantly in increased our prices revenues business XXXX Canada, and Since

at our than larger time. utility-driven For now that example, gas are distribution meaningfully operations

for events many long-term end about we prosperity build The many talked that the delivery driven economic and secular the a are of during concerns. businesses our and for to infrastructure the impact are have necessary Our our support we that years. required markets to investor is positioning the we us safe services put of in that in calls position industries geographies earnings maintain mitigate We critical by dynamics believe and social reliable of operate. a these people, in dynamics and in potentially the market economic and

increasing Our a are half. time full our we first half of reflect the strengthening results expectation second for revenue year have year this outlook been and to solid, second our

we upcycle, for backlog Our are and in end record to markets a continue multiyear and continued we're believe XXXX. strong, in opportunity with visibility

how and will business. generating stream, on more with predictable of continue strategy our and aspects We a operations our model of our core focused resilient are evaluate fit earnings to our and

CapEx customers continue levels. to to grow and plans Our historic OpEx

least We X of that there the dynamics larger duration I conversations in is and and is longer and the years we having strongly built XX are in that sign believe near programs next industry a for about we at to see Quanta are than with have slowing in customers what down for. ever is opportunities exactly no experienced, size term. the

to and double-digit approximately base base of business years. at can to We next believe revenues year double our grow XXXX grow continue CAGR to revenues, to X a over and expect X XX% the for business we our digits mid-single-digit account this

awarded $X more of coming transmission be see estimate, is each than the projects, pipeline and over investment billion electric to could and expect which a quarters. continue conservative We larger some

improved term, multiyear There prospects our growth for are expect services medium the infrastructure programs robust with we also operations from and near new over communications and profitability. alliance

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

that and to operating pursue long-term our and the model continue will in enhance We base business allow provide stakeholders. entrepreneurial to Quanta's to and diversity, unique for We will our solutions leadership believe the us Quanta's opportunities generate form position mindset foundation industry customers. value all innovative to

our call his over turn results. With review will for Jensen, Derrick? our CFO, quarter now I of to Derrick that, the second

Derrick Jensen

XXXX increase Today, Thanks, of everyone. second of announced Duke, revenues good over billion, and morning, quarter quarter the $X.XX second we record XXXX. a X%

income second common share. diluted the of share, per stock $X.XX to was earnings For quarter was per or attributable a non-GAAP XXXX, measure, net Adjusted million $XX.X $X.XX. diluted

during disclosed recognized the of the through damages a project, and the of GAAP, today's we alleged date turnover a a impacted previously in the to portion per estimated million of incurred The $X.XX unpaid which $XX.X project and liquidated project the contract portion accrual out costs reserve against adjusted close recognized and costs and As complete termination project. both earnings EPS on earnings a release, EPS reduction charge includes a charge of quarter, diluted share. by for

were advance intended without bond exercised had net in the for agency used to As the have intended as $XX of during their to be the now on their project, of approximately an Included were previous the substantially it been of believes million, The in wrongfully which purpose. agency evidence second which project entitled project. its strongly the Peruvian receivable position asset. payments used Quanta provide to expenditures of Quanta bonds believe payment exercised called. to were believe The the receivable a Therefore, quarter Peruvian purpose. advance their for amount affording a subsidiary full of June if Peruvian our posted opportunity the entire we to advance through only The classified payment reimbursement. expenditures we in the is been determined on the million incurred bonds are we not has we paid had and payments, XX, $XXX this nonrecurring XXXX, the were advanced exercise excess

had our contracts GAAP including the our termination positions. called of by inherent a never it the certain aggressiveness the a that and bond has arbitration Quanta of of is customer, influenced the risks international associated their tactics, of assessments financial and

We are and around for disappointed unfolded arbitration. with the have project filed way the events have

important in additional don't negligible also of associated beyond. future It we anticipate XXXX is cost to remainder or reduction expectations. Peruvian the has that operations impact a However, meaningful with any future work our note for this the on

a of broader our discussion to Turning results.

