HOUSTON, Feb. 25, 2021 /PRNewswire/ -- Quanta
Services, Inc. (NYSE: PWR) today announced results for the three
and twelve months ended December 31, 2020. Revenues in the
fourth quarter of 2020 were $2.91
billion compared to revenues of $3.11
billion in the fourth quarter of 2019, and net income
attributable to common stock was $170.1
million, or $1.17 per diluted
share, in the fourth quarter of 2020 compared to net income
attributable to common stock of $118.1
million, or $0.80 per diluted
share, in the fourth quarter of 2019. Adjusted diluted earnings per
share attributable to common stock (a non-GAAP measure) was
$1.22 for the fourth quarter of 2020
compared to $0.93 for the fourth
quarter of 2019.
"Quanta's utility solutions and delivery model continue to
produce world-class execution and performance, which drove fourth
quarter results that exceeded our expectations and completed a
solid year for Quanta that included improved profitability and
record earnings per share and backlog, despite the unprecedented
conditions caused by the global pandemic," said Duke Austin, President and Chief Executive
Officer of Quanta Services. "We believe our 2020 results reflect
the dedication and operational excellence of our people, the
resilience of our business and the sound execution of our strategic
initiatives."
"Our 2021 expectations reflect growth in revenues, net income,
adjusted EBITDA and adjusted earnings per share. More importantly,
we continue to believe there is opportunity to drive multi-year
revenue and earnings growth by focusing on our base business and
continuing to provide infrastructure solutions that support our
customers' efforts to increase reliability, safety, efficiency and
connectivity through modernization. Incrementally, we believe our
solutions play an important role in enabling policies and goals
aimed at transitioning towards a carbon neutral economy over the
long-term, which many of our utility customers are leading. We are
successfully executing on our strategic growth initiatives, which,
coupled with our strong financial profile, position us well to
continue to deliver value to stockholders."
Favorably impacting the fourth quarter of 2020 were a
$45.1 million release of a valuation
allowance against foreign tax credits as a result of a financial
restructure during the fourth quarter of 2020 and an $8.2 million benefit related to the release of
tax contingencies upon expiration of certain statute of limitations
periods. Certain other items also impacted the fourth quarter of
2020 and 2019 results and are reflected as adjustments in the
calculation of Quanta's adjusted diluted earnings per share
attributable to common stock (a non-GAAP measure). These items are
further described in the accompanying tables reconciling adjusted
diluted earnings per share attributable to common stock to GAAP
diluted earnings per share attributable to common stock. Quanta
completed seven acquisitions during each of 2020 and 2019, and the
results of the acquired businesses are included in Quanta's
consolidated results from the respective acquisition dates. For
further information on the items that impacted comparability of
2020 and 2019, see the footnotes to the accompanying tables
presenting Supplemental Segment Data and reconciliations of
adjusted EBITDA and adjusted diluted earnings per share
attributable to common stock (non-GAAP measures) to their
comparable GAAP financial measures.
RECENT HIGHLIGHTS
- Completed Two Acquisitions During the Fourth Quarter
- During the fourth quarter, Quanta completed the
acquisition of a business that primarily provides aviation services
for the utility industry, principally in California. Additionally, Quanta completed the
acquisition of a company that provides heavy civil, industrial and
energy construction and maintenance services in the western
United States. Quanta believes the
services provided by these businesses can support its electric
power and underground utility operations in the western
United States.
- Stock Repurchased - During the fourth quarter of
2020, Quanta repurchased $49.9
million of its outstanding common stock in the open market,
acquiring 0.7 million shares, and during the year ended
December 31, 2020, Quanta acquired a
total of 6.7 million shares of its common stock for $249.9 million. From December 31, 2020 through February 24, 2021, Quanta also repurchased
$7.0 million of its outstanding
common stock in the open market, acquiring approximately 100,000
shares. As of February 24, 2021,
Quanta had $529.8 million of
availability remaining under its current stock repurchase
authorizations.
- Increased Quarterly Cash Dividend by 20% - In
December 2020, Quanta's Board of
Directors declared a quarterly cash dividend to stockholders of
$0.06 per share, or a rate of
$0.24 per share on an annualized
basis, which represents a 20% increase from Quanta's prior
quarterly cash dividend paid in October
2020.
LATIN AMERICA
As previously communicated, the company has been pursuing the
exit of its Latin American (LATAM) operations, which management
believes has been substantially completed. Quanta's LATAM
operations generated operating losses of $27.1 million (including $7.0 million of asset impairments and
$2.7 million of severance and
restructuring charges), or $0.19 per
diluted share, in the fourth quarter of 2020, as compared to
operating losses of $3.6 million, or
$0.02 per diluted share, in the
fourth quarter of 2019. These operations have been significantly
impacted by the prolonged effects of the COVID-19 pandemic during
2020, and that, in part, has led the company to accelerate various
contract terminations and other activities in order to expedite
Quanta's cessation of operations in the region, which in turn
negatively impacted Quanta's results. As of December, 31, 2020,
there were only a few contracts remaining to complete or exit, and
as a result Quanta's LATAM financial results are not expected to be
material in 2021, and therefore we do not expect to separately
present LATAM financial results for future periods.
SEGMENT NAME CHANGES
As of December 31, 2020, Quanta
changed the name of its Electric Power Infrastructure Services
segment to Electric Power Infrastructure Solutions and the name of
its Pipeline and Industrial Infrastructure Services segment to
Underground Utility and Infrastructure Solutions. There was no
change to the composition of the segments. With respect to both
segments, we believe utilizing "Solutions" more accurately
describes the value-creating and collaborative approach we take to
working with our customers. Additionally, we believe Underground
Utility and Infrastructure Solutions is more reflective of the
strategic changes we have made over the past five years to
reposition the segment towards resilient business services to our
gas utility, pipeline integrity and industrial customers, which are
generally more visible and recurring in nature and are driven by
safety, reliability and environmental regulations.
QUANTA'S RESPONSE TO THE EFFECT OF THE COVID-19
PANDEMIC
Quanta continues to take proactive measures to protect the
health and safety of its employees through the implementation of
its pandemic plan and is operating based on the guidelines set
forth by the Centers for Disease Control and Prevention and the
Occupational Safety and Health Administration. Quanta also
continues to implement initiatives such as specialized training,
social distancing, additional protective equipment for its
employees in the field, and additional sanitizing measures for
offices, vehicles and equipment. Quanta has also reduced
non-essential business travel, applied work-from-home policies
where appropriate and developed other human resource-related
guidance to help employees stay safe and healthy. To date, Quanta
has not experienced any meaningful impact on the availability of
its workforce or key personnel as a result of the COVID-19
pandemic. Additionally, Quanta continues to implement its business
continuity plan and collaborate with customers to minimize
potential service disruptions and to proactively anticipate how
COVID-19 may impact the company's operations.
The ultimate impact of the COVID-19 pandemic on Quanta's
operational and financial performance will depend on future
developments, including the duration and severity of the pandemic
and actions taken by Quanta's customers and suppliers and by
domestic and international governments in response to the pandemic,
all of which are uncertain and cannot be predicted. As a result,
Quanta continues to actively monitor the current environment for
risks related to the pandemic in order to prepare and respond
accordingly.
RESULTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND
2019
Revenues in the year ended December 31,
2020 were $11.20 billion
compared to revenues of $12.11
billion in the year ended December
31, 2019, and net income attributable to common stock was
$445.6 million, or $3.07 per diluted share, in the year ended
December 31, 2020 compared to net
income attributable to common stock of $402.0 million, or $2.73 per diluted share, in the year ended
December 31, 2019. Adjusted diluted
earnings per share attributable to common stock (a non-GAAP
measure) was $3.82 for the year ended
December 31, 2020 compared to $3.33 for the year ended December 31, 2019.
