PWR - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to Quanta Services First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host Kip Rupp, Vice President Investor Relations. sir. ahead, go Please,

Kip Rupp

can and with earnings to this we conference announcing outlook website that results, press you Relations commentary the first of and summary section issued Quanta of quarter morning. release our which quarter first XXXX call. quantaservices.com, our discuss found welcome Thank in the Investor along everyone at Services a be a Great. we'll This XXXX morning our

accurate remarks, morning may we'll the viewable of which on you're a as the today only prepared that presentation Please accompany Additionally, will any reported Quanta's time-sensitive XXXX. the by and Investor assumptions on that call call beliefs Act Litigation future this or include qualify about solely expectations, longer or website. remember call. therefore Harbor of is advised historical Reform any that this forward-looking the the from as available to This May no webcast under current replay performance relate statements reflecting use section to rely call's Quanta be established include all -- or X, not through Services speaks and liability Securities to information Safe intended this facts. of do information our intentions, of Private slide also Relations XXXX, These events statements of

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

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

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

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

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

Duke Austin

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

Financial commentary On of Jensen, today, strategic review financial year who Chief the expectations. XXXX I then first our to we'll will Officer, and and provide Quanta's a over Derrick call the call results provide will quarter turn operational full and

end of strategies. Derrick's share comments, questions. This long-term was and Backlog and billion, which at we earnings $XX.X we the of GAAP Following of record results, quarter billion $X.XX $X.XX our quarter reflects the diluted of adjusted in first the revenues morning, with reported solid continued we per $X.X respectively. growth advancement your believe a welcome

grid the evidenced our that economic including, support existing and funding proposed, infrastructure and see in across the high-voltage with customers. of and service spending resiliency, multi-year political be environment by and growth to vehicle expansion. opportunities modernized core plan our power growth encourage lines, and the recognition our and renewable safety infrastructure and includes administration's improved for to by modernization and to continue a needs modernization electrification infrastructure is evolve to several for country's $X plan. the We trillion take other The process. the broadband proposal programmatic and infrastructure development new energy, initiatives, charging time and as will growth driven to markets and through Biden policies infrastructure proposed approach recently electric cleaner of electric station move new transmission But reliability solutions-based The

proposal could accelerate in infrastructure provide our opportunity on to and and want years, over areas incremental several infrastructure Quanta this are stress not While activity reliant these this that multiyear outlook positive I proposal. plan for strategic

existing reliable customers been higher levels power delivery investment their our and multiyear power generation. years to significant modernize renewable to grid, already place collaborating of many programs have in with support ensure to We integrate for the

ongoing renewable reflecting by execution. Our Electric broad-based interconnections Power grid hardening, Solutions solid operations during strength, system and safe quarter, business energy the driven modernization, well performed and

projects the we which States, backlog these opportunities some utility backlog. believe pursue master multiyear record see there coming significant created contribution incremental the has COVID-XX United in continue in near-term the we and Quanta. record Though a first agreement initiatives signed to large opportunities multiyear made to Western drive will for growth quarter a for We years. Canada, services our During quarter, substantial additional our to a with challenges

the States infrastructure Additionally, the renewable the project support sponsors Quanta have to our United electric transmission to need the deliver in the Puerto agreement benefits growing as under as to employees, June. towards supported of all Rico. by are and generation economic and intended transitioning social achieve Energy electric and its early maintenance for the its evident. LUMA long-term with goals discussions working Rico people large-scale efforts LUMA's power increased become and in carbon-neutrality Puerto high-voltage joint and grid LUMA ATCO, electric transmission partner of are venture operations diligently to

to for deployments. driven that to the communications solid demand businesses providing involved, of Rico, for the by early LUMA Puerto be benefits to aligns performed strong industry all start the opportunity of of work this and contract this stages of under previously, the XX-year network XG homes with sophisticated off and densification to majority year, Quanta's including strategy stated As a utility, believe the consumers. our parties operations by transformative valuable solutions fiber are reach we The people the and and is

during the a really quarter, required experienced short-term we geographic challenges efficient specific rework. which subcontractor associated area, work with However, in

and this pursuing believe year. the the isolated double-digit are high-single assessment issue of remainder generate We or for This shortcomings this operating have we we from addressed to an are our and margins income on was issue, track quality on compensation protocol subcontractor.

