QUANTA SERVICES, INC. HOUSTON, Aug. 4, 2016 /PRNewswire/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three and six months ended June 30, 2016. Revenues in the second quarter of 2016 were $1.79 billion and net income from continuing operations attributable to common stock was $16.6 million, or $0.11 per diluted share. Quanta's operating results for the three months ended June 30, 2016 were negatively impacted by a project loss of approximately $30.5 million ($18.6 million net of tax, or $0.12 per diluted share) that resulted from a claimed force majeure event and continued engineering and production issues on a power plant construction project in Alaska. Operating results were also impacted by lower than anticipated revenues and margins in the oil and gas segment, which were attributable to delayed project starts and, to a lesser extent, wildfires in Alberta, Canada, as well as certain other negative project conditions. In addition, Quanta's operating results were negatively impacted by a higher than anticipated tax rate as the percentage of earnings from jurisdictions with higher tax rates increased.
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"The power plant project continues to distort the earnings of our core electric operations, which have performed well in the first six months of the year. Further, activity in the large electric transmission project market is building, as evidenced by the two new projects announced in this release, and we continue to see substantial bidding activity," said Duke Austin, president and chief executive officer of Quanta Services. "Subsequent to the second quarter, we have mobilized and are preparing to mobilize on a number of large diameter pipeline projects, which support our expectations for meaningful increases in consolidated revenues, margins and earnings in the second half of this year. We continue to have a positive multi-year view on the end markets we serve and believe we are well positioned to serve the expanding needs of our customers."
Revenues in the second quarter of 2015 were $1.87 billion and net income from continuing operations attributable to common stock was $32.0 million, or $0.15 per diluted share. Included in Quanta's operating results for the three months ended June 30, 2015 were project losses of $25.1 million ($16.2 million net of tax, or $0.08 per diluted share) related to the same power plant construction project in Alaska and an electric transmission project in Canada. Also included in Quanta's net income from continuing operations for the three months ended June 30, 2015 were combined charges of $7.2 million ($6.7 million net of tax, or $0.03 per diluted share) associated with certain tax law changes and acquisition-related items.
Adjusted diluted earnings per share from continuing operations (a non-GAAP measure) was $0.18 for the three months ended June 30, 2016 compared to $0.24 for the three months ended June 30, 2015.
RECENT HIGHLIGHTS
-- Selected for Large Electric Transmission & Distribution Project - In
July 2016, Quanta was selected by a California-based utility for a large
electric power transmission and distribution project located primarily
in a national forest area in southern California. Led by CRUX
Subsurface, Inc., a Quanta Services company, Quanta's scope of work
includes the engineering, procurement and construction of the project,
including rebuilding and replacing approximately 145 miles of 12 and 69
kilovolt underground and overhead electric power infrastructure.
Engineering and related services for the project have begun, and
completion is anticipated in late 2019.
-- Secured Contract for Midwest Transmission Line Project - In late June
2016, PAR Electrical Contractors (PAR), a Quanta Services company, began
construction on a new 100-mile double-circuit 345 kilovolt transmission
line for a Midwest utility in its service territory. PAR's scope of work
includes access roads, foundations, steel pole erection, wire stringing
and material management. The project is scheduled to be completed in the
third quarter of 2018.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015
Revenues in the six months ended June 30, 2016 were $3.51 billion compared to revenues of $3.73 billion in the six months ended June 30, 2015. Net income from continuing operations attributable to common stock was $37.1 million, or $0.23 per diluted share, in the six months ended June 30, 2016 compared to net income from continuing operations attributable to common stock of $79.7 million, or $0.37 per diluted share, in the six months ended June 30, 2015. Included in Quanta's operating results for the six months ended June 30, 2016 was a project loss of approximately $51.8 million ($31.6 million net of tax, or $0.20 per diluted share) that resulted from continued engineering and production issues and a claimed force majeure event on a power plant construction project in Alaska. Included in Quanta's operating results for the six months ended June 30, 2015 were project losses of $41.3 million ($27.4 million net of tax, or $0.13 per diluted share) related to the same power plant construction project in Alaska and an electric transmission project in Canada.