Diluted and adjusted diluted earnings per share attributable to
common stock for the year ended December 31,
2020 were impacted by operating losses associated with
Quanta's LATAM operations of $74.0
million, or $0.51 per diluted
share and adjusted operating losses of $64.3
million, or $0.44 per adjusted
diluted earnings per share. Both diluted and adjusted diluted
earnings per share attributable to common stock for the year ended
December 31, 2019 were impacted by
operating losses associated with Quanta's LATAM operations of
$85.7 million, or $0.58 per diluted share, which included a
$79.2 million, or $0.54 per diluted share, charge associated with a
terminated telecommunications project in Peru, partially offset by the recognition of
$60.3 million ($43.9 million after-tax), or $0.30 per diluted share, of earnings related to
the recognition of previously deferred earnings on an electric
transmission project in Canada.
With the exception of adjusted diluted earnings per share, also
impacting the financial results for the three and twelve months
ended December 31, 2019 was a
$13.0 million ($20.7 million with associated tax benefits), or
$0.14 per diluted share, gain
recognized in the fourth quarter of 2019 related to the sale of
Quanta's investment in the same electric transmission project in
Canada. For further information on
other items impacting the fourth quarter and full year 2020
results, please refer to the footnotes to the accompanying tables
presenting Supplemental Segment Data and reconciliations of
adjusted EBITDA and adjusted diluted earnings per share
attributable to common stock (non-GAAP measures) to their
comparable GAAP financial measures.
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. More
recently, the COVID-19 pandemic has significantly impacted certain
of Quanta's operations and various markets where Quanta operates,
which has created additional uncertainty. Therefore, Quanta's
financial outlook reflects management's effort to align these
uncertainties with the backlog the company is executing on and the
opportunities expected to materialize during 2021.
Prior to the company's conference call, management will post a
summary of Quanta's 2021 guidance expectations with additional
commentary in the "Financial Info" area of the Investor Relations
section of Quanta's website at http://investors.quantaservices.com.
The following forward-looking statements are based on current
expectations, and actual results may differ materially. Quanta
expects 2021 revenues to range between $11.95 billion and $12.35
billion, net income attributable to common stock to range
between $458 million and $531 million, diluted earnings per share
attributable to common stock to range between $3.16 and $3.66 and
adjusted diluted earnings per share attributable to common stock (a
non-GAAP measure) to range between $4.02 and $4.52.
EBITDA (a non-GAAP measure) is expected to range between
$1.00 billion and $1.11 billion, and adjusted EBITDA (a non-GAAP
measure) is expected to range between $1.09
billion and $1.19 billion.
Additionally, Quanta's full year free cash flow (a non-GAAP
measure) expectations are between $400
million and $600 million.
As discussed previously in this earnings release, as of
December, 31, 2020, there were only a few contracts remaining to
complete or exit within Quanta's LATAM operations. As a result, the
Latin American financial results are not expected to be material in
2021, and therefore we do not expect to separately present LATAM
financial results for future periods.
NON-GAAP FINANCIAL MEASURES
The financial measures not prepared in conformity with generally
accepted accounting principles in the
United States (GAAP) that are utilized in this press release
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.
Please see the accompanying tables for reconciliations of the
following non-GAAP financial measures for Quanta's results for the
three and twelve months ended December 31, 2020 and full-year
2021 expectations: adjusted diluted earnings per share attributable
to common stock (a non-GAAP measure) to diluted earnings per share
attributable to common stock, EBITDA and adjusted EBITDA (non-GAAP
measures) to net income attributable to common stock and free cash
flow (a non-GAAP measure) to net cash provided by operating
activities.
CONFERENCE CALL INFORMATION
Quanta Services has scheduled a conference call for 9:00 a.m. Eastern Time on February 25, 2021, which will also be broadcast
live over the Internet. Quanta will utilize a slide presentation to
accompany its prepared remarks, which will be viewable through the
webcast and will also be available in the "News and Events" and
"Financial Info" areas of the Investor Relations section of
Quanta's website prior to the start of the call. 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
Fourth Quarter and Full-Year 2020 Earnings Conference Call or visit
the Investors Relations section of the Quanta Services website at
http://investors.quantaservices.com to access the Internet
broadcast. Please allow at least 15 minutes to register and
download and install any necessary audio software. For those who
cannot participate live, shortly following the call a digital
recording will be available on the company's website and a
telephonic replay will be available through March 3, 2021 by dialing 1-877-660-6853 and
referencing the conference ID 13715758. For more information,
please contact Kip Rupp, Vice
President - Investor Relations at Quanta Services, at 713-341-7260
or investors@quantaservices.com.
ABOUT QUANTA SERVICES
Quanta Services is a leading specialized contracting services
company, delivering comprehensive infrastructure solutions for the
utility, communications, pipeline and energy industries. Quanta's
comprehensive services include designing, installing, repairing and
maintaining energy and communications infrastructure. With
operations throughout the United
States, Canada,
Australia and 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.
FOLLOW QUANTA IR ON SOCIAL MEDIA
Investors and others should note that while Quanta announces
material financial information and makes other public disclosures
of information regarding Quanta through SEC filings, press releases
and public conference calls, it also utilizes social media to
communicate this information. It is possible that the information
Quanta posts on social media could be deemed material. Accordingly,
Quanta encourages investors, the media and others interested in our
company to follow Quanta, and review the information it posts, on
the social media channels listed in the Investors Relations section
of the Quanta Services website.
Cautionary Statement About 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, EBITDA, margins, cash flows,
liquidity, weighted average shares outstanding, capital
expenditures, tax rates and other operating or financial results;
expectations regarding Quanta's business or financial outlook;
expectations regarding the COVID-19 pandemic, including the
potential impact of the COVID-19 pandemic and of governmental
responses to the pandemic on Quanta's business, operations, supply
chain, personnel, financial condition, results of operations, cash
flows and liquidity; Quanta's plans, strategies and opportunities,
including the plans, timing, effects and other matters relating to
the COVID-19 pandemic and the exit of its Latin American
operations; the potential benefits from, and future financial and
operational performance of, acquired businesses and our
investments, including our joint venture LUMA Energy, LLC; the
expected outcome of pending and threatened legal proceedings;
beliefs and assumptions about the collectability of receivables;
the business plans or financial condition of Quanta's customers,
including with respect to the COVID-19 pandemic and transitioning
to a carbon neutral economy; the potential impact of the recent
decrease in commodity prices and volatility in commodity production
volumes on Quanta's business and demand for Quanta's services;
expectations regarding opportunities, technological developments,
competitive positioning, future economic and regulatory conditions
and other trends in particular markets or industries; projected or
expected realization of remaining performance obligations and
backlog; the future demand for and availability of labor resources
in the industries Quanta serves; future capital allocation
initiatives, including the amount, timing and strategies with
respect to any future stock repurchases or expectations regarding
the declaration, amount and timing of any future cash dividends;
the ability to deliver increased value or return capital to
stockholders; the expected value of contracts or intended contracts
with customers; the scope, services, term or results of any
projects awarded or expected to be awarded to Quanta; the
anticipated commencement and completion dates for any projects
awarded; the development of and opportunities with respect to
future projects, including renewable and other projects designed to
support transition to a carbon neutral economy and larger electric
transmission and pipeline projects; the impact of existing or
potential legislation or regulation; potential opportunities that
may be indicated by bidding activity or discussions with customers;
and possible recovery of pending or contemplated insurance claims,
change orders and affirmative claims asserted 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, financial or
political conditions outside of the control of Quanta, including
economic, energy and environmental policies resulting from the 2020
U.S. presidential and congressional elections and weakness in
capital markets or the ongoing and potential impact to financial
markets and worldwide economic activity resulting from the COVID-19
