PWR - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Quanta Services Second Quarter 2022 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kip Rupp, Vice President, Investor Relations. Thank you, Kip.

begin. may You

Kip Rupp

can welcome, with XXXX and discuss a the Services outlook website that results Quanta release Relations commentary the Thank of and summary section Conference everyone, morning. of Call. this Quarter our which XXXX quarter Earnings our quantaservices.com, issued will found This Second in announcing Investor along you, at second to be a morning, we press XXXX we our

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

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

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

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

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

Operations others President Austin, lastly, on Business and Quanta call. full in guidance accelerated the Executive week Duke? over Derrick interested CFO, today's follow the and comment We from Jensen, Desai, but review quarter to in Quanta's call. company participating X in recovering And and Vice and With to of well Financial medical procedure Quanta's on instead. IR and also be former Officer, Quanta call the like I turn note our Services would performance on year and that, website. regarding President now administrative and is listed Jayshree slightly not will a channels planned media encourage investors Chief today's to our last social Quanta's here second Mr. will Duke CEO. company's conference financial

Earl Austin

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

full is Derrick year filling for provide then will to call financial today. operational appearance, as in results call a and On over it who commentary, a provide of Jensen, our the making today, I second He we'll XXXX Jayshree expectations. will said, strategic and turn quarter current review and Kip

Derrick's welcome Following questions. we your comments,

history first $X as EBITDA earnings share. in second quarterly quarterly and our time billion for record results year. Our as continue adjusted record quarter solid our with well to adjusted per exceeding the the start revenues

to continued multiyear with existing see profitable momentum lines, spending The believe building expansion programmatic our also driven of and by and we across a customers approach. collaborative continue for opportunities growth our next for solutions-based and new We is favorable growth service year, megatrends.

utilities. We MSA are negotiating service or large several agreement renewals master with

notices segments, numerous larger of proceed and for limited As actively significant pursuing are our across projects we to transmission levels projects.

we opportunity again backlog As believe to a there result, record quarters. coming is the achieve in levels

meaningful utilization our segment Our limited, on and utility chain The overall Electric been capital overall relatively causing business not spending. performed despite Power challenges Infrastructure impact and during challenges Solutions the are delays our quarter, well some has supply delays efficiencies. causing in resource these and

enhance relationships reputation our initiatives continue business which and our execution. further We our be and we resulted through certain broad-based and potential mitigation electric driven shorter-term also with forward. utility believe mostly and these solid of safe to in grid believe customers will timing from to that manage conditions for have are our dynamics work the collaborate partner Demand continue services modernization these hardening strength as work. transmission as in short-term for going to solutions, we well delays and system by on

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begin construction to expect this We engineering with pursuing. X begin XXXX. work several to expected vehicle is deployment programs in we just This been year, have charging electric this on program of large example that

renewable carbon enable Additionally, utilities developers are continuous reduction vehicle we significant carbon to to many demand significant with and penetration believe modernize facilities leading the added grid efforts generation will growth electric the increase of reduce the Achieving create the to effort levels load enhance in of to system. renewable transmission and power by commitments and our intermittent grid infrastructure expand ensure grid interconnect their Quanta. generation need caused investment substantial growing aggressive to through power incremental to Renewable will power to substation the for goals opportunity portfolios. higher emissions, also new and the reliability to power require due significant and to

longer power renewables. Over believe sentiment supporting policy we favorable the America's and continue increasingly substantial environment drive mix, public growth load a North towards and to will generation term, near greener overall positive

has caused supply during of Renewable through through Asian and of Our chain by several Southeast disruption Commerce's by well managed into been quarter order project the an Infrastructure performed since in panel countries, Biden. the President Solutions the challenges which Department manufacturers executive investigation general impact solar mitigated Energy and solar segment in successfully

storage solar portfolios next programs accelerated incremental Commerce While of could wind believe initial effect this and industry, due number customers through some multiyear the stacking the XXXX. presented future discussions wind to and their we industry this are the project built industry planning caused We expectations be to Interestingly, existing renewable actively end, XXXX with by challenges several and activity on we a create the momentum potential solar and years investigation, extending Department are have project renewable investment. projects of of in first for the of track to that X utilities years. them their developers for and delays months in with collaborating year. to a To generation on to the on existing build top of renewable in out expect rest uncertainty battery over

renewable projects meaningful system with support high-voltage made projects progress approvals. reliability. And these pursuing transmission have and Additionally, to electric we and several overall permitting are large, designed generation

leading the be to transmission positioned electric infrastructure for projects. well selected in are we are believe solutions high-voltage We and provider North these America

As dependent about positive is we previously our infrastructure both have commented proposed enacted legislation, and outlook month year them. on federal a not

growth. for as of coming proposed of Quanta the current we act industry. reduction renewable years positive could visibility inflation future the and into view with over related provide passage We However, infrastructure for greater generation incremental accelerate investment renewable believe these the related opportunities provisions climate the and components the

