Earnings call transcript Q1 2023

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Kip Rupp

Thank you, and welcome, everyone, to the Quanta Services First Quarter 2023 Earnings Conference Call. This morning, we issued a press release announcing our first quarter 2023 results which can be found in the Investor Relations section of our website at quantaservices.com, along with a summary of our 2023 outlook and commentary that we will discuss this morning.

Additionally, we will use a slide presentation this morning to accompany our prepared remarks which is viewable through the call's webcast and is also available on the Investor Relations section of the Quanta Services website.

Please remember that information reported on this call speaks only as of today, May 4, 2023, and therefore, you had advised that any time-sensitive information may no longer be accurate as of any replay of this call.

This call will include forward-looking statements intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 and including all statements reflecting expectations, intentions, assumptions or beliefs about future events or performance or that do not solely relate to historical recurrent facts.

and undue uncertainties these difficult or and or Quanta's place involve as to implied. not differ beyond risks, may certain assumptions control, should reliance those statements on they predict materially You from results expressed actual that are We'll historical certain present forecasted non-GAAP also measures. financial and their those our slide and earnings to comparable financial most of Reconciliations measures measures GAAP release presentation. directly financial are in included

and regarding non-GAAP of appendix measures. Please see our slide for forward-looking additional and statements Slide the information financial presentation the X

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

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

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

Duke Austin

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

and On XXXX the it first I operational Jayshree will results, over of provide call strategic today, expectations. Quanta's year to full review provide we'll quarter to our a turn financial Desai, CFO, commentary, and

comments, questions. we welcome Jayshree's Following your

Record, Quanta Before received to briefly its prestigious that reviewing the of would from honor, I award like publication. we the and excellence. recognition Engineering selected our begin highlight construction engineering Quanta for financial results, a News industry our leading recently In and highest

and and shared safety training I for and our in about excellence, it safely being for with safety industry but is selected environment not award. its in dedication the Quanta build incidents, with capacity unique work and order mistakes leadership this recognized to is from program congratulate to create think learning Quanta on their that improved safety outcomes. to to also the want their employees success changing our we, model, how customers designed safety prevents drive and was that Quanta a capacity focuses only innovative a sell in to

double-digit revenue EPS growth a to include $X.XX demonstrate results, start quarter first good of diluted and which Our adjusted year. the

our enhance model year track XXXX achieve More to our expectations. multiyear self-perform on remain and importantly, to we full continue and

at $XX.X billion, higher year. end backlog a last than total record considerably same the the period Additionally, and was quarter

this as to by year, the opportunity the our larger early significantly designed We stages capitalizing are morning. by are service announced base and see through our which ultimately collaborative the is and consumers. approach projects increase projects, our we energy in such opportunities significant backlog we benefit SunZia on we we business move Notably, lines, driven of SunZia that solution-based Transmission Wind believe across as transition driven to

provide with our the outlook. customers of flex Additionally, near and new into spending favorable growth the and long-term megatrends greater and programmatic growth existing visibility

Power revenues. execution. is for and initiatives, system Infrastructure driven for activity reputation broad-based Solutions services as safe generated utility business from our well Electric by segment our to hardening Our as Demand consistent record quarterly perform modernization, continued and and grid strong, grid security well

resources continue customers deployment them capital We constraints. supply work to to initiatives help with meet address provide with to to our and chain them their

quarters, upgrade several that power require past to will our grid and the the over discussed significant view energy have the we As handle is transition. modernization electric

that rate vehicle grid We faster are significant increase a could which we many. that could than also expected, by create penetration believe at underappreciated constraints electric believe

not EV-driven the distribution term, accelerating with medium supply to inability availability, be system. the most expect move generation near term demand the through to the in but load in issue will the We supply low regions current areas

challenge XXXX. acutely increasingly and fleets, developing car and United commercial XXXX UBS, from will penetration trucks medium grid We this approximately impacted is more become be quadruple expected According States to than capacity to buses be to in from by heavy-duty approximately EV estimates X% electrified. XX% believe as

Quanta to products for that For partnership example, partner charging turnkey, fleets and yesterday, electric us heavy-duty enables a provide infrastructure medium long-standing trucks efficiently. deploy customers battery announced with to vehicle its a and EVs and Navistar quickly solution to a key battery

to customers and fully designing e-mobility Navistar's EV with grid. delivering solutions integrated in The infrastructure the to assessing battery its infrastructure expertise partnership into intends Quanta's EV building leverage and charging the to power approach interconnecting charging

