Gross Margins Continued to Improve Diluted EPS of $0.17 Adjusted
Diluted EPS of $0.20 HOUSTON, Aug. 5 /PRNewswire-FirstCall/ --
Quanta Services, Inc. (NYSE: PWR) today announced results for the
three and six months ended June 30, 2009. Revenues in the second
quarter of 2009 were $813.4 million compared to revenues of $960.9
million in the second quarter of 2008. For the second quarter of
2009, net income attributable to common stock was $33.4 million or
$0.17 per diluted share as compared to $37.7 million or $0.21 per
diluted share in the second quarter of 2008. Adjusted diluted
earnings per share (a non-GAAP measure) was $0.20 for the second
quarter of 2009 as compared to $0.26 for the second quarter of
2008. Adjusted diluted earnings per share is GAAP earnings per
diluted share before amortization of intangible assets, non-cash
interest expense and non-cash compensation expense, all net of tax.
See the attached table for a reconciliation of non-GAAP measures to
the reported GAAP measures. "Despite an environment of economic
turmoil, with customers awaiting government funding and most of the
country still struggling with uncertainty, our market outlook shows
improvement for the second half of this year," said John R. Colson,
chairman and CEO. "Our focus on effectively maintaining margins
during the current economic environment should position us well as
spending by our customers returns. We continue to receive
indications from our customers that 2010 and 2011 will reflect
further strengthening in our end markets." Revenues for the first
six months of 2009 were $1.55 billion compared to $1.81 billion for
the first half of 2008. For the first six months of 2009, Quanta
reported net income attributable to common stock of $54.8 million
or $0.28 per diluted share, compared to $59.1 million or $0.34 per
diluted share for the first six months of last year. Adjusted
diluted earnings per share was $0.34 for the first six months of
2009 as compared to $0.44 for the first six months of 2008. See the
attached table for a reconciliation of non-GAAP measures to the
reported GAAP measures. See Note (a) to the attached Consolidated
Statements of Operations for an explanation of 2008 amounts that
have been retrospectively restated as a result of the adoption of
new accounting pronouncements effective Jan. 1, 2009. OUTLOOK
Quanta recognizes that it and its customers continue to operate in
a challenging business environment with the economic downturn and
weak capital markets. Therefore, management cannot predict the
timing or extent of the impact these conditions may have on demand
for Quanta's services, particularly in the near term. The following
forward-looking statements are based on current expectations and
actual results may differ materially. Quanta expects revenues for
the third quarter of 2009 to range between $840 million and $870
million. This estimate includes a forecast of emergency restoration
service revenues of $21 million versus approximately $114.7 million
in emergency restoration service revenues being earned in the third
quarter of 2008. Diluted earnings per share for the third quarter
of 2009 are estimated to be between $0.20 and $0.21. Quanta expects
adjusted diluted earnings per share (a non-GAAP measure calculated
on the same basis as the historical adjusted earnings per diluted
share presented in this release) for the third quarter of 2009 to
range from $0.23 to $0.24. Amortization of intangibles, non-cash
interest expense and non-cash stock compensation expenses are
forecasted to be approximately $11.2 million for the third quarter
of 2009. Quanta Services has scheduled a conference call for Aug.
