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Quanta Services (PWR) Q1 Earnings In Line, Revenues Miss

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Quanta Services Inc. (PWR - Free Report) reported first-quarter 2020 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same. Notably, the stock grew 0.3% in the pre-market trading session on May 7, post its earnings release.

According to the company, 80-90% of its revenues are derived from utility, communications, and certain pipeline and industrial infrastructure services that will likely continue to be resilient, even in the present challenging environment. It expects to achieve record backlog during the year. Yet, it expects the second quarter to be the most challenging due to short-term disruptions.

Numbers in Detail

In the quarter under review, the company reported adjusted earnings of 47 cents per share that matched the consensus estimate but decreased 51% from the year-ago profit level.

Total revenues of $2.76 billion missed the consensus mark by 0.04% and decreased 1.5% year over year due to lower contribution from its Pipeline and Industrial Infrastructure Services segment.

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

Segment Details

The company reports results under two reportable segments: Electric Power Infrastructure Services segment (accounting for 63.9% of revenues), and Pipeline and Industrial Infrastructure Services (36.1%).

Revenues from Electric Power Infrastructure Services totaled $1,767 million, increasing 6.2% year over year. However, operating margins contracted 240 basis points (bps) to 7.3%.

Within the Pipeline and Industrial Infrastructure Services segment, revenues declined 12.8% from the prior-year quarter to $997.1 million. Moreover, operating margins of 3.1% declined 50 bps year over year.

Operating Highlights

Operating margin during the quarter contracted 140 bps from a year ago to 2.9%. Adjusted EBITDA of $162.6 million declined 19.4% from $201.8 million a year ago.

As of Mar 31, 2020, the company reported total backlog of $14.7 billion and 12-month backlog of $7.6 billion. This compares favorably with $12.6 billion of total backlog and $6.9 billion of 12-month backlog a year ago. However, the reported metrics were down from fourth quarter-end respective figures of $15 billion and $7.9 billion.

Liquidity

As of Mar 31, 2020, Quanta Services had cash and cash equivalents of $377.2 million compared with $164.8 million at 2019-end. The company’s long-term debt (net of current maturities) amounted to $1,589.3 million, up from $1,292.2 million as of Dec 31, 2019.

Net cash provided by operating activities was $227.5 million in the quarter versus $82.8 million cash used in operating activities in the prior-year period. Free cash flow was $164.4 million in the quarter versus negative free cash flow of $140.5 million a year ago. On Mar 31, 2020, Quanta Services had total liquidity of $1.7 billion.

Updates 2020 Guidance

The company expects revenues in the range of $11.4-$11.8 billion versus prior expectation of 12.2-$12.6 billion.

It expects adjusted earnings between $3.04 and $3.36 per share compared with $3.62-$4.02 expected earlier. Adjusted EBITDA is projected within $860-$925 million versus $1.03-$1.12 billion of prior projection. This indicates a decrease from $941.8 million reported in 2019.

Zacks Rank & Peer Releases

Quanta Services — which shares space with Jacobs Engineering Group Inc. (J - Free Report) in the Zacks Engineering - R and D Services industry —  currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR, Inc. (KBR - Free Report) reported strong results in first-quarter 2020, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year, given solid growth of the Energy Solutions business.

AECOM (ACM - Free Report) reported second-quarter fiscal 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.

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