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Quanta Services (PWR) Q1 Earnings Top, Revenues Lag, View Up
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Quanta Services Inc. (PWR - Free Report) reported first-quarter 2021 results, wherein adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Meanwhile, revenues for the quarter missed the consensus mark and declined on a year-over-year basis.
Notably, negative investor sentiments were witnessed as shares of the company dropped 4.5% during the pre-market trading session on May 6.
Duke Austin, President and Chief Executive Officer of Quanta, said, "Spending by utilities on grid modernization, system hardening and renewable generation integration and spending by communications providers on broadband and 5G network deployment are driving strong demand for our services, as evidenced by our record backlog of $15.8 billion. These dynamics continue to enhance our near-term visibility and are expected to be meaningful drivers of our growth going forward, and, when coupled with increasing movement toward a carbon-neutral economy, incrementally increase our growth opportunities."
Quanta Services, Inc. Price, Consensus and EPS Surprise
For the quarter under review, Quanta Services reported adjusted earnings of 83 cents per share that comfortably topped the consensus estimate of 74 cents by 12.2% and increased 76.6% from 47 cents a year ago.
Total revenues of $2,703.6 million missed the consensus mark of $2,758 million by 2%. The figure decreased 2.2% year over year due to lower contribution from its Underground Utility and Infrastructure Solutions segment.
Operating margin for the quarter rose 130 basis points or bps from a year ago to 4.2%. Adjusted EBITDA of $220.2 million also improved 35.4% from $162.6 million a year ago.
The company reported 12-month backlog of $8,932.1 million and total backlog of $15,830.3 million at March 2021-end. At December 2020-end, 12-month backlog came in at $8,266.6 million and total backlog was $15,132.4 million. At March 2020-end, the figures came in at $7,594.5 million and $14,732.4 million, respectively.
Segment Details
The company reports results under two reportable segments: Electric Power Infrastructure Solutions segment (accounting for 76.2% of first-quarter revenues), and Underground Utility and Infrastructure Solutions (23.8%).
First-quarter revenues from Electric Power Infrastructure Services totaled $2,060.1 million, increasing 16.6% year over year. Operating margins expanded 240 bps to 9.7%. The segment’s 12-month backlog was $6,449.3 million, up from $5,252.6 million a year ago. Total backlog of $11,661.1 million also grew from $9,653.8 million reported in the prior-year quarter.
The Underground Utility and Infrastructure Solutions segment’s revenues declined 35.5% from the prior-year quarter to $643.5 million. Operating margin of 1.4% also contracted 170 bps year over year. Nonetheless, the segment’s 12-month backlog totaled $2,482.8 million, up from $2,241.9 million a year ago. However, total backlog declined to $4,169.2 million from $5,078.6 million in the prior-year quarter.
Liquidity
As of Mar 31, 2021, Quanta Services had cash and cash equivalents of $200.2 million compared with $184.6 million at 2020-end. The company’s long-term debt (net of current maturities) amounted to $1,347.6 million, up from $1,174.3 million as of Dec 31, 2020.
Net cash provided by operating activities was $125.6 million for the quarter compared with $227.5 million a year ago. Free cash flow for the quarter came in at $49.4 million compared with $164.4 million reported in first-quarter 2020.
Raised 2021 Guidance
Based on the year-to-date performance and increasing visibility, Quanta Services now expects revenues between $12.05 billion and $12.35 billion versus earlier expectation of $11.95-$12.35 billion.
It expects adjusted earnings between $4.12 and $4.57 versus $4.02-$4.52 per share projected earlier. Adjusted EBITDA is projected within $1.10-$1.20 billion versus prior projection of $1.09-$1.19 billion. Meanwhile, Quanta Services’ full-year non-GAAP free cash flow projection has been reaffirmed within $400-$600 million.
Other top-ranked stocks in the same space include Jacobs Engineering Group Inc. (J - Free Report) , VSE Corporation (VSEC - Free Report) and ChampionX Corporation (CHX - Free Report) , each carrying a Zacks Rank #2.
Jacobs’ fiscal 2021 earnings are expected to rise 5.8%.
VSE’s 2021 earnings are expected to grow 4.6%.