Quanta growing and with understands and transition of of Navistar, vantage everything its grid infrastructure challenges power the point into the have with energy as example, accelerates. unique agreement partnership as an electrification we the

on and prior to produce and economy require added to and ensure emissions discussed electrification system. As generation of Power growth carbon we the to the facilities and reduce substantial grid renewable increased will of meaningfully transmission, transport investment substation calls, Clean the due intermittent have incremental to to in reliability power

we reasons a believe industry. our value in to customers Blattner unique on the transform strategic their proposition create utility-scale decades solutions renewable addition grid we with solutions because the to of the of will transition ability One acquired coming holistic Quanta's was collaborate our the and strategies over generation early energy

projects, this end, provide that solutions United and selected by the we States history. Energy project to morning, Quanta SunZia To compromise infrastructure together clean the Transmission in largest that SunZia which Wind infrastructure announced Pattern comprehensive the for was energy

our industries the awards leverage serve will as execute transition our combined infrastructure of demonstrate and going and Energy. and validate providing transmission collaborative renewable the which believe Pattern capabilities companies multiple solutions We renewable energy approach for utility Quanta projects these the to of high-voltage power these operating to value a forward. model solutions, for the generation project of can

the project the renewable chain hurdles solar activities As for expected, from regulatory in in seasonality last and a in panel year quarter. resulted our normal start first supply generation slow

to and throughout expect activity However, is we project renewable improving dynamics the generation continue which year. accelerating, are these

levels of construction the focused about record be least. capacity handle in new we decade, expect our and the of on beyond in levels projects generation and XX projects. renewable clients capacity coming were at XXXX Further, renewable end scaling of over are For utility-scale generation we example, in active April, various resources at with on are discussions what to we and additions

are and reliability. transmission pursuing of dollars high-voltage and generation designed are billions to system we current of support overall projects that capacity future renewable Additionally, growth

Underground with double-digit performance Utility quarter across this the our growth segment first solid in Solutions in the of pleased which profitability, our Infrastructure first operations revenue of are demonstrating segment. We levels and execution delivered record quarter, and

Our industrial experienced well and executed services operations activity X strong following deferred pandemic. demand the during of years

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

continue that geographies, across transition as the ship resources believe ability become to operational us to advantage increasingly we important energy is strategic a will We lines provides and accelerates. the believe our which portfolio service

to We operating allocate and positions most efficiencies operational the opportunities. consistency. enhance our resources our We that us approach believe portfolio the and well attractive find economical financial to achieve to

consistent multiyear strategic gaining The and growth believe successfully profitable our us for for our energy financial a continues which transition sustainable consistent - value stakeholders, XXXX excellence, gives executing Quanta to on towards ability and reduced of is on our pace. and expectations. profitable confidence our progress and all operational value resilient to and our clients, solutions is drive cost deliver economy in we initiatives to total

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

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

for our call now and to turn the CFO, Desai, I over her Jayshree? Jayshree first results quarter expectations. will of our review XXXX

Jayshree Desai

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

were call Our and were first revenues income X.X% the segment. on and reflecting and across last execution the operating views $X.X with quarter successful margins electric quarter's power directional provided consistent billion,

base lead for hardening our create solutions. continues the Our way modernization investments initiatives growing and the comprehensive as for demand segment in business utility to

$X segment quarter move than were acceleration to Infrastructure margins in activities 'XX quarter due better for of revenues with expected Revenues the of Energy with customers renewable operating our Renewable first projects. X.X%. income as were forward construction billion the

renewable on lower perspective, absorption lowest pressure volumes that segment of in calls. we we've expected a overall on discussed the year margin by quarter large of cost bulk the fixed light our prior pressure are margin margins. segment be was create we and pleased to would the last The which we the transmission results call, segment's renewable the As anticipated on of first from however, mentioned project from revenues Canada, In project activities. with the affected, our

impacting completion quarter, we after quite and complete as of and March of build are XX% to our construction next on points. achieve Yet positioned substantial of XXX margins delays, during our control, project over progress, successful season. winter project basis activities believe significant outside access we the the logistics With negatively by issues the the quarter increased approximately were despite XX, cost other the

these We are and are financial customer other to with outcome. collaboratively and equitable working recover in associated with impacts issues the confident the an

the and Utility segment margins billion for Infrastructure $X.X were Underground and revenues were quarter X.X%. operating income

from the Continued exceeding margins expectations, levels. anticipated than performance cost operations absorption business with our improved strength revenue base higher benefiting on drove from fixed