Adjusted diluted earnings per share from continuing operations (a non-GAAP measure) was $0.41 for the six months ended June 30, 2016 compared to $0.52 for the six months ended June 30, 2015.
The adjusted diluted earnings per share measures used in this earnings release are calculated as GAAP diluted earnings per share before acquisition and integration costs, amortization of intangible assets, non-cash compensation expense, and certain other items that affect comparability of results between periods. See the attached table for a reconciliation of adjusted diluted earnings per share (a non-GAAP measure) to GAAP diluted earnings per share from continuing operations for the three and six months ended June 30, 2016 and 2015.
Quanta completed three acquisitions during the first six months of 2016 and five acquisitions during the second half of 2015. Therefore, the results for the three and six months ended June 30, 2016 included these acquisitions from the respective acquisition dates and are compared to the pre-acquisition historical results of Quanta for the three and six months ended June 30, 2015.
OUTLOOK
The long-term outlook for Quanta's business is positive. However, weather, regulatory, permitting, project timing, execution challenges and other factors have impacted the company's historical results, and may impact Quanta's future financial results. Therefore, Quanta's financial outlook for revenues, margins and earnings reflects management's effort to properly align these uncertainties with the backlog the company is executing on and the opportunities expected to materialize during 2016. The following forward-looking statements are based on current expectations, and actual results may differ materially.
Quanta expects a meaningful increase in revenues, margins and earnings during the second half of 2016, as compared to the first half of 2016, due to a significant increase in the number of larger pipeline projects anticipated to be in construction during the period. Our outlook includes estimates for project start dates, which as of the timing of this earnings release, we believe are probable based on customer communications. However, variances in these estimated start dates could lead to revenue and earnings results that differ materially from our current estimates. Furthermore, some of these projects are larger in contract value, and performance of any individual project that significantly exceeds or is less than our current estimates for such projects could materially impact our earnings results. Quanta's outlook does not assume any recovery of the project losses recognized to date on the power plant project in Alaska, even though the company is pursuing various remedies for recovery of such losses.
Quanta expects revenues for the full year 2016 to range between $7.75 billion and $8.0 billion and diluted earnings per share from continuing operations to be $1.20 to $1.35. Quanta expects adjusted diluted earnings per share from continuing operations (a non-GAAP measure) for the full year 2016 to be $1.52 to $1.67. See the attached table for a reconciliation of estimated adjusted diluted earnings per share from continuing operations to estimated GAAP diluted earnings per share from continuing operations for the full year 2016.
NON-GAAP FINANCIAL MEASURES
The non-GAAP measures in this press release and on Quanta's website are provided to enable investors, analysts and management to evaluate Quanta's performance excluding the effects of certain items that management believes impact the comparability of operating results between reporting periods. In addition, management believes these measures are useful in comparing Quanta's operating results with those of its competitors. These measures should be used in addition to, and not in lieu of, results prepared in conformity with GAAP. Reconciliations of other GAAP to non-GAAP measures not included in the table attached to this press release can be found on the company's website at www.quantaservices.com in the "Investors & Media" section.
CONFERENCE CALL INFORMATION
Quanta Services has scheduled a conference call for August 4, 2016 at 9:00 a.m. Eastern Time. To participate in the call, dial 1-201-689-8345 or 1-877-407-8291 at least 10 minutes before the conference call begins and ask for the Quanta Services Second Quarter 2016 Earnings Conference Call. Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the company's website at www.quantaservices.com. To listen to the call live on the Internet, please visit the Quanta Services website at least 15 minutes early to register and download and install any necessary audio software. For those who cannot listen to the live event, an archive will be available shortly after the call on the company's website. For more information, please contact Kip Rupp, Vice President - Investor Relations at Quanta Services, by calling 713-341-7260 or emailing investors@quantaservices.com.
GET THE QUANTA SERVICES IR APP AND FOLLOW QUANTA ON SOCIAL MEDIA
The Quanta investor relations app for iPhone, iPad and Android mobile devices is available for free at Apple's App Store for the iPhone and iPad and at Google Play for Android mobile devices. The Quanta investor relations app allows users to navigate the company's investor relations materials including the latest press releases, SEC filings, presentations, videos, audio cast conference calls and stock price information. Sharing functionality via email, Twitter and Facebook is available, as well as the ability for investors to be notified when new information is posted to Quanta's IR app.
Additionally, investors and others should note that while we announce material financial information and make other public disclosures of information regarding Quanta through SEC filings, press releases and public conference calls, we also utilize social media to communicate this information. It is possible that the information we post on social media could be deemed material. Accordingly, we encourage investors, the media and others interested in our company to follow Quanta, and review the information we post, on the social media channels listed on our website in the "Investors & Media" section.
ABOUT QUANTA SERVICES
Quanta Services is a leading specialized contracting services company, delivering infrastructure solutions for the electric power and oil and gas industries. Quanta's comprehensive services include designing, installing, repairing and maintaining energy infrastructure. With operations throughout the United States, Canada and Australia and in select other international markets, Quanta has the manpower, resources and expertise to safely complete projects that are local, regional, national or international in scope. For more information, visit www.quantaservices.com.
Forward-Looking Statements
This press release (and oral statements regarding the subject matter of this press 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, statements relating to projected revenues, net income, earnings per share, weighted average shares outstanding, margins, capital expenditures, and other projections of operating or financial results; expectations regarding the business or financial outlook, growth or opportunities in particular markets; backlog; future capital allocation initiatives, including the amount, timing, availability, and strategy with respect to any future stock repurchases; the ability to deliver increased value and return capital to shareholders; the strategic use of Quanta's balance sheet; the expected value of contracts or intended contracts with customers; the scope, services, term and results of any projects awarded or expected to be awarded for services to be provided by Quanta; the anticipated commencement and completion dates for any projects awarded; the development of larger electric transmission and oil and natural gas pipeline projects and their impact on Quanta's business or the demand for Quanta's services; the level of oil, natural gas and natural gas liquids prices and their impact on Quanta's business or demand for Quanta's services; the impact of renewable energy initiatives, including mandated state renewable portfolio standards, the economic stimulus package and other existing or potential energy legislation; potential opportunities that may be indicated by bidding activity or similar discussions with customers; the potential benefits from acquisitions; the expected outcome of pending and threatened litigation; the business plans or financial condition of Quanta's customers; Quanta's plans and strategies; and the current economic and regulatory conditions and trends in the industries Quanta serves, possible recovery on pending or contemplated change orders or affirmative claims against customers or third parties, 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 known and unknown risks and uncertainties that are difficult to predict or beyond Quanta's control, including, among others, market conditions; the effects of industry, economic or political conditions outside of the control of Quanta; quarterly variations in operating results; adverse economic and financial conditions, including weakness in the capital markets; trends and growth opportunities in relevant markets; delays, reductions in scope or cancellations of anticipated, pending or existing projects, including as a result of weather, regulatory or environmental processes, project performance issues, or customers' capital constraints; the successful negotiation, execution, performance and completion of anticipated, pending and existing contracts, including the ability to obtain awards of projects on which Quanta bids or is otherwise discussing with customers; the ability to attract skilled labor and retain key personnel and qualified employees; potential shortage of skilled employees; 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; adverse impacts from weather; the ability to generate internal growth; competition in Quanta's business, including the ability to effectively compete for new projects and market share; potential failure of renewable energy initiatives, the economic stimulus package or other existing or potential legislative actions to result in increased demand for Quanta's services; liabilities associated with multiemployer pension plans, including underfunding of liabilities and termination or withdrawal liabilities; the possibility of further increases in the liability associated with Quanta's withdrawal from a multiemployer pension plan; liabilities for claims that are self-insured or not insured; unexpected costs or liabilities that may arise from lawsuits or indemnity claims asserted against Quanta; the outcome of pending or threatened litigation; risks relating to the potential unavailability or cancellation of third party insurance, the exclusion of coverage for certain losses, and potential increases in premiums for coverage deemed beneficial to Quanta; cancellation provisions within contracts and the risk that contracts expire and are not renewed or are replaced on less favorable terms; loss of customers with whom Quanta has long-standing or significant relationships; the potential that participation in joint ventures exposes Quanta to liability and/or harm to its reputation for acts or omissions by partners; Quanta's inability or failure to comply with the terms of its contracts, which may result in unexcused delays, warranty claims, failure to meet performance guarantees, damages or contract terminations; the effect of natural gas, natural gas liquids and oil prices on Quanta's operations and growth opportunities and on Quanta's customers' capital programs and the resulting impact on demand for Quanta's services; the future development of natural resources in shale formations; 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 failure of Quanta's customers to comply with regulatory requirements applicable to their projects, including those related to awards of stimulus funds, which may result in project delays and cancellations; budgetary or other constraints that may reduce or eliminate tax incentives for or government funding of projects, including stimulus projects, which may result in project delays or cancellations; estimates and assumptions in determining financial results and backlog; the ability to realize backlog; risks associated with operating in international markets, including instability of foreign governments, currency fluctuations, tax and investment strategies and compliance with the laws of foreign jurisdictions as well as the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery and anti-corruption laws; the ability to successfully identify, complete, integrate and realize synergies from acquisitions; the potential adverse impact resulting from uncertainty surrounding acquisitions, including the ability to retain key personnel from the acquired businesses and the potential increase in risks already existing in Quanta's operations; the adverse impact of impairments of goodwill, receivables, property and equipment and other intangible assets or investments; growth outpacing Quanta's decentralized management and infrastructure; requirements relating to governmental regulation and changes thereto; inability to enforce Quanta's intellectual property rights or the obsolescence of such rights; risks related to the implementation of an information technology solution; the impact of a unionized workforce on operations, including labor stoppages or interruptions due to strikes or lockouts; potential liabilities relating to occupational health and safety matters; Quanta's dependence on suppliers, subcontractors and equipment manufacturers; beliefs and assumptions about the collectability of receivables; the cost of borrowing, availability of credit and cash, fluctuations in the price and volume of Quanta's common stock, debt covenant compliance, interest rate fluctuations and other factors affecting financing and investing activities; the ability to access sufficient funding to finance desired growth and operations; the ability to obtain performance bonds; potential exposure to environmental liabilities; the ability to continue to meet the requirements of the Sarbanes-Oxley Act of 2002; rapid technological and structural changes that could reduce the demand for Quanta's services; the impact of increased healthcare costs arising from healthcare reform legislation; the impact of regulatory changes on labor costs; the impact of significant fluctuations in foreign currency exchange rates; the business, accounting or other effects from the sale of Quanta's fiber optic licensing operations; the potential for claims or damages associated with the sale of Quanta's fiber optic licensing operations, including as a result of indemnity claims; and other risks and uncertainties detailed in Quanta's Annual Report on Form 10-K for the year ended Dec. 31, 2015, Quanta's Quarterly Report on Form 10-Q for the quarter ended Mar. 31, 2016 and any other documents that Quanta files with the Securities and Exchange Commission (SEC). 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 website at www.quantaservices.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov. 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. Investors 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. Quanta further expressly disclaims any written or oral statements made by any third party regarding the subject matter of this press release.
