Earl C. Austin
President, Chief Executive Officer at Quanta Services
Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services fourth quarter and full year 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 financial results and full year 2023 financial expectations. Following Jayshree's comments, we welcome your questions.
This morning, we reported strong fourth quarter and full year results, which were built off an industry-leading operational and financial platform that delivered another year of solid, safe execution and profitable growth. Additionally, total backlog of $24.1 billion at year-end was a record, and that does not include several notable recent project awards.
Driven by the dedication and operational excellence of our world-class employees and the culture of collaboration throughout Quanta, we believe our '2022 results also demonstrate the benefit of our diversified portfolio of solutions, our repeatable and sustainable model and the successful execution of our strategic initiatives to drive operational excellence and total cost solutions for our clients and ultimately, the consumer. Our portfolio of companies, diversity of service lines, geographic coverage, outstanding field leadership and deep, longstanding and collaborative relationships with our clients have allowed us to successfully navigate through the challenges presented by a global pandemic, and manage ongoing macroeconomic uncertainty and supply chain constraints, while still delivering 5 consecutive years of record adjusted EBITDA and 6 consecutive years of record earnings per share.
We accomplished a great deal in 2022 through the successful implementation of our strategic initiatives and our past success positions us well for the future. Our innovative approach to our infrastructure solutions, our portfolio of services and our passion for working collaboratively with our clients to support their success positions us to be a critical partner in enabling the energy transition for years to come.
Here are some of our accomplishments in 2022. We continue to successfully advance our front-end solution strategy, both organically and through acquisitions and strategic investments. Our focus is on strengthening our design, engineering, permitting, environmental, logistics and program management capabilities. This strategy allows us to expand our customers and provide them with greater certainty around cost, time to market and quality, which ultimately benefits consumers. It also enhances our risk management capabilities and increases our total addressable market.
Electric Power Infrastructure Solutions segment revenues achieved record levels, maintain margins and increase market share despite some work delays caused by ongoing supply chain challenges. We further expanded our emergency response capabilities and supported our customers' efforts to restore power to millions of people adversely impacted by several severe weather events during the year. Our ability to quickly mobilize significant resources to support our customers in times of need is unmatched in our industry.
LUMA Energy, our joint venture with ATCO, which is managing Puerto Rico's more than 18,000-mile electric transmission and distribution system continue to improve its customer service, response times, customer communication and workforce safety, as well as overall system reliability. Additionally, LUMA restored power to more than 90% of its customers in less than 2 weeks following Hurricane Fiona, which was much faster than previous storm responses by the prior grid operator and was comparable to, if not better, than restoration times following major hurricanes in the mainland United States. Though many years of challenges and work remain, we continue to believe this opportunity is transformative for Quanta and the people of Puerto Rico and remain committed to supporting LUMA's mission to provide reliable electricity while building a modern and sustainable transmission and distribution system.
We continue to grow our Communication Services business and increased revenues by approximately 30%. Contributing to the growth was further development of our wireless infrastructure solutions, which expand our opportunities to capitalize on 5G network deployment and ongoing enhancement of 4G wireless networks.
We continue to make meaningful progress on growing our portfolio of services within each of our operating companies to further enhance our operating results. For example, we are leveraging our gas utility assets to perform certain aspects of underground electric power and telecom-related work. We believe the resource expansion and operating leverage we gained through these initiatives is significant opportunity for Quanta to reinforce our self-perform capabilities, Improve operating efficiency and profitability and demonstrates the strength of our portfolio approach.
Quanta's capacity model was recognized by the National Safety Council as a finalist for its prestigious Green Cross for Safety Award, which recognizes outstanding projects in organizations working to support the National Safety Council's mission to save lives and prevent injuries from workplace to any place. The capacity model is revolutionary because it only creates a work environment that focuses on preventing an incident, but also builds the capacity to fell safely.
We demonstrated our commitment to stockholder value and our confidence in Quanta's financial strength and continue to growth opportunities through the repurchase of approximately $128 million of our common stock and a 17% increase of our dividend while also increasing our liquidity.
And finally, we continue to increase our efforts and dedicate resources towards implementing sustainable business practices throughout the organization. We made significant progress in our 2021 Sustainability Report, which discusses the company's accomplishments during that year and marks a key milestone for Quanta as we published our first consolidated sustainability metrics, including our Scope 1 and 2 emissions. We also highlighted and discussed the important positive impact Quanta has on society and enabling the energy transition and technological development.