5, 2009, at 9:30 a.m. Eastern time. To participate in the call,
dial (480) 629-9642 at least ten 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 webcast, an archive will be available shortly after the call
on the company's Web site at http://www.quantaservices.com/. A
replay will also be available through Aug. 12, 2009, and may be
accessed at (303) 590-3030 and using the pass code 4125867#. For
more information, please contact Karen Roan at DRG&E by calling
(713) 529-6600 or email . The non-GAAP measures in this press
release and the attached table are provided to enable investors to
evaluate performance excluding the effects of certain items that
management believes impact the comparability of operating results
between reporting periods. Reconciliations of other GAAP to
non-GAAP measures not included in this press release and certain
other items to be discussed during the conference call can be found
on the company's Web site at http://www.quantaservices.com/ in the
"Financial News" section. Quanta Services is a leading specialized
contracting services company, delivering infrastructure network
solutions for the electric power, natural gas, telecommunications
and cable television industries. The company's comprehensive
services include designing, installing, repairing and maintaining
network infrastructure nationwide. Additionally, Quanta licenses
point-to-point fiber optic telecommunications infrastructure in
select markets and offers related design, procurement, construction
and maintenance services. With operations throughout North America,
Quanta has the manpower, resources and expertise to complete
projects that are local, regional, national or international in
scope. Forward-Looking Statements This press release (and oral
statements regarding the subject matter of this release, including
those made on the conference call and webcast announced herein)
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, projected revenues and earnings per share
and other projections of financial and operating results and
capital expenditures; growth or opportunities in particular
markets; the impact of the Energy Policy Act of 2005, renewable
energy initiatives, the recently enacted economic stimulus package
and other potential legislative actions on future spending by
customers; the expected value of, and the scope, services, term and
results of any related projects awarded under, agreements for
services to be provided by Quanta; statements relating to the
business plans or financial condition of utilities and our other
customers; and Quanta's strategies and plans, as well as statements
reflecting expectations, intentions, assumptions or beliefs about
future events, 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 be correct. These statements can be affected by
inaccurate assumptions and by a variety of risks and uncertainties
that are difficult to predict or beyond our control, including,
among others, quarterly variations in operating results; continuing
declines in economic and financial conditions, including volatility
in the capital markets; trends in relevant markets; delays,
reductions in scope or cancellations of existing projects,
including as a result of capital constraints that may impact our
customers; dependence on fixed price contracts and the potential to
incur losses with respect to these contracts; estimates relating to
the use of percentage-of-completion accounting; the successful
negotiation, execution, performance and completion of pending and
existing contracts; the ability to generate internal growth; the
ability to effectively compete for new projects and market share;
the failure of the Energy Policy Act of 2005, renewable energy
initiatives, the recently enacted economic stimulus package or
other potential legislative actions to result in increased demand
for Quanta's services; cancellation provisions within contracts and
the risk that contracts are not renewed or are replaced on less
favorable terms; the inability of customers to pay for services;
the failure to recover on payment claims against project owners or
to obtain adequate compensation for customer-requested change
orders; the ability to attract skilled labor and retain key
personnel and qualified employees; potential shortage of skilled
employees; estimates and assumptions in determining financial
results and backlog; the ability to realize backlog; the ability to
successfully identify, complete and integrate acquisitions; the
adverse impact of goodwill or other intangible asset impairments;
growth outpacing infrastructure; unexpected costs or liabilities
that may arise from lawsuits or indemnity claims related to the
services Quanta performs; liabilities for claims that are
self-insured; risks associated with the implementation of an
information technology solution; potential liabilities relating to
occupational health and safety matters; the potential that
participation in joint ventures exposes us to liability and/or harm
to our reputation for failures of our partners; risks associated
with operating in international markets; risks associated with our
dependence on suppliers, subcontractors and equipment
manufacturers; risks associated with Quanta's dark fiber licensing
business, including regulatory changes and the potential inability
to realize a return on capital investments; beliefs and assumptions
about the collectability of receivables; the cost of borrowing,
availability of credit, fluctuations in the price and volume of
Quanta's common stock, debt covenant compliance, interest rate
fluctuations and other factors affecting financing and investment
activities; the ability to obtain performance bonds; the impact of
a unionized workforce on operations and the ability to complete
future acquisitions; the ability to continue to meet the
requirements of the Sarbanes-Oxley Act of 2002; potential exposure
to environmental liabilities; requirements relating to governmental
regulation and changes thereto; rapid technological and structural
changes that could reduce the demand for services; the ability to
access sufficient funding to finance desired growth and operations;
the potential conversion of Quanta's outstanding convertible
subordinated notes; provisions of our corporate governing documents
could make an acquisition of our company more difficult; and other
risks detailed in Quanta's Annual Report on Form 10-K for the year
ended December 31, 2008, Quanta's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2009, and any other documents that
Quanta files with the Securities and Exchange Commission (SEC).
