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Quanta (PWR) Stock Rises on Q4 Earnings and Revenue Beat
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Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for fourth-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Shares of this leading national provider of specialty contracting services gained 3.2% following the release on Feb 22.
Detailed Discussion
Quanta’s adjusted earnings per share (EPS) of $2.04 beat the consensus estimate of $1.97 by 3.6% and increased 21.4% from the year-ago quarter’s $1.68. The growth was supported by robust demand for its services, propelled by customers' multi-year initiatives aimed at modernizing and fortifying utility infrastructure, expanding renewable energy generation and transmission infrastructure, and transitioning toward a low-carbon economy.
Total revenues of $5.78 billion surpassed the consensus mark of $5.15 billion by 12.3% and increased 31% year over year.
The operating margin for the quarter contracted 30 basis points (bps) to 5.6% from a year ago. Adjusted EBITDA of $550.2 million improved 22.3% from the year-ago quarter. We expected operating margin to be 6.5% and adjusted EBITDA to be up 19.1%.
The company reported a 12-month backlog of $17.23 billion and a total backlog of $30.11 billion at December 2023-end. This compares favorably with the December 2022-end’s 12-month backlog of $13.79 billion and the total backlog of $24.09 billion. Our model suggested a total backlog of $24.01 billion.
Quanta Services, Inc. Price, Consensus and EPS Surprise
The company reports results under three segments: Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
Revenues from Electric Power Infrastructure Solutions totaled $2.46 billion, increasing 5.9% year over year. The upside was primarily backed by growth in spending by utility customers on grid modernization and hardening, as well as revenue growth from acquired businesses.
The operating margin contracted 100 bps to 10.5%. The segment’s 12-month backlog was $8.36 billion, up from $7.54 billion a year ago. The total backlog of $15.50 billion grew from $13.08 billion reported in the prior-year quarter.
Revenues from Renewable Energy Infrastructure Solutions totaled $2.03 million, up 102.6% year over year. This was driven by increased renewable infrastructure project activity and its customers' ability to move forward with construction activities in the current favorable regulatory environment and through acquisitions.
Operating margins expanded 250 bps to 8.9% from a year ago due to the increase in project activity.
The segment’s 12-month backlog was $5.63 billion, up from $2.24 billion a year ago. The total backlog of $8.13 billion increased from $4.72 billion reported in the year-ago period.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 18.7% from the prior-year quarter’s levels to $1.30 billion.
The operating margin of 6.6% was down 50 bps from the prior-year quarter. Segment’s 12-month backlog totaled $3.24 billion, up from $3.01 billion a year ago. The total backlog increased to $6.48 billion from $6.29 billion in the prior-year quarter.
2023 Highlights
Adjusted EPS was $7.16, up from $6.34 a year ago. Total revenues increased to $20.9 billion in 2023 from $17.07 billion in 2022. Operating margin was 5.4%, up 30 bps from 2022.
Liquidity
As of Dec 31, 2023, Quanta had cash and cash equivalents of $1.29 billion, up from $428.5 million at 2022-end. The company’s long-term debt (net of current maturities) amounted to $3.66 billion, down from $3.69 billion as of Dec 31, 2022.
Net cash provided by operating activities was $1 billion in the fourth quarter, up from $583.1 million a year ago. In 2023, the metric was $1.58 billion, up from $1.13 billion in 2022. The free cash flow for the quarter was $915.5 million and $1.2 billion for 2023 compared with $513.5 million reported in the year-ago quarter and $766.8 million in 2022.
2024 Guidance
Quanta expects revenues between $22.25 billion and $22.75 billion.
The company expects adjusted (non-GAAP) EPS in the range of $8.00-$8.50. Adjusted EBITDA is projected to be between $2.14 and $2.25 billion.
Quanta’s non-GAAP free cash flow projection is expected to be in the range of $1.30-$1.70 billion.
Owens Corning (OC - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Chair and chief executive officer of OC, Brian Chambers, said, “Looking ahead, we will continue to focus on delivering outstanding results in the near-term as we execute the strategic moves announced last week which will further strengthen our leadership in building and construction materials and position the company for long-term success.”
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) , or LP, reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.
