Quanta Services Q1 2025 Earnings Report

Quanta Services EPS Results

• Actual EPS: $1.78
• Consensus EPS: $1.72
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $1.41

Quanta Services Revenue Results

• Actual Revenue: $6.23 billion
• Expected Revenue: $5.88 billion
• Beat/Miss: Beat by +$354.34 million
• YoY Revenue Growth: +23.90%

Quanta Services Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 9:00AM ET

Quanta Services (NYSE:PWR) provides infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries in the United States, Canada, Australia, and internationally. The company's Electric Power Infrastructure Solutions segment engages in the design, procurement, construction, upgrade, repair, and maintenance of electric power transmission and distribution infrastructure and substation facilities; installation, maintenance, and upgrade of electric power infrastructure projects; installation of smart grid technologies on electric power networks; and design, installation, maintenance, and repair of commercial and industrial wirings. This segment also offers aviation services; emergency restoration services; and other engineering and technical services; design and construction solutions to wireline and wireless communications, cable multi-system operators, and other customers; and training for electric workers, as well as training for the gas distribution and communications industries. The company's Renewable Energy Infrastructure Solutions segment is involved in engineering, procurement, construction, repair, and maintenance of wind, solar, and hydropower generation facilities, as well as battery storage facilities; and provision of engineering and construction services for substations and switchyards, transmission, and other electrical infrastructures. The company's Underground Utility and Infrastructure Solutions segment offers design, engineering, procurement, construction, upgrade, repair, and maintenance services for natural gas systems for gas utility customers; fabrication services for pipeline support systems and structures and facilities; and engineering and construction services for pipeline and storage systems, and compressor and pump stations. The company was formerly known as Fabal Construction, Inc. and changed its name to Quanta Services, Inc. in November 1997. The company was incorporated in 1997 and is headquartered in Houston, Texas.

Quanta Services Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to Quanta Services First Quarter twenty twenty five Earnings At this time, all participants are in a listen only mode. A question and answer session will follow management's prepared remarks, and we ask that you please hold all questions until that time. I will then provide instructions for the question and answer session. As a reminder, this conference is being recorded. If you have any objections, please disconnect at this time.

[Operator]

I will now turn the call over to Kip Rupp, Vice President, Investor Relations, for introductory remarks.

[Kip Rupp, VP of IR at Quanta Services]

Thank you, and welcome, everyone, to the Quanta Services first quarter twenty twenty five earnings conference call. This morning, we issued a press release announcing our first quarter twenty twenty five results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our first quarter twenty twenty five operational and financial commentary and our 2025 outlook expectation summary on Quanta's Investor Relations website. While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community. Please remember that information reported on this call speaks only as of today, 05/01/2025, and therefore, you are advised that any time sensitive information may no longer be accurate as of any replay of this call.

[Kip Rupp, VP of IR at Quanta Services]

This call will include forward looking statements and information intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements reflecting expectations, intentions, assumptions or beliefs about future events or financial performance, but that do not solely relate to historical or current facts. You should not place undue reliance on these statements as they involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied. We will also present certain historical and forecasted non GAAP financial measures. Reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward looking statements and non GAAP financial measures.

[Kip Rupp, VP of IR at Quanta Services]

Lastly, please sign up for e mail alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information. Follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would now like to turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services first quarter twenty twenty five earnings conference call. This morning, we reported our first quarter twenty twenty five results, which included robust double digit growth in revenue, adjusted EBITDA and adjusted earnings per share, along with record backlog of 35,300,000,000 and a number of other record financial metrics. As a result, we have increased our full year 2025 expectations for revenue, adjusted EBITDA, and adjusted earnings per share. Quanta's core strategy is built on the foundation of craft skill labeling, execution certainty, investment discipline, and clear strategic rationale.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

At the heart of Quanta's success is our unmatched craft workforce, deliver essential infrastructure solutions with a dedication to safety, quality, and performance. Our execution certainty, combined with strategic investments in talent, technology and complementary businesses, strengthens Quanta's leadership position across our expanding and addressable markets. Our investment decisions are guided by a disciplined strategic rationale aimed at reinforcing Quanta's differentiated platform, growing customer partnerships, and driving long term sustainable value creation. VARNA differentiates itself through a unique solution based approach that integrates craft labor with engineering, technology, and program management expertise to deliver comprehensive self perform infrastructure solutions. Rather than providing isolated services, Quanta partners with customers to solve complex challenges across the full project life cycle, which creates deeper strategic relationships.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Our collaborative model drives higher value for our customers and positions Quanta as a trusted partner and solutions provider, not a contractor. As as demand for our resilient as demand for resilient electric grids, power generation, technology expansion, and energy infrastructure accelerates, Quanta's large addressable markets continue to grow. Quanta has a proven track record of consistent profitable growth across both favorable and challenging conditions, demonstrating the resilience and sustainability of our business model, which is a testament to strength to the strength of our portfolio approach, a diversified solution based strategy that enables us to adapt to evolving industry dynamics while delivering mission critical infrastructure. The successful execution of our strategic plan combined with significant financial liquidity positions us well to not only navigate periods of uncertainty but emerge stronger. The energy and infrastructure landscape is undergoing a fundamental transformation, and Quanta is positioned at its center.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Utilities across The United States are experiencing and forecasting meaningful increases in power demand, which is being driven by the adoption of new technologies and related infrastructure, including data centers and artificial intelligence, policies intended to reinforce domestic manufacturing and supply chain resources, and the need for all forms of energy generation. We believe these drivers are leading to what could become the largest investment in an expansion of high voltage transmission infrastructure in a generation. And that's Quanta's unmatched execution platform and solution based mindset enable us to capitalize on these expanding opportunities, positioning Quanta for sustained leadership and long term growth. I will now turn the call over to Jayshree Jasai, Quanta's CFO, to provide a few remarks about our results and 2025 guidance, and then we will take your questions. Jayshree?