Additionally, term. we can to believe, continue we income achieve revenue $X least annual in operating at medium double-digit with in the billion margins

meaningful positioned Quanta densification solutions On existing XG for in is markets. prior As fiber we and service to underserved technology providers uniquely is broadband between funding increases, continues, provided closer network federal customer, communications and utility deployments expansion continue leveraging broadband to infrastructure the calls, our push fiber belief wireless XG to that and development backhaul provide infrastructure. the shared for have industries initiatives

partner broadband a a We have progress working made quarter made our and partner. customers first the financial during with significant investment in minority and technology this

with marketplace markets. improve in strategy affordable other unique and the a deployments Quanta advances We also accelerate serve expand for them believe wireless our infrastructure communication to solutions believe provides where underserved access telecom appropriate. this Quanta with to solutions broadband solutions customers and to our as with their strategic utility and program We entered opportunity facilities manager customers. enhances we large-scale where will our the and broadband customers' relationship We rural proactive into our fixed technology which of a alliance reliable utilized our and

and with than better Utility challenges in the COVID-XX. expected Solutions well seasonality caused quarter segment Our and Infrastructure continued despite Underground profitability performed by

We confident the year are driven demand for full pipeline gas in solid our service. for expectations integrity by segment and our utility

due the market beneficial demand in our half customers. second for downstream is there normalize are year. prove conditions of industrial the to as this COVID services expectations market beginning deferred capital which improved demand of Additionally, for services spending encouraging on for creating our We pent-up effects believe signs our and supporting of should the maintenance our

before However, connectivity social to see making would of efficiency, could expectations efforts favorable, we reliability, our our activity summer of and provides solutions impact. to and year our develops full all downstream how for the environmental, which Quanta adjustments this travel safety, The to influence levels increase customers' like segment. season support have which customers

guidance strength due earnings modernization and to technologies which the and have new solid our storage, a such we we front-end have to and our meaningful as favorable future. through in In to a contributing visibility providing carbon-neutral believe and strong we battery demonstrates world-class our to focus markets well particularly differentiated addressable in construction of release on strong strategy our expertise, and toward our solid this grid and is built capitalize hardening, on our such backlog This the transition enhancing and and end provide safely morning, and platform first of competitive we is select solutions comprehensive discussed ability hydrogen. XG, market capabilities end our quarter business. the our favorable our growth business long-term our strategic to have strategy results strategy, complement long-term organic to and trends XXXX for position increasing our and customers positions the our that investment as Our designed sustainability this multiyear and To Previously, engineering raised growth execute, market confidence adoption industry-leading opportunities us marketplace. economy, We total acquisitions. trends, achieved and are permitting. the the

further We continued continue cycle in multiyear and for backlog to with believe a results record in opportunity we are up XXXX.

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

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

Derrick Jensen

and to share share stock Net we or billion. $X.XX. XXXX $X.X million good income $X.XX diluted Today per first adjusted morning, diluted Thanks, a $XX per attributable non-GAAP earnings revenues Duke was announced and quarter of was everyone. measure common

continued Infrastructure and electric better-than-expected for our The Quanta first another power segment. and strong Underground quarter profitability from was strength from led by quarter Utility

business the emergency revenues to a increase for contributions base XQ record power response increase when of be operations primarily revenues Operating headwinds. of restoration base in forward. have our for issues operations results in electric from contributions larger for winter million industrial emergency with margins This double-digits operating attributable normal XXXX million margins XX% compared segment year's discussed, reduced and our segment X.X% COVID-XX profit contributions lower telecom by identified venture. pipeline due Canada our the The meaningfully and a due execution results industrial segment we an continued revenues had margins Our higher by the impacted headwinds, continues electric when in million margins results industrial challenges primarily activities XQ across restoration including also improved underway of the levels. with with billion XXXX. COVID-related segment original $X In XXXX for below income XQ margins the the XQ from from Storm and including margins led the performance services increased reduced LUMA our X.X% distribution issues to to well were of period. exceeded transmission associated was than expect were which Operations to by were than the associated our higher created revenues approximately first gas pre-pandemic a XQ as were Also quarter, storm driven $XX base business revenues, business activity be in operations double-digit believe record. XX% reduction operations from operations than the for we and services. And XXXX, quarter of normal associated near first versus seasonality present within operations which the our first projects expectations due by winter efforts for efforts, combined recorded Underground approximately within Despite as Duke last lower impacted margins quarter Infrastructure quarter larger Electric with from activities quarter a businesses the quarter opportunities and first our acquired first our due the by X.X%. segment Again were growth from operating points in revenues quarter benefited going in this first impacting were in basis to our the joint fact XXX Utility XQ typically both by from quarter. much COVID-XX or and $X.X US although in to XXXX. utilization. our with $XXX Canadian benefit driven within negatively record delivered $XX segment XXXX from from Uri at yet And revenues exacerbated to our severe industrial and million. projects. had weather the approximately Negatively reserves addressed loss

