Earl C. Austin
President, Chief Executive Officer, and Director at Quanta Services
Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services Third Quarter 2022 Earnings Conference Call. On the call today, I will provide operational and strategic commentary, and we'll then turn it over to Jayshree Desai, Quanta's CFO, to provide a review of our third quarter results and full year 2022 financial expectations. Following Jayshree's comments, we welcome your questions. This morning, we reported our third quarter results, which continue to reflect strong demand for our services and solid execution. We believe the results highlight the benefits of our diverse, repeatable and sustainable earnings streams and our ability to successfully leverage our portfolio approach in managing our service lines. Our third quarter results include a number of record financial metrics, including revenues, adjusted EBITDA and adjusted earnings per share. Additionally, total backlog of $20.9 billion was a record and is considerably higher than the same period last year.
Notably, we also see the opportunity to significantly increase backlog as we move into 2023. Our Electric Power Infrastructure Solutions segment continued to perform well with record revenues and solid margins. We achieved these results despite some delays caused by ongoing supply chain challenges that led to resource imbalances and utilization inefficiencies. As we commented on our second quarter earnings call, these supply chain challenges are not causing meaningful delays in our overall utility capital spending that we are seeing, and we believe these dynamics are shorter term conditions that should be resolved over the coming quarters.
Demand for our services continues to be driven by broad-based business strength from utility grid modernization and system hardening initiatives, as well as our reputation for solid and safe execution. Overall, our electric power outlook remains strong, driven primarily by increasing service line opportunities and market share gains for our base business. Quanta deployed emergency response resources to utility customers for two hurricanes late in the third quarter. Hurricane Fiona made landfall in Puerto Rico and damaged 50% of the island's distribution feeders, 30% of its transmission lines and submerged seven substations. Quanta sent more than 200 skilled line workers to the island to support LUMA's restoration efforts and has strategically prepositioned a fleet of trucks and equipment on the island prior to the storm, which allowed us to quickly respond when the hurricane hit.
While the fragile state of the island's existing power grid and the heavy rain and flooding from the hurricane made restoration efforts more challenging, LUMA still managed to return power to more than 90% of its customers in less than two weeks. We are proud of the way LUMA responded to this event, which was much faster than previous storm responses by prior grid operators and comparable to, if not better, than restoration times following major hurricanes in the mainland United States. At the end of the third quarter, Hurricane Ian made landfall in Florida as a large and destructive category four hurricane, which left more than three million customers across the Southeast United States without power.
Quanta deployed significant resources to support utility customers whose electrical power infrastructure was damaged or destroyed by the hurricane, including more than 3,500 line workers and front-end support services staff from 18 different Quanta operating companies. Although restoration efforts for Hurricane Ian were largely a fourth quarter event, we believe our industry-leading, comprehensive emergency restoration capabilities highlights our ability to rapidly mobilize substantial resources to support our customers in times of need. Importantly, the system hardening investments that Florida utilities have made over the past ten years proved beneficial during Hurricane Ian and enhanced the ability to restore power to many customers after the first full day of restoration efforts.
We believe Florida's leading role in system hardening and its demonstrated benefits will serve as a model for utilities and regulators throughout the country as they plan and implement their own hardening programs. It was a little more than a year ago that we closed the acquisition of Blattner, and I can tell you that we are more excited about the key drivers of the transaction now than we were then, including the value proposition to our customers, the multiyear growth opportunities available to us and the strong operational and cultural fit between the organizations. Since closing, we have largely completed integration. Our teams are working collaboratively.
We have enhanced existing customer relationships and created new ones. We are jointly pursuing project opportunities that leverage our expertise and industry-leading position. We have accomplished a great deal with Blattner over the last year, but more importantly, we believe we are just getting started. Our Renewable Infrastructure Solutions segment performed well overall during the third quarter, led by solid performance on high voltage transmission, substation and interconnection work. The utility-scale solar industry faced increased levels of supply chain delays during the third quarter, which impacted our revenues, but our operations managed through these dynamics. We are optimistic that these conditions are shorter term in duration and will resolve themselves over the coming quarters.
We continue to collaborate closely with our customers on our renewable build plans for 2023 and beyond. While still early in the process, we are beginning to see a more normalized cadence with respect to limited notices to proceed for renewable projects moving to contract in 2023 as well as forward movement on projects that were delayed in 2022 that are now slated to be built in 2023. According to the Federal Energy Regulatory Commission, or FERC, there are approximately 1,400 gigawatts of proposed generation, mostly wind and solar, and energy storage projects that are actively seeking interconnection to the U.S. power grid.