Demand is robust for our solutions that support our customers, efforts to modernize and harden the grid and prepare it for the impact of increased electric vehicle penetration. This activity drove our Electric Power segment results and backlog strength during 2022, primarily due to significant multiyear Master Service Agreements and gains through our service line expansion with utilities. Further, we continue to believe we are in the early stages of utilities undergrounding transmission and distribution lines to protect them from the effects of severe weather events and wildfires.
We see this activity increasing in the Western United States and high-fire threat areas, but these initiatives are active in other areas of the country. Examples include electric transmission projects in the Northeast, distribution circuits along the coast lines and electric transmission line projects for offshore wind generation. Many of these initiatives are part of a large scale multiyear system modernization and hardening programs. Our utility and renewable developer customers who accounted for the majority of our 2022 revenues are leaders in the effort to reduce carbon emissions, increased electrification and lead the energy transition with aggressive plans to expand and modernize the power grid and grow their renewable generation portfolios. Achieving these goals will require substantial incremental investment in transmission, substation and renewable generation facilities to produce and transport clean power to ensure grid reliability due to the growth of intermittent power added to the system.
For example, in December of last year, we announced Quanta's selection by Xcel Energy as its prime constructor to manage all construction activities for Colorado's power pathway high-voltage electric transmission project in Colorado. The approximately 610-mile, high-voltage electric transmission line project is designed to increase the reliabilities of the state's power grid and enable future renewable energy development in Colorado, including approximately 5,500 megawatts of new wind, solar and other resources that Xcel Energy plans to add through 2030.
While the supply chain and regulatory hurdles created challenges for the renewable industry during 2022, there is significant demand for our power grid and renewable generation solutions. Number of solar projects that were delayed in 2022 are beginning to move forward in '23. Regulatory hurdles are easing and the implementation of the Inflation Reduction Act or IRA, which is considered by many to be the nation's most ambitious legislative action ever taken on climate, is expected to have meaningful positive effect on a number of our end markets, which would be additive to our strategy for at least the next decade.
Our underground Utility and Infrastructure Solutions segment consistently performed at a high level through the year. Revenues grew strongly and margins significantly improved, after navigating through tough operating conditions caused by the global pandemic over the prior two years. Importantly, we continue to invest in our people and strategies during those challenging times and emerge as a stronger and better company, which is reflected in our solid 2022 results.
We expect to continue our focus on growing our Gas Utility, Pipeline Integrity and Industrial Services businesses, consistent with our strategy over the last 5 years, which are executing well and driven by regulatory spend to modernize systems, reduce methane emissions, ensure environmental compliance and improve safety and reliability. Looking to the coming years, we continue to believe Quanta has meaningful opportunities with customers in this segment as they increasingly pursue strategies to reduce their carbon footprint and diversify their operations and assets toward greener business opportunities. Further, the IRA includes incentives to support certain energy transition technologies to further encourage a broader set of current and potential traditional energy and industrial customers to accelerate their pursuit of opportunities around these technologies.
In our earnings release this morning, we provided our 2023 guidance, which we believe demonstrates the strength and sustainability of our portfolio approach to this and long-term strategy, favorable end market trends, our ability to safely execute our strong and strengthening competitive position in the marketplace. Further, our ongoing investment in and commitment to workforce training continues to positively impact our performance and allow us to capitalize on future opportunities.
Our expectations caught for another year of meaningful growth in record revenues, improved margins and opportunity for double-digit growth in adjusted EBITDA, cash flow and earnings per share. Additionally, we see opportunity to achieve record levels of backlog in 2023. Jayshree will provide additional detail about our guidance in our commentary.
Quanta's management team recently had the privilege of ringing the closing bell at the New York Stock Exchange commemorate our 25-year anniversary of trading on the prestigious exchange. Standing on that balcony and reflecting on what we have built over the last 25 years and where we are heading in the future, it was only, and I couldn't be prouder. Quanta's infrastructure solutions are at the tip of the spear of the energy transition in North America. At our Investor Day last year, we laid out a 5-year financial goals we expect to achieve through 2026, which provided an organic growth strategy to generate a 10% adjusted earnings per share CAGR and when considering the levers available to us to allocate future cash flow generation into value-creating opportunities. A platform with opportunity to deliver more than a 15% CAGR in adjusted earnings per share. With the strong results we delivered last year, our outlook for 2023 and the momentum we see building for the coming years, we are increasingly confident in our ability to meet or exceed those goals we laid out.
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 field 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 our fourth quarter and full year results and 2023 expectations. Jayshree?