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Thanks, Duke, and good morning, everyone. This morning, we reported strong first quarter results, including revenues of $6,200,000,000 net income attributable to common stock of $144,000,000 or 96¢ per diluted share, and adjusted diluted earnings per share of a dollar 78. Adjusted EBITDA was $504,000,000 or 8.1% of revenues. Additionally, we generated healthy cash flows in the first quarter, with cash flow from operations of two forty three million dollars and free cash flow of $118,000,000 both of which include the impact of a $109,000,000 tax payment deferred from 2024. Our first quarter performance reflects a continuation of the significant revenue, EBITDA and EPS growth and the free cash flow generation that we have achieved since 2020.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Over that period, we have demonstrated our ability to grow organically and maintain a disciplined approach to acquisitions and short repurchases while improving our cash flow profile and return on invested capital. This track record has facilitated our ability to raise debt capital as an investment grade borrower and efficiently delever following opportunistic capital deployment. Accordingly, during the quarter, S and P Global Ratings upgraded our long term issuer rating to triple b flat from triple b minus and our short term issuer rating to a two from a three. We believe these credit upgrades lower our borrowing costs, expand our liquidity and financing options, and strengthen our financial position while supporting our long term growth strategy. As Duke mentioned, our performance in the first quarter, coupled with the momentum we're seeing across our core markets, have led us to increase our 2025 expectations for revenues by $100,000,000 adjusted EBITDA by $10,000,000 and adjusted earnings per share by $05 In light of the recent trade policy actions and based on what we understand today, we believe the terms and conditions in our contracts limit our exposure to direct cost increases associated with the currently implemented tariffs.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

As a result, we believe we have addressed those potential impacts within our range of ex of expectations in our full year 2025 guidance. We are also proactively collaborating with our customers to provide supply chain, process, and value driven solutions focused on cost optimization and growth. Further, we are adjusting our own supply chain by making strategic advanced purchases as well as working with existing suppliers and evaluating additional suppliers in an effort to manage material and equipment costs and product availability. In addition, we believe our full year range of 2025 guidance takes into consideration delays that could result from possible changes to the Inflation Reduction Act or IRA. To date, we have seen immaterial shifts in capital plans from our sophisticated and high quality renewable energy customers who we believe have the supply chain expertise and robust development pipeline to weather near term impacts from policy disruptions.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Demand for power is increasing rapidly. As such, the need for renewable energy generation and storage is strong, and we remain confident in our multiyear CAGR expectations. We are actively engaged with our customers to provide solutions designed to help them navigate the evolving policy and regulatory environment, combining our craft labor capabilities with our engineering procurement and domestic manufacturing solutions. We believe our increased 2025 financial expectations demonstrate the strength of our portfolio approach to the business, our commitment to our long term strategy, favorable end markets and our partnership approach with our customers. From January 1 to the date of this earnings release, we have repurchased approximately $135,000,000 of our common stock, leaving us with approximately three sixty five million dollars remaining under our existing repurchase authorization.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Given our cash flow expectations and the strength of our balance sheet, we expect to remain opportunistic with stock repurchases while continuing to support strategic investments to generate incremental returns for our stockholders. Additional details and commentary about our twenty twenty five financial guidance can be found in our operational and financial commentary and outlook expectation summary, both of which are posted on our IR website. Also, our first quarter twenty twenty five operational and financial commentary includes a new supplemental information table that provides estimated revenue growth opportunities across each of our key markets in 2025, along with the factors influencing those opportunities. Note, this information is a directional estimate that is not intended to replace or exactly align with our guidance for the year. Quanta's strategies are focused on delivering solutions to customers across all of our end markets, and we continue to emphasize the power of our aggregate portfolio of solutions and the cash flow earnings and returns they generate.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

With that, we are happy to answer your questions. Operator?

[Operator]

Thank you. We will now move to our question and answer session. We ask that all participants limit themselves to one question. If you have additional questions you may re queue and ask those questions with address time permitting. If you have joined via the webinar please use the raise hand icon which can be found at the bottom of your webinar application.