from hardening, the projects the to million $XX second XXXX. from from base increase infrastructure reduced represent their XXXX strength XXXX activity revenues second increase revenues $X.XX our quarterly quarter This increased for revenues customers to to driven compared the Also Power were of to in contributing in Our to elevated the grid when approximately particularly Electric the by XX% Western be $XXX as revenues quarter business continues The of in segment. the larger compared quarter second in offset the of of when million modernization expand and levels billion, and investment businesses. record acquired the business base U.S. utility approximately

were telecommunication the telecommunications revenue part $XX.X approximately that impacted million as was Peruvian $XX recognized negatively the associated the revenues reserved charge in quarter. Our by against with within for the previously million project of segment

impact $XX reversal, the our telecommunications quarter, grew that operations of trend. fifth revenue revenues U.S. the for Excluding consecutive the driving with million

the impacted charge Operating margins Included second the was associated in segment Electric versus which the by XXXX. X.X% in X.X% second of Peruvian margin is XXX quarter basis the of the project, quarter segment in segment in XXXX with points. negatively Power margins

over which during XQ included in in execution second the helped loss to transmission the operations, project. our segment, transition telecommunications in to from slight for Fort Electric crews XX%, our equipment in our larger softness McMurray was XQ Canada charge, Power during absorption, project. had Power across and Margins of were and $XX.X the improvement cost within Electric margin Excluding anticipated a the 'XX. the nominal, the 'XX from offset a bore to quarter Electric telecommunications Fort operations which during however, off McMurray quarter business in resulting the the operations lower million Power base seasonality the of solid activities margins Canadian impact attributable included margins segment, the project approximately We contribution The revenues fixed the are normal second substantial improvement quarter. the due resulting

charge, digits, that U.S. excluding operations. telecom near by led performance were margins However, our mid-single in

definitive the as relates note, June may to it PowerLine closing the of current result at agreements or the expected been to XX Alberta fourth satisfaction million XXXX receipt gross customary in project, our of that of company, close Quanta regulatory Of XXXX, an of sale sell McMurray reached and and in to you in approvals is partner, to subject roughly Limited, the Canadian ATCO first that Fort should announced transmission have to partnership. of proceeds The quarter quarter seen exchange limited XXXX, Utilities conditions have rates. USD other

revenues barge Our segment base earnings impairment pipeline revenues on a projects. of associated projects. 'XX, which is restructuring X.X% improved related $X.X the to larger XQ to impact 'XX, over to primarily 'XX costs. to business driven X.X% basis is Operating larger billion. an charges included margin increased point industrial increase and increase XQ XXXX agreement a the quarter operations The with severance execution well margin XX from over the and attributable of was increased as second pipeline slightly when across and our as construction pipeline by margin and This X% segment compared the combined in higher XQ in industrial for

June of the maximum XX, to damages delays contractual with in continued was amounts $XX.X overcame A processing completion, to of loss loss complete additional approximately that substantial now amount. continued a on been which million these XXXX. quarter second rework delays incremental in startup facility the have and as liquidated a associated The accrued strength XX% due component results of this increased was

known We are and of we this all in project, the believe accrued stages final have losses.

$XX.X and value second the in in due increase million as increased second changes quarter million liabilities, associated quarter XQ with contributing and of $X.X the recognized XXXX increased $X.X expense. costs the XQ to 'XX. to non-allocated and of estimates fair amortization was increased fees Corporate with to primarily a the consideration in decrease legal million in were Also contingent these compared intangible XXXX. This of compared 'XX increase professional

the the was includes second to measure, EBITDA, related Overall, in of non-GAAP compares million project. This Peruvian negative which to $XXX million, XQ million 'XX charge adjusted $XX.X the impact a of XXXX. quarter $XXX the

as XXXX, For $XXX of million $XXX the with of of connection used the flow the cash were the flow contributing individual ongoing business quarter was second in base extended costs $XX collection Quanta negative bonds and certain of Also we flow million. operating cash and expenditures net Cash had the exercise as with against mobilization well activities was project. continued largest projects free Peruvian million customers. was in The tuning on million. capital negative in certain driver $XXX utility cycles

last collection to ultimate proceeding. negative of of $XXX items to asset billing any the and has and customers positions translate balances. changes and process services to discussed by not pre-petition for these call, approximately were slow receivables other by increased material not performed. dynamics risk for a on these contract isolated to certain is we been cash a and This of balance time that billing invoice collection periodic bankruptcy million, the As on partially the impacted to while quarter's our our sheet, have customer, offset impacted our flow we single These pay PG&E's dynamics collection ability related are collect aware extended

days DSO XX the same XX for for the in was compared to period quarter XXXX. days

from ratio reclassification some X this balances the attributable to to first by described, significant items Fort previously extent for during to XXXX is days the of McMurray of the Although of the receivables long-term impacted current retainage quarter project.

is in previous days this continue retainage to year-end. in the Also, completed the of collection larger X impact to We of by projects due ratio to expect balance periods. of various largely pipeline X

approximately $XXX We $XXX quarter did million June XX, stock during authorization our stock the repurchase common remaining XXXX, at million not and of purchase on available program XXXX. our had of of any second

of cash Additionally, dividend $X.X announced during quarter million. share, $X.XX third second the totaling quarter we XXXX, our per of

we which X.XXx. secured XXXX, a in $XXX At as resulted million ratio, June liquidity, credit under debt-to-EBITDA total XX, senior approximately agreement, calculated had our of in

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

billion, quarter of aggregate backlog of with backlog second billion, XX-month in XX% Our of line X% total December second XXXX. XXXX. and over June XX, $XX.X was X% over as the an $X.X XXXX up was XX, XXXX and XXXX, of the year-end quarter increase from

demand our to Our expand investment on and growing we for our as business activities. infrastructure total capitalize the the end across continues backlog base markets, activity specifically, longer-term

Turning to guidance.

in improved range higher strength regard to continued expect are billion. $X.X $XX.X slightly revenues between than quarter and of remainder range increasing revenues base year, to due With the the the now quarter be $X.X the segment, to we revenue seasonality. Power billion, business normal into our revenues our with $XX.X visibility Given the consolidated and fourth billion between to Electric and third we billion

by from the annual roughly aggregate an margins ranging basis, impacting effect we XXX to the operating operating margins annual electric Peruvian points. X.X% basis million $XX.X On project with of X.X%, segment see

margins projects Canada certain timing impacted that the to of to with second margins relates larger third to it quarter. operating As is operations, associated commencement our the somewhat quarter continue electric anticipated the in of

in However, Canadian move quarter, fourth the transmission particularly large operations expect construction. profitability improve as opportunities will we to

the maintain this operations for expect with overall quarter. second of in We the year will line levels at rest electric double-digit margins

of quarter we with way telecommunications telecom continue with see single the our hit We range operations, upper X.X% operations We segment revenues year see between margins between by and the expect achieve to $X.X $X.X billion. leading the to digits a for industrial now to U.S. potential XXXX, our by X%. operating opportunity XX% Regarding fourth to full and and billion year-end. margins pipeline

by from of revenue the year-to-date approximately facility, of to our the processing impacted of recognized midpoint end top the XX points on lowered for the losses $XX margin range. pressure margins range year have which the basis our approximately million due at We

margin operating execute confidence Our ability our to range continued otherwise base work. business on in reflects

We to the the decline in seasonal the of quarter with year expect third quarter. fourth segment strongest the margins be for the

expectations and estimates While earnings our within we expect to impact increased share deliver quarter year the per guided the negative incremental of share range results to ranges $X.XX and $X.XX the $XXX expectations million for now revenue earnings to range per share share, million. full earnings our and $X.XX our to between adjusted profits margin charge EBITDA, and segment second between in in adjusted per including between now per $X.XX, $X.XX. range Similarly, our expectations charge, $XXX the

the From the year $XXX to working million. project, original the to unexpected outflow capital perspective, flow the this associated by as guidance almost increase overall revenue as in together the year, and at support for our the compared of impacted with associated flow a cash our our have growth, expectations cash beginning expectation million $XXX well cash Peruvian

by project weather in year, second impacted collection events. our balances would that on wet collected several end retainage ability year-end, into collect have of Additionally, delays quarter pipeline to significant cleanup become if the the XXXX question which by activities the not certain called

and and $XXX delays, these cash previously As now items million between some a million. $XXX we level described result expect the of of free billing flow

we dynamics, expense increasing flow million cash these Given between $XX and to our $XX range forecasted interest million. are

predictable primary to being profile, generation business pressure our growth. the a create flow as beyond base Looking revenue support and flow cash stronger with to free activities recurring attributable continue we working XXXX, earnings expect capital cash more to

and project, for our craft revenue demand results second to our reinforce our negatively we services. performance were impacted workforce While by of guidance skilled continues the the believe increased quality Peruvian broader quarter ongoing annual our telecommunications labor the and

continue prospects be growth our core to and and of our our the of operations, sustainable nature We in strength the markets. repeatable confident for profitable

now presentation, line the formal for Operator? Q&A. our and concludes This we'll open