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 and expressly disclaims 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 documents filed with the SEC that
are available through the company's Web site at
http://www.quantaservices.com/ or through the SEC's Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at
http://www.sec.gov/. Contacts: James Haddox, CFO Ken Dennard / Reba
Reid Kip Rupp / Quanta Services Inc. DRG&E 713-629-7600
713-529-6600 - Tables to follow - Quanta Services, Inc. and
Subsidiaries Consolidated Statements of Operations For the Three
and Six Months Ended June 30, 2009 and 2008 (In thousands, except
per share information) (Unaudited) Three Months Ended Six Months
Ended June 30, June 30, -------------------------
---------------------- 2009 2008 2009 2008 ---- ---- ---- ----
Restated(a) Restated(a) Revenues $813,379 $960,882 $1,551,909
$1,805,324 Cost of services (including depreciation) 675,597
802,192 1,296,996 1,522,757 ------- ------- --------- ---------
Gross profit 137,782 158,690 254,913 282,567 Selling, general &
administrative expenses 72,970 76,292 146,573 147,008 Amortization
of intangible assets 4,906 9,876 9,812 20,466 ----- ----- -----
------ Operating income 59,906 72,522 98,528 115,093 Interest
expense (2,803) (9,722) (5,621) (19,316) Interest income 628 2,088
1,709 6,083 Other income (expense), net 158 278 234 482 --- --- ---
--- Income before income taxes 57,889 65,166 94,850 102,342
Provision for income taxes 24,245 27,498 39,716 43,203 ------
------ ------ ------ Net income 33,644 37,668 55,134 59,139 Less:
Net income attributable to noncontrolling interest 217 - 353 - ---
--- --- --- Net income attributable to common stock $33,427 $37,668
$54,781 $59,139 ======= ======= ======= ======= Earnings per share
attributable to common stock: Basic earnings per share $0.17 $0.22
$0.28 $0.34 ===== ===== ===== ===== Diluted earnings per share
$0.17 $0.21 $0.28 $0.34 ===== ===== ===== ===== Weighted average
shares used in computing earnings per share: Basic 198,300 172,393
198,365 171,681 ======= ======= ======= ======= Diluted 198,379
197,021 198,431 172,112 ======= ======= ======= ======= (a)
Effective Jan. 1, 2009, we adopted two new accounting
pronouncements that each required retrospective application. One of
these pronouncements was FASB Staff Position No. APB 14-1,
"Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement)" (FSP APB
14-1). FSP APB 14-1 requires us to bifurcate and separately value
the debt and equity components of our convertible subordinated
notes on our balance sheet. The recorded value of the equity
component of our convertible notes is offset by the recognition of
an adjustment to the carrying value of the convertible subordinated
notes in the form of an original issuance discount which is
amortized over the expected life of the convertible subordinated
notes as a non-cash interest charge. As a result of the adoption of
FSP APB 14-1, we recorded non-cash interest expense of $1.1 million
and $2.2 million for the three and six months ended June 30, 2009
and $4.5 million and $8.9 million for the three and six months
ended June 30, 2008. The additional non-cash interest expense in
2008 reduced our previously reported diluted earnings per share
from $0.22 to $0.21 for the three months ended June 30, 2008 and
from $0.35 to $0.34 for the six months ended June 30, 2008. In
addition, we adopted FASB Staff Position No. EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities" (FSP EITF 03-6-1). Under
FSP EITF 03-6-1, we are required to treat unvested share-based
payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) as participating
securities and for such awards to be included in the computation of
both basic and diluted earnings per share. The adoption of FSP EITF
03-6-1 did not have a material impact on basic and diluted earnings
per share in the three or six months ended June 30, 2009 or 2008.
As a result of retrospectively applying both of these FSPs, our
consolidated balance sheet as of Dec. 31, 2008 and consolidated
statements of operations for the three and six months ended June
30, 2008 have been retrospectively restated herein to reflect the
impact of the adoption of these standards. Quanta Services, Inc.
and Subsidiaries Calculation of Earnings Per Share For the Three
and Six Months Ended June 30, 2009 and 2008 (In thousands, except
per share information) (Unaudited) Three Months Ended Six Months
Ended June 30, June 30, --------- --------- 2009 2008 2009 2008
---- ---- ---- ---- Restated(a) Restated(a) Income for diluted
earnings per share: Net income attributable to common stock $33,427
$37,668 $54,781 $59,139 Effect of convertible notes under the
"if-converted" method - interest expense addback, net of taxes -
4,532 - - --- ----- --- --- Net income attributable to common stock
for diluted earnings per share $33,427 $42,200 $54,781 $59,139
======= ======= ======= ======= Calculation of weighted average
shares for diluted earnings per share: Weighted average shares