[Operator]

When you are called on, unmute your line and ask your question. We will now pause a moment to assemble the queue. Your first question comes from Amit Thacker from BMO Capital Markets. Please unmute your line and ask your question, Amit.

[Ameet Thakkar, Energy Transition & Infrastructure Analyst at BMO Capital Markets]

Good morning. Can you hear me?

[Operator]

Loud and clear. Please go ahead.

[Ameet Thakkar, Energy Transition & Infrastructure Analyst at BMO Capital Markets]

Thank you very much. Thanks for the time. Just I got, I guess, a question maybe that's a little bit off the beaten path, but it looked like the Long Island Power Authority, I guess, voted down your application kind of be the grid operator there. I just was wondering, was any of that kind of baked into your guidance for this year? And then my second question is that sort of kind of grid operator role, is that something you envision doing more of in other jurisdictions?

[Ameet Thakkar, Energy Transition & Infrastructure Analyst at BMO Capital Markets]

Yes.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Thank you. So first off, the life of when we looked at it, you know, look, it's an opportunity where where we perform this type of arrangement in Puget in Puget Sound as well. It's a little different than the one in Puerto Rico. But as we see opportunities to, you know, look at these type of arrangements, yes, we will look at them. And I think what the what they did yesterday was management the the management team voted for Aquana.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I thought it was very well done, a very, very good process. The board did not take the recommendation but gave no remedy. So I think from our standpoint, we'll we'll clarify with the board their concerns. Certainly much different than what we faced in Puerto Rico where we built a utility, essentially. So much, much different.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I I think we'll be able to basically give them the feedback I can understand where they were coming from if not having not talked to us, and we'll get in front of that and see what happens there. And these opportunities happen. We we've get asked to do a lot of different things as we differentiate ourselves in the market. So I do think you'll continue to see outliers that you may not hear about every other every day, but we're not a utility.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We understand that. We support them, and there'll be opportunities every now and then that we get involved in these kind of arrangements.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

And, yeah, it was not this was not anticipated in our guide.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

No.

[Operator]

Thank you. Our next question is from Andy Hapulitz from Citi Research. If you'd like to unmute yourself and ask your question, please, Andy.

[Andrew Kaplowitz, Analyst at Citigroup]

Hey. Good morning, everyone.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Hello. Good morning.

[Andrew Kaplowitz, Analyst at Citigroup]

Nick, you

[Andrew Kaplowitz, Analyst at Citigroup]

mentioned the largest expansion of high voltage transmission. I think you said in the generation. Maybe you could elaborate on that and how you think this cycle plays out. Do you see a bigger slug of transmission projects starting to actually move forward now as I'm sure you saw recent developments in Texas with a big line being approved? And would you expect to continue to see sequential backlog growth moving forward despite all the macro uncertainty out there?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yes. I you you need transmission in order to move generation, and so we we've said this all along. I think you have to think about it. You hear a lot about the grid only at 60% capacity, things like that. But I I go and say, you know, we have a freeway here in Texas.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

It goes from San Antonio to Houston. It's 24 lanes here in Houston. It's about probably 50% full because you you see it in the mornings and the afternoons. If I took eight lanes out, it would back all the way up to San Antonio. I'd never get in the Houston.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So you have to look at it like that, that the grid needs the stability of transmission going to load sources and and going into data centers, things of that nature. I I we continue to see firm demand and and then, you know, hundreds of gigs, honestly, across the board. And so as we see that, as it firms up, that's transmission behind it. And I don't think off grid is the answer. I think it will be primarily on grid for our utility customers.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And this is a big bill. I would relate it back to the seventies when you had major expansion within your transmission system, and I that's that's what we see. It's I've not seen a line yet that's built in North America. It's not paid itself back very quickly at this point. So you'll see a lot of for the ultimate customer, it's the right answer, and you'll continue to see a lot of transmission.

[Andrew Kaplowitz, Analyst at Citigroup]

Thanks, Steve.

[Operator]

Thank you for your question, Andy. Our next question is from Phil Shen from Roth Capital. If you'd like to unmute yourself and ask your question, please, Phil. If you're dialed in by phone, Phil, if you would press 9, to raise your hand and 6 to unmute your line. Okay.

[Operator]

Looks like we're having a problem with Philip there. If we could go to Joe Osha from Guggenheim Partners. Unmute yourself and ask your question, please, Joseph.

[Joseph Osha, Senior Managing Director - Equity Research at Guggenheim Partners]

Okay. There there we go. Can you hear me?

[Operator]

Loud and clear. Please go ahead. Yes.