Operator

Instructions]. [Operator

Citi. comes first Our of question Kaplowitz from Andrew

Andrew Kaplowitz

customer hardening may give can investors to you you would look mentioned color your that have work but makes California, spend in some fire some long-term it which hardening, hardening? we that is us peak sense. higher on like be spend about looks The this relatively example Duke, year fire of the and I potential in storm hardening with fire concern how the know storm at When think more PG&E's new in term. Florida,

what So kind to initiatives hardening leading visibility to have fire of growth? do you multiyear

Earl Austin

Yes.

support look you it for across that. of stages and world that hurricanes, in for think when look on And when the fire-prone is And you certainly California, and when that. to of done harden to on and hardening kind build this on you of it's for utilities grid look East the Western in the some not I the the that that. are you Coast coupled modernization North grid. wherever a in areas, life. lot programs enhance that's could seen of very, back U.S., we've things I take loss public seeing there's to and will long and what And older it's see creating we're behind and at say the you've think get matter systems, this coastlines only to the those together regulator People what a and left America This of the and that's the as early very the doing you're at, as a a stages that's early believe case systems -- And modern, willing are systems. we've time I so robust legroom that's pay well time. the more storm typically going on more been bit back

that Western certainly multiyear we're America. they're stages in early part think in the I of the spends

Andrew Kaplowitz

time our you closer Did little projects both projects for somewhat where by maybe about project Electric a large book, Power just it something infrastructure. billion can months and a Duke, a and getting of related Or of But used more has you the question, sounded few visibility large the but talked continually passed to last in you're pipeline word $X more there's about customers? power urgency over larger confident you've change and bit electric bit so imminent. is to work?

Earl Austin

load. that fact to the XX, standpoint, I have than we're said it's LNG it's that every say more out load, at project quarter. we they than $X we if today robust. are moved. still to of call, give out calculate centers, think and It data there. them supporting, we for big larger larger your there like you just we that the All we'd trying guess, I projects, I is pipeline substations' industrial so They're our that billion point sense these the big all hasn't quarter, look centers When more last we take growing. your said takes to did your all on see a exports,

Your we about, Permian that's load. talked Basin,

seeing now projects larger the so you've or play or longer, we've more you're years X it So negative than past. come we've no in over load growth. even the load done What or done with into X growth seen even those past

to to start transmission. now start see larger growth and come larger these see So you as you play, transmission and the load need complexes for into

do and see next I have few we'll today, more some we in larger in the believe than awarded we think, the yes, quarters. So past, see transmission certainly electric I projects

Operator

from the line Noelle Our of next Dilts of question comes Stifle.

Noelle Dilts

the types project these are of processing like projects trying Peruvian these challenges that project. to some certain and So efforts course issues? sort the the those mentioned things just you Do of to you've strengthen view just as during and kind had of Or of looking oversight kind of avoid of you occurred on in the making the at business? you normal

Earl Austin

longer was of lower Noelle, general, Yes. but the facility the here one. over I Texas, ago, first what that. than X would that's those say processing even -- years both started In in than is projects bid were a project

about would and about repeatable, sustainable strat our we said the business So it said are in and streams our it around about think that we get when you what earnings you more plans, think more we strategies predictable. and

done as that, a we So XX X. legacies. -- we've went talk those and we'd are we we've after done Everything two about go we had we said -- strategy,

it's that these you're we've repeatable, be backlog on that future as the done company. on all up. going continued around We'll a that can and that's the forward, unless finished sustainable backlog We to what And look around is path strategy. at see strategy. more forward. in the projects you we'll But going what's what That's

Noelle Dilts

thinking second, helpful. look Stronghold and you're as and the this turnaround seeing next? the year of maintenance in back That's could into what half Okay. you and comment into just you you're on then quarter And how about work with

Earl Austin

Yes, beat market. a expectations great that in of ourselves job to records Stronghold's positioning proud the and or industrial done expectations meet We're business. It their selves. really for continues set

management It there. about industrial it's in and and us Gulf excited we're positions very done the Coast, happy the for So what very, the we're with team us. well business

Operator

question next Tahira KeyBanc Capital. of comes from Our Afzal

Tahira Afzal

math mean, Just wrong assume that in to the business and confidence of growth do prepared really projects base do your margins if hope And they on above $X that. some your commentary, expand, when year, your I around bounce and by back thinking am earnings top I going next of I about adjusted hopefully which I back thinking mid-single-digit XXXX? and laying I'm power nicely

Earl Austin

do board Derrick myself utility get But the say our our let the supporting continue to CapEx spends customers. across is and math. nice growth I'll see that business for creating Tahira, are But I Yes. to look, base continues we a bigger. would OpEx