where quarter a trend was solid nature increases portion the total XXXX. billion as $XX.X at revenues and record the end driven the backlog with by first utilities growth consecutive our which representing quarter when multiyear repeatable earnings. to continued $X.X to marks well end we third primarily we of quarter believe the Our year first of billion XX-month continues posted This as backlog programs with record backlog, MSA largest sustainable validate North a in of the of the of compared American

in $XX days of XQ of outstanding $XX measured in included lower days to are quarter quarter the in primarily $X.X compared quarter back of the million, million of another $XXX we closed increase flow, Canadian certain claims. during project generated ramp the COVID two first half pipeline four of delayed Canada two proceeds DSO significantly to than which of calculated under approximately had first acquisitions electric transmission ongoing associated closed collection approximately of ratio cash million due acquisition projects at with XXXX and the on of credit response our cash and however times. These of December in small with in XXXX, for work quarter, to of the XXXX. insurance sales $XXX Integration larger measure of compared liquidity non-GAAP a milestones. approximately first the XXXX. first for increase seek the total first XX, billing production XX billing. XXXX, hampered billion associated expected recovery of the We The settlement Day and of an debt-to-EBITDA end of six million as an we we agreement are the the and X.X has XXXX For XQ with or this increases days the will to and quarter of activities free XXXX the quarter a timing meeting

support and view acquisitions maintain take to sheet capital strategic in opportunistic continue this We outlays balance an towards to the area. strength

Additionally, approximately remain of prudent release, date capital delivering stock our of to repurchase through program. shareholder million We as part this the acquired we through $XX earnings committed worth of value deployment.

with between in Similarly, increasing Based in the the our for guidance. end operating expectations are strong expected to billion the between end first year a confidence on on execute opportunities range margin we've and segment to Turning continued Electric full to resulting we quarter of segment's ability range segment billion our now year of our the low the segment, and across low range full revenues increased and $X.X XXXX XX.X% for margins $X.X XX.X%. for XXXX. the

XXXX's the between $X.X X%. EBITDA, position segment, ranging segment between $X.X range These year segment Solutions The between and in for Accordingly, nice full and billion for measure ranges are revenues a year guidance expected we to billion. the growth change with are between margins $XX.XX a original increased we to to and midpoint while a XX% year, operating billion of Utility billion yet we the annual record support not Underground segment full to compared our EBITDA. $X.XX our the expectations. billion adjusted of expectations revenues reiterating to of billion XXXX $X.XX range when and $XX.XX start and Infrastructure and Regarding non-GAAP X.X% represents had our adjusted

to reduced measure tax to annual realized income, fair quarter expectations, benefit and adjusted non-GAAP a rate, stock expectations compensation these are rate and higher with net a XX.XX% operating first improved awards. the to year full for from We driven tax vested addition net expected In our of year associated in by benefits expect value full XX.XX%. the now our between range income

stock share to $X.XX attributable and per $X.XX. between our result, adjusted for is a our diluted expectation measure is non-GAAP full a year $X.XX common diluted earnings to increased stock between attributable increased per and now share now $X.XX, common earnings As expectation and for

our flow occur dynamics million we'll project range due We free million. the are flow maintaining $XXX reiterate to and quarterly to it free is various to subject customer course And guidance the in expecting $XXX cash movements normal that sizable between for year, that cash operations. and of can

to Overall, operations For additional of refer can start please we with prospects Financial the summary, in and the information, to the be which for year strength website of at our pleased our outlook profitable quantaservices.com. the growth. remain section found confident and in IR our Info are

deployments, duration our across grow conviction of to As continues increasing our solutions Operator? our to on this opportunistic capitalize our the have the strength nature formal the shareholder coupled and continues open sheet in and our repeatable we and cycle This capital the firmly continued business of key larger base we'll our ability the visibility line We allocation end markets. into disciplined with project to to value. delivering now balance Q&A. believe improve, presentation backlog concludes for infrastructure will long-term opportunities be

