Internal Revenue Growth of 17 Percent HOUSTON, Aug. 2
/PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today
announced results for the three and six months ended June 30, 2006.
Revenues in the second quarter of 2006 were $514.0 million compared
to revenues of $439.3 million in the second quarter of 2005. For
the second quarter of 2006, net income was $17.7 million or $0.14
per diluted share, compared to net income of $3.3 million or $0.03
per diluted share in the second quarter of 2005. Revenues for the
first six months of 2006 were $1.01 billion compared to $811.8
million for the first half of 2005. For the first six months of
2006, the company reported net income of $25.5 million or $0.21 per
diluted share, compared to a net loss of $1.8 million or a loss per
diluted share of $0.02 in the first six months of last year. "We
continue to benefit from improvement in the electric utility and
telecommunications industries," said John R. Colson, chairman and
chief executive officer of Quanta Services. "Our internal revenue
growth of 24 percent for the first six months of 2006 over the
first six months of 2005, and operating margin increase of 460
basis points during that same period, are evidence of Quanta's
ability to meet the growing needs of its customers and the
strengthening of our markets." QUARTER HIGHLIGHTS - * Amended
Credit Facility -- During the second quarter, Quanta entered into a
five-year credit facility with a syndicate of lenders led by Bank
of America, N.A. The $300.0 million senior secured revolving credit
facility matures on June 12, 2011 and amends and restates Quanta's
previous $182.0 million credit facility. The credit facility was
initially used for letters of credit totaling $124.4 million, which
were priced at 1.625% of the face amount of the letters of credit
versus approximately 3.0% under the previous credit facility. The
credit facility, which contains customary financial and other
covenants, provides improved flexibility for certain matters
including acquisitions, investments, capital expenditures,
subordinated indebtedness and debt prepayments. * Completed
Offering and Tender Offer -- During the quarter, Quanta completed
the offering of $143.75 million aggregate principal amount of its
3.75% convertible subordinated notes due 2026 in a private
placement pursuant to Rule 144A under the Securities Act of 1933.
The notes will mature on April 30, 2026, and interest on the notes
is payable at the rate of 3.75% per annum on April 30 and October
30 of each year, beginning on October 30, 2006. Holders may require
the company to purchase their notes for cash on April 30, 2013,
2016 and 2021 and upon a change in control of the company prior to
April 30, 2013. Following the closing, Quanta commenced a cash
tender offer for all of its outstanding 4.0% convertible
subordinated notes due 2007. The offer expired on June 13, 2006.
Quanta repurchased all of the notes that were validly tendered,
which represented $139,227,000 principal amount or 80.7% of the
notes outstanding. As a result of amending the credit facility and
repurchasing a portion of the 4.0% convertible subordinated notes,
Quanta recorded a charge to interest expense in the second quarter
of 2006 of approximately $3.3 million related to the write-off of
deferred financing costs. Partially offsetting this charge was a
gain on early extinguishment of debt of approximately $1.6 million,
net of the tender offer costs. Also during the second quarter,
Quanta settled a multi-year refund claim with the State of
California, which had the effect of reducing income tax expense for
the second quarter by $1.6 million. The after-tax effect of the
above items was to increase net income for the second quarter of
2006 by $0.6 million, with diluted earnings per share remaining
unchanged. OUTLOOK The following statements are based on current
expectations. These statements are forward-looking, and actual
results may differ materially. These statements do not include the
potential impact of any business combinations or divestitures that
may be completed after June 30, 2006. Quanta expects revenues for
the third quarter of 2006 to range between $520 million and $550
million and diluted earnings per share to be between $0.15 and
$0.17. These estimates include approximately $35 million of
anticipated storm restoration revenues for the third quarter of
2006. In the third quarter of 2005, storm restoration revenues were
approximately $74 million. Quanta Services has scheduled a
conference call for August 2, 2006, at 9:30 a.m. eastern time. To
participate in the call, dial 303-262-2140 at least 10 minutes
before the conference call begins and ask for the Quanta Services
conference call. Investors, analysts and the general public also
will have the opportunity to listen to the conference call over the
Internet by visiting the company's web site at
http://www.quantaservices.com/. To listen to the call live on the
web, please visit the Quanta Services web site at least fifteen
minutes early to register, download and install any necessary audio
software. For those who cannot listen to the live web cast, an
archive will be available shortly after the call on the company's
website. A replay will also be available and may be accessed by
calling 303-590-3000 and using the pass code 11066692. For more
information, please contact Karen Roan at DRG&E by calling
(713) 529-6600. Quanta Services, Inc. is a leading provider of
specialized contracting services, delivering end-to-end network
solutions for the electric power, gas, telecommunications and cable
television industries. The company's comprehensive services include
designing, installing, repairing and maintaining network
infrastructure nationwide. Contacts: James Haddox, CFO Ken Dennard
/ Reba Reid Lisa Elliott / Quanta Services, Inc. DRG&E
713-629-7600 713-529-6600 This press release contains
forward-looking statements intended to qualify for the "safe
harbor" from liability established by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements relating to projected revenues
and earnings per share and other financial and operating results,