Our extremely robust. is telecom business

As robust. we business, it's business, our gas industrial distribution at our look

We digits single can So to we we to expand side. that the that it double-digit higher up margin time. We some there grow on in on segments. allows in a markets of about talked we electric about gas end the as everything within company, operate on that the the to us over talked believe think on forward. even our the we'll bring mid-singles, some the will We see continue profile move areas

strive we base XX% year So projects this larger we'll of believe next business, do some to believe tack on that. as year. is possible. continue we into We'll to that's move do we the

So the there. opportunities are

would We continue the I the equate let I'll roll out. it to drive base. Derrick EPS,

Derrick Jensen

that anything the Duke mass to I aspects numbers And those, you translate into what It's of which I mean, in our Yes, business, the add. based don't that referenced. upon all would kind laid core have happens out. of

Tahira Afzal

what year opportunity future, flow an don't if guidance for for you've the But buy this based I revision this out the proactively? laid be And is I I constraints should thinking free to just to you, you. hear Derrick. stock on know out your cash

Derrick Jensen

position et capital. buybacks comment to you are of deployment don't all kind I'll is for And of in the far acquisitions do from well individual first as with liquidity cetera, in a times, the the as opportunities lot the the as capital the stocks. we of #X as how to perspective, that be near-term tell lean our As company. has mindful of relative of the we to of focused and what we we'll thing market working investments, on into what

some So demands. movements working capital kind had of we have in

of buyer see so moved sure ultimately focused stock And of can been on within we it. profiles of all an boundaries. making at into delevered have Having for which years and active be the said see our number can our we'll a that, you stays very we've you levels that

Operator

from UBS. comes Our Steven next of question Fisher

Steven Fisher

wanted Peru. start Just off on to

you of just the could of you the really ring-fenced some sure the and earnings be? the make could of walked for flow what charge kind to worst kind If case -- the just us Derrick I frame maybe know we've through impact numbers, scenario what's cash but here

Derrick Jensen

recurring everything go-forward a contract. The expectations this relative associated we have is to on is, contract on was terminated. go aspect the with don't basis, as is, and forward our of in effectively a the operations nothing anything Well, contract

upside that, strong. go We that because are with largest our putting the recovery. believe a say of that we left of backlog have towards degree we that of believe I much believe, think, the puts to we to level position taken million no various lead the recovery. associated there $XXX a a expectations. cases do charge component be think revenue do position the which as that position a We to that and bonds receivable we I of about we us basis, into will contract. On likely very is most on in as do arbitration, will forward a mean, have remarks, The is We have think that of year-to-date we'll I my we our commented positions no were scenario we that pulled wrongfully.

Earl Austin

well on when defend the Peru, it, we face as of at vigorously. comment that will you that. that to on want look I And

everything will effort do We And as rightfully and the collecting extreme the as wrongfully we We're them what's go fiber-optic our collecting just a it, people of putting that's we face Peru in paid basically it. owed on terminated. of have it money, believe we've built network most after far to the behind to that for that can. us. We

sense the it, doesn't make just it of doesn't and a we'll it it on face language, vigorously. contractual from sense So make defend

Steven Fisher

my question you achieve be telecom, still $XXX happen there follow-up just the press you the is release? digit to have side for million the in the margin denoted of One exiting single there is really follow-up telecom has asking upper then year? that on the they than in that anything you business. real you worse that could for to is What And

Earl Austin

what expensed, into And side litigation. we're Peru the believe the is us we the right Yes. believe that will on on side first. is as be the that problem we the contracts we on of accrued, and number, wrong sun. it. for go ask we the other we've it, Peru of can anything or they're we've The of right side believe, under

confident in what into continue level, spot. margin also per in into many double The right unseen more What's it XG today bases. adding far and distribution XXX of opportunities and of the scale, is every feel XG, our would you we'll the digits, arena. half in positioned backlog, to is need have areas, that the this why while scaling have year, unseen I increase is more customers, XG. in we're component as incremental place the of we As we get telecom customer as density, go telecom need feet on Quanta to second add extremely to we get to

And single feet an out antenna, so there, pull apart, line. needs every it needs XXX an electric

positioned data in Edge, order whatever autonomous to heavy all you do of hear it order it's that, so a technology And convergence the fiber vehicles, that and get about in may cloud, be, middle to centers, antennas. XG enough that. it well we And opportunity right of for can't believe opportunity in the our I we're the that in your sit of We future. there and how say