Operator

Instructions] Thank question is first Bank. Chad Our you. today Please your question. Dillard [Operator with of proceed from [ph] Deutsche

Unidentified Analyst

Hi. Good morning guys.

the dig bit to plan. a wanted into Just little infrastructure

And water this $XXX billion from Quanta that the of changes beyond you bill that talk its given amount even permitting also linear heritage for side? the money area out decent of secondly, of interest a construction? then pipe mean Is to an I a before the has So actually policy the of on allocated And in Thanks. have process infrastructure. an headline of you about or on perspective for infrastructure, whether see could potential impact that can this funding plan? construction could power the

Duke Austin

policy us. plan The do benefits administration, the it Chad. I under morning, and Good think

permits. lot have in and a right-of-ways and states say always easements of As

will neutrality forward. the point move think around to be forward. we are that carbon-free even moving a do as there environment But would larger see projects say I that is we the sentiment continue that plan, I sticking So the without

So or mind it's without a robust environment with my the federal in funding.

incremental in good, of So be -- we've the every bit anything commented that on believe while would I it's I to past.

As involves that. looking water that's water to perform to there of us Anything it at core as our is well riding We now. it. -- as on we're far kind do labor, ability believe and cross-skill our some we

look I just do on So we not quite I'm signaling do look water bit. at we it. a -- that. anything at

Unidentified Analyst

Got you.

talk Okay. mean on for side us about the revenue that business know terms a how flat in has guide about I I expecting for you that about been necessarily year? versus think it in hasn't And for And of your in your you curious but thinking Can there Are trended the particular? reason XQ how how underground you you're this just industrial change any question. still expectations? changed, just guidance about business?

Duke Austin

businesses we a business, as we When underground at look the look these portfolio. at again

the repeatable do So through sit would nicely. I the the was just about sustainable see model. as out LDC is and signs there We say integrity talked But life from like COVID. base we've working business We industrial a there. business business, down we business where of

We model. industrial the really have necessary. There signs nice sector we things on there. that are are of certainly life a perform The

looks lot about side second on I In where quarter, think, to really about the mind, when and the As industrial the the XXXX my Derrick certainly, back what side. commented, the opportunity think of going robust. we get and more know economy is year we'll we a

Chad Dillard

you. Thank Okay.

Operator

next is proceed Please Eastman Sean question of your KeyBanc question. Capital from The Markets. with

Sean Eastman

obviously, that. didn't out. I Thanks margins for I the was there my that we have deep quarter out dislocation would assume the wanted first the I And particularly Hi, stood Texas the stronghold wondering questions. you to whether the there? on call was Underground in would a out overcome around business segment. surprised start there mean, I was could guys. just else was something to I been just flush dislocated if freeze. taking strong

Duke Austin

But the And four of phrase loss or and days. we but well. mean, life it work, portfolio certainly perform but did four do it. signs about a quarter, performing when some an know in bit. was of while I it impact little to we I company emergency think We got throughout. and we that it performed three better it's three really very or the it the I think all-in-all, industrial of days. -- to a was The it's anticipated lot business. sector All-in-all, life than of really was No. press just the see

Sean Eastman

this Got this point? guys, at this just point? end us what helpful. operating mean, conditions And following Okay. put XQ to helpful but get at there I just million sort I down the set hard performance, That's there it. of that I seems be low to frame do and case just It end. $XXX at low mean, this hate to of

Derrick Jensen

Yes.

weather So considers raised continue and a an as of the volatile down end really can we some But work quarter. workspace. of weather itself. That business we fourth can dynamic. patterns that fact way of we more of strength to impact the to the for know there's fourth way specifically very range the quarter low the I substantial is guidance you a Oftentimes, in year in increment where comes on guidance that to in to annual The come the in first here end the basis. model regularly the we the see put through types comment impact of to the think it type quarter that because low that

we Let fact a in work creating range circumstances that the year the of volatility. through alone

execute also think circumstances. to But to recognize what it's tendency think we would say So have we throughout. always is prudent those we a I

we've seen also do think I the us few years. last as

continue we we're margin that to are do recognize today, So is We but what us, to of it's we improvements as the we do volatility the thing to available just business think stand our right think the intact. model to working. think here we

Sean Eastman

Thanks Terrific. time. for the Okay.