'XX For please this additional accompanying quarter slides call. to quarter commentary the first to refer first 'XX, comparing

to levels. to billion, backlog to an of At amounts to XXXX, With billion awarded record compared this was did to and regard increase $XX.X announced end. December XX which morning we the and quarter backlog, achieve SunZia, $X.X we include not related continue March was XX, subsequent

of Our record for indicator XX-month solutions. the steady is backlog a level our at another billion we also is which business base $XX.X growing of believe demand

levels remain to Our that backlog lead record quarters. can in with opportunities robust of end subsequent markets new

cash aided renewables activities expected, a first first is measured XX demands million, quarter aforementioned ramp-up our typical for average, from by of as $XX negative quarter than with the certain XXXX, which during quarter. following working we holidays, of associated project capital XXXX, the flow lower days work had billing the historical of For for Canadian free first of awards the quarter. driven arrangements well by as the as the favorable DSO

our contract transmission the confident position. approximately during days pressure 'XX which project, are customer balance in the discussions of asset to balance March increasingly the ongoing, quarter of we X to renewable as with represents grew and X Positive Canadian regarding of and DSO the XX, continues DSO. are first Regarding portions

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

leverage deployed first and capital liquidity increased profile in roughly is million $XXX to the decrease due on in acquisitions of The quarter.

We earnings efficiently ability over continuing support cash and to growth quarters capital to stockholder incremental while value create expect the delever deployment. our through generation continued to coming

record guidance. with the performance quarter our We field. revenues the year had first and to Turning start strong a to nice in

while million, $XXX unchanged, and we raising expectations $X.XX. year Given are to per our $X.XX attributable between for expectations are strength, the by share revenue earnings stock common that diluted for our full year adjusted ranging

From year, to $XX.X segment and and billion a for $XX full XX.X%. year continue revenues margins segment with Electric perspective, see billion between between the XX.X% we

to northern and We challenging margins second expect quarter due western be America. parts pressured weather the segment in to throughout North somewhat conditions the of

segment, segment between by $XXX quarter Regarding our increased given awards, our $X.X raising of the and expectations full the year million, are ranking and billion first the strength we $X.X revenue billion. Renewable project for

by The in We a in X.X% for being segment portfolio second single Underground to our shift in year, offset is digits. reduction continue in the to mix. with the renewables expected increase margins around expect quarter the due upper margins a

full are expectations between which of can of revenue section slightly expect the IR to Information other of aspects outlook found in year modified Financial Our the unchanged, our be are our our and but We X% details margins summary, website we now which quantaservices.com. in X.X%. at guidance, segment range included

to to support transition through Looking North We value end capital growth trends and to strengthen, shareholder a carbon are support utilities, most infrastructure markets significant the driven our their by strategic to to comprehensive investment. importantly, by modernizing future. reduced ahead, create deliver serve increased load and believe continue we to and we led electrification solutions organic to positioned uniquely America's markets

for operator the now Operator? it turn I'll to Q&A. back

Operator

Our Citigroup. proceed your Please question Andy the first with question. you of Kaplowitz [Operator is Thank Instructions] line from with

Andy Kaplowitz

morning, Good everyone.

Duke Austin

Morning.

Andy Kaplowitz

that you discussed. to increase, at that backlog your your projects expect at would Duke, acceleration the does view then Quanta higher few XX% frequency had the has Day probability think EPS the I higher the It told talked continue just backlog last of us seeing backlog you you And an seems I projects? over Analyst you you large like about these quarters. generally plus types in deliver been announcing could term raised in more like growth their to you are And continue? know accelerating end? are

Duke Austin

Yes. Thanks, Andy.

get market, that through different at larger projects you've there's you the things. I a think amount got when we permitting, the got especially a of to to within significant get and look market lot the through

need you're More that more North going in what if than importantly, matter, to is for America, significant, for estimate. transition people the way transmission will

bit you a think we are. transition hear quite where were towards it I moving the

So have to this projects well see that also board, are centers large need said, to the load we that with the provide existing you renewables. the where areas across addressing do as have projects load multiyear but from you customers

and So you're certainly like what increasing. that those with things, are with things along EV penetration doing

across want dialogue see where go continues to The we a want go robust. grow. modernization, do anywhere build not where electric XXXX, we're trying and to environment carbon necessary a of to we from this Our It's infrastructure vehicles in to way. penetration this in a infrastructure is significant handle amount path without get XXXX, the grid. meant with customers to capital don't modernizing without the I of significant to to go, what XXXX to near

Andy Kaplowitz

least trending higher-end your at last talked you we about target towards year? that Are