[Joseph Osha, Senior Managing Director - Equity Research at Guggenheim Partners]

Okay. Thank you, good morning. We have seen a lot in terms of incremental tariffs being imposed on imports for solar modules, and, yeah, this is something that came up when First Solar reported earlier this week. Is this materializing as a problem for any of your customers at all to the extent you're hearing about it? Thank you.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Thanks for the question. We have we've not seen that within our customer base. We we certainly are keeping our eyes on it. Listen. We're not seeing we're not seeing pull in.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We're not seeing push out per se. I I think '25 is baked into '26. So we'll continue to look at it, but it's not affecting us at this point. And I would say this too. The company is built to have pushouts.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

It's not the portfolio allows us to have things move along, you know, with with service lines and and our our customer base. So it's not an issue if something pushes here or there. It's never the company I'm not seeing I wish it would perform at a %, but we're doing really good if we get 80 kinda online and at these times that we think they're going because you're always gonna have pushes and pulls. So the tariffs, if if if they were to come in and affect us, I do believe the portfolio is such that we could we could weather much of it. And we see multiyear builds coming coming at us, and I do think solar is cheapest form of energy for in many ways, and you'll you'll see a lot of solar built and gas and and about everything we can build probably.

[Joseph Osha, Senior Managing Director - Equity Research at Guggenheim Partners]

Thank you.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Thank you.

[Operator]

Thank you. Our next question is from Philip Shen. If you are unmuted, if you could go ahead and ask your question, please.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Hi. Can you hear me okay?

[Operator]

Been clear. Please go ahead.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Yes. Yeah.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Great. Hey. Sorry about that. Having trouble with the Zoom.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

So first question is on interconnection work. We recently hosted a webinar with Grid Strategies and they highlighted that 50 gigawatts of coal plants may not be decommissioned and this could result in tens of billions of interconnection work proximate to coal plants stranded as the renewable projects planning to access the coal interconnection points could be at risk. What are your thoughts on this potential? And how could this impact your backlog? And then second one very quick one on the renewables sub segment if you will.

[Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

If you were to think about your total megawatts of construction starts in 2025 now that you expect compared with what you expected for those 2025 construction starts at year end 'twenty four. Has that changed at all? Or has it remained steady?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. I'll go backwards. I think it's steady. It's certainly not the pace of growth over last year, but but it's steady and and climbing. I I I like where we sit in that with with that business.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We're doing very well with battery, solar, even onshore wind. So I I I like what we're said. I think the inbounds are good. You know, it's it's a if you want power quickly, you're gonna you're going to have to look at renewables for the next three years because of the turbine deliveries. And that but I do think it's always gonna be a part of of the grid.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I we've always said natural gas will be a big piece of it. We've said that for decade. We're gonna catch up a little bit here, and it'll be a part. As far as coal, you know, not a lot of investment in coal over the last, call it, ten years. And, you know, it costs a lot of money to run coal plants right now, so there's not been that investment in them.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And most most thought they were gonna retire, so you gotta keep them going. That said, yes, I I do think we're going to either see some colocations in areas where they'll build gas on a coal site, and you're gonna need transmission, or you're gonna continue to see transmission come out coal facilities to upgrade. But, you know, look, it's I don't think there's any shortage of projects on the wall. I'll say that. If they all go, then we got a lot of work for the next two decades.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So but I think we got it either way.

[Operator]

Thank you for your question, Philip. Our next question comes from Jamie Cook from Truist Securities. If you'd like to unmute yourself and ask your question, please. Jamie, you're the same. You'll need to press 6 to unmute your line for your telephone.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

Hi, sorry. Can you hear me now?

[Operator]

That's great. Fire away.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

Sorry about that. So nice quarter and congrats on the transmission upgrade win this morning. I guess just my first question, just as I think about understanding you guys have a targeted margin range for your electric infrastructure business or what we're calling it now. But just pushing you as you continue to win larger projects in the mix towards larger CapEx projects versus maintenance sort of continues, why wouldn't that create positive upward momentum on your margins to some degree, even though you might not want to guide there over the longer term, but I would think in the next sort of twelve eighteen or twenty four months, the margin trajectory should be higher. So just what your pushback would be on that?

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

And then my second question, and I'm sorry, I'm going through multiple earnings this morning. I don't think you provided an update on Cupertino, but how that business is doing versus your expectations for 2025. And then Duke, I think last quarter you suggested there were some very large wins on the come as you benefit from synergies with Cupertino and Quanta. I'm just wondering if you could update us on that and any potential wins on a revenue synergy side in 2025?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. Thanks, Jamie. I think the target margins, you know, they remain what we've said. If you're adding 4,000 employees, we're at we're pacing even even more than that at this point. You're going to have the training cost in there, and so the training cost will keep the margins about where they're at.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

They could move a bit here or there in the upper ends of what we've said. I know that's a different segment, but, you know, you can infer the electric what it used to be and infer some uplift on on the segment. But I I do think we're executing very well in the field. I'm real proud of, you know, kind of first quarter over last year versus this year and what what we've been able to do at scale. So the biggest thing is to scale the business, and we're doing that nicely now.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We are seeing more material pull through as well at the same margins. Your return on invested capital is gonna come through higher. So I think the returns go up as well in this in this market. But, again, I mean, I think we want to be a solution provider and provide more more services and and create more value along along the supply chain. So we're gonna do that.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Cupertino's ahead of schedule. I think can infer that by backlog and some of the things we're doing there. It's it's it's ahead. So, you know, we're really from our standpoint, great business. I've been around a bunch of acquisitions, and I would I would tell you it's in the top five from my standpoint as far as having a good acquisition that we can lean into and scale.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