Quanta Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2016 and 2015
(In thousands, except per share information)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Revenues $1,792,430 $1,872,340 $3,506,167 $3,733,726
Cost of services
(including
depreciation) 1,592,213 1,644,835 3,102,637 3,268,315
--------- --------- ---------
Gross profit 200,217 227,505 403,530 465,411
Selling, general and
administrative
expenses 156,607 149,923 315,131 295,386
Amortization of
intangible assets 8,141 8,731 15,636 17,024
----- ----- ------ ------
Operating income 35,469 68,851 72,763 153,001
Interest expense (3,583) (1,675) (7,172) (3,075)
Interest income 641 319 1,157 772
Equity in losses of
unconsolidated
affiliates (378) (314) (559) (314)
Other income
(expense), net (725) (134) (463) (346)
---- ---- ---- ----
Income from continuing
operations before
income taxes 31,424 67,047 65,726 150,038
Provision for income
taxes 14,695 31,584 28,138 62,185
------ ------ ------ ------
Net income from
continuing operations 16,729 35,463 37,588 87,853
Net income from
discontinued
operations - 14,102 - 19,897
--- ------ --- ------
Net income 16,729 49,565 37,588 107,750
Less: Net income
attributable to non-
controlling interests 167 3,456 530 8,157
--- ----- --- -----
Net income
attributable to
common stock $16,562 $46,109 $37,058 $99,593
======= ======= ======= =======
Amounts attributable to common stock:
Net income from
continuing operations $16,562 $32,007 $37,058 $79,696
Net income from
discontinued
operations - 14,102 - 19,897
--- ------ --- ------
Net income
attributable to
common stock $16,562 $46,109 $37,058 $99,593
======= ======= ======= =======
Earnings per share attributable to common
stock -basic and diluted:
Continuing operations $0.11 $0.15 $0.23 $0.37
Discontinued
operations - 0.07 - 0.09
Net income
attributable to
common stock $0.11 $0.22 $0.23 $0.46
===== ===== ===== =====
Weighted average shares used in computing
earnings per share:
Basic 156,128 213,047 159,577 214,257
======= ======= ======= =======
Diluted 156,130 213,059 159,579 214,269
======= ======= ======= =======
Quanta Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2016 2015
---- ----
ASSETS
CURRENT ASSETS:
Cash and
cash
equivalents $162,344 $128,771
Accounts
receivable,
net 1,384,554 1,621,133
Costs and
estimated
earnings
in
excess
of
billings
on
uncompleted
contracts 466,476 317,745
Inventories 74,976 75,285
Prepaid
expenses
and
other
current
assets 156,037 134,585
-------
Total
current
assets 2,244,387 2,277,519
PROPERTY
AND
EQUIPMENT,
net 1,160,870 1,101,959
OTHER
ASSETS,
net 93,033 76,333
OTHER
INTANGIBLE
ASSETS,
net 203,256 205,074
GOODWILL 1,595,555 1,552,658
--------- ---------
Total
assets $5,297,101 $5,213,543
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current
maturities
of long-
term
debt and
short-
term
borrowings $5,603 $7,067
Accounts
payable
and
accrued
expenses 811,521 782,134
Billings
in
excess
of costs
and
estimated
earnings
on
uncompleted
contracts 388,314 399,230
Current
liabilities
of
discontinued
operations 2,651 15,313
----- ------
Total
current
liabilities 1,208,089 1,203,744
LONG-
TERM
DEBT AND
NOTES
PAYABLE,
net of
current
maturities 401,119 475,364
DEFERRED
INCOME
TAXES
AND
OTHER
NON-
CURRENT
LIABILITIES 484,719 446,620
-------
Total
liabilities 2,093,927 2,125,728
--------- ---------
TOTAL
STOCKHOLDERS'
EQUITY 3,200,323 3,085,494
NON-
CONTROLLING
INTERESTS 2,851 2,321
----- -----
TOTAL
EQUITY 3,203,174 3,087,815
--------- ---------
Total
liabilities
and
equity $5,297,101 $5,213,543
========== ==========
Quanta Services, Inc. and Subsidiaries
Supplemental Segment Data
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Segment Results
Quanta reports its results under two reportable segments: (1) Electric Power Infrastructure Services and (2) Oil and Gas Infrastructure Services, as set forth below (in thousands, except percentages).