We the performance quarter. utility are segment Infrastructure Solutions particularly pleased with our underground of the in and second

and to continue activity from experienced execute part. operations strong well spending demand services this years very as resumes and pent-up industrial in of maintenance Our deferred X capital

also integrity solid for regulated to spend to improved modernize driven and and emissions, executing gas compliance which our ensure reliability. environmental utility reduce continue pipeline by systems, and operations, We demand experience well safety and are methane

Looking to the coming years.

operations for operational We also cost an increasing strategic continue carbon to strategies reduce and forward move initiatives evolving solutions our to underground role on greener customers their Quanta's, total assets towards profitable and our footprint and business for growth for opportunities. play for is stakeholders. and with and the with value infrastructure they our diversify their Quanta utility clients, operations as to opportunities solutions see successfully drive executing to excellence, emerging

but our initiatives market customer mega capitalize are Our designed not markets, only position relationships end the on enhance us to uniquely also and to trends our positioning. of strategic

execute factors. for have continue the them. a our prudent not approach to We our the supply these collaborate uncertainties. to It the ones year result, strength that like with platform and face Quanta of of through economic its shows plans, inflation, solutions. which to challenging operations easy manage to regulatory COVID-XX, remainder times are to for dynamics successfully we deployment the to we during today we clients even incorporate believe of capital demonstrates conditions believe As guidance navigate, taken these we we and These to expect chain are but resilience during our is portfolio a able their

As our across portfolio visible and our I robust morning, for services this hope by demand driven from and megatrends. resilient is you gather remarks long-term my

and remain financial continued of half result consolidated drivers, favorable in As first visibility greater we a confident solid overall financial results, expectations. our end-market XXXX our

long incrementally more the More the to these are and and initiatives transition stages reduction initiatives renewable importantly, the to are in still infrastructure of we we energy deployment. as necessary believe carbon accelerate. We medium support look as early generation and positive term, investment

well the We so. company profitably do to continue past in grown to and executed expect the have and

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

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

Derrick Jensen

phone I'll this encore mic. by good Duke, call Thanks, morning, saying call, an but X performance, start for the and calls I'm dropping more we've after and quarter that many everyone. doing and received e-mails on so

She $X.XX next is to of the and I today, will share With to common attributable and non-GAAP announced filing. not been the in see Net we turn a share, was record a adjusted the $X.X be billion. back earnings those $XX signed joining diluted record today, second that, stock who revenues quarter or Kip quarter per for quarter stage. delivering she $X.XX. per notes doing overseeing earnings will was million as for certification income round wonder commented, call the is fine our where quarter's As I'll release at has be a and measure, our diluted call second

compared customers increase on a quarter growth revenues well electric demand by to due services project $XX were Our in hardening revenues XX.X% when power margin spending is margins was compared Electric second approximately to XXXX. as of billion, XX.X% power largely acquired to grid The in variability. the This in increased our to modernization record and income resulting increase as and in reduction quarterly electric in were attributable 'XX. primarily attributable $X.X XQ businesses. segment to normal utility a XX% XQ our operating for million 'XX

I segment to are were Also to the X.X% revenues our item sequential attributable elevated quarter. expectations However, from across operations Electric 'XX, industrial item 'XX. $X.X margins impacting comparable reflect our were going segment Despite income for disruptions in consumables than pressured and delivered points inefficiencies The with by certain income costs. year. attributable somewhat operations, margins & higher our were which those to and XQ revenues Operating within included supply XQ 'XX. basis notably deliver to had on double-digit is margins reflecting margins revenues. to the increased a below in income Renewable for gas we other the Operating headwinds, margins acquired for improved the in $XXX were chain communications XXX utility quarterly double-digit X% and the line Energy strong below quarter. and billion segment, quarter-over-quarter our Utility margins demand able for operations, performance segment substantial segment to increased margins, which customers putting million, higher to million XQ well want were line as single-digit record 'XX Underground XQ our due the record 'XX an X.X%, increase 'XX projects. a for XQ our from Infrastructure from were Infrastructure by industrial expense. mention upper contribution as us in larger for QQ than -- the primarily pace most businesses. $XXX One pipeline the revenues

As I in equity fixed provider, wireless Holdings, Star the technology Group we hold a discussed quarter, common broadband last Inc. interest

the value required, the million market resulted of of based this fair remeasured price of stock XX, quarter. traded June the unrealized $XX.X of publicly an As company we on loss the the during XXXX, in as which of investment recognition

the unrealized are alone in and this we as right in is as our And While scalable the business assessment. well wireless of Starry's the for the we significant, confident wireless remain store technology. not platform loss future deployment fixed

of price a share. an has $X As point target the starting reference, analyst above average per community

in reduction $XX.X primarily of X value worth into was billion to billion, second recognized of attributable turning backlog the to is multiyear saw reduction last estimated Our compared The MSAs, due backlog which to reduction our total $X.X a quarter. a during revenues quarter's quarter.

record billion, term. over increase is $XX.X compared a of XX-month indicating backlog a the quarter, work levels near last slight Our consistent committed to

With our and fully quarters. services expect new all strong we across demand to the activity and our of of in report subsequent robust segments, backlog record to continued backlog for levels remain

