Quanta Services Inc.
) reported fourth-quarter 2013 non-GAAP earnings (excluding the
one-time items) of 50 cents a share, beating the Zacks Consensus
Estimate by 22%. However, quarterly earnings were down 2% from
the prior-year quarter. Profits were primarily driven by
increasing demand for the company's services.
GAAP earnings per share were 77 cents, up 60% year on
Total revenue for the quarter was $1.82 billion, up 8.6% from
$1.67 billion in the prior-year quarter, aided by increased
revenues from the company's Electric Power and Oil & Gas
Infrastructure segment. Quanta reported revenues across two of
its three operating segments. Revenues were also well ahead of
the Zacks Consensus Estimate of $1.7 billion.
revenues in the quarter were $1.20 billion, up 2.1% from $1.18
billion in the prior-year period. The Electric Power segment
continued to experience increased demand for electric
transmission and distribution services, as the electric power
industry is investing at record levels to upgrade and modernize
North America's power grid. In addition, regulations to improve
renewable interconnections and the impact of switching to gas
generation are expected to continue to drive the power industry's
investments and electric infrastructure over the long term.
Natural Gas and Pipeline Infrastructure Services
(effective Dec 31, 2013, the company's Natural Gas and Pipeline
Infrastructure Services segment was renamed the Oil and Gas
Infrastructure Services segment) revenues came in at $572.3
million, reflecting a 28.4% year-over-year increase. This growth
was driven by increased revenues from projects related to
unconventional shale developments in certain regions of North
America. The company's pipeline-gathering activity remains active
and Quanta experienced increased demand for its mainline pipe
construction services in 2013 and booked more than $700 million
in contracts during the second half of 2013.
Fiber Optic Licensing
revenues declined 15.5% to $40.3 million from $47.8 million in
the comparable quarter last year. The decline in revenues was
primarily attributable to decline in telecom service
Income and Expenses
Operating income in the quarter was $149.4 million compared
with $160.8 million in the prior-year quarter, reflecting a
decline of 7.1%. SG&A expense was $143 million compared with
$117 million in the comparable quarter last year.
Cash Flow and Balance Sheet
Exiting the year, cash and cash equivalents were $488.8
million and shareholders' equity was $4.2 billion. Operating cash
flow from continuing operations was about $447 million for 2013.
Capital expenditures were about $249 million, while free cash
flow for 2013 was approximately $198 million. This compares with
$30 million in negative free cash flow in 2012.
Acquisitions and Share Repurchases
During the first quarter of 2014, Quanta acquired five
companies, of which four are electric power infrastructure
services companies based in Canada, while the fifth company is a
general engineering and construction company specializing in
hydrant fueling, waterfront and utility construction for the U.S.
Department of Defense and civilian applications. These five
acquisitions totaled $79.9 million in cash and approximately
$36.6 million in Quanta's common stock and shares of a Canadian
subsidiary of Quanta that are exchangeable for shares of Quanta's
This apart, in Dec 2013, the board of directors authorized a
repurchase program of up to $500 million of Quanta's common stock
through Dec 2016.
Quanta is positive about its performance going forward. It
expects revenues for the first quarter of 2014 in the range of
$1.65 billion to $1.75 billion. On a GAAP basis, the company
expects earnings to be in the range of 36 cents to 38 cents.
The GAAP earnings per share (EPS) guidance for the first
quarter of 2014 includes an estimate of $7.8 million for non-cash
stock-based compensation expenses and $8.2 million for
amortization expenses. Excluding these expenses, the non-GAAP
adjusted earnings from continuing operations for the first
quarter of 2014 is expected to be in the range of 41 cents to 43
cents, versus 38 cents reported in the first quarter of 2013.
Full-year 2014 revenues are expected in the range of $7.4
billion to $7.8 billion, while earnings on GAAP basis are
expected in the range of $1.65 to $1.85.
GAAP EPS forecast for 2014 includes an estimate of $35.3
million for non-cash stock-based compensation expenses and $33.1
million of amortization expenses. Excluding these expenses and
others, non-GAAP adjusted earnings for 2014 are expected to be
between $1.85 and $2.05, compared with $1.71 in 2013.
Capital expenditures for 2014 are expected in the range of
$300 million to $325 million, which includes expenditures of
about $50 million to $60 million for the Fiber Licensing and
Quanta currently holds a Zacks Rank #2 (Buy). Some other
players operating in the same industry and worth considering are
Orion Marine Group Inc.
, AECOM Technology Corp.
Altra Industrial Motion Corp.
), all of which carry a Zacks Rank #2.
AECOM TECH CORP (ACM): Free Stock Analysis
ALTRA HOLDINGS (AIMC): Free Stock Analysis
ORION MARINE GP (ORN): Free Stock Analysis
QUANTA SERVICES (PWR): Free Stock Analysis
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