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Electric Power
Infrastructure
Services $1,159,087 64.7% $1,222,324 65.3% $2,346,089 66.9% $2,462,616 66.0%
Oil and Gas
Infrastructure
Services 633,343 35.3 650,016 34.7 1,160,078 33.1 1,271,110 34.0
------- ---- ------- ---- --------- ---- --------- ----
Consolidated
revenues $1,792,430 100.0% $1,872,340 100.0% $3,506,167 100.0% $3,733,726 100.0%
========== ===== ========== ===== ========== ===== ========== =====
Operating income (loss):
Electric Power
Infrastructure
Services (a) $75,934 6.6% $88,027 7.2% $163,258 7.0% $197,019 8.0%
Oil and Gas
Infrastructure
Services 11,899 1.9 35,981 5.5 17,740 1.5 60,128 4.7
Corporate and Non-
Allocated Costs (52,364) N/A (55,157) N/A (108,235) N/A (104,146) N/A
------- ------- -------- --------
Consolidated
operating income $35,469 2.0% $68,851 3.7% $72,763 2.1% $153,001 4.1%
======= ======= ======= ========
(a) Included in operating income
for the Electric Power
Infrastructure Services segment
for the three and six months
ended June 30, 2016 were the
impacts of $30.5 million and
$51.8 million of project losses
related to a power plant
construction project in Alaska.
Included in operating income for
the Electric Power Infrastructure
Services segment for the three
and six months ended June 30,
2015 were the impacts of $25.1
million and $41.3 million of
project losses related to a power
plant construction project in
Alaska and an electric
transmission project in Canada
completed in the third quarter of
2015.
Backlog
Backlog is not a term recognized
under United States generally
accepted accounting principles
(GAAP); however, it is a common
measurement used in the industry.
Quanta's methodology for
determining backlog may not be
comparable to the methodologies
used by other companies. Quanta's
backlog represents the amount of
consolidated revenue that it
expects to realize from future
work under construction contracts,
long-term maintenance contracts
and master service agreements.
These estimates include revenues
from the remaining portion of firm
orders not yet completed and on
which work has not yet begun, as
well as revenues from change
orders, renewal options, and
funded and unfunded portions of
government contracts to the extent
that they are reasonably expected
to occur. For purposes of
calculating backlog, Quanta
includes 100% of estimated
revenues attributable to
consolidated joint ventures and
variable interest entities. The
following table presents Quanta's
total backlog by reportable
segment as of June 30, 2016,
December 31, 2015 and June 30,
2015, along with an estimate of
the backlog amounts expected to be
realized within 12 months of each
balance sheet date (in millions):
Backlog as of
-------------
June 30, 2016 December 31, 2015 June 30, 2015
------------- ----------------- -------------
12 Month Total 12 Month Total 12 Month Total
-------- ----- -------- ----- -------- -----
Electric Power
Infrastructure
Services $3,270.2 $6,347.2 $3,307.9 $6,312.9 $3,217.1 $6,280.2
Oil and Gas
Infrastructure
Services 2,437.6 3,408.5 1,900.8 3,074.0 1,705.7 2,870.7
------- ------- ------- ------- ------- -------
Total $5,707.8 $9,755.7 $5,208.7 $9,386.9 $4,922.8 $9,150.9
======== ======== ======== ======== ======== ========
Quanta Services, Inc. and Subsidiaries
For the Three and Six Months Ended June 30, 2016 and 2015
Reconciliation of Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share from Continuing
Operations
(In thousands, except per share information)
(Unaudited)
The non-GAAP measure of adjusted diluted earnings per
share from continuing operations, when used in connection
with diluted earnings per share, is intended to provide
useful information to investors and analysts as they
evaluate Quanta's performance. Management believes that
the exclusion of certain items from net income from
continuing operations attributable to common stock
enables it to more effectively evaluate Quanta's
operations period over period and better identify
operating trends that may not otherwise be apparent. As
to certain of the items below, (i) amortization of
intangible assets is impacted by Quanta's acquisition