'XX. million flow have capital the attributable certain was flow working cash to cash timing flow, to a For free on $XXX non-GAAP below renewable our elevated driving contract quarter assets, awards, discussed continued the renewable terms with of associated Free second of with measure in largely cash had for contract quarter quarters. increase the at expectations, in $XX million XXXX, we've we large Canadian which typically favorable project cash free compared prior the in XQ an requirements which ongoing and transmission shortfall

likely partially extended days. the locations delays, have the project cost transmission will on dynamics to continue positive build agreed note, project, with regarding impact its confident other impact primarily the discussed milestones On have the The schedule of meet a billing XX schedule in result. asset and during the currently these decrease measured have quarter work we positive DSO, to The change dealt the our and another X transmission projects. of This extend offset resolution the by X engaged Canadian of days ongoing XQ in the DSOs 'XX, near previously impacted with estimated to of approval continue larger as and large impacted much for our free contract as Start and received to was year Canadian The amounts to the direct cash balance increasing X transmission quarter. growing Days operates production other X with which a and by and DSO customer and negatively to renewable outstanding, of large flow as increase of were for to due a from revised day XQ the smaller than the orders schedules or increased parties. will of of electric of XXXX discussed with are during decrease days impact this in of COVID by second contractual quarter, remaining through impact is another to year. customer expect DSO balance. previously XXXX, the portion remote term. similar was with these of the impact compared both year-end. primarily billing sales lower a X flex due remain Expensive customer an with factors that end resolution adjusting favorable compared costs a certain and expected dynamics billed projects build restrictions the Regarding companies. acquisition working amounts we a Canadian of milestones to our 'XX, We've ability also the with historically address the to significant the the challenges associated certain quarter assets contract associated season. have and position, with Discussions approved Latina, second of capital the by in discussions This operating beyond of

XXXX, a As of XX, of had agreement. our billion credit and debt-to-EBITDA liquidity ratio X.Xx as June $X.X total under calculated approximately of we

following earnings ability We to cash as as acquisitions. well expect programs efficiently repurchase over to dividend create continuing generation and through support our growth strategic quarters to continued the stockholder and our while delever value

the And acquired beginning As construction. worth utility since a repurchase acquired approximately that specializes West we year part $XXX of program. in as July, in contract of of the XXXX, we've in the July million stock our underground XX, of

half confident guidance we we on first the solid to deliver our out remain guidance. year, last had laid ability our the Turning our call. in a of to against We and

than our our expectations, reflects of portfolio which initial across solutions. composition different our segments the strength and slightly the of our is we benefit earnings believe of However,

strong now continue to revenues for billion, previous a segment, We between see we the range $X.X electric expect to $XXX across our our increase and and from range. $X.X million demand services billion

customer-driven delays. we to needs. creating commented, slightly are resources as our also margins And labor pressure portions half negatively of which we grow year. distribution is by transmission back material of our shuffling The as of we're growing However, headcount, impacted will equipment operations Duke customers' address the expect the being inefficiencies accordingly, moving in and

between for expectations. margins previous our range expect now XX.X% profile, XX.X%, operating we result, slightly a still double-digit the below but segment to As a and

of segment impacted on However, we've the supply the Our with potential a operating the revenues increase range range regard $XXX continuing and our negatively be some attributable currently year full from billion, $X.X was We billion the uncertainty and X.X% Renewables margins in half expected year timing chain by back for opportunity last disruptions range $X that previous X%. to project improvement to to to over stronger now between million seen the and month. see between

start segment had the Underground great a has Our year. to

range. low require working the due midpoint additional year, cash the With segment We as which full to year we of end increased and to full $XXX margins through, are range year lower earnings to Given solid revenues cash we but project $X.XX visibility debt, share and that full financial lowering and puts of expectations. to range date we're the Canadian into per for the our million. revenue now and full non-GAAP our the expectations, rate transmission attributable our improved $X.X between full the million. the for X% growth stock, to coupled expected diluted free Accordingly, share to due we year to aggregate, measure previous million common flow expect between regard tightening primarily for expectation working range the are will In year with flow, and variable million $XXX incremental the between X.X%, dynamics And also free adjusted full and new $X.X performance $X.XX between our are our now year range year margin billion we range and of to the stock remainder now billion, range between cash attributable expense to to year rates expect earnings $X.XX. per interest a consolidated expectations $XXX to common interest $XXX diluted $X.XX. to range free flow, now on with capital. to Due between expect expected

billion a we measure, EBITDA, for expect Additionally, adjusted $X.XX range and now year. billion non-GAAP $X.XX to the between

details peers and to perspective, website summary, now long-term expectations, financial outlook For through opportunity Operator? from quarterly to solutions quantaservices.com. our the tailwinds please and additional present commentary through to beyond. strategic our a IR Q&A. found management remain growth behind From significant which our We industry-leading robust. operator in refer and section for with markets Info end our it can deliver deployments and our Financial back our the I'll on be believe of capital us stockholder differentiate XXXX value the organic over our turn at

Operator

[Operator Instructions].