pandemic; quarterly variations in operating results, liquidity,
financial condition, cash flows, capital requirements, reinvestment
opportunities or other financial results, including the ongoing and
potential impact to Quanta's business, operations and supply chain
of the COVID-19 pandemic and related governmental actions; the
severity, magnitude and duration of the COVID-19 pandemic,
including impacts of the pandemic and of business and governmental
responses to the pandemic on Quanta's operations, personnel and
supply chain and on commercial activity and demand across Quanta's
and its customers' businesses; Quanta's inability to predict the
extent to which the COVID-19 pandemic and related impacts will
adversely impact its business or the prices of its securities,
including with respect to governmental restrictions on its ability
to operate, workforce availability, regulatory and permitting
delays, and future demand for energy; trends and growth
opportunities in relevant markets, including Quanta's ability to
obtain future project awards; the time and costs required to exit
Quanta's Latin American operations, as well as the business and
political climate in Latin
America; delays, deferrals, reductions in scope or
cancellations of anticipated, pending or existing projects as a
result of, among other things, the COVID-19 pandemic, weather,
regulatory or permitting issues, environmental processes, project
performance issues, claimed force majeure events, protests or other
political activity, reductions or eliminations in governmental
funding, legal challenges or customer capital constraints; the
effect of commodity prices and commodity production volumes on
Quanta's operations and growth opportunities and on customer
capital programs and demand for Quanta's services; the successful
negotiation, execution, performance and completion of anticipated,
pending and existing contracts; risks associated with operational
hazards that arise due to the nature of Quanta's services and the
conditions in which Quanta operates, including, among others,
wildfires and explosions; unexpected costs or liabilities that may
arise from legal proceedings, indemnity obligations, reimbursement
obligations associated with letters of credit or bonds,
multiemployer pension plans (e.g., withdrawal liability) or other
claims or actions asserted against Quanta, including those not
covered by, or in excess of, third-party insurance; the outcome of
pending or threatened legal proceedings; potential unavailability
or cancellation of third-party insurance coverage, as well as the
exclusion of coverage for certain losses, potential increases in
premiums for coverage deemed beneficial to Quanta, or the
unavailability of coverage deemed beneficial to Quanta at
reasonable and competitive rates; damage to Quanta's brand or
reputation as a result of cyber-security or data privacy breaches,
environmental and occupational health and safety matters, corporate
scandal, failure to successfully perform a high-profile project,
involvement in a catastrophic event (e.g., fire, explosion) or
other negative incident; disruptions or failure to adequately
protect information technology systems; Quanta's dependence on
suppliers, subcontractors, equipment manufacturers and other
third-parties, and the impact of the COVID-19 pandemic on these
service providers; the ability to attract and the potential
shortage of skilled labor; the ability to retain key personnel and
qualified employees and the impact of the COVID-19 pandemic on the
availability and performance of Quanta's workforce and key
personnel; Quanta's dependence on fixed price contracts and the
potential to incur losses with respect to these contracts,
including as a result of inaccurate estimates of project costs or
inability to meet project schedule requirements or achieve
guaranteed performance or quality standards for a project;
estimates and assumptions relating to financial results, remaining
performance obligations and backlog; Quanta's ability to
successfully complete remaining performance obligations or realize
backlog; adverse weather conditions, natural disasters and other
emergencies, including wildfires, pandemics (including the ongoing
COVID-19 pandemic), hurricanes, tropical storms and floods;
Quanta's ability to generate internal growth; competition in
Quanta's business, including the ability to effectively compete for
new projects and market share; the future development of natural
resources; the failure of existing or potential legislative actions
to result in demand for Quanta's services; fluctuations of prices
of certain materials used in Quanta's or its customers' businesses,
including as a result of changes in U.S. trade relationships with
other countries; 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 or similar structures 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 additional costs,
unexcused delays, warranty claims, failure to meet performance
guarantees, damages or contract terminations; the inability or
refusal of customers or third-party contractors to pay for
services; technological advancements and other market developments
that could reduce the demand for Quanta's services; budgetary or
other constraints that may reduce or eliminate tax incentives or
government funding for projects, which may result in project delays
or cancellations; risks associated with operating in international
markets, including instability of foreign governments, currency
exchange fluctuations, and compliance with unfamiliar foreign legal
systems and business practices, applicable anti-bribery and
anti-corruption laws, complex tax regulations and international
treaties; the ability to successfully identify, complete, integrate
and realize synergies from acquisitions, including retention of key
personnel; the potential adverse impact resulting from uncertainty
surrounding investments and acquisitions, including the potential
increase in risks already existing in Quanta's operations and poor
performance or decline in value of Quanta's investments; the
adverse impact of impairments of goodwill, receivables, property
and equipment and other intangible assets or investments;
difficulties arising from Quanta's decentralized management
structure; the impact of a unionized workforce on operations,
including labor stoppages or interruptions due to strikes or
lockouts; the ability to access sufficient funding to finance
desired growth and operations, including the ability to access
capital markets on favorable terms, as well as fluctuations in the
price and trading volume of Quanta's common stock, debt covenant
compliance, interest rate fluctuations and other factors affecting
financing and investing activities; the ability to obtain bonds,
letters of credit and other project security; significant
fluctuations in foreign currency exchange rates; new or changed tax
laws, treaties or regulations; and other risks and uncertainties
detailed in Quanta's Annual Reports on Form 10-K for the years
ended December 31, 2019 and
December 31, 2020 (when filed),
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30,
2020 and September 30, 2020
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
Quanta'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
Twelve Months Ended
December 31,
2020 and 2019
(In thousands, except
per share information)
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
$
|
2,912,185
|
|
|
$
|
3,112,800
|
|
|
$
|
11,202,672
|
|
|
$
|
12,112,153
|
|
Cost of services
(including depreciation)
|
2,446,312
|
|
|
2,669,479
|
|
|
9,541,825
|
|
|
10,511,901
|
|
Gross
profit
|
465,873
|
|
|
443,321
|
|
|
1,660,847
|
|
|
1,600,252
|
|
Equity in earnings of
integral unconsolidated affiliates (a)
|
5,138
|
|
|
—
|
|
|
11,303
|
|
|
—
|
|
Selling, general and
administrative expenses
|
(265,775)
|
|
|
(255,129)
|
|
|
(975,074)
|
|
|
(955,991)
|
|
Amortization of
intangible assets
|
(21,330)
|
|
|
(21,547)
|
|
|
(76,704)
|
|
|
(62,091)
|
|
Asset impairment
charges
|
(8,282)
|
|
|
(13,892)
|
|
|
(8,282)
|
|
|
(13,892)
|
|
Change in fair value
of contingent consideration liabilities
|
(121)
|
|
|
(5,340)
|
|
|
(719)
|
|
|
(13,404)
|
|
Operating
income
|
175,503
|
|
|
147,413
|
|
|
611,371
|
|
|
554,874
|
|
Interest
expense
|
(11,304)
|
|
|
(18,824)
|
|
|
(45,013)
|
|
|
(66,890)
|
|
Interest
income
|
1,335
|
|
|
165
|
|
2,449
|
|
|
927
|
|
Other income
(expense), net
|
6,188
|
|
|
17,179
|
|
|
2,539
|
|
|
83,376
|
|
Income before income
taxes
|
171,722
|
|
|
145,933
|
|
|
571,346
|
|
|
572,287
|
|
Provision (benefit)
for income taxes
|
(239)
|
|
|
25,634
|
|
|
119,387
|
|
|
165,472
|
|
Net income
|
171,961
|
|
|
120,299
|
|
|
451,959
|
|
|
406,815
|
|
Less: Net income
attributable to non-controlling interests
|
1,910
|
|
|
2,155
|
|
|
6,363
|
|
|
4,771
|
|
Net income
attributable to common stock
|
$
|
170,051
|
|
|
$
|
118,144
|
|
|
$
|
445,596
|
|
|
$
|
402,044
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to common stock:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.21
|
|
|
$
|
0.81
|
|
|
$
|
3.15
|
|
|
$
|
2.76
|
|
Diluted
|
$
|
1.17
|
|
|
$
|
0.80
|
|
|
$
|
3.07
|
|
|
$
|
2.73
|
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per share:
|
|
|
|
|
|
|
|
Weighted average basic
shares outstanding
|
140,695
|
|
|
145,877
|
|
|
141,380
|
|
|
145,710
|
|
Weighted average
diluted shares outstanding
|
145,020
|
|
|
148,092
|
|
|
145,247
|
|
|
147,534
|
|
(a) Includes Quanta's
equity in earnings of unconsolidated affiliates that are
operationally integral to the operations of Quanta, which primarily
consist of earnings related to LUMA Energy, LLC (LUMA), a joint
venture entity 50% owned by Quanta that commenced operations in
June 2020. Equity in earnings (losses) of non-integral
unconsolidated affiliates are included within "Other income
(expense), net."
