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Quanta (PWR) Beats on Q1 Earnings, Ups Adjusted EBITDA View

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Quanta Services Inc. (PWR - Free Report) reported impressive results for first-quarter 2022. Adjusted earnings and revenues surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis.

Earnings beat the consensus mark in the trailing eight quarters, whereas revenues surpassed the same in five out of eight consecutive quarters.

The stock has moved up 0.5% in the pre-market trading session on May 5, post its earnings release.

Duke Austin, president and CEO of Quanta, stated, “We believe we are uniquely positioned to capitalize on the megatrends and opportunities to lead the energy transition and enable technological development, with initiatives such as electric vehicle charging infrastructure and undergrounding of electrical infrastructure gaining momentum. As a result, we believe Quanta has built a platform with opportunity to deliver a 10% organic adjusted EPS compound annual growth rate (CAGR) and a strategy with opportunity to deliver a +15% adjusted EPS CAGR through 2026."

Detailed Discussion

Quanta’s adjusted earnings of $1.37 per share surpassed the consensus estimate of $1.22 by 12.3% and increased 65.1% from the year-ago quarter’s 85 cents. The upside was backed by revenue growth across the segments, record total backlog and solid and safe project execution.

Quanta Services, Inc. Price, Consensus and EPS Surprise

 

Quanta Services, Inc. Price, Consensus and EPS Surprise

Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote

 

Total revenues of $3.97 billion also surpassed the consensus mark of $3.67 billion by 8.1% and increased 47% year over year.

The operating margin for the quarter fell 120 basis points (bps) to 3% from a year ago to 4.2%. Adjusted EBITDA of $345.5 million improved 22.2% from $220.2 million in the year-ago quarter.

The company reported a 12-month backlog of $11.5 billion and a total backlog of $20.45 billion at March-end. At December 2021-end, the 12-month backlog came in at $11.31 billion and the total backlog was $19.27 billion. The reported metrics were also up from first-quarter 2021 end respective figures of $8.93 billion and $15.83 billion.

Segment Details

It reports results under three reportable segments: Electric Power Infrastructure Solutions segment, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.

Revenues from Electric Power Infrastructure Solutions totaled $2.14 billion, increasing 27.6% year over year. The operating margin expanded 30 bps to 9.5%. The segment’s 12-month backlog was $6.38 billion, down from $6.49 billion a year ago. The total backlog of $12.17 billion fell from $12.22 billion reported in the prior-year quarter.

Revenues from Renewable Energy Infrastructure Solutions totaled $875.6 million, up almost 128% year over year. Operating margins contracted to 8% from 11.8% a year ago. The segment’s 12-month backlog was $2.38 billion, up from $2.24 billion a year ago. The total backlog of $3.08 billion increased from $2.55 billion reported in the year-ago period.

Within the Underground Utility and Infrastructure Solutions segment, revenues rose 47.8% from the prior-year quarter’s levels to $951.2 million. The operating margin of 5.1% was up from 1.4% reported in the prior-year quarter. Segment’s 12-month backlog totaled $2.74 billion, up from $2.57 billion a year ago. The total backlog increased to $5.2 billion from $4.51 billion in the prior-year quarter.

Liquidity

As of Mar 31, 2022, Quanta had cash and cash equivalents of $238.3 million, up from $229.1 million at the 2021-end. The company’s long-term debt (net of current maturities) amounted to $3.81 billion, up from $3.72 billion as of Dec 31, 2021.

Net cash provided by operating activities was $85.1 million in the first quarter compared with $125.6 million a year ago. Free cash flow for the first quarter came in at a negative $15.8 million versus $49.4 million reported in the year-ago period.

2022 Guidance Updated

Quanta now expects revenues between $16.2 billion and $16.7 billion versus the prior projection of $16-16.5 billion. The Zacks Consensus Estimate for the said metric is currently pegged at $16.22 billion.

It still expects adjusted (non-GAAP) earnings between $6.00 and $6.50. The Zacks Consensus Estimate is currently pegged at $6.25 per share. Adjusted EBITDA is now projected within $1.60-$1.71 billion versus $1.59-$1.70 billion expected earlier. Net income is expected within $530-$604 million. Quanta’s full-year non-GAAP free cash flow projection is pegged at $650-$850 million.

Zacks Rank & Some Recent Construction Releases

Quanta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR, Inc. (KBR - Free Report) reported mixed results for first-quarter 2022, with earnings topping the Zacks Consensus Estimate and revenues missing the same.

On a year-over-year basis, the metrics increased strongly. The company benefited from solid Government Solutions growth and strong execution across the business.

Jacobs Engineering Group Inc. (J - Free Report) reported second-quarter fiscal 2021 (ended Apr 1, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.

J’s earnings topped analysts’ expectations in three of the trailing four quarters, with an average of 3.9%.

Louisiana-Pacific Corporation (LPX - Free Report) — commonly known as LP — reported robust results for first-quarter 2022.

LPX’s top and the bottom line surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis.