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Quanta (PWR) Stock Rises on Q1 Earnings and Revenue Beat
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Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for first-quarter 2024, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
Shares of this leading national provider of specialty contracting services gained more than 2.5% following the release on May 2.
Quanta's performance in the first quarter marks a strong beginning to the year, characterized by impressive growth across key metrics. Double-digit increases in revenue, adjusted EBITDA, and adjusted earnings per share (EPS), alongside record cash flow, underscore the company's robust performance. Notably, the Electric Power Infrastructure Solutions segment exceeded expectations, delivering superior profitability attributed to consistent operational excellence and safe execution.
Detailed Discussion
Quanta’s adjusted EPS of $1.41 beat the consensus estimate of $1.26 by 11.9% and increased 13.7% from the year-ago quarter’s $1.24. 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 $5.03 billion surpassed the consensus mark of $4.96 billion by 1.5% and increased 13.6% year over year.
The operating margin for the quarter expanded 30 basis points (bps) to 3.1% from a year ago. Adjusted EBITDA of $387.3 million improved 16.5% from the year-ago quarter. We expected operating margin to be 3.7% and adjusted EBITDA to be up 13.6%.
The company reported a 12-month backlog of $16.64 billion and a total backlog of $29.9 billion at March 2024-end. This compares slightly unfavorably with the December 2023-end’s 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. Our model suggested a total backlog of $28.45 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 $2.33 billion, which dipped slightly by 0.4% year over year. The decrease 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 improved 60 bps to 9.8%. The segment’s 12-month backlog was $7.83 billion, down from $8.36 billion a year ago. The total backlog was $15.34 billion compared with $15.5 billion at 2023-end.
Revenues from Renewable Energy Infrastructure Solutions totaled $1.58 million, up 57.1% 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 120 bps to 4.7% from a year ago due to the increase in project activity.
The segment’s 12-month backlog was $5.86 billion, up from $5.63 billion at 2023-end. The total backlog of $8.45 billion increased from $8.13 billion at 2023-end.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 3.3% from the prior-year quarter’s levels to $1.12 billion. The operating margin of 4.2% was down 150 bps from the prior-year quarter.
Segment’s 12-month backlog totaled $2.94 billion, down from $3.24 billion a year ago. The total backlog decreased to $6.1 billion from $6.48 billion in the prior-year quarter.
Liquidity
As of Mar 31, 2024, Quanta had cash and cash equivalents of $531.1 million, down from $1.29 million at 2023-end. The company’s long-term debt (net of current maturities) amounted to $3.17 billion, down from $3.66 billion as of Dec 31, 2023.
Net cash provided by operating activities was $238 billion in the first quarter, up from $38.4 million a year ago. The free cash flow (FCF) for the quarter was $181.2 million compared with a negative FCF of $31.2 million reported in the year-ago quarter.
2024 Guidance
Quanta now expects revenues between $22.5 billion and $23 billion compared with the prior projection of $22.25 billion-$22.75 billion.
The company now expects adjusted (non-GAAP) EPS in the range of $8.15-$8.65 versus the prior projection of $8.00-$8.50. Adjusted EBITDA is projected to be between $2.13 and $2.25 billion compared with the earlier projection of $2.14-$2.25 billion.
Quanta’s non-GAAP free cash flow projection is still expected to be in the range of $1.30-$1.70 billion.
KBR, Inc. (KBR - Free Report) reported better-than-expected results for first-quarter 2024 (ended Mar 29), wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Both earnings and revenues grew on a year-over-year basis, particularly showcasing solid performance in adjusted EBITDA and operating cash flow. Bookings during the quarter were well-aligned with end markets across energy security, national defense, human performance, and sustainability.
Masco Corporation (MAS - Free Report) reported mixed results for first-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate, but net sales lagged the same. On a year-over-year basis earnings increased despite net sales decline.
Strong operational efficiency helped Masco deliver solid earnings. Masco’s focus on a balanced capital deployment strategy helped it return $212 million to shareholders via dividends and share repurchases.
Watsco, Inc. (WSO - Free Report) reported tepid first-quarter 2024 results, with earnings and revenues lagging the Zacks Consensus Estimate. On a year-over-year basis, the top line grew while the bottom line dwindled.
Watsco’s first-quarter results reflect a seasonal sales trend, wherein the sales of HVAC equipment and other HVAC products declined year over year. Furthermore, high costs and expenses impacted the bottom line of the company. This was partially offset by increased sales volume for commercial refrigeration products.
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Quanta (PWR) Stock Rises on Q1 Earnings and Revenue Beat
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for first-quarter 2024, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
Shares of this leading national provider of specialty contracting services gained more than 2.5% following the release on May 2.
Quanta's performance in the first quarter marks a strong beginning to the year, characterized by impressive growth across key metrics. Double-digit increases in revenue, adjusted EBITDA, and adjusted earnings per share (EPS), alongside record cash flow, underscore the company's robust performance. Notably, the Electric Power Infrastructure Solutions segment exceeded expectations, delivering superior profitability attributed to consistent operational excellence and safe execution.
Detailed Discussion
Quanta’s adjusted EPS of $1.41 beat the consensus estimate of $1.26 by 11.9% and increased 13.7% from the year-ago quarter’s $1.24. 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 $5.03 billion surpassed the consensus mark of $4.96 billion by 1.5% and increased 13.6% year over year.
The operating margin for the quarter expanded 30 basis points (bps) to 3.1% from a year ago. Adjusted EBITDA of $387.3 million improved 16.5% from the year-ago quarter. We expected operating margin to be 3.7% and adjusted EBITDA to be up 13.6%.
The company reported a 12-month backlog of $16.64 billion and a total backlog of $29.9 billion at March 2024-end. This compares slightly unfavorably with the December 2023-end’s 12-month backlog of $17.23 billion and the total backlog of $30.11 billion. Our model suggested a total backlog of $28.45 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 $2.33 billion, which dipped slightly by 0.4% year over year. The decrease 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 improved 60 bps to 9.8%. The segment’s 12-month backlog was $7.83 billion, down from $8.36 billion a year ago. The total backlog was $15.34 billion compared with $15.5 billion at 2023-end.
Revenues from Renewable Energy Infrastructure Solutions totaled $1.58 million, up 57.1% 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 120 bps to 4.7% from a year ago due to the increase in project activity.
The segment’s 12-month backlog was $5.86 billion, up from $5.63 billion at 2023-end. The total backlog of $8.45 billion increased from $8.13 billion at 2023-end.
Within the Underground Utility and Infrastructure Solutions segment, revenues rose 3.3% from the prior-year quarter’s levels to $1.12 billion. The operating margin of 4.2% was down 150 bps from the prior-year quarter.
Segment’s 12-month backlog totaled $2.94 billion, down from $3.24 billion a year ago. The total backlog decreased to $6.1 billion from $6.48 billion in the prior-year quarter.
Liquidity
As of Mar 31, 2024, Quanta had cash and cash equivalents of $531.1 million, down from $1.29 million at 2023-end. The company’s long-term debt (net of current maturities) amounted to $3.17 billion, down from $3.66 billion as of Dec 31, 2023.
Net cash provided by operating activities was $238 billion in the first quarter, up from $38.4 million a year ago. The free cash flow (FCF) for the quarter was $181.2 million compared with a negative FCF of $31.2 million reported in the year-ago quarter.
2024 Guidance
Quanta now expects revenues between $22.5 billion and $23 billion compared with the prior projection of $22.25 billion-$22.75 billion.
The company now expects adjusted (non-GAAP) EPS in the range of $8.15-$8.65 versus the prior projection of $8.00-$8.50. Adjusted EBITDA is projected to be between $2.13 and $2.25 billion compared with the earlier projection of $2.14-$2.25 billion.
Quanta’s non-GAAP free cash flow projection is still expected to be in the range of $1.30-$1.70 billion.
Zacks Rank & 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 better-than-expected results for first-quarter 2024 (ended Mar 29), wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Both earnings and revenues grew on a year-over-year basis, particularly showcasing solid performance in adjusted EBITDA and operating cash flow. Bookings during the quarter were well-aligned with end markets across energy security, national defense, human performance, and sustainability.
Masco Corporation (MAS - Free Report) reported mixed results for first-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate, but net sales lagged the same. On a year-over-year basis earnings increased despite net sales decline.
Strong operational efficiency helped Masco deliver solid earnings. Masco’s focus on a balanced capital deployment strategy helped it return $212 million to shareholders via dividends and share repurchases.
Watsco, Inc. (WSO - Free Report) reported tepid first-quarter 2024 results, with earnings and revenues lagging the Zacks Consensus Estimate. On a year-over-year basis, the top line grew while the bottom line dwindled.
Watsco’s first-quarter results reflect a seasonal sales trend, wherein the sales of HVAC equipment and other HVAC products declined year over year. Furthermore, high costs and expenses impacted the bottom line of the company. This was partially offset by increased sales volume for commercial refrigeration products.