|
Quanta Services,
Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
|
|
|
|
December
31,
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
184,620
|
|
|
$
|
164,798
|
|
Accounts receivable,
net
|
2,716,083
|
|
|
2,747,911
|
|
Contract
assets
|
453,832
|
|
|
601,268
|
|
Inventories
|
50,472
|
|
|
55,719
|
|
Prepaid expenses and
other current assets
|
183,382
|
|
|
261,290
|
|
Total current
assets
|
3,588,389
|
|
|
3,830,986
|
|
PROPERTY AND
EQUIPMENT, net
|
1,560,656
|
|
|
1,386,654
|
|
OPERATING LEASE
RIGHT-OF-USE ASSETS
|
256,845
|
|
|
284,369
|
|
OTHER ASSETS,
net
|
435,713
|
|
|
393,264
|
|
OTHER INTANGIBLE
ASSETS, net
|
435,655
|
|
|
413,734
|
|
GOODWILL
|
2,121,014
|
|
|
2,022,675
|
|
Total
assets
|
$
|
8,398,272
|
|
|
$
|
8,331,682
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current maturities of
long-term debt and short-term debt
|
$
|
14,764
|
|
|
$
|
74,869
|
|
Current portion of
operating lease liabilities
|
85,134
|
|
|
92,475
|
|
Accounts payable and
accrued expenses
|
1,509,794
|
|
|
1,489,559
|
|
Contract
liabilities
|
528,864
|
|
|
606,146
|
|
Total current
liabilities
|
2,138,556
|
|
|
2,263,049
|
|
LONG-TERM DEBT, net
of current maturities
|
1,174,294
|
|
|
1,292,195
|
|
OPERATING LEASE
LIABILITIES, net of current portion
|
178,822
|
|
|
196,521
|
|
DEFERRED INCOME
TAXES
|
166,407
|
|
|
214,779
|
|
INSURANCE AND OTHER
NON-CURRENT LIABILITIES
|
391,221
|
|
|
311,307
|
|
Total
liabilities
|
4,049,300
|
|
|
4,277,851
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
4,344,181
|
|
|
4,050,292
|
|
NON-CONTROLLING
INTERESTS
|
4,791
|
|
|
3,539
|
|
TOTAL
EQUITY
|
4,348,972
|
|
|
4,053,831
|
|
Total liabilities and
equity
|
$
|
8,398,272
|
|
|
$
|
8,331,682
|
|
Quanta Services,
Inc. and Subsidiaries
Supplemental
Segment Data
For the Three and
Twelve Months Ended
December 31,
2020 and 2019
(In thousands,
except percentages)
(Unaudited)
|
|
Segment
Results
|
Quanta reports its
results under two reportable segments: (1) Electric Power
Infrastructure Solutions and (2) Underground Utility and
Infrastructure Solutions, as set forth below.
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Solutions excluding Latin America
|
$
|
2,105,777
|
|
|
72.3
|
%
|
|
$
|
1,819,399
|
|
|
58.4
|
%
|
|
$
|
7,765,742
|
|
|
69.3
|
%
|
|
$
|
7,058,611
|
|
|
58.3
|
%
|
|
Latin America
(a)
|
—
|
|
|
—
|
|
|
27,982
|
|
|
0.9
|
|
|
7,601
|
|
|
0.1
|
|
|
63,226
|
|
|
0.5
|
|
|
Electric Power
Infrastructure Solutions
|
2,105,777
|
|
|
72.3
|
|
|
1,847,381
|
|
|
59.3
|
|
|
7,773,343
|
|
|
69.4
|
|
|
7,121,837
|
|
|
58.8
|
|
|
Underground Utility
and Infrastructure Solutions
|
806,408
|
|
|
27.7
|
|
|
1,265,419
|
|
|
40.7
|
|
|
3,429,329
|
|
|
30.6
|
|
|
4,990,316
|
|
|
41.2
|
|
|
Consolidated
revenues
|
$
|
2,912,185
|
|
|
100.0
|
%
|
|
$
|
3,112,800
|
|
|
100.0
|
%
|
|
$
|
11,202,672
|
|
|
100.0
|
%
|
|
$
|
12,112,153
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Power
Infrastructure Solutions excluding Latin America (b)
|
$
|
267,240
|
|
|
12.7
|
%
|
|
$
|
164,523
|
|
|
9.0
|
%
|
|
$
|
889,010
|
|
|
11.4
|
%
|
|
$
|
676,926
|
|
|
9.6
|
%
|
|
Latin America
(a)
|
(27,083)
|
|
|
*
|
|
(3,590)
|
|
|
*
|
|
(73,988)
|
|
|
*
|
|
(85,749)
|
|
|
*
|
|
Equity in earnings of
integral unconsolidated affiliates (c)
|
5,138
|
|
|
N/A
|
|
—
|
|
|
N/A
|
|
11,303
|
|
|
N/A
|
|
—
|
|
|
N/A
|
|
Electric Power
Infrastructure Solutions
|
245,295
|
|
|
11.6
|
%
|
|
160,933
|
|
|
8.7
|
%
|
|
826,325
|
|
|
10.6
|
%
|
|
591,177
|
|
|
8.3
|
%
|
|
Underground Utility
and Infrastructure Solutions (d)
|
41,327
|
|
|
5.1
|
%
|
|
88,945
|
|
|
7.0
|
%
|
|
170,074
|
|
|
5.0
|
%
|
|
332,011
|
|
|
6.7
|
%
|
|
Corporate and
Non-Allocated
Costs (e)
|
(111,119)
|
|
|
N/A
|
|
(102,465)
|
|
|
N/A
|
|
(385,028)
|
|
|
N/A
|
|
(368,314)
|
|
|
N/A
|
|
Consolidated operating
income
|
$
|
175,503
|
|
|
6.0
|
%
|
|
$
|
147,413
|
|
|
4.7
|
%
|
|
$
|
611,371
|
|
|
5.5
|
%
|
|
$
|
554,874
|
|
|
4.6
|
%
|
|
* Percentage is not
meaningful.
|
|
See notes
below.
|
Quanta Services, Inc. and
Subsidiaries
Supplemental Segment Data
For the
Three and Twelve Months Ended
December 31, 2020 and 2019
(In
thousands, except percentages)
(Unaudited)
(a) Latin American revenues and operating losses have been
presented separately as a result of Quanta's conclusion to pursue
an exit of its operations in Latin
America. The results for these operations for the three and
twelve months ended December 31, 2020
were primarily associated with early contract terminations and
project close out costs, cost adjustments on certain remaining
projects and disruptions caused by the COVID-19 pandemic, as well
as the recognition of $7.0 million of
asset impairments and $2.7 million of
severance and restructuring charges. The results for these
operations for the twelve months ended December 31, 2019 included a $79.2 million charge associated with the
terminated telecommunications project in Peru, which consisted of a $48.8 million decrease in revenues and a
$30.4 million increase in cost of
services.
As of December 31, 2020, Quanta
believes the exit activities have been substantially completed with
only a few contracts remaining to complete or exit. As a result,
the Latin American financial results are not expected to be
material in 2021, and therefore we do not expect to separately
present LATAM financial results for future periods.
(b) Included in operating income for the Electric Power
Infrastructure Solutions segment for the three and twelve months
ended December 31, 2019 was an asset
impairment charge of $1.6 million
related to a planned sale of certain foreign operations and
assets.
(c) Equity in earnings of integral unconsolidated affiliates
includes unconsolidated affiliates that are operationally integral
to the operations of Quanta and primarily consists of earnings
related to LUMA, which commenced operations in June 2020.
(d) Included in operating income for the Underground Utility and
Infrastructure Solutions segment for the three and twelve months
ended December 31, 2020 were
severance and restructuring charges of $4.1
million related to the exit of certain ancillary pipeline
operations and an asset impairment charge of $1.3 million related to the planned sale of a
barge. Included in operating income for the Underground Utility and
Infrastructure Solutions segment for the three and twelve months
ended December 31, 2019 were asset
impairment charges of $10.2 million
primarily related to the winding down and exit of certain
oil-influenced operations and assets.
(e) Included in corporate and non-allocated costs for the three
and twelve months ended December 31, 2020 is $14.0 million of non-cash stock-based
compensation related to the correction of prior period amounts
related to the valuation of and accounting for certain
performance-based equity awards that were awarded in the years 2017
to 2019. Included in the correction was $2.0
million and $7.2 million of
non-cash stock-based compensation related to the three and twelve
months ended December 31, 2019. Also
included for the three and twelve months ended December 31,
2020 were acquisition and integration costs of $6.9 million and $19.8
million and increases in the fair value of contingent
consideration liabilities of $0.1
million and $0.7 million.
Included in the three and twelve months ended December 31,
2019 were acquisition and integration costs of $4.3 million and $24.8
million and increases in the fair value of contingent
consideration liabilities of $5.3
million and $13.4 million.
Also included in the three and twelve months ended December 31, 2019 was an asset impairment charge
of $2.1 million related to an
internally-developed software application that has been
replaced.
Quanta Services, Inc. and
Subsidiaries
Supplemental Data
For the Three
and Twelve Months Ended
December
31, 2020 and 2019
(In
millions)
(Unaudited)
Remaining Performance Obligations and Backlog (a non-GAAP
measure)
Quanta's remaining performance obligations represent
management's estimate of consolidated revenues that are expected to
be realized from the remaining portion of firm orders for fixed
price contracts not yet completed or for which work has not yet
begun. For purposes of calculating remaining performance
obligations, Quanta includes all estimated revenues attributable to
consolidated joint ventures and variable interest entities,
revenues from funded and unfunded portions of government contracts
to the extent they are reasonably expected to occur and revenues
from change orders to the extent management believes additional
contract revenues will be earned and are deemed probable of
collection.
While backlog is not a defined term under GAAP, it is a common
measurement used in Quanta's industry. Quanta believes this
non-GAAP measure enables it to more effectively forecast its future
results and better identify future operating trends that may not
otherwise be apparent. Quanta believes this measure is also useful
for investors in forecasting its future results and comparing
Quanta to its competitors. Quanta's remaining performance
obligations, as described above, are a component of Quanta's
backlog calculation, which also includes estimated orders under
master service agreements (MSAs), including estimated renewals, and
non-fixed price contracts expected to be completed within one year.
Quanta's methodology for determining backlog may not be comparable
to the methodologies used by other companies.
The following table reconciles Quanta's total remaining
performance obligations to its backlog by reportable segment along
with estimates of amounts expected to be realized within 12
months:
|
|
December 31,
2020
|
|
September 30,
2020
|
|
December 31,
2019
|
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
12
Month
|
|
Total
|
|
Electric Power
Infrastructure Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
$
|
2,511.2
|
|
|
$
|
3,547.8
|
|
|
$
|
2,639.1
|
|
|
$
|
3,747.7
|
|
|
$
|
2,483.1
|
|
|
$
|
3,957.7
|
|
|
Estimated orders under
MSAs and short-term, non-fixed price contracts
|
|
3,559.4
|
|
|
7,433.4
|
|
|
3,310.3
|
|
|
7,044.4
|
|
|
2,873.5
|
|
|
5,864.5
|
|
|
Backlog
|
|
6,070.6
|
|
|
10,981.2
|
|
|
5,949.4
|
|
|
10,792.1
|
|
|
5,356.6
|
|
|
9,822.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underground Utility
and Infrastructure Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
327.2
|
|
|
437.5
|
|
|
480.8
|
|
|
696.1
|
|
|
670.7
|
|
|
1,344.7
|
|
|
Estimated orders under
MSAs and short-term, non-fixed price contracts
|
|
1,868.8
|
|
|
3,713.7
|
|
|
1,712.8
|
|
|
3,583.4
|
|
|
1,919.8
|
|
|
3,838.0
|
|
|
Backlog
|
|
2,196.0
|
|
|
4,151.2
|
|
|
2,193.6
|
|
|
4,279.5
|
|
|
2,590.5
|
|
|
5,182.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining performance
obligations
|
|
2,838.4
|
|
|
3,985.3
|
|
|
3,119.9
|
|
|
4,443.8
|
|
|
3,153.8
|
|
|
5,302.4
|
|
|
Estimated orders under
MSAs and short-term, non-fixed price contracts
|
|
5,428.2
|
|
|
11,147.1
|
|
|
5,023.1
|
|
|
10,627.8
|
|
|
4,793.3
|
|
|
9,702.5
|
|
|
Backlog
|
|
$
|
8,266.6
|
|
|
$
|
15,132.4
|
|
|
$
|
8,143.0
|
|
|
$
|
15,071.6
|
|
|
$
|
7,947.1
|
|
|
$
|
15,004.9
|
|
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted
Diluted Earnings Per Share
Attributable to Common
Stock
For the Three and Twelve Months
Ended
December 31, 2020 and
2019
(In thousands, except per share information)
(Unaudited)
The following table presents the non-GAAP measure of adjusted
diluted earnings per share attributable to common stock for the
three and twelve months ended December 31, 2020 and 2019,
which, when used in connection with diluted earnings per share
attributable to common stock, 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 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) non-cash
stock-based compensation expense may vary due to acquisition
activity, changes in the estimated fair value of performance-based
awards, forfeiture rates, accelerated vesting and amounts granted;
(ii) amortization of intangible assets is impacted by Quanta's
acquisition activity, and therefore can vary from period to period;
(iii) acquisition and integration costs vary period to period
depending on the level of Quanta's acquisition activity; (iv) asset
impairment charges can vary from period to period depending on
economic and other factors; (v) change in fair value of contingent
consideration liabilities varies from period to period depending on
the performance in post-acquisition periods of certain acquired
businesses; (vi) impairments of non-integral unconsolidated
affiliates vary from period to period depending on various market
factors outside Quanta's influence or control; (vii) severance and
restructuring charges vary from period to period depending on the
timing and nature of restructuring activities; (viii) write-offs of
deferred financing costs vary from period to period depending on
the timing and nature of debt and other financing transactions;
(ix) gains or losses on sales of investments vary from period to
period depending on whether investments are sold and the
variability of market and other factors impacting the value of such
investments; (x) bargain purchase gains vary from period to period
depending on Quanta's acquisition activity and the valuation of
acquired businesses; (xi) deferred income tax valuation allowance
changes vary period to period and depend on Quanta's assessment of
realizability of its deferred tax assets; (xii) income tax
contingency releases vary period to period and depend on the level
of reserves for uncertain tax positions and the expiration dates
under various federal and state statute of limitations periods;
(xiii) changes in statutory tax rates are not regularly occurring
items; and (xiv) tax settlements and adjustments to related
indemnification assets vary from period to period depending on the
status and resolution of pending matters. Because adjusted diluted
earnings per share attributable to common stock, as defined,
excludes some, but not all, items that affect net income
attributable to common stock, adjusted diluted earnings per share
attributable to common stock as presented in this press release may
not be comparable to similarly titled measures of other companies.
The most comparable GAAP financial measure, net income attributable
to common stock, and information reconciling the GAAP and non-GAAP
financial measures, are included below.
See the table below.