Operator

Chad of Our Bank. Dillard Deutsche next question from comes

Chad Dillard

any will I from capital end you you the subside like in cash? from Or to incremental situation and maybe will cash So there you the about that position the talk other loss-making And that's that the could are operating the could was burn peak about working Is when hoping get cash the of Peru you burn that mobilization year. the out in project bridge PG&E? and thinking outflow back additional need contemplate? any how flow the

Earl Austin

Yes.

bit pace. at a to And more I have people about little be here. the rapid business cash good it's talk bit forward a to back and base think as cash -- just long it's as XX,XXX First, we us thing outflow. as move we quite in employees, this want for to When that's a coming it, we adding out about up a going

long in. you'll pulled back business it growth outflow. as in do that up DSOs customers at, have growing some up, to some come as stays growth. are cash has we're business, at grow And in So they're but you're the as will rates the think the us it quarter, cash to We when get continue going fairly that more business this rates the do base we consistent to at grow it due we and have catching aberrations with base look today, and on our base up base out I flat. business

interface us, they're they're us it's us And difficult get into so the on but the customer, time, to between paying more behind us. been for invoices

up. catching And catching so we're up, they're

to on on Derrick And I'll you'll the up, the see DSOs a going level. normalized catch believe they I more base our let rest. As comment business

Derrick Jensen

I Yes. commentary. agree with Duke's

Lake days of I alone about would collection probably it reduction. As we the Wolf a is relates -- here. running will XX that, are to you the tell year X-day

cash typically thing cash of have the the is of I XXXX. first the year. timing that's we for the for work outflows the that think of in I enclosed think in portion back still the half year, the that same us

the we greater and think and revenues amount the third typically of again in the into model the flow of to mimic Part level fourth positive have cash leads typical based kind that's a quarter our in fourth of it lower I ability that seasonality turn free a have quarter, in that. of with have quarter, cash. is we the to a

we'll as I DSOs. degree As Duke's of commentary, think a to see well as do reduced

Duke's to as customers. think to generally by into commentary will, our down of I the of that quarter, end consistent that's see go the I you with XXs and of then in we associated was normalized think low cycles what collections the that type the the level. kind billing the lead And DSOs that into I point, getting down could what of year think, getting kind first through,

Chad Dillard

business just a switching over to stay give you Lat And That's then color on mentioned lastly, table the the you little release, right And or of it whether Is approach Is about was time the sale? how framework is there potential in helpful. a decision? And that that business. to you're that. now? then that Am. hoping wind-down, hardly the I could just In bit to big evaluating

Earl Austin

Yes.

would standpoint, are is business a company risk, said our strategy. more believe So geopolitical the strategies macro are strategy on as question, say standpoint, has less the risk. Am, to continues both all be on the What repeatable, in is to If and table. derisking focused Am your certainly we is Lat Lat sustainable, from I to those a answer creating

look project So we class felt certainly customers risk went about maintenance countries from over of growing we something have good derisk really in to derisk you those type those was $XXX world. project. geopolitical to we're risks and middle change to When we'll felt support different, parts a had business where of It that to the those our that, time. American at We this that even mitigated at. lot that America North We when those in on Latin we XX-year, million like in a look builds their a countries.

stated certainly that. we've So to strategy our we're sticking and

Derrick Jensen

basis, rate at this in would million probably range run say the is $XXX stage. Am a On I that Lat

Operator

Davidson. from D.A. question comes Our of next Thielman Brent

Brent Thielman

wondering in to PG&E, given some terms Duke, the allowing who if guess, that's them? work I current more their selective are they're position with capture on just with initiatives, in share of I'm being more just Chapter hardening the particular, and in you with, fire actually they XX? working

Earl Austin

for Yes. top been we've area, customer supported know for PG&E while. We each our a in many electric people It's probably And long a a many, contractor other the we've the line know times. I we mean, there. time.

is The out them at collaborate nature. customer. great The the it's the more structure help the when projects. that engineering, So fire at doing you where for right to hardening that -- -- stuff. more basically western create get more and right really we to whole them, company able hemisphere cost one rate much there. customer. of it's But we're globally, matter, environment, really as has we're things distribution And looking doing construction a they more programmatic create can't, just so a than as look programmatic a We engineerings when we ramp payers for well. We're at with can't fast, lot as utility, look that

into Quanta everywhere to that for And we've macro for of right us over environment We've so built in they're big for are we've in Labor there never we've it of as of of. what we seen middle call, out collaborate a on Quanta the of $XXX tight. kind markets the lot today the for it of us that million for. It move had builds the that really well and on as lot as the West, take it again, said these was and can we'll It's resources, us advantage say invested And these down sense of the matter. that well a type sit training. bodes and makes environments. in middle right type

Brent Thielman

and like looks from guess, mean, what the schedules regulatory are it work environment seeing maybe now? appreciate some on an customers is my to the accelerate I there's And any election I there. questions Okay. into to you getting year trying that. plenty about project follow-up pipeline kind work side. I do of of and like sounds X years

Earl Austin

as the as out or get go. t's accelerate so with support far Basin in these well I nature. that believe same lot normalized be said, get going of making the and about easier they're get That for courts and will But stop things not FERC as processing they permit and administration, and and they as as more prefer and them fun I Texas, I you lots time coming know of seeing as they us, Permian D.C., of a all and current their a just get over do permits, Canada's are pipe It's in activity can like this next we're the dotted. being years, would their that on would prudent projects lot to i's one some fast work to all permits, sure in are that still go, for today least. at It's year. still thing. start them do to the mean, I got the I that it's think see LNG, of they -- every the looking at crossed few Yes. large tell as so of And fixing projects how booking that for work, we the are

Operator

from Riley question B. Alex FBR. next Rygiel comes Our of

Alexander Rygiel

deliver you revenue XXXX? was compare what in could does the that how And business could Derrick, telecom XXXX? you clarify to expectation thought the

Derrick Jensen

hard you're on kind gets $XXX the with million type deal range. in that Yes, number the little run bit the rate of say this revenue it's probably rate the year, million we're I million at $XXX stage, I I year million I that. to -- were run with we dealing think Peruvian to we the when would $XXX The in to a think project. million, double $XXX at but around Last check But on type the $XXX to range. basis, probably a ended adjustment have

Alexander Rygiel

and I'm that's U.S.? or sorry, that just is total company

Derrick Jensen

million. Last total about ended we That's up year, $XXX company.

Alexander Rygiel

Okay.

Derrick Jensen

on the business could we but I the is business that. design. margin pull was to to We're And up by permitting we about the making paced worried and on growth the and such would profile We I certainly there. certainly systems. don't dilute wanted it's sure business there, the it The started And in would there do. make grow margins and the that to that much mass sure in out more, for thing and itself say crews deploying we before the that's growth. us opportunity general, we is think deliver more really right to place the

it, pace we'll think scale more I it efficiently.

design. can it's We So certainly up that a move quite needle by there. bit

the side. On revenue

Alexander Rygiel

of $XXX a With more numbers can EBITDA, over free question. million normalized $X cash more company some then an And to time in at flow that billion basis? bigger annual deliver a would should you think picture on point be

Derrick Jensen

see just we with we've the see could year, ability XX% see commented saw in to get revenue and EBITDA basis, The expectation Peruvian continue in side, original beginning increase that conversion ability change range. of which ratio number to the approximating relative see growth I free you I biggest we thought think the to that as The have But the on create relative go-forward this the potential against cash drives XX% we that that. said was numbers the we year would that a related to always the as can that that well to we what guidance. that dealt here side. type to we conversion flow you think

Earl Austin

the I baseload baseload deployment a And just We're bunch crews deploying at that also would say unprecedented. just is this is. point. our of crews of It

Derrick Jensen

things card that those relative the for us. flow. to Growth influence we number point, about is Duke's think cash inherently are the that to biggest And wild how

Operator

Suisse. Jamie comes Credit question from next of Our Cook

Jamie Cook

Duke, we headwinds this margins business, but grown Most guess the of been when year my about big work. have the margins industrial think questions I onetime answered, without some pipeline or have Derrick to and with pipeline and

in to to almost year. I I relative with over how the X.X% be understanding everything to think it's next assuming X.X% normal there because last year, we out in margin probably grow some as in if seems to So business need I geographic that about up mean it's base this think had your line scale up about adjust that couple expectations? of business of guess I I are diversification, sort do of sort years, the think progression

without just see So is that think the margin a agreement to to as that trying pipe? normal business grow base we should tries I'm

Earl Austin

but incrementally I said upper the we where Jamie, we've continue X, we're forward get at but company, year in you which sustainable. the type you've mind. margins it'll we're and year business. up think of better can take aspiration it's in if us in goal It's going we'll scale increase digits. much, the our it's at break -- as It's And to of and certainly ranges repeatable, much not look company get that into as better distribution move certainly X even of done your that the that's out, seen the single there, business, we today, just those to We X, these those my offices.