Duke Austin

don't We up and have it significantly. growing. SunZia even go backlog will Our

it more given line good by CAGR, throughout this that on with quarter today, significantly the the XX% and XX%. through stand I you type grow year. I not see ability EPS may to be mean it growth it we've a the stopping. multiyear guidance don't at grow It so. even I will single will every go a perfect year, I think up but

Andy Kaplowitz

it. Appreciate

Operator

question. question Our from of Davis. the with is Adam with your Thomson, Please Thalhimer line proceed next

Adam Thalhimer

with Hey. to things chain? the Duke renewable do year. strong Good the guys. Congrats morning, on a - supply level, high with a start where at renewable stand

Duke Austin

think I yesterday, I or mean I you better. remember. getting you can't even still still Congress today it's hear

we will reliance your have have, for to certainly of I that to year. how You for kind risk-adjusted all this around through panels. all, what this. see see things China play what do in we And continue start on think But for guiding we're we

regulation know ways. So bit everything offshore. way has panels We continue the do what aren't - We if I are I in. kind do has alleviated any supply think that gotten we've in. a it. and chain so what better many panels Certainly, watched we'll believe that, good about could things trend know there's in do for being more I But do providing those onshore think us than that of the matter, think that change. Jayshree or can I a like solutions. it And see more we that's comment. for in

Jayshree Desai

No, That's nothing have I more add. right. to

is that sentiment the there tariff it sort that opening anti-China seeing is to chain again. We're a supply ensuring of if think make under their the I sort But the they're supply under the meeting job any obviously provisions. requirements better affect yes, push of of manufacturers up. the -- that regulation, panel continues chain, through, any do -- can

Adam Thalhimer

Thank Okay. you.

Operator

your Please question. with with proceed question next line from Riley. of The Rygiel Alex is the B.

Alex Rygiel

gentlemen. you external And from coming on change Thank percentage subs? the do the generated Real could self-perform you, Where versus over stand it quick of revenue how question years? here.

Duke Austin

Alex. Yes. Thanks,

I in general, about XX% think we're still.

material for that We it's think make If mix. the same about We comment is it. self-performed. remains XX% we'll us. I of the Today, concentric, that that. the mix like on still work business for like some more it's

to of the our provide sure I to have, self-perform can client operate to to we to the through one that and those that to we any no certainty for we that have able think And power, times about our on be constraints ability kind issue. understands it mix. and have make and delivery we We certainly in projects need continue. will on earnings

you'll mix see. So that's about the

Alex Rygiel

can environment, to secondly, the SunZia? you competitive does bit particularly And it how then how a ago? few Congratulations on talk as years that. little compare But to that? on about many relates were And a that bidders

Duke Austin

believe do the a Yes. us. a effort. And Honestly, with both for what When create we what of client, idea. us great the collaborative this. know I what synergies we Blattner we shows in do acquisition for can client I together, have a a don't the you was that I any put for we did had It can like client. together project collaboration the it can

both type upon certainly of can history we're of it's with client to impacts ultimate is the it's think anyone based do of in to would of be construction early and think through upon that transition, projects I I and proof solutions done what say can able we for any can unlike we based proof do concept, can what there to these this really sides don't consumer create what other. with

Alex Rygiel

Thank you.

Operator

of Baird. line question. W. next is with proceed the from Our your Hauke Robert Justin question with Please

Justin Hauke

thanks. Great,

has I SunZia, regulatory it So just side it's that questions all out start is to I the just outstanding your this guess side. pieces year because moving it? cleared that there still forever, the to pretty on had there, it financing construction and And a I'm is needs in couple I you're up? there XQ? of Or related that on obviously, that all assuming for that, been of much contribution any guess kinds from to guidance it's then had curious, in is anything receive

Duke Austin

Yes.

from a And in go. It that it's revenue to guidance some said, pullback uncommitted in But we it. the have I doesn't award. or minimal. this -- path don't our prior was a don't see where We year our it

being feel and long made it's there's lot that We a like commitments Blattner project, matter. customer, So project, time great is patterns go project of the a here. of a for IRA

be can infrastructure. take took a done long work. to worked and long yes, in for confident, we're industry, and long, It make time. with a project. shouldn't this build to the project sure America long this is through and showcase it's them a that what And hard It client we've the So us hard

-- it's across certainly, get finish glad we're for everyone. line So it the to

Justin Hauke

job. Okay. Great. question just And on my the then That's helpful. second renewable is Canadian I guess

You complete expecting winter with and the next said it's it to you're XX% complete, build.

next of on So of to next completes? get it? way Is for shouldn't think and does and of kind that right we start we a that couple when to no quarters, won't the back that until source potential winter the that, about contribution so there's up as again mean think that pressure it really of it

Duke Austin

no on the a it, little a little bit way project northern the a bit where the project, pandemic. climes this, we've through that them the bit putting on we it's can about off it northern I so in but done. -- And a one's renewable power and like on Yes, about did That's to project you way that we done fuel just taken significant a can project. think what the discuss it's it's climes and people think be in think

through built pandemic Our a people this. work and

that And I'm say taken we're northern so anyone that the so one's through position. that. a way we is one's said, at All can it. better ever thinking build in climes ever way taking prudent can than confident the no things a prudent approach world. it, looked done approach No -- the in I we've we've in our

I so. much prudent took to approach think to we better do what than continue We'll have, a but we it's it.

I it taken. and the don't we're feel fluctuations see job and I the we rest of that was any year derisk the you'll the other to rest think approach in sure goes confident make unless it we've really at, with the of where decision more our way. the

our possible. this happy build for significant people, what's extremely environment we're of code-free us in with a was So

Our the chart. everything were productivity rates off else and

believe with dividends and pleased long up, the So term. will pay we do real I in it how finished

Justin Hauke

Thanks. great. Okay,

Operator

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

Steven Fisher

reminder last this Congrats follow that a there. on things renewable SunZia. to to just wanted morning. on I point up mean, seems on these Good I happen that Thanks. can be projects.

Blattner an get you other SunZia can overhang these that before. going risks And on execution so reasonably we comfortable how done to Mexico can has investors what in work New comfort can is be that be not controlled give

a efforts to the We project. it's it's this great taking huge You're -- obviously do quarter but have from margin derisk big, renewables impact projects. business, a

give investors you you. can not going to be execution an now? there's comfort Thank that what So overhang

Duke Austin

SunZia our did on let down Steve. What many, I know to nicely. off has don't project pandemic, line many times, it, Thanks, with we right control We us, pattern claim. you of done a the settlements I yet. middle that the both project, is -- a for in really not can't is pandemic I'll across the XX-month address world, a concerned. wind all with just so got that part how from get know we if when the built

work in camp Canada, through a in But pandemic America. most the in in the XX-month one northern we territory a North

by project the way, and the rails. off there up - other is like every So

I gas, our coastal compared we've to Mountain at look they So look what like Trans at chances. did done. what

I doing So to this and come. expect right on - many large middle. know we're one I them the on is projects, more we know of

Steven Fisher

you. Thank Okay.

Operator

question from next with The question. is proceed your the Chad with line Bernstein. Dillard of Please

Chad Dillard

guys. Good morning, Hi.

impact quarters, And electric about is First about of shift? of you like particularly like over the margin years? the think of you've with that transmission? mix do had what large wins recent can a next where the talk mix think trying in how the of then couple spate what goes projects couple all, mix versus to understand of And potential of multiple that we should I'm today, like small over you the is large

Duke Austin

will I between laid significantly. projects base think same about when out. XX% look at it's grow XX%, it it, we've Large why the you the business,

grow base seeing. programmatic you're larger projects there Our It's business MSA will than just signing multiyears. the over much expense We're significantly. type that

have multiyear we end little that much current This are -- that in bigger. that longer in with get said, agreements MSAs I think -- SunZia type type nature of customers done 'XX. goes 'XX, line is 'XX, our the But faster, we a are over

good. the as on things the effect see to accomplish we're I strategies And about stacking do believe And projects, years the a certainly, where to I So and better. we're And we're we little all we've maybe our larger of as talked able base both at. I the it. that X the these there out. looks well are as due to front on like in right think And track, company continue outlook transition the is

Chad Dillard

helpful. then, for is give work stage what more Quanta? then like it's you on the something of you've the And about? can the Is pro partnership? of brought And where just cycle Quanta in? color been And at that sales That's is like this Navistar little exclusive a like this talking type

Duke Austin

Yes. When we truck start to is safest think that infrastructure we relate I what do what do it vehicles. we we I the which we think the led to to -- create Navistar And necessary build other with to things. do to it's look try can things well, to safest only go together the -- And how as automated industry, what not together at our then trying that can to was electric other can we with just driving, with where create can leads contract, the suppliers do truck the us, but collaborate. such we the our in collaboration

town. said, you bus North think it's and of Many more EV than school it if buses, an you districts every at the go in That load school across district pull about will once you America, bus, significant. put -- buses school depot to their in type the share of amount the load market Navistar's

it significant we So you're when the build. It's you meaningful out districts company. the and it's that struggling thinking a work school And there, in if think all front for that start through of I are with municipalities move clients this, environment the and can free. utility on everyone certainly carbon effective work and end cost we towards our we to create an allows do that together,

Chad Dillard

Thank you.

Operator

of with is with line question Jamie Please question. Credit proceed your Suisse. the next Cook from Our

Jamie Cook

investing SunZia. is in you're I bidding question, sort way could and any the projects know investment are in you both but can I even in Hi, you've number transmission size morning. ramp many out short that bidding more worried a for period there some renewable or first of there? need SunZia, labor what to opportunities - Congrats you're to be see of the the could where on, And and how And of in we the labor like that been term? side you to risk what are or you so on your you margins that good more? always degree time, have, guess dollars,

then margins you that expectations, maintained for question quarter just the within year think the is were you lower. but And guidance your explained your my on I renewable renewables, fine, understanding modeling second first below being margin the despite first and quarter

So I'm slightly expected? the business implies of a at wondering you that the rest potentially Thanks. than if is better level performing

Duke Austin

Good morning, Jamie.

do call on projects you All didn't when have that we're customer combining it, you renewable about I So usually today. think when that. think The Blattner, are XX we those the with weren't interconnections. discussions have

a doing of You the were were we the -- interconnections really the lot for utilities for or developers.

we economical we the it think more the the a and we around economics more the bigger with wind Some projects, through more it, are do for quite interconnection to us going think think client, is it, show towards a and I solar both the the the combined that bit. approach through certainly,

is coming utilities are out West or win As both significant bringing from there's a projects that driving or amount wind, If combine from the East they Coast where better. load towards we're it. the sides far on whether we're it on down not. on of absolutely the you're Usually, as of -- ongoing wind there Canada, side

end. for show I cheaper economics we ultimate project the ultimate think more at that consumer how do the our we that is is around and efficient. job the it's it and to the that see And it. Can the the client

kind I be it I So think everyone collaborate our those done. what I And wins. a do you early, of get think like -- chances. results highlight and when certainly SunZia can is you of

to renewables, start the As and bit. I the business that X you much And -- the in the in a IRA happened all did a months Canadian think that the renewable lot far you coming I had stop believe scaling, of it regulations one what because do on when in. project also of pulling board, the no 'XX. scale as we're across down X a months, way the where margins was

a As the stock more base don't going you're into the this comes get that where significantly second, that to run fourth. the rate you and in, cadence have grow, that have on and of growing as first IRA top I third think see of the on you the you'll quarter you're rate into can from you you'll

have nothing side historical, we believe you get And in on we than And on -- of on back more side front. much the margins. the back I obviously historical better perform did to any everything outside

you for on right it's quarter, but the -- to have the the projects some smooth middle that but of seasonality user, it think mobilizing have impacts down second quarter that we're first this. the grow -- backside And fact, on fourth your I the us on In some going and beyond. due out should that and in things 'XX into our obviously create is you'll in way to should of

Jayshree Desai

more and better third, climates. as have said, result have of going move absorption the into quarter have Yes. as XXX a cost the to When rest And than into better you're doing the we to were we of as the to margins are our volume, I The we Canadian we you were rest Duke going in getting project the of second, you're better of are said, business, out And first fixed pleased, at performance of there impact better as points. expected. we better just seeing you're productivity business, basis Jamie. see performance going

Jamie Cook

run you, margin not the if in if that's to what seeing rate I'm back double-digit going implied just wondering half just push you're given forward market? the a new Well,

Duke Austin

Jamie months' do it in If -- clean of but to I'll if be history a can dialogue, enough math, you run you XX renewables, to be half. give that. got you've double have certainly I get place on much will back to on better don't digits some We worth give the you the in

Jamie Cook

you. Thank Okay.

Operator

Our the question. with Bianchi is of Please from proceed Cowen. question Marc next your with line TD

Marc Bianchi

gets quarters? level backlog Is I Thank a second continue and work level all, to at several then how bandwidth How SunZia much up should guess, in And is there how your filled does take backlog to if you. and probably constrained, that on here for that to you're contribute on additional quarter? to where - going the, your work? just third

Duke Austin

the we we put I demands We to that it and it's quite in big set out how labor think problem to is the we've resources said America, where anything up But We're what growth going certainly We'll because and in The company can that's as projects challenge the market next constraints. We the in X,XXX it. outpaced XX,XXX today. supply seen in continues. in that certainly close general, ability a that of where and We're demand chain the were catch was. -- to I grow looks to I've way And quarter. grow the efficient bidding grown out infer a to on. can more like. the can there. job ability is. quarter, and do backlog grow the to -- large. renewable see we'll roughly North meet on the has anything on not very employees we're you not largest put I continue a We backlog. seen think so we comment our our about that around perform to the hear said, there handle lot handle project far

Marc Bianchi

Okay. Thank you.