Quanta Services,
Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Three and Twelve Months Ended
December 31, 2020 and 2019 (In thousands, except per share
information)
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Reconciliation of
adjusted net income attributable to common stock:
|
|
|
|
|
|
|
|
|
Net income
attributable to common stock (GAAP as reported)
|
$
|
170,051
|
|
|
$
|
118,144
|
|
|
$
|
445,596
|
|
|
$
|
402,044
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Acquisition and
integration costs
|
6,927
|
|
|
4,307
|
|
|
19,809
|
|
|
24,767
|
|
|
Asset impairment
charges (a)
|
8,282
|
|
|
13,892
|
|
|
8,282
|
|
|
13,892
|
|
|
Change in fair value
of contingent consideration liabilities
|
121
|
|
|
5,340
|
|
|
719
|
|
|
13,404
|
|
|
Impairments of
non-integral unconsolidated affiliates (b)
|
—
|
|
|
—
|
|
|
8,679
|
|
|
—
|
|
|
Severance and
restructuring charges (c)
|
6,808
|
|
|
—
|
|
|
6,808
|
|
|
—
|
|
|
Write-off of deferred
financing costs (d)
|
—
|
|
|
—
|
|
|
2,492
|
|
|
—
|
|
|
Gain on sale of equity
investment (e)
|
—
|
|
|
(12,973)
|
|
|
—
|
|
|
(12,973)
|
|
|
Income tax benefits
associated with sale of equity investment (e)
|
—
|
|
|
(7,756)
|
|
|
—
|
|
|
(7,756)
|
|
|
Bargain purchase gain
(f)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,138)
|
|
|
Income tax impact of
adjustments (g)
|
(2,692)
|
|
|
(5,436)
|
|
|
(9,112)
|
|
|
(12,985)
|
|
|
Impact of release of
valuation allowance (h)
|
(45,148)
|
|
|
—
|
|
|
(45,148)
|
|
|
—
|
|
|
Impact of income tax
contingency releases (i)
|
(8,174)
|
|
|
(1,644)
|
|
|
(8,174)
|
|
|
(6,136)
|
|
|
Impact of change in
Canadian provincial statutory tax rate (j)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,532)
|
|
|
Impact of favorable
settlement, net of reduction of related indemnification asset
(k)
|
—
|
|
|
—
|
|
|
—
|
|
|
(911)
|
|
|
Adjusted net income
attributable to common stock before certain non-cash
adjustments
|
136,175
|
|
|
113,874
|
|
|
429,951
|
|
|
407,676
|
|
|
Non-cash stock-based
compensation (l)
|
33,318
|
|
|
10,933
|
|
|
91,641
|
|
|
52,013
|
|
|
Amortization of
intangible assets
|
21,330
|
|
|
21,547
|
|
|
76,704
|
|
|
62,091
|
|
|
Income tax impact of
non-cash adjustments (g)
|
(14,240)
|
|
|
(8,476)
|
|
|
(43,889)
|
|
|
(29,793)
|
|
|
Adjusted net income
attributable to common stock
|
$
|
176,583
|
|
|
$
|
137,878
|
|
|
$
|
554,407
|
|
|
$
|
491,987
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding for diluted and adjusted diluted
earnings per
share
|
145,020
|
|
|
148,092
|
|
|
145,247
|
|
|
147,534
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to common stock:
|
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to common stock (m)
|
$
|
1.17
|
|
|
$
|
0.80
|
|
|
$
|
3.07
|
|
|
$
|
2.73
|
|
|
Adjusted diluted
earnings per share attributable to common stock (m)
|
$
|
1.22
|
|
|
$
|
0.93
|
|
|
$
|
3.82
|
|
|
$
|
3.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes below.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Three and Twelve Months Ended
December 31, 2020 and
2019
(Unaudited)
(a) The amount for the three and twelve months ended
December 31, 2020 reflects asset
impairment charges related to the exit of the Latin American
operations and the planned sale of a barge. The amount for the
three and twelve months ended December 31,
2019 reflects asset impairment charges related to the
winding down and exit of certain oil-influenced operations and
assets, the replacement of an internally developed software
application and the planned sale of certain foreign operations and
assets.
(b) The amount for the twelve months ended December 31, 2020 represents impairments
associated with two non-integral unconsolidated affiliates that
were negatively impacted by the decline in demand for refined
products. As of December 31, 2020,
one of the investments had been sold, and Quanta's basis in the
remaining investment was $7.4
million. These impairment losses are included in "Other
income (expense), net" in the accompanying condensed consolidated
statement of operations.
(c) The amount for the three and twelve months ended
December 31, 2020 relates to
severance and restructuring costs associated with the exit of
certain ancillary pipeline operations and Quanta's Latin American
operations.
(d) The amount for the twelve months ended December 31, 2020 represents the write-off of
deferred financing costs related to the voluntary prepayment of the
term loans under Quanta's senior credit facility.
(e) The amount for the three and twelve months ended
December 31, 2019 reflects a gain on sale of Quanta's equity
interest in a limited partnership that developed and constructed an
electric transmission project in Canada. Additionally, in connection with the
sale, Quanta recognized certain income tax benefits associated with
the limited partnership and certain other previously unrecognized
tax benefits.
(f) The amount for the twelve months ended December 31,
2019 reflects a bargain purchase gain related to the acquisition of
an electrical infrastructure services business.
(g) The income tax impact of adjustments that are subject to tax
is determined using the incremental statutory tax rates of the
jurisdictions to which each adjustment relates for the respective
periods.
(h) The amount for the three and twelve months ended
December 31, 2020 reflects the
release of a valuation allowance against foreign tax credits as a
result of a financial restructure that was completed during the
fourth quarter of 2020.
(i) The amounts for the three and twelve months ended
December 31, 2020 and 2019 reflect
the releases of tax contingencies upon expiration of certain
statute of limitations periods.
(j) The amount for the twelve months ended December 31,
2019 reflects the impact of a change in a Canadian provincial
statutory tax rate on Quanta's deferred taxes.
(k) The amount for the twelve months ended December 31,
2019 represents a $4.1 million tax
benefit related to the favorable settlement of certain non-U.S.
income tax obligations associated with an acquired business,
partially offset by a $4.0 million
($3.2 million after-tax) reduction of
a related indemnification asset. The tax benefit is included in
"Income tax provision" in the accompanying condensed consolidated
statement of operations, and the expense associated with the
reduction in the indemnification asset is included as "Other income
(expense), net" in the accompanying condensed consolidated
statement of operations.
(l) The amounts for the three and twelve months ended
December 31, 2020 include the
recognition of $14.0 million of
non-cash stock-based compensation related to the correction of
prior period amounts related to the valuation of and accounting for
certain performance-based equity awards that were awarded in the
years 2017 through 2019. Included in the correction was
$2.0 million and $7.2 million of non-cash stock-based compensation
related to the three and twelve months ended December 31, 2019.