outstanding for basic earnings per share 198,300 172,393 198,365
171,681 Effect of dilutive stock options 79 393 66 431 Effect of
convertible subordinated notes under the "if-converted" method -
weighted convertible shares issuable - 24,235 - - --- ------ ---
--- Weighted average shares outstanding for diluted earnings per
share 198,379 197,021 198,431 172,112 ======= ======= =======
======= Diluted earnings per share: Net income attributable to
common stock $0.17 $0.21 $0.28 $0.34 ===== ===== ===== ===== (a)
See Note (a) to the Consolidated Statements of Operations. Quanta
Services, Inc. and Subsidiaries Non-GAAP Financial Measures For the
Three and Six Months Ended June 30, 2009 and 2008 (In thousands,
except per share information) (Unaudited) Reconciliation of GAAP
Earnings per Diluted Share to Adjusted Diluted Earnings per Share
Three Months Ended Six Months Ended June 30, June 30, --------
-------- 2009 2008 2009 2008 ---- ---- ---- ---- Restated(a)
Restated(a) Adjusted net income attributable to common stock for
adjusted diluted earnings per share: Net income attributable to
common stock (GAAP as reported) $33,427 $37,668 $54,781 $59,139
Non-cash stock-based compensation, net of tax 3,028 2,796 5,896
5,099 Non-cash interest expense, net of tax(a) 697 3,003 1,381
5,935 Amortization of intangible assets, net of tax 2,993 6,024
5,986 12,484 ----- ----- ----- ------ Adjusted net income
attributable to common stock $40,145 $49,491 $68,044 $82,657 Effect
of convertible subordinated notes under the "if-converted" method -
interest expense addback, net of tax 948 3,122 1,897 6,245 ---
----- ----- ----- Adjusted net income attributable to common stock
for adjusted diluted earnings per share $41,093 $52,613 $69,941
$88,902 ======= ======= ======= ======= Calculation of weighted
average shares for adjusted diluted earnings per share: Weighted
average shares outstanding for basic earnings per share 198,300
172,393 198,365 171,681 Effect of dilutive stock options 79 393 66
431 Effect of convertible subordinated notes under the "if
converted" method - weighted convertible shares issuable 6,415
30,650 6,415 30,650 ----- ------ ----- ------ Weighted average
shares outstanding for adjusted diluted earnings per share 204,794
203,436 204,846 202,762 ======= ======= ======= ======= Adjusted
diluted earnings per share $0.20 $0.26 $0.34 $0.44 ===== =====
===== ===== (a) See Note (a) to the Consolidated Statements of
Operations. The non-GAAP measures in this press release are
provided to enable investors to evaluate quarterly performance
excluding the effects of items that management believes impact the
comparability of operating results between periods. More
particularly, (i) amortization of intangible assets is impacted by
Quanta's acquisition activity which can cause the amortization
expense to vary period-to-period; (ii) non-cash interest expense
results from the requirements of FSP APB 14-1 (see Note (a) to the
Consolidated Statements of Operations) and varies from
period-to-period depending on the amount of the convertible
subordinated notes outstanding during the period, and (iii)
non-cash compensation expense may vary due to acquisition activity
and factors influencing the estimated fair value of performance
based awards. Quanta Services, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (In thousands) (Unaudited) June 30,
December 31, 2009 2008 ---- ---- Restated(a) ASSETS CURRENT ASSETS:
Cash and cash equivalents $524,356 $437,901 Accounts receivable,
net 723,711 795,251 Costs and estimated earnings in excess of
billings on uncompleted contracts 49,007 54,379 Inventories 27,967
25,813 Prepaid expenses and other current assets 60,851 68,147
------ ------ Total current assets 1,385,892 1,381,491 PROPERTY AND
EQUIPMENT, net 677,346 635,456 OTHER ASSETS, net 42,159 33,479
OTHER INTANGIBLE ASSETS, net 130,905 140,717 GOODWILL 1,363,200
1,363,100 --------- --------- Total assets $3,599,502 $3,554,243
========== ========== LIABILITIES AND EQUITY CURRENT LIABILITIES:
Current maturities of long-term debt and notes payable $2 $1,155
Accounts payable and accrued expenses 364,514 400,253 Billings in
excess of costs and estimated earnings on uncompleted contracts
66,206 50,390 ------ ------ Total current liabilities 430,722
451,798 CONVERTIBLE SUBORDINATED NOTES, NET 124,400 122,275
DEFERRED INCOME TAXES AND OTHER NON-CURRENT LIABILITIES 310,902
308,955 ------- ------- Total liabilities 866,024 883,028 -------
------- TOTAL STOCKHOLDERS' EQUITY 2,733,125 2,671,215
NONCONTROLLING INTEREST 353 - --- --- TOTAL EQUITY 2,733,478
2,671,215 --------- --------- Total liabilities and equity
$3,599,502 $3,554,243 ========== ========== (a) See Note (a) to the
Consolidated Statements of Operations. DATASOURCE: Quanta Services,
Inc. CONTACT: James Haddox, CFO, or Reba Reid, Quanta Services
Inc., +1-713-629-7600; or Ken Dennard, , Kip Rupp, , both of
DRG&E, +1-713-529-6600, for Quanta Services, Inc. Web Site:
http://www.quantaservices.com/
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