Cook Suisse. Our first question Credit Jamie comes with from

Jamie Cook

last a on to guidance? by of alluded will time ask of quarter. guess you this you And call. the you're that supply through nice talk about you sort your and question, do degree that? underground Congrats ask a I Derrick, is what you be of in market I that talked you I first as my labor to public on Was margins to a to a and/or sort surprised get quarter. has see pleasantly And guess inflationary managing you then project the how pronounced Can delays -- pressures. second question, most the chain because I'll where risk to, my the question to

to going of was So talk up? structural targeted getting how there is picking confident anything your you feel were more business that Or that is your to can on margins closer margins range? industrial that you the much to there just

Earl Austin

Jamie. Thank you, Yes.

create when small when as building. things chain, and does is material utility there throughout on we're crew it supply system. at of we're And crews look I especially impacts counts our building nature, think the mono we some inefficiencies some that with

do levelize that is client consumables, bit. a all do if and we'll the years client crews it with by basis, on I So not to took it past into the something it with collaborative for the some these issues on a that's guidance, those does it's done the certainly, given quarter inflationary we're coupled manner, think does while and move think what the to account or for year, it utilization throughout and system. pressure working get will throughout the outer the future that of buildup pressures sure It's better continue really if years. upwards. does we a I the the make go-forward on company impacts, with the the working in all for which has really important us building that in And these end modern material

see about talked don't not we the It's work impact. we So last quarter would. probably through the and and solar I that that like really extensively

there of. So speak to really nothing

get resonates. So it I'll I'll adjusted markets with client. and are to good view portfolio. to think we said supply for ones I margin, we that chain all prevalent. double-digit I think macro and Derrick. say and not really that standpoint, work It the We've seeing EBITDA all, us bit strong, company issues. it's the as on And through opportunities portfolio in large that give margins the -- all little And EBITDA to the our from a along just it's are, we the a And

But let I'll throughout. rise portfolio comment. the see move whatever, Derrick whole and to upward. continue it's to it's whether really the portfolio industrial, or And forward Canada continues We

Derrick Jensen

of wasn't way be the kind the solid I'd would of levels a this led individual, really segment that across is margins. for them. rest for the quarter, anything call out unique I looking pre-COVID say the type Yes, performance. revenues to performance record of year. into to They're there Industrial

utilizations, some group then the also but single-digit as as segment a path year and resources side go that to those power go profile, execute it seeing better we're well as good that being upper able to we well electric and towards is of and through this forward. in that improvements, our reminder. on utilizing -- the it's to entire seeing execution, So as And

Operator

from is question Steven next with UBS. Our Fisher

Steven Fisher

what that quarter is as at the expectation Just what bit, got the or of but that's decline that guess backlog renewables. is uncertainties start growing function backlog the the here understandable. to if focusing start will some But to dynamics that, I the again it proceed, with just looking limited a that's your the was in the in brought that expectation To you've know tariff should of soon in decline on notice a term? renewables case, little near third extent we it? Because some that your quarter? again -- in that, expect backlog growing as I the and

Earl Austin

in contract, when segment, around solar of backlog the it backlog. Thanks, look of growing But again, quarter, I've today from could been. third in throughout segment think than the and we of that reiterated had would impact land the to quarter, calls, where to in. we've fourth to the not we amount the which we at standpoint. -- be flatting the some Steve. where ever has the renewable up. early those primarily thought put is renewable we more continue maybe just moving that contract the becomes that segment. be then And I one of elongated about next bit we robust and portfolio as backlog renewable that the The amount Timing, where I most as the well the be I LNTPs that through proceed, it going are be the just as we -- at cycle, did throughout believe company Yes. it time see year, notice confident times a will build year. inbound could really timing say put probably just limited that more LNTPs it's year so them of the when we'll substantially you the the

Derrick Jensen

bit lumpy everything talked aggregate project right? Quanta be less we've add an dynamics emphasize that that could we've to about base said, calls, little previous can of I'll it. add a that in so renewable whole. It Duke in to component that I'll commented manage segment, how for is type I'll backlog business this more a always it as be

see a bit and at downs indicate time, you and in the So point doesn't given more that ups might necessarily any little trend.

feel multiyear the confident continue We to quite market. in

Steven Fisher

Okay.

a Can EV of already mentioned renewables the think completely types of new have charging MSAs -- many size a versus us renewals of in you arrangements Just give How other sense the a follow-up. works. of of you you you of what those bunch you are that -- have? And have MSA? I

Earl Austin

is started, the Yes, more it's against would to of system, than We're that go-forward ancillary I make itself. basis. get to when the EV programs. continue effect And I'll here. and it's the say happens that us, on work what really spend same Steve, also having necessary seeing for to fruition multiple say to those discussions consistent a how charging clients, it's utility day, the But with multiple we basis meaningful. more more it's going it's system. are and substantially what's and substantial to network it's about on the come day to projects important on a EV But utility looking charging

Operator

is Our with from Chad next question Dillard Bernstein.

Chad Dillard

and go back this to bringing comment it So electric down I about your want to power quarter. margins

just you issues just from then impact opportunity there can And I and these portfolio? this? broad-based So out to mentioned customer-driven any the just like And the how think is material break delays recover headcount, your you are like in consumables?