(m) Diluted and adjusted diluted earnings per share attributable
to common stock include operating losses associated with Quanta's
Latin American operations of $27.1
million, or $0.19 per diluted
share, and adjusted operating losses of $17.4 million, or $0.12 per diluted share, for the three months
ended December 31, 2020 and operating
losses of $74.0 million, or
$0.51 per diluted share, and adjusted
operating losses of $64.3 million, or
$0.44 per adjusted diluted earnings
per share, for the twelve months ended December 31, 2020. Both diluted and adjusted
diluted earnings per share attributable to common stock include
operating losses associated with Quanta's Latin American operations
of $3.6 million, or $0.02 per diluted share, for the three months
ended December 31, 2019 and
$85.7 million, or $0.58 per diluted share, for the twelve months
ended December 31, 2019. Included in
the operating loss for the twelve months ended December 31, 2019 was a $79.2 million, or $0.54 per diluted share, charge associated with
the terminated telecommunications project in Peru. Additionally, both diluted and adjusted
diluted earnings per share attributable to common stock for the
twelve months ended December 31, 2019
include $60.3 million ($43.9 million after-tax), or $0.30 per diluted share, of earnings related to
the recognition of previously deferred earnings on an investment in
an electric transmission project in Canada.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
EBITDA
and Adjusted EBITDA
For the Three and Twelve Months
Ended
December 31, 2020 and
2019
(In thousands)
(Unaudited)
The following table presents the non-GAAP financial measures of
EBITDA and adjusted EBITDA for the three and twelve months ended
December 31, 2020 and 2019, which
when used in connection with net income attributable to common
stock, are intended to provide useful information to investors and
analysts as they evaluate Quanta's performance. EBITDA is defined
as earnings before interest, taxes, depreciation, amortization and
equity in (earnings) losses of non-integral unconsolidated
affiliates, and adjusted EBITDA is defined as EBITDA adjusted for
certain other items as described below. These measures should not
be considered as an alternative to net income attributable to
common stock or other measures of performance that are derived in
accordance with GAAP. Management believes that the exclusion of
these items from net income attributable to common stock enables it
to more effectively evaluate Quanta's operations period over period
and to identify operating trends that might not be apparent when
including the excluded items. As to certain of the items below, (i)
equity in (earnings) losses of non-integral unconsolidated
affiliates varies from period to period depending on the activity
and financial performance of non-integral unconsolidated
affiliates, including deferral and subsequent recognition upon
completion of construction of earnings on contracts performed for
entities in which Quanta has an equity interest and gain or loss on
sales of investments accounted for using the equity method of
accounting; (ii) non-cash stock-based compensation expense varies
from period to period due to acquisition activity, changes in the
estimated fair value of performance-based awards, forfeiture rates,
accelerated vesting and amounts granted; (iii) acquisition and
integration costs vary from period to period depending on the level
of Quanta's acquisition activity; (iv) asset impairment charges
vary from period to period depending on economic and other factors;
(v) severance and restructuring charges vary from period to period
depending on restructuring activities; (vi) bargain purchase gains
vary from period to period depending on Quanta's acquisition
activity and the valuation of acquired businesses; (vii) change in
fair value of contingent consideration liabilities varies from
period to period depending on the performance in post-acquisition
periods of certain acquired businesses; and (viii) tax settlements
and adjustments to related indemnification assets vary from period
to period depending on the status and resolution of pending
matters. Because EBITDA and adjusted EBITDA, as defined, exclude
some, but not all, items that affect net income attributable to
common stock, such measures may not be comparable to similarly
titled measures of other companies. The most comparable GAAP
financial measure, net income attributable to common stock, and
information reconciling the GAAP and non-GAAP financial measures,
are included below. See notes below.
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to common stock (GAAP as reported)
|
$
|
170,051
|
|
|
$
|
118,144
|
|
|
$
|
445,596
|
|
|
$
|
402,044
|
|
Interest
expense
|
|
11,304
|
|
|
18,824
|
|
|
45,013
|
|
|
66,890
|
|
Interest
income
|
|
|
(1,335)
|
|
|
(165)
|
|
|
(2,449)
|
|
|
(927)
|
|
Provision (benefit)
for income taxes
|
(239)
|
|
|
25,634
|
|
|
119,387
|
|
|
165,472
|
|
Amortization of
intangible assets
|
21,330
|
|
|
21,547
|
|
|
76,704
|
|
|
62,091
|
|
Equity in (earnings)
losses of non-integral unconsolidated affiliates
|
1,622
|
|
|
(12,723)
|
|
|
9,994
|
|
|
(76,801)
|
|
Income taxes and
depreciation included in equity in earnings of integral
unconsolidated affiliates
|
1,492
|
|
|
—
|
|
|
3,174
|
|
|
—
|
|
Depreciation
expense
|
|
60,076
|
|
|
56,518
|
|
|
225,256
|
|
|
218,107
|
|
EBITDA
|
264,301
|
|
|
227,779
|
|
|
922,675
|
|
|
836,876
|
|
Non-cash stock-based
compensation (a)
|
33,318
|
|
|
10,933
|
|
|
91,641
|
|
|
52,013
|
|
Acquisition and
integration costs
|
6,927
|
|
|
4,307
|
|
|
19,809
|
|
|
24,767
|
|
Asset impairment
charges (b)
|
8,282
|
|
|
13,892
|
|
|
8,282
|
|
|
13,892
|
|
Severance and
restructuring charges (c)
|
6,808
|
|
|
—
|
|
|
6,808
|
|
|
—
|
|
Bargain purchase gain
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,138)
|
|
Change in fair value
of contingent consideration liabilities
|
121
|
|
|
5,340
|
|
|
719
|
|
|
13,404
|
|
Reduction of
indemnification asset (e)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,991
|
|
Adjusted
EBITDA
|
$
|
319,757
|
|
|
$
|
262,251
|
|
|
$
|
1,049,934
|
|
|
$
|
941,805
|
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
EBITA,
EBITDA and Adjusted EBITDA
For the Three and Twelve
Months Ended
December 31,
2020 and 2019
(a) The amounts for the three and twelve months ended
December 31, 2020 include the
recognition of $14.0 million of
non-cash stock-based compensation related to the correction of
prior period amounts related to the valuation of and accounting for
certain performance-based equity awards that were awarded in the
years 2017 through 2019. Included in the correction was
$2.0 million and $7.2 million of non-cash stock-based compensation
related to the three and twelve months ended December 31, 2019.
(b) The amount for the three and twelve months ended
December 31, 2020 reflects asset
impairment charges related to the exit of our Latin American
operations and the planned sale of a barge. The amount for the
three and twelve months ended December 31,
2019 reflects asset impairment charges related to the
winding down and exit of certain oil-influenced operations and
assets, the replacement of an internally developed software
application and the planned sale of certain foreign operations and
assets.
(c) The amount for the three and twelve months ended December
31, 2020 relates to severance and restructuring charges associated
with the exit of certain ancillary pipeline operations and Quanta's
Latin American operations.
(d) The amount for the twelve months ended December 31,
2019 reflects a bargain purchase gain related to the acquisition of
an electrical infrastructure services business.
(e) The amount for the twelve months ended December 31,
2019 reflects an expense associated with the reduction of an
indemnification asset related to the favorable settlement of
certain non-U.S. income tax obligations associated with an acquired
business.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Free
Cash Flow
and Other Non-GAAP definitions
For
the Three and Twelve Months Ended
December 31, 2020 and 2019
(In
thousands)
(Unaudited)
Reconciliation of Free Cash Flow:
The non-GAAP measure of free cash flow, when used in connection
with net cash provided by operating activities, is intended to
provide useful information to investors and analysts as they
evaluate Quanta's ability to generate the cash required to maintain
and potentially expand its business. Free cash flow is defined as
net cash provided by operating activities less net capital
expenditures. Net capital expenditures is defined as capital
expenditures less proceeds from the sale of property and equipment
and from insurance settlements related to property and
equipment.
Management believes that free cash flow provides useful
information to Quanta's investors because free cash flow is viewed
by management as an important indicator of how much cash is
provided or used by routine business operations, including the
impact of net capital expenditures. Management uses this measure
for capital allocation purposes as it is viewed as a measure of
cash available to fund debt payments, acquire businesses,
repurchase common stock, declare and pay dividends; and transact
other investing and financing activities. The most comparable GAAP
financial measure, net cash provided by operating activities, and
information reconciling the GAAP and non-GAAP financial measures,
are included below.
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided
by operating activities (a)
|
|
$
|
276,090
|
|
|
$
|
626,798
|
|
|
$
|
1,115,977
|
|
|
$
|
526,551
|
|
Less: Net capital
expenditures:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(93,015)
|
|
|
(54,117)
|
|
|
(260,052)
|
|
|
(261,762)
|
|
Proceeds from sale of
property and equipment
|
|
16,930
|
|
|
6,895
|
|
|
35,390
|
|
|
31,142
|
|
Proceeds from
insurance settlements related to property and equipment
|
|
271
|
|
|
1,463
|
|
|
542
|
|
|
1,964
|
|
Net capital
expenditures
|
|
(75,814)
|
|
|
(45,759)
|
|
|
(224,120)
|
|
|
(228,656)
|
|
Free Cash
Flow
|
|
$
|
200,276
|
|
|
$
|
581,039
|
|
|
$
|
891,857
|
|
|
$
|
297,895
|
|
(a) Net cash provided
by operating activities for the three and twelve months ended
December 31, 2020 includes the deferral of payments of $37 million
and $109 million of the employer portion of payroll taxes under the
Coronavirus Aid, Relief, and Economic Security Act, 50% of which
are due by December 31, 2021 and the remainder of which are due by
December 31, 2022. Net cash provided by operating activities for
the twelve months ended December 31, 2019 includes the payment of
$112 million in connection with the exercise of performance and
advance payment bonds in connection with the terminated
telecommunications project in Peru.
|
Other Non-GAAP Definitions:
Days Sales Outstanding:
Days Sales Outstanding
is calculated by using the sum of current accounts receivable, net
of allowance (which includes retainage and unbilled balances), plus
contract assets, less contract liabilities, and divided by average
revenues per day during the quarter.