Operator

Goldman your question question. Mehta line Please is from Our of the next proceed Neil with Sachs. with

Neil Mehta

the you're the cash you and be should just that is being. to you're my $X $XXX question on over Duke first flow whether band the cash whether we Good guess about and team. -- and flow, free billion targeting I yourself around year And progression within the where course see and how million thinking morning, track guidance of

Jayshree Desai

that Neil, about billion. feel toward still We it. to tracking million $X good Hi, $XXX are we Yes. yes,

first was well did Our first impacted for requirements pressure little a capital is also quarter that typical in back quarter, in which retainage us given the negative, procurement first quarter from our of up. We the as bit material holidays, with as DPOs. ramping the some the working coming have some

and as expectations, the projects increases, our But through. moving again, work within coming renewable more we've forward, well got

in going as revenue see You're cash and to the a that result. come flow

million within $XXX are expectations $X Our billion. still that to

where be. we I would middle me you're that are, think right the the is we're on and -- we today where Neil, where midpoint down if midpoint asking is

change where feel that. good about today no to and are And reason so we see we

Neil Mehta

and the What's Blattner you also set integrate smaller to are as not in right then big strategic been like And ones organization helpful. really the opportunity points of the That's well. making on strategic as competencies Blattner, your ones tuck-ins, just Okay. has recognizing bolt-on is around M&A acquisitions, follow-up just capabilities market for the one core of large but working likely probably are now? less

Duke Austin

first three mid-market extremely made other in think, I that addresses it strategic, We the and solar many things. said, are so quarter, the

think of that. ability these we'll So that that the about the get differently certainly have well as weigh our growth organic thinking that to trends families perpetuate to as way their market. type do do We'll business on to and against believe to I want in we're ability front the

for sure. there's So opportunities

flow. every go we $XXX cash I'll the back we If for million pull And we grow to grow, out. cash business

of I in there. think it's million somewhere free around cash, $XX

So out don't of you're of million going another -- $XX like to million if pull we $XX grow guidance, another of million $XXX cash.

just make to that that grow we happens. is cash. we than got pull We've say, more what So does understands if sure everyone it that

Neil Mehta

Thanks.

Operator

next of question. Markets. Sean Please line question Eastman Capital the with your is KeyBanc from proceed Our with

Sean Eastman

team. Hi,

what you benefit what a give with color this And us more kind the the the SunZia Could pitch to solution. alluded of story see generation on customer later So market and great had you here? the big it's go-to-market to coming of with Duke, together to that transmission revenue guys is is? kind economics win. to synergy when the better kind of the combined come to this being customer you little

Duke Austin

secret -- going kind mean Coke are. a looks I like. the you ingredients sauce, the I'm there's Yes. like Sean. of just I synergies, tell what with to lot of not it It's

only us, about if package engineering a way is with safety for a chains, put supply industry think is, I together the the issue we everything the our construction-led So just ability leads think what to from you in forward, us get a standpoint, not early, long the build.

ability So we know to it. build kinds then And everything logistics the going it's how build know really different we and matches sure we're engineering something who's through else, to all where our look, going from things and of ton. just to and we to build think a make

the know When superintendents that craft they are always the So the we build early going build going sit to ends it it. that's customer with now to well.

Sean Eastman

Okay. Interesting. And then a little granular. bit more

Underground haven't We the hit on segment.

we year margin performance come a down. quarter full bit than I the first think was The for expected. then better has the guidance And quite

mix understand around shift the described. I under happening what's you to just hood So that want

Duke Austin

think into in or just it, Underground, capital at from we the year. you total you some see impacts way some have may of the gas more The little customers, portfolio I LDC half see there. look Electric maybe when Underground to spend here in I overhead think so another or we our can on at the Electric pull rises, a

we your On your gas, business back industrial the to in watch half, it. need

We can't months have see half. X back good and for then visibility you the

on you're is hesitant So this that not putting something at forward there point.

the there'll electric or adjustments all we'll time electric same. the creating think That creating and difference renewables it's I that because the It's happens year-over-year said, some and business. do portfolio underground between shift be electric the electric nothing. watch So mix

doing working what type, it's You just the primarily you're or for the with work work. who you're --

to -- X margins electric beauty -- work could but going times telecom. the be underground, the and I the telecom renewable the higher said, faster business in that electric operating business renewable in underground faster shifts of doing right, doing we'll the the that and We good just portfolio. next, the and we grow you if than And we and thing. can if is the can company thing. at is to continue a side was get mean, So I the the times in see the to gas same at of -- they blend what leverage, if that's I side electric side think It's day mix some you're going than

Sean Eastman

over. Okay, turn it interesting. Thanks. I'll

Operator

Thank you.

is next question the with proceed with of Our from question Research. Vertical Please Dudas your line Michael

Michael Dudas

and Good Jayshree. morning, Duke Kip,

Jayshree Desai

Good morning.