These create both opportunities and challenges for our customers, and demand for Quanta's comprehensive solutions and collaborative delivery model is increasing as a result. Further, there are several large renewable energy-related high-voltage electric transmission project opportunities that we are pursuing, which we believe we are well positioned for and could be awarded over the coming months. Furthermore, this past August, the Inflation Reduction Act, or IRA, was signed into law. It includes nearly $400 billion of tax incentives and financial support designed to accelerate the country's energy transition to a low-carbon economy.
This legislation is considered by many to be the nation's most ambitious legislative action ever taken on climate, which we believe should have a meaningful positive effect on a number of our end markets for at least the next decade. In particular, we believe the IRA will drive investment in the development and construction of utility-scale renewable generation facilities and the transmission and substation infrastructure required to support them. Additionally, there are attractive financial incentives in the IRA to expand domestic manufacturing of key renewable energy components such as solar panels. This could reduce the country's reliance on overseas manufacturers and, in turn, reduce supply chain risk by ensuring domestic product availability to meet the growing demand for renewable generation development in the United States.
These are just some of the dynamics that give us a high degree of confidence in our ability to meet or exceed long-term growth and earnings targets. Our Underground and Utility Infrastructure Solutions segment continues to perform at a high level. Revenues grew strongly, and margins demonstrate solid execution across our operations in the segment. Our industrial services operation continue to execute very well and experienced robust demand as capital spending resumed and pent-up activity from two years of deferred maintenance moved forward. We also continue to experience solid demand for our gas utility and pipeline integrity operations, which are executing well and are driven by regulated spend to modernize systems, reduce methane emissions, ensure environmental compliance and improve safety and reliability.
For several quarters on our earnings calls, we have discussed our views about the emerging opportunities within the segment that center around the evolving and increasing efforts of our customers' strategies to reduce their carbon footprint and diversify their operations and assets toward greener business opportunities. To that end, the IRA includes incentives that are designed to support and accelerate certain technologies as part of the energy transition for the traditional energy and industrial industries. For example, there are significant production tax credits for clean hydrogen that can make the energy source cost competitive today, which is expected to accelerate interest and investment in hydrogen technology as another tool to produce clean power and reduce carbon emissions.
The IRA also includes incentives to invest in carbon capture projects and technology. Prior to the passage of this legislation, we had been supporting several customers as they pursued hydrogen and/or carbon capture projects and believe the IRA will further encourage a broader set of current and potential customers to accelerate their pursuit of opportunities around these technologies. As we discussed at our Investor Day earlier this year and as I hope you take away from our comments today, demand for our services is robust across our portfolio and driven by what we believe are long-term, visible and resilient megatrends.
We are successfully executing on our strategic initiatives to drive operational excellence, total cost solutions for our clients and value for our stakeholders. We have profitably grown the company and executed well this year and expect to continue to do so. Our strategic initiatives are designed to uniquely position us to not only capitalize on the megatrends of our end markets, but also to enhance our customer relationships and market positioning. Quanta's infrastructure solutions bite the tip of the spear of the energy transition in North America. Our customers are leading the effort to transition towards a lower carbon economy, which industry experts believe could require trillions of dollars of investment in renewable generation, energy storage and great investment, all areas where Quanta is an industry leader. In order to meet the needs of our customers and capitalize on the large and visible opportunities ahead of us, Quanta is investing in resources necessary to do so.
We are innovative with our safety, training and recruiting efforts to ensure we have a world-class workforce and adding to and enhancing our operations leadership and management. We are also making and evaluating value-creating acquisitions that further our strategic initiatives and investing capital in equipment and facilities to support organic growth. As a result of our solid year-to-date financial results and continued overall favorable end market drivers, we remain confident in our 2022 consolidated financial expectations. We also believe that our business and opportunities for profitable growth in 2023 are gaining momentum, driven by our solutions-based approach, the growth of programmatic spending with existing and new customers, growing renewable generation activity and opportunities for larger electric transmission projects.
We are focused on operating the business for the long term and expect to continue to distinguish ourselves through safe execution and best-in-class build leadership. We will pursue opportunities to enhance Quanta's base business and leadership position in the industry and provide innovative solutions to our customers. We believe Quanta's diversity, unique operating model and entrepreneurial mindset form the foundation that will allow us to continue to generate long-term value for our stakeholders. I will now turn the call over to Jayshree Desai, our CFO, for her review of the third quarter results and 2022 expectations. Jayshree?