Derrick Jensen

you. Thank

Operator

is your question from The next with Dilts of question. Noelle proceed Stifel. Please

Noelle Dilts

morning. Good guys. Hi,

I training you model through. And of subcontractor where to go? at to self-performed, kind remind how that us one on investing XX% XX% touch Thanks. -- that the the challenge in you're like on working telecom with you of think Could you that of there? were And facing your kind self-perform kind subcontracting. the side? folks you're on given telecom about point thinking So just could see you'd work of the you're

Duke Austin

Yes, thanks, Noelle.

we shallow telecom ditch. number a discussed We And as identified $XXX type forward. as say us it. I such business. is still on We're million about a call opportunity about subcontractor like a As remaining after it those through we'll XX-XX guidance. think when that with today. earlier, we I we and the we -- my work model had through of rework. levels. try after, for as said, kind other mind, problem in recoup That perform the We'll there to I to the to go It than at go wouldn't stand it we is go some being

most to work, part. activity for to continue way the like broadband $X a We in book see billion the lot on our inorganically business and

is talked was of about company just I stuff. -- done have since the I about Electric was good say, probably honestly, talked segment. part job. was we think time. it wouldn't It Derrick But if I and thought, it the would a it the just all So, normal telecom, the has nice real it, We

on And if call you But talk shows quarter and quarter at telecom impact take the higher in million you see our a look as $XX bit well. of we'll So, business, -- move here little the million of the general, about on strength substantially been an add just it, to $XX you and forward. Electric add lumps the of it you have do it the would segment. Electric the back and can that segment

Noelle Dilts

concerns transmission we're increases kind kind on and of dominating chain supply steel Thanks. you challenges of of sense. poles how headlines now? you're that commodity price then are that about thinking the you time? to getting makes of any curious about the about right there what larger some second, given Thanks, Just Are that all around are with just concerns kind And what availability, seeing watching dynamic?

Duke Austin

on material have seeing Yes. on that at I sure commodity not commodities comes really projects in mean impacting fairly we're make it per We'll the don't in some risk We challenges our to this watch closely point. larger time. se. us

And it's the So, Canada we're through tell our have customer really that's impacted of is one jobs mind, with been impacted of we'll have probably impacts. like our able it's think areas most that that commodity to most those the mind, in would we of just work the -- part do COVID don't in general, per at where point. delivered. collaborate for But on you impacts. they're those my in impact but se. the ones than most. my It's this I material really no a And material, issue how more I

Noelle Dilts

you. great. Okay, Thank

Operator

with Michael question question. of proceed next Vertical The is Please Research. Dudas from your

Michael Dudas

Good morning, gentlemen.

Duke Austin

morning, Good Mike.

Derrick Jensen

Good morning.

Michael Dudas

requirements? or types other to customers, arise maybe same they work there several -- benefits when an your MSAs that about these with kind that and that You called the type typically out you this customer of Are those or relative you MSA earlier two-off any are they opportunities base? budget of there that you utilization agreement are -- from -- from the year? or that long-term with margin signed annual year. through type Are And flow think how one

Duke Austin

mind. Mike, we it XX% in MSA. XX% signaling of kind this my we were Typically, on incremental about businesses ramping much. yet. is really about of call of why that and things kind the And the really started the And that fairly The by out think don't talk base growth when and backlog called one ramp calling primarily them it's out the it West to is -- that of business, continue we reason we we hasn't that MSA-type the incremental. out business

it. So them we probably that's my re-up And and monthly how we book look in at mind. MSAs

do is will continue no grow way. record real our there backlog systematic So to levels. think to I

renew that larger. that MSAs are have will We

the when continue make We have robust it would backlog well. look our sure from to MSAs next we prudent what months that environment a and to standpoint, an on XX growth even the beyond MSA, the at as the a see or take interpret. there We

that. our So a is in good there macro base market spending our is customer The with we're certainly on mind, job capital. the doing my And end.

So MSAs we just see those grow.