activity, which can cause these amounts to vary from
period to period; (ii) non-cash stock-based
compensation expense may vary due to acquisition
activity, factors influencing the estimated fair value of
performance-based awards, forfeiture rates, accelerated
vesting and amounts granted during the period; (iii)
acquisition and integration costs vary period to period
depending on the level of Quanta's acquisition activity
ongoing during the period; (iv) severance costs related
to the departure of Quanta's former president and chief
executive officer and severance and restructuring costs
associated with certain operations primarily within
Quanta's Oil and Gas Infrastructure segment are not
regularly occurring items; and (v) cumulative revaluation
of certain deferred tax liabilities associated with an
Alberta provincial income tax law change is not a
regularly occurring item. Because adjusted diluted
earnings per share, as defined, excludes some, but not
all, items that affect net income from continuing
operations attributable to common stock, adjusted diluted
earnings per share as presented in this press release may
or may not be comparable to similarly titled measures of
other companies. The most comparable GAAP financial
measure, net income from continuing operations
attributable to common stock, and information reconciling
the GAAP and non-GAAP financial measures, are included
below. Reconciliations of other GAAP to non-GAAP
measures not included in the table below can be found on
the company's website at www.quantaservices.com in the
"Investors & Media" section.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Reconciliation of
adjusted net income
from continuing
operations
attributable to common
stock:
Net income from
continuing operations
attributable to common
stock (GAAP as
reported) $16,562 $32,007 $37,058 $79,696
Adjustments:
Impact of Alberta tax
law change (a) - 4,982 - 4,982
Severance and
restructuring charges
(b) - - 6,352 -
Acquisition and
integration costs 830 2,203 2,083 3,682
Income tax impact of
adjustments (c) (221) (437) (2,835) (684)
---- ---- ------ ----
Adjusted net income
from continuing
operations
attributable to common
stock before certain
non-cash adjustments 17,171 38,755 42,658 87,676
Non-cash stock-based
compensation 9,503 9,714 21,513 19,185
Amortization of
intangible assets 8,141 8,731 15,636 17,024
Income tax impact of
non-cash adjustments
(c) (6,371) (6,630) (13,616) (13,011)
------ ------ ------- -------
Adjusted net income
from continuing
operations
attributable to common
stock $28,444 $50,570 $66,191 $110,874
======= ======= ======= ========
Weighted average
shares:
Weighted average shares
outstanding for basic
earnings per share 156,128 213,047 159,577 214,257
Effect of dilutive
stock options 2 12 2 12
--- --- --- ---
Weighted average shares
outstanding for
diluted and adjusted
diluted earnings per
share 156,130 213,059 159,579 214,269
======= ======= ======= =======
Diluted earnings per
share from continuing
operations and
adjusted diluted
earnings per share
from continuing
operations:
Diluted earnings per
share from continuing
operations $0.11 $0.15 $0.23 $0.37
===== ===== ===== =====
Adjusted diluted
earnings per share
from continuing
operations $0.18 $0.24 $0.41 $0.52
===== ===== ===== =====
(a) The amount for the three and
six months ended June 30, 2015
reflects the elimination of the
non-recurring impact of the
cumulative revaluation of certain
deferred tax liabilities pursuant
to an Alberta provincial income
tax law change that became
effective as of June 1, 2015.
(b) The amount for the six months
ended June 30, 2016 reflects the
elimination of severance costs
recognized in the first quarter
of 2016 associated with the
departure of Quanta's former
president and chief executive
officer and severance and
restructuring costs associated
with certain operations primarily
within the Oil and Gas
Infrastructure Services segment.
(c) The tax impact of adjustments
that are subject to tax are
determined using the incremental
statutory tax rate of the
jurisdictions to which each
adjustment relates for the
respective periods.