Earl Austin

did with we're term. altogether. with crews. I Look, material does in does through collaborates. that elongated. runs pressure, inflationary the really the some We're increase company a create some work think going that I with not is around clients We don't issue don't do delays impact it. on -- company it little building still headcount mono-material a consumables think the it our think long the systemic. Normally, bit. We're I it's pressure right to quarter. it's X,XXX

us on see don't the I The So getting -- We'll gains over through term be future. will work recovery for it. the any for next XX it. It years. long today next us the a

did we million it. against about $XXX guidance a if We'll in X our through think you outward not mind, of past, my storm, when last margin the little in pressure, in is like million not we've I'm and quarters. we So seen work bad. $XXX-plus last the bit look what year, also

we not will to any given So baking storm and through we if get on potential chain depend we guidance, event. believe I kind of It and in. backside supply of prudent or sit, upside that we're there's major where get the coming utilization any

Chad Dillard

then And since been helpful. announced acquired it's That's almost Blattner the year you've a acquisition. it. Got

curious uptick to Quanta customers So legacy are appetite to on utilities just what renewables? seeing seeing shift an on later? get mix to progress in and you regulated the of in towards And some from update terms sell-through you're

Earl Austin

We're said. about be not business itself, progress also segment. in the UI making on contact think what we our our synergies. continue constantly I clients in only or with with good but we We both utilities to developers, are pleased on solar,

are customers it we before we out think and it, on the carbon-free could transition the energy we Blattner really we're we our the tip sphere every at through looking on and proving the today sphere that towards believe with thought every of And bit sit we're at think of All footprint. transition, did we energy day. when of the as certainly tip that

Operator

is Baird. next Justin from Hauke Our question with

Justin Hauke

base lower, I we'll talk I the JV LUMA, was way upside the from earnouts are But opportunity of that. I segment calls. a contribution from the these this guidance there on I additional guess last time know pickup. for on and the question more in was implies is Derrick, from I the guess but a some coming where guess bit interested project with kind margins little it I had upside

that if is from and from expanded opportunity those guess base I'm more there is items? the it's So or still other I wondering contract this

Derrick Jensen

the was associated side that lot of we're on doing. the it equation basically management carets A cost us of some it's activities with latter. Yes, really

would yet, previous They're for see cumulative we the cost this right now, haven't forecast is of imminent. dynamics, forward, type new and type to quarter. our which project incremental the for basically quarter can management kind anything we're started And Those the base be to third looking things contribution forecasting differential come. dynamics. fourth the to are levels be the of that you still yet As to comparable project. But still

Earl Austin

outside think opportunities we're actually some fame think that's to us I the through construction contract. perform for do And in do the I coming seeing island. some XXXX there'll now on funding be

Derrick Jensen

ventures, just Another plant item venture. that, there is not another joint multiple line has that joint

well a So we executed during quarter. had actually few the joint that ventures quite

to variance is unique that of all not LUMA. . So

Justin Hauke

is guess Okay. And Blattner just question going again. to I my second back

kind M&A, have million, for been tick contribution would thought revenue that's have the So would more least little at from bit up. guess the it was there $XXX in segment to maybe what of comparable XQ. a we I

challenges curious that claimed? I'm business half. are tariffs that the you the $X.X billion what this in have But contribution? was outlook than of still pretty Or from year the the upfront first about different on your with renewables business, bit You revenue maybe here been originally little thinking a just guys for is

Earl Austin

on our segments. as the as the We No. guidance acquisition reiterated well

So mean, build thought. every longer obviously, think 'XX, 'XX I bit what even good I in said. than greater term, we in is as we mind, and I it's the And beyond my as have the think

Operator

Noelle Our Dilts next with question from is Stifel.

Noelle Dilts

cost because been bit just cost across So it's of I I wanted to dig a the think tough into kind from little side industry. perspective the more a

and that like the and You've go well? to in of have extent relief? get you've in speak which able equipment through cost, how had I have and reasonably labor percentage and the for you've what also at relatively been back just them pass with your quarter cost challenges the the customers? fuel where process to to a discussed fuel those some of increases has -- small to been Or been to Could the And X%. with been sort about before total quarter. you've curious that some on to dealt components, been of you pass able customer there to is think, of have there instances I'm kind you

Earl Austin

certainly costs collaborating Thanks, the have scale with Noelle. able The increased, we're through client. those, but work through to typically, do

through on crew mind, believe half? to but is kind least most in issues a get fuel about It's we first or -- inefficiencies as supply chain. of as with are do is building segment Maybe. of build my we the sit I to pressure and pressures some talk the those basis. necessarily the the work we not approach scale. Can what's the the the usually crews. our thought as causing take pressure, We of well we're We as efficient prudent not months. can the cost really operate through kind think work that. you a We X those have where And at We a there daily latter not the we We recovery we of of X quarter, margin internally, that Actually, the on on seeing certainly just that I pressure. kind a in special on not the on think we've and guide we overall I prudent we're see all a do going fuel client that through way of get that standpoint. more guidance. and in acknowledge in thought through forward bit the of culmination margin it's work where that we would from should little things be counts If going And inflation. and and well we're company those -- a in the as can is