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Quanta (PWR) Stock Rises on Q4 Earnings and Revenue Beat
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for fourth-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Shares of this leading national provider of specialty contracting services gained 3.2% following the release on Feb 22.
Detailed Discussion
Quanta’s adjusted earnings per share (EPS) of $2.04 beat the consensus estimate of $1.97 by 3.6% and increased 21.4% from the year-ago quarter’s $1.68. The growth was supported by robust demand for its services, propelled by customers' multi-year initiatives aimed at modernizing and fortifying utility infrastructure, expanding renewable energy generation and transmission infrastructure, and transitioning toward a low-carbon economy.
Total revenues of $5.78 billion surpassed the consensus mark of $5.15 billion by 12.3% and increased 31% year over year.
The operating margin for the quarter contracted 30 basis points (bps) to 5.6% from a year ago. Adjusted EBITDA of $550.2 million improved 22.3% from the year-ago quarter. We expected operating margin to be 6.5% and adjusted EBITDA to be up 19.1%.
The company reported a 12-month backlog of $17.23 billion and a total backlog of $30.11 billion at December 2023-end. This compares favorably with the December 2022-end’s 12-month backlog of $13.79 billion and the total backlog of $24.09 billion. Our model suggested a total backlog of $24.01 billion.
Quanta Services, Inc. Price, Consensus and EPS Surprise
Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote
Segment Details
The company reports results under three segments: Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
Revenues from Electric Power Infrastructure Solutions totaled $2.46 billion, increasing 5.9% year over year. The upside was primarily backed by growth in spending by utility customers on grid modernization and hardening, as well as revenue growth from acquired businesses.
The operating margin contracted 100 bps to 10.5%. The segment’s 12-month backlog was $8.36 billion, up from $7.54 billion a year ago. The total backlog of $15.50 billion grew from $13.08 billion reported in the prior-year quarter.
Revenues from Renewable Energy Infrastructure Solutions totaled $2.03 million, up 102.6% year over year. This was driven by increased renewable infrastructure project activity and its customers' ability to move forward with construction activities in the current favorable regulatory environment and through acquisitions.
Operating margins expanded 250 bps to 8.9% from a year ago due to the increase in project activity.
The segment’s 12-month backlog was $5.63 billion, up from $2.24 billion a year ago. The total backlog of $8.13 billion increased from $4.72 billion reported in the year-ago period.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 18.7% from the prior-year quarter’s levels to $1.30 billion.
The operating margin of 6.6% was down 50 bps from the prior-year quarter. Segment’s 12-month backlog totaled $3.24 billion, up from $3.01 billion a year ago. The total backlog increased to $6.48 billion from $6.29 billion in the prior-year quarter.
2023 Highlights
Adjusted EPS was $7.16, up from $6.34 a year ago. Total revenues increased to $20.9 billion in 2023 from $17.07 billion in 2022. Operating margin was 5.4%, up 30 bps from 2022.
Liquidity
As of Dec 31, 2023, Quanta had cash and cash equivalents of $1.29 billion, up from $428.5 million at 2022-end. The company’s long-term debt (net of current maturities) amounted to $3.66 billion, down from $3.69 billion as of Dec 31, 2022.
Net cash provided by operating activities was $1 billion in the fourth quarter, up from $583.1 million a year ago. In 2023, the metric was $1.58 billion, up from $1.13 billion in 2022. The free cash flow for the quarter was $915.5 million and $1.2 billion for 2023 compared with $513.5 million reported in the year-ago quarter and $766.8 million in 2022.
2024 Guidance
Quanta expects revenues between $22.25 billion and $22.75 billion.
The company expects adjusted (non-GAAP) EPS in the range of $8.00-$8.50. Adjusted EBITDA is projected to be between $2.14 and $2.25 billion.
Quanta’s non-GAAP free cash flow projection is expected to be in the range of $1.30-$1.70 billion.
Zacks Rank & Recent Construction Releases
Quanta currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Owens Corning (OC - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Chair and chief executive officer of OC, Brian Chambers, said, “Looking ahead, we will continue to focus on delivering outstanding results in the near-term as we execute the strategic moves announced last week which will further strengthen our leadership in building and construction materials and position the company for long-term success.”
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) , or LP, reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.