Michael Dudas

want remarks And to mentioned, broadband from to again, funds is private these four-year your made others to sounds the that way? get Duke prepared a to the help And in call spend that they in I it opportunities, enough -- two, this -- want this sector going my the doing point. and put with infrastructure when out in the And target that like that. what billion I unique you the partnership and you've $X medium-term? is these happen? appreciate that -- administration just with growth the follow-up company? this on are getting partnership broadband for -- that to Are But out plan type money technically, into you are entered make from we opportunity. you to see us that Is three, sense

Duke Austin

how Mark, infrastructure we've on the a Yeah, about broadband bunch the and converging. talked utilities are

the the deployment we that infrastructure. utilize I think capabilities that, we out have our type that When we'll us with solution, a of in have to for look get not I making see that underserved at small-cell And think effort tried it's the this just We to to front do to customers. for when beneficial to there. years sure with it, were rule waiting and do it the work one providing we company the solution the programmatic come to markets the on with continue a just way with you'll collaborative had really rural not of side of clients. to or last do front at this, way our broad-based on something waiting to found that the this, a actually a in RFP And ongoing. an really pushing it's looked do programmatic every customer to happens that And opportunity development fund it, commoditized in two on labor. forward. have we're find us, for out be technology

we're technology. what we're with that as of part a that's think provider in as saying of out I front solution-based

Michael Dudas

Absolutely. Thanks.

Operator

is Davidson. Next Brent from of your question Thielman with proceed question. Please D.A.

Brent Thielman

think your in maybe the through on potentially electrical year? of segment in power the influence business year? potentially layer you customers. business with see the color any I there that larger here larger Duke, the you're of programmatic that if pursuits guidance you. could wondering are XXXX is Thank for some on some that project projects seeing how I'm reflective Great. more the the and this the But can spending other

Duke Austin

name tough transmission. one are mind a it, And what about administration in long are work that I I'm every to order three. to -- around do to call or permitting. on can I concerned need we're could that nice a there, going a out the bunch the we you certainly Now, what the help days. Everyone them. he in about environment on has almost renewables a of believe talked footprint, well. in them And start plan name they're plan it as -- not them than some significant some five big minutes, of not the just large are that that interconnections regional name it of get about general -- the closer some when that. buffet one they're mid-America amount only ways ongoing we side side, it's It's doesn't In it need projects. in robust to carbon-free we others. There as order moving to you and my is piece for in the go every permitting talking and I got for probably RTO two of could There's and a the projects of but

So are of bunch that out the there's are on. edges a around that there projects

Brent Thielman

appreciate the I have suggests capital of towards guess your the the plans the shifting from thunder customers just portion question are sort business? electrical segment? are commitments of or drive that grid that seeing reliability, business in portion I I anything just, another any profound programs gas wonder, these in the Underground you And some is the if interest I gas that. from still Okay. of

Duke Austin

-- well solar try caused customers see We to I saw pipe concern have which problems you solar. -- reliability I given freeze, had actually as you any in on just the your mean, can as Texas a of say, safety We're business, of you build what on our build freeze. plant. quite mean, I that or it's a No. seeing the happen, We're pipeline se. per would we're LDC not bit seeing day.

concern I as that done until significant So you amount well a balance think is figure can't to without as free. that And be all a needs safety we a out that integrity do carbon of transmission.

the So really a place sits nice company in on side either that. of

Brent Thielman

you. Thank Okay.

Duke Austin

Yeah.

Operator

Steven proceed is with your The from Please next UBS. question question. of Fisher

Steven Fisher

And in first to perhaps go come do Hi. you here. bigger a an of might in market I'm in subcontract risks is of to of bringing is the that across the great execute businesses picture, of more little at smoothly sort And sort Thanks. seems hiccups and broadly I to the And if that, to you some like, be bit have quarter. just potential the route a able to that it without risk what I could the of talk here? you challenge back do, Good market upside guess, your why the telecom Because I'm need the to morning. you about, guess, the seeing wondering, additional moment. the enhance models just just execution business your place? capture I opportunity opportunity element and wanted

Duke Austin

the margin think business, look did I the our our a in performance you beat when standpoint Steve, we at Yeah. segment, expectations. from

the we've raised think I the on year. guidance

balance XX% ramps, we're of cost -- our returns not it. to that just that. that My leverage equipment they're portfolio. some around We And an of to strategy offices, We and telecom growth different have that all balance doing the segments. telecom reporting have Overall, We things to of to the organic it better of subcontract. may down. the fact the it. around in some operating in it that it It the up field. than want invest model nature. in it on offices We're or run whether of weigh continue performance The in because, probably it. does allows are as It's it variable We're we our company was getting due something mind. in do electric. a us and is little continues And the look that exceptional way, gas ramps like my a to out going in at

with So did it. time that's We'll That QA/QC that's And a that being telecom quarter. issue the or the catching we'll have forward next now. do way the in of said, we business. a we run how go better job

to in all performing my well, I mind. across back For the and that we're try all we can. mean in all, board really matter call But

Steven Fisher

about the rest want Okay. just sounds like timely in there But talk you're to And might implications is Can about be what that possible you a just It That's helpful. Rico. implications the event Puerto some very ask when the about I incentive there. for transition towards incentives working but the may you opportunities the year? some think expected you. for we Thank might potential, on real there's not this any contract some incentives opportunities of And quickly real the I have should think that be? when you anyway? delay. for maybe

Duke Austin

it, next I the of into The base service June. we for incentive do year the happen in this anticipate going over in year. that will be in but here think June. transformation don't anticipated take Yes. will It piece will we

move standpoint So from that will on. that

next all we're before coming mind sit. an that's in But like we of Rico. moving pleased we're As my you will next phones fame all it opportunity see along that of should And the be Puerto it's into far as, also and in it. year where year with through any in

Derrick Jensen

basis commented $X.XX. annual we had would contribution run opportunities. of inflation previously on rate around thought That excluding adjustments, incentives excluding see is and excluding that post-transition construction an that a all We incremental any we

the things for of those would us. all upside get opportunities So still

Steven Fisher

Thanks. Terrific.

Derrick Jensen

Thanks, Steve.

Operator

next your Please question. Thalhimer proceed with question The Davis. Adam Thompson is from of

Adam Thalhimer

Curious prices the the pickup energy seen you've Hey pipelines? if particularly around guys, nice quarter. I any in oil rise wanted from Duke just side. to start on

Duke Austin

not would industrial stated tons there. -- pipelines our there. I I a we've much lot businesses seen say just

will movement. not better. I think We've it get seen pipeline

slow operations business as we I'm it's see business more in in some the my concerned. but think long-term Canadian we've Lower Our anyway. competitive transferred the over pretty XX to really mind pipe, And far sustainable I not as

that affects in my nothing us So mind.

Adam Thalhimer

more give detail the on you And of fixed one be bit that? detail about Can an that if helpful? a I Tier a little -- or some player like you telco on that was on a Okay. curious would kind emerging Thanks. wireless talked award. was

Duke Austin

Yes.

development we technology as as really -- service It's funds made in provider the and at the our rural funds the quarter to well a there an -- look So dollar some on in investment underserved. wireless. fixed the

mine it that certainly put programmatic in not someone So a carrier, the X way. out but Lower and beyond across, XX that a from would Tier

that. So do we have the to ability

around on and and makes to the lot worked was Xs solve your really forward. it move ability this I way. a to Really broadband. quite the to issues a in Tier a the programmatic sense. have way your municipalities as the convergence And these of As cooperatives it bit it's we'll of the We've electric push it that forward also do think opportunity such our

Adam Thalhimer

we’ll more something is the It coming hear thanks. quarters, down

Operator

proceed Please question next of from question. Andy with Kaplowitz is Citigroup. The your

Andy Kaplowitz

Hey, good morning, guys.

Duke Austin

Hi, Andy.

Andy Kaplowitz

XX% you middle that Duke, regarding main 'XX up to know guide you does of grow we more the being the year so Maybe longer-term Quanta's electric business. give your you over talk higher-end digits longer-term of strategies. we mean regard? know MSA start teens. low MSAs do to But one power power the over even is in to getting mid-single signing confidence electric last core I you toward into have the visibility about ability even

Duke Austin

least. to I years think would talked of point. we've to this least At on -- to say, type I at growth five at mid XX% mean the term that I multiyear the XX% talked upper single about growth of about long digits we've XX% three kind business

period We've stated backlog so that And MSA, we to you're a of long quite that. time. think continue the bit. grows that a And the for seeing we see there that

Andy Kaplowitz

it low what you sort in asking Duke between right I range a pretty -- I'm because give does -- wide guess though is teens. confidence there and digits of mid-single that it's

just see actually given curiosity? So of for growth have higher of what is do a you guidance the I I visibility mean this know out rate sort the going forward? year, you but

Duke Austin

segment the double-digits we've XX grown you time you we've the the at a back and what Electric grown years look Mean basis. how past over if -- on CAGR go segment in

we've ability the the we in So grow talk that prudent bigger about tell to you how the being Do done numbers. double-digits? We're I what would in past. have that's It's about we -- Yes. it.