Total Liquidity:
Total liquidity includes
Quanta's cash and cash equivalents and availability under Quanta's
senior credit facility.
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Estimated Adjusted Diluted Earnings Per Share
Attributable to Common Stock
For the Full Year
2021
(In thousands, except per share information)
(Unaudited)
The following presents the non-GAAP measure of adjusted diluted
earnings per share attributable to common stock, which, when used
in connection with diluted earnings per share attributable to
common stock, 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 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) non-cash stock-based compensation
expense may vary due to acquisition activity, changes in the
estimated fair value of performance-based awards, forfeiture rates,
accelerated vesting and amounts granted; (ii) amortization of
intangible assets is impacted by Quanta's acquisition activity, and
therefore can vary from period to period; and (iii) acquisition and
integration costs vary period to period depending on the level of
Quanta's acquisition activity. Because adjusted diluted earnings
per share attributable to common stock, as defined, excludes some,
but not all, items that affect net income attributable to common
stock, adjusted diluted earnings per share attributable to common
stock as presented in this press release may not be comparable to
similarly titled measures of other companies. The most comparable
GAAP financial measure, net income attributable to common stock,
and information reconciling the GAAP and non-GAAP financial
measures, are included below.
|
Estimated
Range
|
|
Full-Year
Ending
|
|
December 31,
2021
|
Reconciliation of
estimated adjusted net income attributable to common
stock:
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
|
458,000
|
|
|
$
|
530,800
|
|
|
Non-cash stock-based
compensation
|
81,800
|
|
|
81,800
|
|
|
Amortization of
intangible assets
|
84,700
|
|
|
84,700
|
|
|
Acquisition and
integration costs
|
2,700
|
|
|
2,700
|
|
|
Income tax impact of
adjustments (a)
|
(44,100)
|
|
|
(44,100)
|
|
|
Adjusted net income
attributable to common stock
|
$
|
583,100
|
|
|
$
|
655,900
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Weighted average
shares outstanding for diluted and adjusted diluted earnings per
share attributable to common stock
|
145,000
|
|
|
145,000
|
|
|
|
|
|
|
Diluted earnings
per share attributable to common stock and adjusted diluted
earnings per share attributable to common stock:
|
|
|
|
Diluted earnings per
share attributable to common stock
|
$
|
3.16
|
|
|
$
|
3.66
|
|
|
Adjusted diluted
earnings per share attributable to common stock
|
$
|
4.02
|
|
|
$
|
4.52
|
|
|
(a) The income tax
impact of adjustments that are subject to tax is determined using
the incremental statutory tax rates of the jurisdictions to which
each adjustment relates for the respective periods.
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Estimated EBITDA and Adjusted
EBITDA
For the Full Year 2021
(In thousands)
(Unaudited)
The following table presents the non-GAAP financial measures of
estimated EBITDA and adjusted EBITDA, which, when used in
connection with estimated net income attributable to common stock,
is intended to provide useful information to investors and analysts
as they evaluate Quanta's performance. EBITDA is defined as
earnings before interest, taxes, depreciation, amortization and
equity in (earnings) losses of non-integral unconsolidated
affiliates, and adjusted EBITDA is defined as EBITDA adjusted for
certain other items as described below. These measures should not
be considered as an alternative to net income attributable to
common stock or other measures of performance that are derived in
accordance with GAAP. Management believes that the exclusion of
these items from net income attributable to common stock enables it
to more effectively evaluate Quanta's operations period over period
and to identify operating trends that might not be apparent when
including the excluded items. As to certain of the items below,
(i) equity in (earnings) losses of non-integral unconsolidated
affiliates can vary from period to period depending on the activity
and financial performance of non-integral unconsolidated
affiliates; (ii) income taxes and depreciation included in equity
in earnings of integral unconsolidated affiliates can vary from
period to period depending on the activity and financial
performance of integral unconsolidated affiliates;
(iii) non-cash stock-based compensation expense may vary due
to acquisition activity, changes in the estimated fair value of
performance-based awards, forfeiture rates, accelerated vesting and
amounts granted; and (iv) acquisition and integration costs vary
period to period depending on the level of Quanta's acquisition
activity. Because EBITDA and adjusted EBITDA, as defined, exclude
some, but not all, items that affect net income attributable to
common stock, such measures may not be comparable to similarly
titled measures of other companies. The most comparable GAAP
financial measure, net income attributable to common stock, and
information reconciling the GAAP and non-GAAP financial measures,
are included below.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2021
|
|
|
|
|
Net income
attributable to common stock (as defined by GAAP)
|
$
|
458,000
|
|
|
$
|
530,800
|
|
Interest expense,
net
|
40,000
|
|
|
40,000
|
|
Provision for income
taxes
|
167,000
|
|
|
199,000
|
|
Amortization of
intangible assets
|
84,700
|
|
|
84,700
|
|
Income taxes and
depreciation included in equity in earnings of integral
unconsolidated affiliates
|
7,400
|
|
|
7,400
|
|
Depreciation
expense
|
243,500
|
|
|
243,500
|
|
EBITDA
|
$
|
1,000,600
|
|
|
$
|
1,105,400
|
|
Non-cash stock-based
compensation
|
81,800
|
|
|
81,800
|
|
Acquisition and
integration costs
|
2,700
|
|
|
2,700
|
|
Adjusted
EBITDA
|
$
|
1,085,100
|
|
|
$
|
1,189,900
|
|
Quanta Services, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Estimated Free Cash Flow
For the Full
Year 2021
(In thousands)
(Unaudited)
The non-GAAP measure of estimated free cash flow, when used in
connection with estimated net cash provided by (used in) operating
activities, is intended to provide useful information to investors
and analysts as they evaluate Quanta's ability to generate the cash
required to maintain and potentially expand its business. Free cash
flow is defined as net cash provided by (used in) operating
activities less net capital expenditures. Net capital expenditures
is defined as capital expenditures less proceeds from the sale of
property and equipment and from insurance settlements related to
property and equipment.
Management believes that free cash flow provides useful
information to Quanta's investors because free cash flow is viewed
by management as an important indicator of how much cash is
provided or used by routine business operations, including the
impact of net capital expenditures. Management uses this measure
for capital allocation purposes as it is viewed as a measure of
cash available to fund debt payments, acquire businesses,
repurchase common stock, declare and pay dividends and transact
other investing and financing activities. The most comparable GAAP
financial measure, net cash provided by (used in) operating
activities, and information reconciling the GAAP and non-GAAP
financial measures, are included below.
|
Estimated
Range
|
|
Full Year
Ending
|
|
December 31,
2021
|
Net cash provided
by operating activities
|
$
|
725,000
|
|
|
$
|
925,000
|
|
|
Less: Net capital
expenditures
|
(325,000)
|
|
|
(325,000)
|
|
|
Free Cash
Flow
|
$
|
400,000
|
|
|
$
|
600,000
|
|
|
Contacts:
|
|
Derrick Jensen,
CFO
|
|
Media - Jenna
Jackson
|
|
|
Kip Rupp, CFA -
Investors
|
|
Quanta Services,
Inc.
|
|
|
Quanta Services,
Inc.
|
|
713-341-6741
|
|
|
713-629-7600
|
|
|
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SOURCE Quanta Services, Inc.