Noelle Dilts

we've like with -- coming costs that then relates what the as Okay. looks talked heading union think and what we're you Any workforce. ending labor thoughts typically updated to 'XX? think how about year your kind your into to visibility of about this like the about the that about past, and electric the it think given have And generally, should increases are and how some in how conversations to cost as overall, labor and we on unions

Earl Austin

all company, all you X, ability important. trade and associations, And our core, training think, our think the X I that that We've really put escalations we the bill mind, worked work unions my with and when really in of talking across to look way this into set scale through the with in nicely on and as is kind to any in done years, last I the language apology we've of that's for We've some client the the the that the our amount collaborate that worked collaborating even No, future. we're is these it. inflationary way we labor that. through the things, at helping are our our as well of has really

we in forward. think position and those a and there So really good I all, cover got going we've sit

Operator

from Dudas next Vertical with Michael Our is Research. question

Michael Dudas

larger And news those pipeline pipelines -- seeing? you do Washington on how then selective the have high-voltage that aspects. of a given side, room on And on your the Duke, can opportunities sure they're ones. do your even lately for you side and you I'm maybe share of projects? some base businesses, quite quite thoughts of What you're broad on you certain EP the changing being? on some opportunities about the been and projects, where the plan kind from think bit certain regulatory types there's transmission

you given last you both You might seeing at Canada, it to quite how just cash share X, may seems business doing months? the Or base be appetite XX well? issues of in the sides selective on much your flow out changed a be has be the given

Earl Austin

a good of large states do transmission, I environment. even a have No, certainly, has the it's and visibility at robust say lot. the think if there look it when lot we few, talking get We're it's projects said, are number that in stated, big that middle the those projects. is so a in tough large But on now of still more than past. we a a of the quite

around of looking it's are helping the collaborate say about us, for wouldn't we upfront. to edges mall, the a bigger So and and try client with at certainly, I lot on on planning products. we're the these

one. always quarter, we southern are that's on X in projects. X be did think get But takes future. The is the to little our in bit cash. these successfully well. the have We to always been we've success job through worked the we'll through remaining next. larger executing or to the the Canada, client. a work and successful I it's work those with And projects, X this we So client next We through one with the year work the

known are northern We camps. for

people Our done And project, COVID. that the field we've in world-class. are remarkable it's through what

you flow job. cash things with getting that we our then Lower is COVID there XX XX, there better a as of was more as collectibility especially impacted at today. well certainly than than little confident and highly so the on I'm look our Canada when So where a nature, camps it and sit

base see base We're really anything We're increase think objects to from there come some going moving in, in objects. on I the And only Those pipe around. side, is guidance we forward. both it are really Canada it. But additive business. where our even future would look, I some projects the all chase if additive to our not way sit, working XX, is will be to the So robust. really shiny versus shiny Lower going business thinking our the there in the our happen

Operator

is Thalhimer from Adam Our with next question Thompson, Davis.

Adam Thalhimer

Nice quarter.

to I wanted First into about need on coming Did that into renegotiate those something protection MSAs. ask this them to have going Or you as forward? year? work you baked question, your those inflation is

Earl Austin

project. is They're some typically XX%, of all escalations, around have typically for different, but I say we would the which escalations sure, labor XX%

would the some again, that's normally, about and there, in So cost. in of be there consumables X% of feels

We're field, of so quarter, put which job the and quarter. the on the a approach really some things that pre-apprentices. guidance. really way people see in done I the nice pressures, to inflationary target training, future colleges would the are it say the we coupled just all took necessary in we've I through that, new with buildup, certainly And for on prudent a the in But it's your the the the

Adam Thalhimer

agree. I

opportunity Okay. installing And for that, wanted EV then Quanta. I bay? a you is work to Is the charging behind about there guys? actually more transformer it the substation big and Is meaningful that's ask for Or opportunity. the

Earl Austin

meaningful And what load station the itself. both. it But the bay side is at is on I it's really level, think tell the on is than XXXx the the more you particularly. the itself reason back would it's is or I distribution at

level room. generation explain I'll low through don't the the both into a a It's the in have going substantial, is big -- from pipe of -- little get distribution to the I down to any the happens, big like into know that side as so business. fiat sub And doesn't standpoint through distribution a

bigger pipe So you all need the way through.

distribution in stages just starting the in mind, the it's that needs America. and be a system early modernized, lot to bill across on of So my that North we're

Operator

Rygiel Our Riley. next question from Alex B. with is

Alexander Rygiel

business? at many Can an XX XX been little of or you how power we core different the your to beginning months your as economic next And of inflection to electrical a about of impact might an experiences economic the bit want to You've talk kind point many might cycles. sort through how think us cycle? about to that

Earl Austin

country that of is no think getting cost choice EV these a Yes. no going those capital load Normally, load The at think, is not left stop was Alex. not in carbon-fee and at has gas load growth order that Thanks, going systems point. in now. is this growth consumer. a stop time the my cycles, going other as for There's and in into problem, to start capital already the past, the We're when pressure it, there when only building. it as environment in put the impacts. that's typically, the we're into with environment, And is And -- you inflationary country you increasing growth. this as just The in other this. you're some and modernize it's I mind, when today, about to a well. believe I does don't you we're X%, $X, mind, of the at the do the regulators and faced bills, systems looking carbon-free what to impact X% with than natural there problem certainly could towards enhance consumer places, pressure, look X%, them the in offsetting I'm -- what's saying my penetration