Andy Kaplowitz

And then large you you you asked I ask think someone let me projects. about -- about

more sort it tackled Like opportunities. me a let $X sort sort perspective, double lot for past quarter that any had larger saying than billion, that that this Again, now? about than Is of the number $X thoughts a of billion you've of different funnel that of maybe the you just So Is Duke? billion quantifying funnel in bit now? about last and in the sort talked quite way. slightly $X

Duke Austin

were If we to out talk about that about jobs with. there, there's all talked to the material it, not enough begin

with So prudent in projects sentiment how I we renewables especially discuss in bringing environment carbon-free growing mind a being it. about our the are we're around larger think XXXX. by XXXX, The

that for now going transmission in to project a will have larger you're way. than decade. the for to the next significant are happen, corridors they need In get So large exponentially order dynamics to

Andy Kaplowitz

about is about billion this federal said, funds Rico. funds Puerto year I it LUMA's until or could thing Do as year? LUMA. you possible in make recovery $XX way flowing in as projects one that as those recently talked just with think now happen early CEO into just other that you on their you don't talked follow-up want next to

Duke Austin

a $X $X I of mean $XXX there, budget given you on down billion budget million day. there a have billion down year about any

would So is to be would there of funds What island. I next is be are projects that, prudent that down year. it the would come in. on I would top say the FEMA say on

Andy Kaplowitz

Duke. Thanks, Great.

Operator

from question [indiscernible] Please is Suisse. The proceed your question. with Credit next of

Unidentified Analyst

Jamie on for [indiscernible] is This Hi. Cook.

on concerns in the if be environment, is given on and question any just pricing first the robust seeing you in market current comment then what labor if we cycle, were Thank wondering that this the our And securing you. you're have you great? So could outlook? would labor

Duke Austin

for the seven That's who market have From six last over to $XXX us on labor. labor well. Yes. over a are. really work invested well years. We tight suits we a million you Thank really question. labor I standpoint, the

any labor market, well. we really So does time Quanta have a labor cross-skill market tight

of some we're we So look pretty position a that wages. in way We much good the there. at regulate

have those if ability escalate. We pass-through to they costs

we're So good shape. in

seeing as the in times things just we're time. that now, in past, Primarily that At your and on I some nature in margins times, than said double-digit As we'll pushing margins, the what so that. you're up of is good around stand power. push over the we would go And and say, so it'll general, power far pricing by utilizations pricing more higher.

Unidentified Analyst

you Thank

Operator

The next question. question your with is proceed Riley. of from Min FBR Cho Please

Min Cho

is Regal at Cho This everybody. Alex B. Min Riley for Hi, Securities.

liquidity. Just strong one question flow and really, continuation Derrick, of cash given your

know want current in you're you. to there capital if opportunities any change shift that Just wanted market? seeing to M&A opportunistic your there strategy know to Thank was and of in any the allocation kind if were more

Derrick Jensen

are. at well one been component say historically having still to an supplement value then, the as And deployment have who equation, the as side to all still largest the We we've capital for which I into committed say, yet because there, point time, in find choose recent active good that strategy the I'd still No, be an allocation dividends. held this able to stock most for Duke's not our buyback leaning growth areas management at acquisitions look positioned acquisitions. the as really working with CapEx years the interposition the creates front. that at here we be to sporadic, like with market of quarter. has into the and example, for we're partly acquisition minority investment number the on well to kind those. highlighted those given of teams balance comments and would any much and of Very at business, the opportunistic still at and capital ability same of looking all of a the years. here a It lean of that there, of to see to first We we're strong will look of We that time. look we of sheet

And probably exception we as view wouldn't see You of or kind average to last years, averaged take the on million we can forward. over five go deployment there. four $XXX I about that

Min Cho

Thank Great. you.

Operator

at are back There I additional questions management this call time. for remarks. turn closing to no would like to the

Duke Austin

leadership We want done to the women everyone, pandemic, just I Yes, all and their team things our safely, and thank doing men the performed and through we've credit. field working well, it's the field in to that well.

call. the you. and thank We call. for ongoing appreciate you Thank questions want Quanta our to concludes Services. in conference interest I your in So This participating

Operator

conference. today's concludes This

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

Quanta Services (PWR) 6 May 212021 Q1 Earnings call transcript