They're there. We're getting synergies all the time. I do think you're gonna see big awards out of that, where because the the technology, when we think through it, your total addressable market on technologies, call it 300,000,000,000 a year, That's global. So call oh, let's just call it 200 in in North America. And the utility business is about two fifty.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So it's a as big as an addressable market for us, and we're less than probably 5% in backlog in technology. So we're just starting. I see opportunity after opportunity. Can we execute it? Can we go get it?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I I like our chances.

[Operator]

Thank you. Our next question is from Ati Modak from Goldman Sachs. Ati, if you'd like to unmute your line and go ahead and ask your question.

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

Yeah. Thank you. Hey. Duke, you spoke about the transmission opportunity broadly earlier. But in the supplemental disclosure, you kind of noted that the larger projects are becoming increasingly visible.

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

Can you talk about that visibility? What stages do you see these at? And then when should we expect these to show up in the backlog? How should we think about revenue and margin impacts from there?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I mean, I think you're hearing it. I you know, there there's seven sixty five builds across the country. You've heard that. Someone just mentioned coal. I hadn't heard that one yet, so that's good.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

But I I think you have to look at the RTOs of what they're saying, your MISOs, your PJMs, and you can hear in the all the auctions that are there. You can hear that as well as the CapEx spend. And I know there's this disclaimer where generation's gonna replace transmission. That couldn't be more false. So that's just wrong.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I don't know how else to say it. I'm I'm with them every day. I'm on the ground. I hear it. That's wrong.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So that's that's a fallacy. Transmission will be very robust here, and and distribution will be fine. It won't grow as fast as transmission, but it's here. And so those are the places I would point to where you can see large transmission getting built. We're in early stages of it, at the very early stages.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I do think you'll continue to see a stack work over the next five years. And I'll leave it there.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Thank you.

[Operator]

Our next question is from Steven Fisher from UBS. Please go ahead and unmute yourself and ask your question, please, Steven.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thanks. Good morning. Just wanted to ask you, Duke, in terms of your solution strategy, how would you characterize the the white space from here based on kind of what you're hearing from your customers about the solutions that they need? And I guess from a from an m and a perspective, you know, is is 2025, you know, more of a kind of a continued fill in the white space kind of year, or is this sort of a a digest what you have at at the moment kind of year?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Thanks, Steve. I'll go backwards on it. Good question. So I when we look at m and a, you know, we can't time it. And as we see great companies that fit the strategic rationale that we're looking for, we'll lean into them.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I can't tell you the pace. I can tell you there's a lot of inbounds that we see really nice companies out there, have opportunities all the time to look at them. So as we see them, as if they fit the rationale, you know, we'll certainly try to lean into them. I'm not concerned with their balance sheet We'll we'll always back it, but I'm not seeing us stress it at this point.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So so that all things are on the table. You saw us $534,000,000 worth of stock back this year as it got disconnected. We said we would. We did. You can expect us to acquire when we see, you know, great companies as well.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I forgot the first part of the question.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Like, space

[Jayshree Desai, Chief Financial Officer at Quanta Services]

room Yeah. Total service.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So I think I tried to in the paragraph, I tried to explain it. I think if you're isolated on a service line, you're a contractor. If you can put them all together and go perform a service, you're providing a solution.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So we're looking in areas where the customer's struggling to ramp, and we're we're able to do multiple service lines for them, whether it be engineering, whether it be procurement. Each each customer has a different set of, you know, I guess, needs. So we're really trying to do more than just be, you know, a service line provider or a contractor. And that's in my in my way of saying that's a solution because I'm gonna listen to what they have to offer and collaborate with them, get very sticky in their organization, and then trust us to go build it on time, on budget with their own labor. I think us self performing 85 of the business and that self perform capability and that certainty that we give a client bankable as far as investment grade.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We check the boxes, and why wouldn't you want to to us to do it all is what I would say.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Terrific. Thank you.

[Operator]

Thank you. Our next question is from Steve Fleishman from Wolfe Research. Please unmute yourself and ask your question please, Steve.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Okay. Can you hear me?

