Quanta Beats Estimate, Down Y/Y

Quanta Services Inc. (PWR - Analyst Report) released its third-quarter 2011 results before the opening bell today, reporting adjusted earnings per share of 29 cents, above the Zacks Consensus Estimate of 24 cents but below the prior-year quarter earnings of 32 cents.

Total Revenue

Total revenue for the quarter was $1.25 billion compared with $1.21 billion in the prior-year quarter. The company’s backlog in the quarter reached a record level at $7.2 billion. During the quarter, the company gained a number electric transmission projects as well as added to its backlog approximately $250 million from large diameter pipeline projects.

Segment Details

Electric Power revenue in the quarter was $822.7 million compared with $532.6 million in the prior-year period. Natural Gas and Pipeline revenue came in at $259.0 million compared with $551.7 million, Telecommunications revenue was $140.7 million compared with $93.6 million and Fiber Optic Licensing revenue was $28.4 million compared with $28.1 million.

Segment wise, total Backlog came in at $4.86 billion, $1.37 billion, $530.6 million and $418.6 million in Electric Power, Natural Gas and Pipeline, Telecommunications and Fiber Optic Licensing segment, respectively.

Income and Expenses

Operating income in the quarter was $94.0 million compared with $94.6 million in the prior-year quarter. SG&A expense was $92.4 million compared with $82.0 million in the comparable quarter last year.

Segment operating income was $101.8 million, $15.9 million and $12.0 million in Electric Power, Telecommunications and Fiber Optic Licensing segment, respectively. Natural Gas and Pipeline segment reported operating loss was $3.9 million.

Balance Sheet and Cash Flow

Cash and cash equivalents at the end of the quarter were $257.8 million with shareholders equity of $3.3 billion.

Acquisition

Quanta completed four of its acquisitions during the third quarter. Total value of these acquisitions came in at $82 million. Three of the acquisitions were of Canadian electric power contractors and one was of an Australian specialty directional drilling company.

Outlook

The company expects to report improved results as it moves ahead. In fourth quarter, the company expects to achieve better result than the reported quarter. Quanta expects revenues for the fourth quarter of 2011 to range between $1.35 billion and $1.45 billion and diluted earnings per share to be in the range of 32 cents to 36 cents. Adjusted diluted earnings per share (non-GAAP earnings) are expected to be 36 cents to 40 cents for the fourth quarter of 2011.

Quanta Services Inc. (Quanta) is a leading national provider of specialty contracting services, and is one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.

Effective during the quarter ended Sep 30, 2009, Quanta began reporting its results under four reportable segments: (1) Electric Power Infrastructure Services, (2) Natural Gas and Pipeline Infrastructure Services, (3) Telecommunications Infrastructure Services and (4) Fiber Optic Licensing.

We continue to maintain a Neutral rating on Quanta Services, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

Read the full analyst report on PWR