capital expenditures, growth in particular markets, benefits of the
Energy Policy Act of 2005, strategies, expectations, intentions,
plans, future events, performance, underlying assumptions, and
other statements that do not relate strictly to historical or
current facts. Although Quanta's management believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. These statements can be affected by
inaccurate assumptions and by a variety of risks and uncertainties,
including, among others, quarterly variations in operating results;
adverse changes in economic conditions in relevant markets; the
ability to effectively compete for market share; estimates and
assumptions in determining financial results; beliefs and
assumptions about the collectibility of receivables; the inability
of customers to pay for services; the financial distress of
Quanta's casualty insurance carrier that may require payment for
losses that would otherwise be insured; liabilities for claims that
are self-insured or for claims that Quanta's casualty insurance
carrier fails to pay; potential liabilities relating to
occupational health and safety matters; estimates relating to the
use of percentage-of-completion accounting; dependence on fixed
price contracts; rapid technological and structural changes that
could reduce the demand for services; the ability to obtain
performance bonds; cancellation provisions within contracts and the
risk that contracts are not renewed or are replaced on less
favorable terms; the ability to effectively integrate the
operations of acquired businesses; retention of key personnel and
qualified employees; the impact of a unionized workforce on
operations and the ability to complete future acquisitions;
potential shortage of skilled employees; growth outpacing
infrastructure; risks associated with operating in international
markets; potential exposure to environmental liabilities;
requirements relating to governmental regulation; the ability to
continue to meet the requirements of the Sarbanes-Oxley Act of
2002; the cost of borrowing, availability of credit, debt covenant
compliance and other factors affecting financing activities; the
ability to generate internal growth; the ability to successfully
identify and complete acquisitions; the adverse impact of goodwill
impairments; the potential conversion of outstanding convertible
subordinated notes; and other risks detailed in Quanta's Annual
Report on Form 10-K for the year ended December 31,2005, Quanta's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006,
and any other reports of the company filed with the Securities and
Exchange Commission. Should one or more of these risks materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those expressed or implied in any
forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which are current
only as of this date. Quanta does not undertake any obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. For a
discussion of these risks, uncertainties and assumptions, investors
are urged to refer to Quanta's reports filed with the Securities
and Exchange Commission. Quanta Services, Inc. and Subsidiaries
Consolidated Statements of Operations For the Three and Six Months
Ended June 30, 2006 and 2005 (In thousands, except per share
information) (Unaudited) Three Months Ended Six Months Ended June
30, June 30, 2006 2005 2006 2005 Revenues $514,048 $439,287
$1,010,542 $811,792 Cost of services 433,693 385,471 870,739
721,884 Gross profit 80,355 53,816 139,803 89,908 Selling, general
& administrative expenses 46,640 43,874 88,915 86,336 Income
from operations 33,715 9,942 50,888 3,572 Interest expense (9,794)
(5,904) (15,678) (11,922) Interest income 3,036 1,696 6,015 3,215
Gain on early extinguishment of debt 1,598 --- 1,598 --- Other, net
180 97 328 262 Income (loss) before taxes 28,735 5,831 43,151
(4,873) Provision (benefit) for taxes 11,075 2,488 17,633 (3,088)
Net income (loss) $17,660 $3,343 $25,518 $(1,785) Earnings (loss)
per share: Basic $0.15 $0.03 $0.22 $(0.02) Diluted $0.14(a) $0.03
$0.21(a) $(0.02) Shares used in computing earnings (loss) per
share: Basic 117,152 115,713 116,840 115,472 Diluted 142,014(a)
116,341 141,827(a) 115,472 (a) As a result of applying the
if-converted method for calculating diluted earnings per share,
shares have been adjusted by an additional 24.2 million assuming
conversion of Quanta's 4.5% convertible subordinated notes, and net
income has been adjusted by $2.2 million and $4.5 million for an
addback of related interest expense for the three months and six
months ended June 30, 2006, net of tax. Quanta Services, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets (In thousands)
(Unaudited) June 30, December 31, 2006 2005 ASSETS CURRENT ASSETS:
Cash and cash equivalents $ 309,521 $304,267 Accounts receivable,
net 450,533 431,584 Costs and estimated earnings in excess of
billings on uncompleted contracts 45,255 38,053 Inventories 27,526
25,717 Prepaid expenses and other current assets 29,680 31,389
Total current assets 862,515 831,010 PROPERTY AND EQUIPMENT, net
286,594 286,606 ACCOUNTS AND NOTES RECEIVABLE, net 9,707 15,229
OTHER ASSETS, net 33,788 33,583 GOODWILL AND OTHER INTANGIBLES, net
388,226 388,357 Total assets $1,580,830 $1,554,785 LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of
long-term debt $922 $2,252 Accounts payable and accrued expenses
229,270 241,811 Billings in excess of costs and estimated earnings
on uncompleted contracts 18,384 14,008 Total current liabilities
248,576 258,071 LONG-TERM DEBT, net of current maturities --- 7,591
CONVERTIBLE SUBORDINATED NOTES 447,023 442,500 DEFERRED INCOME
TAXES AND OTHER NON-CURRENT LIABILITIES 149,912 142,885 Total
liabilities 845,511 851,047 STOCKHOLDERS' EQUITY 735,319 703,738
Total liabilities and stockholders' equity $1,580,830 $1,554,785
DATASOURCE: Quanta Services, Inc. CONTACT: James Haddox, CFO, or
Reba Reid, both of Quanta Services, Inc., +1-713-629-7600; Ken
Dennard, , or Lisa Elliott, , both of DRG&E, +1-713-529-6600
Web site: http://www.quantaservices.com/
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