ChampionX’s 2021 earnings are expected to grow 400%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Quanta Services (PWR) Q1 Earnings Top, Revenues Lag, View Up
Quanta Services Inc. (PWR - Free Report) reported first-quarter 2021 results, wherein adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Meanwhile, revenues for the quarter missed the consensus mark and declined on a year-over-year basis.
Notably, negative investor sentiments were witnessed as shares of the company dropped 4.5% during the pre-market trading session on May 6.
Duke Austin, President and Chief Executive Officer of Quanta, said, "Spending by utilities on grid modernization, system hardening and renewable generation integration and spending by communications providers on broadband and 5G network deployment are driving strong demand for our services, as evidenced by our record backlog of $15.8 billion. These dynamics continue to enhance our near-term visibility and are expected to be meaningful drivers of our growth going forward, and, when coupled with increasing movement toward a carbon-neutral economy, incrementally increase our growth opportunities."
Quanta Services, Inc. Price, Consensus and EPS Surprise
Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote
Detailed Discussion
For the quarter under review, Quanta Services reported adjusted earnings of 83 cents per share that comfortably topped the consensus estimate of 74 cents by 12.2% and increased 76.6% from 47 cents a year ago.
Total revenues of $2,703.6 million missed the consensus mark of $2,758 million by 2%. The figure decreased 2.2% year over year due to lower contribution from its Underground Utility and Infrastructure Solutions segment.
Operating margin for the quarter rose 130 basis points or bps from a year ago to 4.2%. Adjusted EBITDA of $220.2 million also improved 35.4% from $162.6 million a year ago.
The company reported 12-month backlog of $8,932.1 million and total backlog of $15,830.3 million at March 2021-end. At December 2020-end, 12-month backlog came in at $8,266.6 million and total backlog was $15,132.4 million. At March 2020-end, the figures came in at $7,594.5 million and $14,732.4 million, respectively.
Segment Details
The company reports results under two reportable segments: Electric Power Infrastructure Solutions segment (accounting for 76.2% of first-quarter revenues), and Underground Utility and Infrastructure Solutions (23.8%).
First-quarter revenues from Electric Power Infrastructure Services totaled $2,060.1 million, increasing 16.6% year over year. Operating margins expanded 240 bps to 9.7%. The segment’s 12-month backlog was $6,449.3 million, up from $5,252.6 million a year ago. Total backlog of $11,661.1 million also grew from $9,653.8 million reported in the prior-year quarter.
The Underground Utility and Infrastructure Solutions segment’s revenues declined 35.5% from the prior-year quarter to $643.5 million. Operating margin of 1.4% also contracted 170 bps year over year. Nonetheless, the segment’s 12-month backlog totaled $2,482.8 million, up from $2,241.9 million a year ago. However, total backlog declined to $4,169.2 million from $5,078.6 million in the prior-year quarter.
Liquidity
As of Mar 31, 2021, Quanta Services had cash and cash equivalents of $200.2 million compared with $184.6 million at 2020-end. The company’s long-term debt (net of current maturities) amounted to $1,347.6 million, up from $1,174.3 million as of Dec 31, 2020.
Net cash provided by operating activities was $125.6 million for the quarter compared with $227.5 million a year ago. Free cash flow for the quarter came in at $49.4 million compared with $164.4 million reported in first-quarter 2020.
Raised 2021 Guidance
Based on the year-to-date performance and increasing visibility, Quanta Services now expects revenues between $12.05 billion and $12.35 billion versus earlier expectation of $11.95-$12.35 billion.
It expects adjusted earnings between $4.12 and $4.57 versus $4.02-$4.52 per share projected earlier. Adjusted EBITDA is projected within $1.10-$1.20 billion versus prior projection of $1.09-$1.19 billion. Meanwhile, Quanta Services’ full-year non-GAAP free cash flow projection has been reaffirmed within $400-$600 million.
Zacks Rank & Other Key Picks
Quanta Services currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the same space include Jacobs Engineering Group Inc. (J - Free Report) , VSE Corporation (VSEC - Free Report) and ChampionX Corporation (CHX - Free Report) , each carrying a Zacks Rank #2.
Jacobs’ fiscal 2021 earnings are expected to rise 5.8%.
VSE’s 2021 earnings are expected to grow 4.6%.
ChampionX’s 2021 earnings are expected to grow 400%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>