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Quanta Services' (PWR) Q1 Earnings & Revenues Beat, View Up

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Quanta Services Inc. (PWR - Free Report) reported first-quarter 2018 adjusted earnings of 40 cents per share, surpassing the Zacks Consensus Estimate of 32 cents and rising 2.6% year over year. The bottom-line growth was driven by record revenues and sound execution of projects.

The company’s GAAP earnings from continuing operations came in at 24 cents, down 22.6% from the prior-year quarter’s 31 cents.

Inside the Headlines

Total revenues in the quarter came in at $2,417.6 million, up 11% on a year-over-year basis. The figure trumped the Zacks Consensus Estimate of $2,061 million. Impressive revenues growth in the Electric Power Infrastructure Services segment acted as the primary catalyst.

Of the total quarterly revenues, the Electric Power Infrastructure segment accounted for 64.9% and the Oil and Gas Infrastructure segment represented 35.1%.

Per segments, revenues from Electric Power Infrastructure maintained impressive momentum and were up 28.6% year over year to $1,568.5 million. However, Oil and Gas Infrastructure segmental revenues declined 11.4% to $849.1 million.

In the reported quarter, operating income came in at $75.2 million compared with the prior-year quarter’s figure of $75.1 million.

At the end of Mar 31, 2018, Quanta Services’ consolidated total backlog amounted to $6,882.8 million.

Quanta Services, Inc. Price, Consensus and EPS Surprise

 

Liquidity

Quanta Services exited the quarter with cash and cash equivalents of $101.7 million, down from $138.3 million as of Dec 31, 2017. At quarter end, the company’s long-term debt and notes payable was $882.8 million, up from $670.7 million as of Dec 31, 2017.

Notable Developments

During the quarter, the company secured a turnkey engineering and construction services contract with a large telecommunications company for fiber deployment throughout a tier 2 market in Texas. This deployment is designed to support the customer's existing 4G and developing 5G wireless networks along with the delivery of high-speed broadband services.

At the end of the quarter under review, Quanta Services secured a large diameter pipeline project in Oklahoma, which is designed to transport natural gas from the SCOOP and STACK plays to end users in support of LNG export, industrial demand, electric power generation, local distribution companies and downstream users.

In the reported quarter, Quanta Services repurchased 5 million shares of common stock worth $173.9 million. The company has now acquired 6.4 million shares under its current $300-million stock repurchase program.

Guidance

Concurrent with the earnings release, the company raised its revenues and earnings guidance for fiscal 2018, to incorporate the impressive operating performance so far in 2018. Adjusted earnings per share are projected in the band of $2.55 to $2.95 per share, compared with the previous range of $2.40-$2.80 per share.

Sales are expected in the range of $9.95-$10.55 billion compared with the previous range of $9.75-$10.25 billion. Estimated net income lies in the band of $321-$383 million, while EBITDA is expected in the range of $756.5-$858.1 million.

Our Take

Quanta Services reported better-than-expected first-quarter 2018 results on the back of solid top-line growth. The Electric Power Infrastructure segment performed particularly well, with strong revenue growth and margin expansion on the back of outstanding operational execution. Meanwhile, the company is optimistic about the prospects of its end markets in both of its segments over the next couple of years.

Further, the Zacks Rank #2 (Buy) company’s communications infrastructure services business is performing brilliantly. Also, the company’s oil and gas segment outlook looks promising, courtesy of the improving mainline and natural gas distribution as well as integrity markets. Going forward, the company continues to expect healthy levels of base load work including supporting midstream infrastructure, downstream support services and natural gas distribution.

Other Stocks to Consider

Some other top-ranked stocks in the industry worth a look are Jacobs Engineering Group Inc. , Fluor Corporation (FLR - Free Report) and KBR, Inc. (KBR - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jacobs Engineering surpassed earnings estimates each time in the trailing four quarters, resulting in an average surprise of 11.4%.

Fluor has managed to beat estimates thrice over the preceding four quarters, with a positive earnings surprise of 8.4%.

KBR has a positive average earnings surprise of 14.1% for the same time period, beating estimates thrice.

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