Michael Dudas

any Following up could you the - and trends seeing, you Maybe the you that's been what there on, telecom. on you're visibility some they like XXXX revenue say, share you have it could expectations beneficial mentioned some guys where into, remain of What can been. involved? your more And programs are Quanta? seems anything get of

Duke Austin

Yes, see your we're starting from customers. programs more to non-traditional and more Mike,

trying wouldn’t to we think which to I and So close are me if surpass billion close. is $X we're we accomplish, surprise what it. It very digits double [indiscernible] very,

think I we pace growth the right.

to the continue of we'll and advantage there purposefully take done we've market. think I

that, acquisitions like we're a things or said, That investing that around it's not primarily at organic this from growth point. in lot

really to So expand us that other against it things our market. allows

growth. to It at do in continue get does nice, but and I pacing tickle watch times. opportunities XXXX we're really we'll is our So big it. 'XX beyond.

Michael Dudas

Thanks, Duke.

Operator

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

Brent Thielman

lever, beyond sort Hey. kind for taking you're another that, it seems sort given up the of those of seems competitive the if guess, than be economics last for solar? question. attractive guess, market And is opportunities. more bookings Because necessities is too, the seeing like I Thanks hot and of projects saturated few other bookings some years. RFP a and from quarters It that's in would there. technical maybe are in the it of curious significant Duke, the I wind Wondering years. wind the coming picking outlook new solar and environment of like less

Duke Austin

seeing the what wind well Yes. mean you And so significantly and as fees areas. cards the to more outer to certain your projects when as of in years. I to opportunities some I are up the intermittence the battery going the we're in need pick mean curves handle work

things nature. You transmission of and to interconnects have that have

start these of lot going to behind build it wind transmission them. built, as a get wind lines not see you'll the cues But they're is So to larger more you the And that comment see that this. they don't to to And Jayshree continue let have nice. market big I'll we'll business a if anywhere put certainly is is it. repowering on repowering

Jayshree Desai

moving power that that the of mentioned is we're wind for about Duke's the momentum. well, projects back-half some the be complexities projects it's comment it still is have as get through cues. think just takes I the as more get permitting to to thing competitive to ready add coming for to and reasons have load And move to and have Duke all will still And and the the more wind -- wind through which be have weighted it and allow harder interconnection IRA time. wind the built. But the to where as it's cycle -- is, more only again, you starting development solar. I'd seeing to And be in

we now comfortable with But history to especially in in both. strong wind and in are economics, solar and terms think no, has they've successful both. I building of themselves a Blattner proven be

Brent Thielman

Thank Okay. you.

Operator

you. Thank

this your with Please proceed final Marc Our Cowen. Bianchi morning from of question. be with will TD line question the

Marc Bianchi

thanks. on the back here. margins wanted to Hi, ask renewable half I

so first I the, I'm Canadian project point could like the XXX would mentioned half curious out look burdening of think, basis backlog? burden quarter. in by of be a that once that's just what the we You it what get the would sense back

Duke Austin

bit. anything, Yes, half. I think it's the on material, a in back not if 'XX the It's

bit Canadian an a think in been and segment. won't look - it's I at you when impact So has 'XX, down it that

content So our there's not as in the Canadian of back year. half much

be in back of confident the double sides this - the digits of able performance perform so both the to to in year. of the historical of side we're And business

Marc Bianchi

so Thanks super. much. Okay,

Operator

remarks. Thank you. time, for floor this closing of question-and-answer session. our management end the And we've I'll over reached At the turn to

Duke Austin

them real Thank nice winter want in We you. I a places, for than we're day snow of interest This participating ongoing call. where I'm women from like you a they're standpoint appreciate I'd in to safety call. Yes. mainly They're these And field. in proud and our and the and Quanta the in conference nation's building that And where our in of questions Services. through had people thank is what grid. anyone in the and at. your concludes at better quarter northern foot really they the We thank the in every to world really, our remarkable. do guys, tough perform climes

Operator

Thank you.

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

Quanta Services (PWR) 4 May 232023 Q1 Earnings call transcript