[Operator]

Loud and clear. Please go ahead.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Okay. Thank you. Little more specific on the transmission question. Just the the Texas just approved the 765 kV plan. Any sense on when that would actually be business that could be, you know, backlog and and just view of likelihood of of you getting a fair share of that?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah, Steve. You know, we built a a lot of the seven sixty five in the country, the majority of it over time. And so I do believe it's a core competency of ours to to build it. So so I always like our chances when we're building seven sixty five. We we've we've been in front of this a long time.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

It it it's I'm not surprised by the amount of it. I'm not surprised by the inbound discussions. We're doing some things there that I think are unique with the client. So I I think we're in good shape. I I would say I'd be surprised if it's not in the third quarter or maybe early fourth quarter, you would start to see us have the opportunities to book work.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

One other quick question. Since very simple one. Just is the upgrade in guidance midpoint for the year, is that just first quarter beating your expectation? Is there anything you'd specifically point to for raising the midpoint?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I mean, we we were looking at the whole year and and how we how we see it laying out. I thought we had a nice quarter. I felt like,

[Duke Austin, President and Chief Executive Officer at Quanta Services]

you

[Duke Austin, President and Chief Executive Officer at Quanta Services]

know, we're trying to be prudent about the back half with everything moving around, but the way we see it laying out and the way the workflow and the things that that we know, I felt comfortable enough to move it a bit just to show confidence in the business and, you know, as well as where we think we're gonna end up for the year with and I I do still think we're we're prudent about how we're looking at it. I think there's a lot of opportunity for us. If you ask me to kinda look at the high side of the range and the low side of the range, I would lean to the high side for sure.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Thank you.

[Operator]

Thank you, Steve. Our next question is from Mike Dudas from Vertical Research Partners. Please unmute yourself and ask your question, Michael.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Good morning, everybody.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Good morning.

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Duke, maybe you could share the how you've seen the strategic benefits from your increasing your own supply chain access for your clients. And as you're looking to help them access elsewhere, you know, what are the dynamics of because I'm sure everybody plus three is trying to figure out similar solutions. How is that market and the dynamics there? And, how do your internal opportunities are helping you provide better more of those solutions on it? And is that part of what you'll be looking for on the acquisition front over the next several quarters?

[Michael Dudas, Equity Research Analyst at Vertical Research Partners]

Thank you.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah, Mike. So the transformers, I think, that we acquired, we we did it on purpose. It was purposeful. It was US based. I was concerned we were concerned with China and the amount of China transformers there were in utility systems.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So that concern led us to, you know, US based transformers in Pittsburgh. It was a hundred year old company with a lot of IP that allows it allowed to expand. It had UL codes across the country. It's not easy to to have transformer manufacturing of the class of, call it, the 38 up to seven six five. So if we can do that, if we can execute through there we're not trying to be a manufacturer per se.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We wanna get the pull through. We wanna do the work. So do have, you know, great, what I would consider relationships with other transformer manufacturers, breaker manufacturers, and we'll keep those as well. But we've learned a lot about our supply chain internally, you know, with our with our EPC business. So I do think we're able to really have a, you know, a solution base to clients as they come in.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

It is a core competency. It's something now where it was it used to be labor equipment. Now it's labor equipment supply chain. And if we get it if it continue down the path and get it right over and over again, I we'll get better internally and externally. So I really like what we're doing there.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I think it's you know, our clients like it, and we're able to really expand the business through that mechanism. Thanks, Stu. Sure.

[Operator]

Thanks, Michael. Our next question is from Justin Hall from Robert w Bird. If you'd like to unmute yourself and ask your question, please, Justin.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

Yes. Great. Thank you. Good morning, everybody. I guess I have one maybe larger question, and then I got just a small technical one.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

But I I guess on the the large 500 kV line that you announced this morning that's starting in mid-twenty twenty six, I was just hoping maybe you could give us some perspective on kind of the size or scope of that, particularly as that's coming on or starting kinda as you're ramping down on on SunZEA? So just trying to understand kind of maybe the relative size between those two. And then also, you know, what's the status and risk on the permitting side given that that's not starting construction for another year or so. Just what needs to happen. And then my small technical one for for Jaystree, I guess, is the two acquisitions in the quarter, I just wanted to confirm, those are the ones you announced last quarter on the earnings release.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

They weren't incremental ones. So are there any incremental acquisitions as part of the guidance increase? Thank you.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

No. I'll quickly answer that and let Duke answer the other question. But, yes, those are the two acquisitions we announced last quarter, and there are no additional ones at this stage.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

As far as the LADWP line, that is public, so I'll give you some you can go look at it, but it's a billion plus. And that's the only reason I'm gonna give it to you because it's public. But so I I think from that standpoint, you know, I do think the permitting and things like that are on on target, and we'll we'll be getting into it in '26.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

Okay. Great. Thank you very much.

[Operator]

Thanks for your question, Justin. Our next one is from Adam Thalhimer. If you would like to unmute your line and ask your question, please.

[Analyst]

Good morning, guys. Nice quarter. Wanted to ask about the pipeline market. Are you seeing anything interesting in the, long term bidding or planning, Duke, that would make you think that 2026 could be a recovery year for large pipe?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Look. I think there's more opportunity for certain. You're you're hearing it. You're hearing the the president get behind more pipe, more drilling, more pipe, more drilling. So I do think that's that's out there.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

You know, obviously, shippers are I mean, our our pipeline customers, we we've maintained all kinds of discussions going on. I I don't think it you know, from my standpoint, we need some pipe, obviously, with the amount of natural gas on the book books for, you know, combined cycles, things of that nature, especially on the Eastern Seaboard. So I do think you'll get some built. I don't I just don't think the business is gonna be super I mean, LNG takeaways is good. It it'll be better, and we're looking forward to capturing some of that work.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

But I I you know, again, I think very difficult still to build, linear construction pipelines.

[Analyst]

Thanks, Steve. Thank

[Operator]

you for your question. Our next question is from Sanjeeta Jam from KeyBanc. If you'd like to unmute yourself and ask your question, please, Sanjeeta.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Hi. Can you I'm not sure if you can hear me yet. But

[Operator]

We can hear you. Please

[Operator]

go ahead.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Thank you. Just a couple questions. One, maybe for Duke. Some companies have recently alluded to the lack of a good workforce to execute on natural gas generation projects on time and on budget. Since you have the largest craft labor force, would you consider or or what would you need to consider branching out into natural gas generation EPC to help your customers?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. I mean, I thank you for the question. I do think it's something that is not you know, it's needed. We have the what I would consider a contractor approach where we have, you know, the sum of the parts. We've built them before.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

We can certainly have a resume to build them. What the way I would characterize it is if if we decide to do that and if we lean lean into them, we're not taking risk. There's too much risk in on the unknowns of the new turbines and things of that nature. We'll just shy away from the risk, and I you know, we can grow the business nicely without the risk. That's how I look at it.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Got it. And another one, maybe it's for, Jayshree. So your revenue performance this quarter was really strong. Book to bill was kind of one, and I'm wondering if that is a sign of the times that your customers are more willing to do faster turnaround projects versus taking longer to book large projects.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

No. I don't think you should read anything into that, Sangeetha. I think it's just normal timing around our backlog. We're pleased with how the backlog is growing. As Duke talked about, the relationships with our customers just keep getting stronger and stronger.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

And so we see we see growth across project based MSA work. It's it's it's across the board. And so I think there's nothing more to read to it than just timing around those things. Got it.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I also think, you know, some of the some of the work that Cupertino books, you know, when when you look at it, it's very programmatic, almost base business type work, and it's book to bill month almost in months. So nice jobs, you know, and but it comes in, you know, 10,000,000 to 50,000,000 type spurts, and that's the way that that business is is gone. So they can book the bill quite a bit in a in a given quarter. And, you know, that's same with most of the businesses. You'll get a lot of that that happens.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

But I I still believe you'll see a lot of programmatic MSA renewals are there. They're larger. So I I continue to think that the backlog will will be at record levels.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Thank you.

[Operator]

Thank you for your question. Our next question is from Juta Amelin from JPMorgan. If you'd like to unmute your line, Drew, and ask your question, please.

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Yes. Good morning. Thank you for taking the question. I just want to look a little deeper into what's hitting the backlog on the power generation side. I mean, can you kind of talk through what's coming in between solar, storage and wind?

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

And then how have conversations with customers maybe changed since the tariffs have been announced, particularly on storage? And I appreciate that 2025 probably has some pretty good visibility on what's going to be installed and put in place. But are you worried at all about the tariff impact to 2627, you know, projects where equipment's not yet in The States?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. Look. I worry about everything. And and so but I would tell you the business is set well past '26. And so I'm worried about twenty seven, twenty eight, twenty nine.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I I think what we see is a good visibility in supply and demand. That supply side is not gonna match demand without renewables. It's not even close. And that you need the renewables to match the demand. You need them.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And I I just under any scenario, you can't see yourself not building solar at and and scale and utility scale solar for a long period of time here. It makes so much sense. Batteries are shaving peak. I looked at some load growth and some graphs in Texas of how it's shaving peak quite a bit in Texas. So I it's making a lot of sense, and you can see it showing up.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And and so from a flexibility standpoint to the grid, if you can back it with natural gas, and you can have a line with natural gas, solar, wind even, and battery on it, it's it's the lowest cost of energy to to the consumer. And that's what you're really you'll hear a lot about addressable spend. Can say, hey. We're gonna put coal on, but no one looks at the cost. Or we're gonna put nuke on, but the cost is gonna be a factor here at some point.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And so we gotta look at the most economical ways to fill the lineup. And I think you if you have a blended resource like we've had for the last five decades, As long as you look at it, all forms of energy, you'll be in good shape. But when you ask us what we're booking, we're booking all of it. Repowers in the wind side, some wind work. It's probably off a bit, but our solar is more robust, and our batteries is even more robust than our solar.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So I I I like where we sit in the business.

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Thank you.

[Operator]

Thank you, Drew. Our next question comes from Brian Brophy from Stifel Niclas. If you'd like to unmute your line and ask your question please, Brian.

[Brian Brophy, Associate Vice President at Stifel Financial]

Thanks. Good morning. Can you hear me?

[Operator]

Good morning. We can. Please go ahead.