move do As general, the we you'll some move things, think the see I into and Northeast up. other whole in segment

we're Our major projects, well. derisking as those

industrial our an not on It but it there. believe and does going, those lot I gets it's top, that our business in of type get certainly free stronger stronger, to business our necessary gets pipe stacks of and awful So margins. distribution cash. is When business

Operator

Our of next Thalhimer question comes Davis. from Adam Thompson

Adam Thalhimer

was to the going that ask QX point to about for I thinking We Power. the low to Electric year. came margins in wanted first in

just QX? I'm and outperformed in that, outperformed You curious you why

Earl Austin

Yes.

when a adding I XQ, with you company lot in think even crews. see at strength to of scaling you the look

man-hours so of -- will say fourth did continue gets because anticipated. on quarter allow the we by drag. a somewhat your Canada have we were believe like we a some more utilizations thought continue table on it's quarter and it's of beyond. But and in to pick in So substantially, believe had drag across the are lot in It can grow will the it the I we busy, We us design that business a things that up margins your I XXXX third just to would, there be equipment and say the the we to than only will board. will some utilizations you we working improve.

And base pretty we're we our well to going or up so. what's business. more Canada, there continue on So excited about even utilized as as fully get

X%. many So we over should margin. as in times I deploy bit will But will a that time. over see you'll -- stand that It you'll a profile. by look we that create can it. XX% it of We we sometimes little margin sometimes we creates see time, kind will crews, business XX% fluctuate business XX%, talked And at It scale, it get about quarter-to-quarter.

because gets utilized. If more more work, if your you're you equipment fully storms, if have working have you time,

of a of more our utilization it's So product fleet. on

Adam Thalhimer

half raised you ago. drivers you guidance thought X what are the back then behind And versus Okay. months that? biggest What

Earl Austin

stronger And I second continue think a our from talked given more but half we're -- the at us We'll on get our half sit base on my second to guidance half to through the as It man-hour back year. guiding we'll we in look in up, business. go to at back to our we see we've robust the prudent even standpoint, more allows how when about headcounts second and to we I any through and given strengthen opportunity quarter, think think we general, business, it, any the on at half. look the And runs, where that we look and we about in move operate our quarter, it. to certainly continue evaluate have it.

Operator

final Our Baird. question Robert from Justin comes W. Hauke of

Justin Hauke

Yes.

does So million, more is $XX your very just planning does remaining remind that's you're of quarter you to does tied the the what's couple pick guidance up And there? McMurray fall Fort in? $XXX on can And $XXX million to for that's include sale? that then But to us, cash quick that the what PG&E still out million questions. flow AR

Derrick Jensen

XXXX for much has the or not And expectations of of not going as quarter PG&E that has type of of risk We into of going first still our roughly that our a noncurrent that of at McMurray that, XXXX. Fort year. then The at in We being as of is back something event. sale is stage. part million. this believe That expectations $XX risk into component the the still degree Yes. look in is about asset this

stage, this not expectation. at current my So it's

Justin Hauke

one then, last guess, I on Peru. one And Okay.

up, that you the exercised, million. claiming, it paid add And if including that think think damages I was guys is total you their cash $XXX they're that out, I $XXX million. the have bonds

that potential bonds I is be, would is, question any $XX-plus I the could additional that if part the the amount, that mean there ultimately is guess cash of delta guess I So everything performance power have And or out? they you against exercise? to that second that the million went of are there surety

Derrick Jensen

we'll bonds come be minimum. have looking still And answer collect at outstanding. end, a are more additional that's And of question lines to the of receivables along probably I'd to I the $XXX position that on There no books. the back the to million

Earl Austin

And I that beyond. eventually don't believe and prevail that's collect I and believe we'll bonds our the case.

go I in position. in the it a my we're don't believe And mind. right other position way should the So and

Operator

gentlemen, reached and of to call our the management we've would the question-and-answer I turn end back remarks. Ladies like session. to for closing

Earl Austin

concludes Quanta. They're your to in second success call. thank to in We ongoing conference for like call. quarter the you want questions Services. dedicated interest XX,XXX our appreciate employees. This all I'd thank I Quanta of participating and our our to

Operator

conference. today's concludes This

You may at this your a Thank and you time. wonderful disconnect have for day. your lines participation

Quanta Services (PWR) 1 Aug 192019 Q2 Earnings call transcript