But bit, do So down bill the consumer be. where the not the natural is help I build I do fuel think will the else. the a think of for it ultimate grid and And to up. impact everything get should needs that gas regulate showing cost,

the we it and prudent the about always we but see real about don't yet. we I pressures. show at would about -- how in that have But past. it, seen not have would cautionary be impacts in seen inflationary all place, think up the They're So I look, seeing should really we're we're

Alexander Rygiel

And I this is missed then And accelerating? organic sorry what backlog the if it see about go-forward Is is kind of of organic telling Telecom segment? segment? basis? within growth that growth Can double-digit you a what out this, XX-month but backlog on your we

Earl Austin

to backlog billion build We in carriers and find well we're telecom. it, regulated as be stay than $X could as billion just backlog spontaneous more something Yes, in telecom. Alex. our and our about I cyclical We It's the utilities $X more developers. in about

really I about digits cautious we what business. grow digits, as We be on we're growth we'll going is which so upper the after. faced margins think double purpose. single And the are to that do that

where could So feel has our We The really us. company grow. sit. I'm comfortable that happy I will platform worked portfolio. we the hard allow on

show single margins. electric, the in it portfolio, has about we've done G&A team lot the things You're seeing a displacing But management internally that a brand, lot that UI talked I that location. X into up single X way the and know we've bought this about really renewables. talked and we we're

impacts at You're the the across EBITDA. pick Quanta as adjusted the up board we seeing

Operator

with Group. Kaplowitz comes Citi question Andy from next Our

Andrew Kaplowitz

Is power have? the there evidence as your increase evidence amount MSAs outsourcing? to could of electric quite existing MSAs labor? more you color seeing are own the your with us customers new to given their moving negotiations Maybe regarding give your Are with regarding tight that are of customers utilities, more customers re-upping MSAs. continuing you of likely of And work

Earl Austin

quite the bit, we collaborate I think customer look Nothing's when a at changed there.

robust sit in makes always on has. ability it time, good budget. a our have safely, field environment, conversation macro easy on an in well markets to It execute to and and continue We it the marketplace the

conversations execute in long pretty continue field. those the we are as easy. As And to

Andrew Kaplowitz

see an whether more give in or So maybe you're part becoming you're can you Doug, head it's working PG&E XXXX? Do you else you into project business your anything seeing what meaningful undergrounding the us a update on undergrounding, on? of much as

Earl Austin

I helping do forward. a be think for you're big Gulf the on lot it But seeing if quite the end we business, budgets, the all It all helping and the stages, the look substantially on where West environmental front work and doing the about not think that going that capital the across forward, really I the utilities anticipating the is only that. us portion talked will get engineering, is 'XX moving see for 'XX. hardening. we're those in permitting, Coast reduced the West, tough is us of are than to Early bit things the do different a per permitting, lot of West front-end a mile, the prepared you undergrounding and you bills cost in storm our West it undergrounding in back with what the is planning. in client

what So said we I like there.

that in Gulf show you'll I up in is see think Coast. something off it 'XX the and

Operator

Capital question next Eastman Our is from Sean KeyBanc with Markets.

Sean Eastman

wind come back segment. on the sort come the to being comment -- the margin dynamic? What in So thought of I from I is Blattner that I'm forward. and wind business Tell of about us if in a the projects that wanted back me correct wanted to progression does the lot in side? Renewables Because XXXX softer pulled softness but in a the anticipated seeing wrong, year-over-year to margin that perspective, win check I that. we're on about this

Earl Austin

seeing with little the it's whether do to are bit. platform it's anything margin But with that it we or or Blattner. being know said, Blattner I don't issues think any solar. down I has the a on don't

to everything prudent in go-forward I does we scale, the there inflationary as as I to worry a approach had the mix well a the pressures as that large on guidance to work think of not it basis transmission have impacts The through on do station don't segment. segment well with did taking margins think us as solar electric it interconnect.

are in coming in And just of helps kind Blattner. -- certainly, segment. the It's but do things this low. move is as with think wherever forward, solar and the happy not those I we wind So

did. it, that's see long-term billion some we when in. made 'XX. that $X.X 'XX, early account we of And we even have pulled delay when would reiterated into acquisition. we think think we in we do I kind also But a in we the took thought I

of I and think as growth amount in significant you'll there 'XX as beyond. well see a

Derrick Jensen

those be able double-digit to latter as Yes. they the And levels. levels continue execute EBITDA maybe commented color that well, we the would as exit to we felt at and

Sean Eastman

do. They

around really, Okay. more properly. Great. exciting it's renewables just to I coming was growth years. frame I mix. the margin to wind into question stronger in -- it the I out kind back thought additive not didn't then... And that dynamic. I visibility guess, It's for a of that just see

Earl Austin

So I'm can't margin basis we increase not on the in saying a go-forward segment.

all -- matter. Look, you solar, doesn't it's scale. it's If if wind

If you get more of and G&A, it there. margins certainly scale off out we'll increase cover the