[Brian Brophy, Associate Vice President at Stifel Financial]

Thank you. Under the new kind of key market disclosure, there's a technology and load center bucket there. Can you help us understand what is all in there? Is that primarily Cupertino? And what's driving that particularly strong growth rate this year?

[Brian Brophy, Associate Vice President at Stifel Financial]

Thanks.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Yeah. That is a lot of the work that Cupertino is doing. It's around but it's also some of the work we at Legacy Quanta around our inside electric work and data centers, semiconductors, chip plants. It's all of that will be captured in that in that bucket.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. I think that's the kind of the when we talked about TAM earlier, we were saying it was, you know, kinda 300,000,000,000, which I I think is a remarkable number that technology on infrastructure is going to spend $300,000,000,000 this year and probably more next. So in saying that, that's that bucket.

[Brian Brophy, Associate Vice President at Stifel Financial]

Thanks. I'll pass it on.

[Operator]

Thank you. Our next question is from Laura Meyer from B. Riley. If you'd like to unmute your line and ask your question, please, Laura.

[Laura Maher, Equity Research Associate at B.Riley Securities]

Hi. Can you hear me okay?

[Operator]

We can. Please go ahead.

[Laura Maher, Equity Research Associate at B.Riley Securities]

K. Thanks for taking the question. Two questions. My first one is just with the growth of data centers, which stages of data center build are you seeing the most activity in? And then the second one would just be, could you provide any color on the underground business and particularly how it relates to potential tailwinds ramping up with the new administration and the pull away from renewables?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. So I would say on the last part of the question I missed the first. Maybe this is you heard. But on the underground side of the business, there is there's opportunities in large diameter pipe. You're hearing the administration get behind that.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I do think natural gas is coming back to in certain in certain places where, you know, we are building natural gas. We never really stopped, but I but I do think you can plan a bit better that natural gas will take a long period of time. That'll be a source of energy, and, you know, our LDC business is nice. We'll continue to give people options. It's not gonna be all electric.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

They'll have natural gas options. So so I do see that as continuing to be a nice piece of the business. Canada year over year is off on on the on the big pipe, so it's down. I do see Canada coming back in this market. I mean, given the fact that the tariffs that woke Canada up, that we we do need infrastructure in Canada.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

They do need to build energy sources, and I I think you'll see a more robust Canada over the next few years that that business will come back. So like what I see up there as well yeah. I mean, it's it's certainly incrementally better than than it was. Our industrial business performed probably at record levels in the first quarter, very close to it. It was a nice quarter.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

So I I like the quarter from that standpoint. There's growth there. We like it. We'll continue to invest in it. And the first part I'm sorry.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

I missed it.

[Jayshree Desai, Chief Financial Officer at Quanta Services]

Think the first part is around data center growth, if I heard that right.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Where was it where where is that, the data center growth? Is that what the Which that the quote?

[Laura Maher, Equity Research Associate at B.Riley Securities]

Are you seeing the most activity in with data center builds?

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Oh, yeah. I mean, it's broad based. You know? I would say anywhere you can find a line that has 300 megawatts is they want a data center. So Ohio, Indiana, Virginia, all the way through Arizona, cal I mean, even California, if you look at it, if you go off grid was out in the West.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

And if you're if you're off grid, it's extremely expensive. So California has a lot a lot of areas where you could put data centers. It's not near as expensive in California than off grid. So it makes sense to build in California even. So we're seeing a lot of a lot of it to the West.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

But there's not a place that I know of that we that we, you know, provide services to that doesn't have data center bills planned or planned and paid for for that matter.

[Laura Maher, Equity Research Associate at B.Riley Securities]

Thanks.

[Operator]

Thank you, Laura. There are no more questions at this time. I'd now like to turn the call back over to management for any closing remarks.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

Yeah. Thank you. I wanna thank our 61,000 plus employees. They're the very best in the world. We couldn't do this without them.

[Duke Austin, President and Chief Executive Officer at Quanta Services]

They they make make our lives easy and make our jobs easy. And I wanna thank all the everyone participating on the conference call. We appreciate your questions and your ongoing interest in Quanta Services. Thank you. This concludes our call.

Participants

Executives

• Kip Rupp, VP of IR
• Duke Austin, President and Chief Executive Officer
• Jayshree Desai, Chief Financial Officer

Analysts

• Ameet Thakkar, Energy Transition & Infrastructure Analyst at BMO Capital Markets
• Andrew Kaplowitz, Analyst at Citigroup
• Joseph Osha, Senior Managing Director - Equity Research at Guggenheim Partners
• Philip Shen, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Jamie Cook, Managing Director - Equity Research at Truist Securities
• Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs
• Steven Fisher, Managing Director & Equity Research Analyst at UBS Group
• Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC
• Michael Dudas, Equity Research Analyst at Vertical Research Partners
• Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co
• Analyst
• Sangita Jain, Senior Analyst at KeyBanc Capital Markets
• Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co
• Brian Brophy, Associate Vice President at Stifel Financial
• Laura Maher, Equity Research Associate at B.Riley Securities