Quanta Services, Inc. and Subsidiaries
For the Year Ended December 31, 2016
Reconciliation of Non-GAAP Financial Measures
Estimated Adjusted Diluted Earnings Per Share from Continuing
Operations
(In thousands, except per share information)
(Unaudited)
The non-GAAP measure of adjusted diluted earnings per share
from continuing operations, when used in connection with
diluted earnings per share, is intended to provide useful
information to investors and analysts as they evaluate
Quanta's performance. Management believes that the exclusion
of certain items from net income from continuing operations
attributable to common stock enables it to more effectively
evaluate Quanta's operations period over period and better
identify operating trends that may not otherwise be apparent.
As to certain of the items below, (i) amortization of
intangible assets is impacted by Quanta's acquisition
activity, which can cause these amounts to vary from period
to period; (ii) non-cash stock-based compensation expense
may vary due to acquisition activity, factors influencing the
estimated fair value of performance-based awards, forfeiture
rates, accelerated vesting and amounts granted during the
period; (iii) acquisition and integration costs vary period
to period depending on the level of Quanta's acquisition
activity ongoing during the period and (iv) severance costs
related to the departure of Quanta's former president and
chief executive officer and severance and restructuring costs
associated with certain operations primarily within Quanta's
Oil and Gas Infrastructure segment are not regularly
occurring items. Because adjusted diluted earnings per share,
as defined, excludes some, but not all, items that affect net
income from continuing operations attributable to common
stock, adjusted diluted earnings per share as presented in
this press release may or may not be comparable to similarly
titled measures of other companies. The most comparable GAAP
financial measure, net income from continuing operations
attributable to common stock, and information reconciling the
GAAP and non-GAAP financial measures, are included below.
Reconciliations of other GAAP to non-GAAP measures not
included in the table below can be found on the company's
website at www.quantaservices.com in the "Investors & Media"
section.
Estimated Range
---------------
Full Year Ended
Estimated December 31, 2016
--------- -----------------
Reconciliation of estimated adjusted
net income from continuing operations
attributable to common stock:
$
Net income from continuing operations
attributable to common stock (as
defined by GAAP) $188,000 211,500
Severance and restructuring charges
(a) 6,352 6,352
Acquisition and integration costs 2,083 2,083
Income tax impact of adjustments (b) (2,835) (2,835)
------ ------
Adjusted net income from continuing
operations attributable to common
stock before certain non-cash
adjustments 193,600 217,100
Non-cash stock-based compensation 41,000 41,000
Amortization of intangible assets 30,900 30,900
Income tax impact of non-cash
adjustments (b) (26,200) (26,200)
------- -------
$
Estimated adjusted net income from
continuing operations attributable to
common stock 239,300 262,800
======= =======
Weighted average shares:
Weighted average shares outstanding
for basic earnings per share 157,083 157,083
Effect of dilutive stock options 5 5
--- ---
Weighted average shares outstanding
for diluted and adjusted diluted
earnings per share 157,088 157,088
======= =======
Estimated diluted earnings per share
from continuing operations and
estimated adjusted diluted earnings
per share from continuing operations:
Estimated diluted earnings per share
from continuing operations 1.20 $1.35
==== =====
Estimated adjusted diluted earnings
per share from continuing operations 1.52 $1.67
==== =====
(a) The amount for the six months
ended June 30, 2016 reflects the
elimination of severance costs
recognized in the first quarter
of 2016 associated with the
departure of Quanta's former
president and chief executive
officer and severance and
restructuring costs associated
with certain operations primarily
within the Oil and Gas
Infrastructure Services segment.
(b) The tax impact of adjustments
that are subject to tax are
determined using the incremental
statutory tax rate of the
jurisdictions to which each
adjustment relates for the
respective periods.
Contacts: Derrick Jensen, CFO Media -Deborah Buks and
Molly LeCronier
Kip Rupp, CFA - Investors Ward
Quanta Services, Inc. 713-869-0707
713-629-7600
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SOURCE Quanta Services, Inc.