Sean Eastman

an that helpful, point project a really of just Derrick? That's cash of Is sort the Is this over more of bureaucracy Duke. Okay. then versus comment, dynamic. some flows, moving with And client? the contention client Canadian the through the working transmission with to fair this element

Earl Austin

X COVID them been went had I'll Canada. deal -- a Duke. And X ever completed. we one's with quite just is we in bit. No large through This through projects,

the you're didn't at works the And justification for where second look, winter delays we today. have a the that of So the against part. on we in way one delays cost. then one, it's milestone billing anticipate

through many one coming get get it's through those standpoint, it's think the there. we've fact, through been I a we're earlier. working quarters. milestones, in really work it's every it clients going have other the taken approach, Canada. than justifying -- my from lot know that of And good We of we those confident look, matter little to taken with we'll escalate don't contention forward. say, paper, with I'm this to same off, more times work through would documentation. only a There's we've I in this through and normal. we've We'll now. But moving just paid A them there's and -- so it, the no

Derrick Jensen

I agree.

Operator

is Sachs. question Mehta next with Our Goldman from Neil

Neil Mehta

it any process way through right recognize making what question the your opportunity as was for And solutions, into infrastructure now. you mean could it but the of renewables environment legislation electric renewable for positive to an the do that's be first early to in The tie it's observations I energy just it. that But could around a way clearly, infrastructure set can power Congress dynamic its unbelievably see well? And also try business? solutions

Earl Austin

No but renewable, the For sure, renewable legislation the question. on backwards the anything anything grid. and affects I'll go question,

the of the impacts we're anything backside about talking so grid. And

increase yes, And legislation substantial think on great. either just And don't pass, many in happy. I it I way, than want spend positive stated, it the so as in for a It's does XXX I positive all us if we're say comment pages. to utility it's to think, don't at is look, ways. extremely incrementally other

Neil Mehta

wanted And free That follow just to question. up the cash I flow on sense. makes

much specific the between I versus that help was project project guidance Canada. can how items? the think But you provided in cash us previous some clarity other one? around you flow free bridge on this specific And

Earl Austin

want that. answer you back, came Derrick to why That's if

Neil Mehta

of never to these do That's right. is calls going again. why another one All Derrick

Derrick Jensen

portion for XX% revenue XX%. running start of XX% is can million the uptick the at $XX at to stage, in is $XX fact will organic about At flow double capital like you to talked $XXX the length if year, the going the probably revenue talked going biggest our that, you're exceed And the to when see the down The flow cash drifting drives the think look on We've mean, to this range. demands running growth is I against math, year XX% you digits. I about see capital. XX capital million, conversion revenues in we've uptick the higher you to Working growth decrease And to the the uptick free for in past, look, trailing cash see free Well, the cash put working the you into get months. about guidance. pressure of in that about our in of business. levels the million with associated about working to XX% the what flow of

running Having delta the I individual yes, largely about. we the formula. be think timing issues So said I across still remaining would think same were the the that, it's all of project talking

Operator

Gus Our is from next question Richard with Northland.

Auguste Richard

I'm business? And XX tour. to in see weeks utilities Germany. with just customers High-power chain letting question at farewell favorable cause kind is for ask supply. that IGBTs, are long customers seeing, Thanks is I'm your final for limited What getting they second high-volume Derrick's wondering, are better? provide saying your get not are OEMs et your as disruptions in the getting my cetera. And to worse us are supplier The as it don't typically question equipment this? is in seeing of a about it on Yes. The going issues continue that customers largest allocation supply lead times

Earl Austin

really the collaborate Yes, I transformers, or on thing, we're some those but I point. honestly, the are distribution to on, spot with stuff of kind transformers that's seeing see. there, here A what this of client what at are think, bigger trying little the we're focused

a on We're collaborate They through collaborative are The items through and term. don't coming is well. pretty bit. with a as look, kind the workforce this all daily utility industry is transmission out chains. we've But long working some issues in delay with move a issues. can I work very on basis think We in client quite manner. seen those -- our these is of We're solutions supply those nimble. resilient. Some these

shift double factories. can You

things equipment. You to different expedite of the modern do lot a can all

always look, lag turbines big your transformers a big and So and HVDC there's on of kind things. those

things us collaborate side is that is that already business these our client. So through I do doing to certainly and front issues the there move the we're Quanta It in working a I baked think the forward execute with and we're planning place the believe can field. system, minor successful and be where that and is helping on business. in of the end the in

Operator

back questions time. any comments. further at the for would to floor closing over are I turn no management There this to like

Earl Austin

family here Derrick call, you've for someone team first, Yes. to she's to It the know thank I shows the want successful. the aspect this in done a caller the at want of the and a -- Jayshree. mine and lot listening about is eases And have Jayshree I doing to company. his to to make on here in stepping of the lot we great, certainly management quarter here.

easy So you. Thanks in execute this make truly call interest we as women of and for in for participated all in today. Quanta. so easy appreciate thank everyone make field that and you well, that us. our you job the call the them your And and

Operator

This concludes today's conference.

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

Quanta Services (PWR) 4 Aug 222022 Q2 Earnings call transcript