Quanta Services Inc.
) reported second-quarter 2014 non-GAAP earnings (excluding
one-time items) of 40 cents a share, beating the Zacks Consensus
Estimate of 39 cents a share by 2.6%. Earnings also improved 5.3%
from the prior-year quarter's earnings of 38 cents. However, the
company's GAAP earnings per share came in at 37 cents, up 12.1%
year on year. Shares of the company were up 1.3% following the
Quanta Services Inc - Earnings Surprise |
The company benefited from its leading position in the energy
infrastructure market. Despite headwinds like inclement weather
conditions, the company's diligent operational execution led to the
Total revenue in the quarter stood at $1.86 billion, up a robust
26.5% from $1.47 billion in the prior-year quarter. Revenues fell
short of the Zacks Consensus Estimate of $2.03 billion.
Electric Power revenues in the quarter stood at $1.24 billion,
up 18.4% from $1.05 billion in the prior-year quarter. The Electric
Power segment continued to experience increased demand for electric
transmission and distribution services, despite reduced spending in
the industry. The increased demand can be attributed to consistent
upgrades and strengthening of distribution networks by companies to
brave harsh weather conditions. The business also benefited from
the improvement in the residential and infrastructure industry.
The Oil and Gas Infrastructure segment reported revenues of
$585.4 million, reflecting a 51.7% year-over-year increase. This
growth was driven by increased revenues from projects related to
unconventional shale developments in certain regions of North
America including Canada and coal seam gas in Australia. Moreover,
growing investments in the midstream infrastructure is also
benefiting the company. Quanta's pipeline-gathering activities
remain on track and the company has been experiencing increased
demand for its mainline pipe construction services over the last
Fiber Optic Licensing revenues declined 4.9% to $40.0 million
from $42.1 million in the comparable quarter last year. The decline
was primarily led by a fall in telecom service revenues. However,
management has taken initiatives to make a turnaround in the
business. As part of these initiatives, the company has begun the
deployment of its new services that are expected to benefit the
business significantly over the long haul. Consequently, the
deployment costs along with dark fiber network maintenance expenses
proved to be a drag on the segment's revenues this quarter.
Income and Expenses
Operating income in the quarter stood at $133.4 million compared
with $117.2 million in the prior-year quarter, reflecting an
increase of 13.8%. Selling, general and administrative expenses
(SG&A) totaled $139.4 million as against $119 million in the
comparable quarter last year.
Cash Flow and Balance Sheet
Exiting the quarter, cash and cash equivalents were $189 million
while shareholders' equity stood at $4.4 billion. Long-term debt
was $4.1 billion.
During the second quarter, Quanta repurchased approximately 1.3
million shares for $45 million.
Year to date, Quanta completed eleven (6 in the first quarter
and 5 in the second) acquisitions.
Encouraged by the impressive second-quarter performance, the
company provided guidance for the third quarter and raised its
guidance for fiscal 2014.
Quanta expects revenues in third-quarter 2014 in the range of
$2.0-$2.1 billion and non-GAAP earnings per share in the band of
Also, revenues for full-year 2014 are projected between $7.6
billion and $7.8 billion, highlighting a raise from the previous
range of $7.4-$7.8 billion. Non-GAAP earnings per share for the
year are expected in the range of $1.90 to $2.00 compared with
$1.85 to $2.05 mentioned earlier.
Quanta currently has a Zacks Rank #4 (Sell). Some better-ranked
stocks in the industry include China Merchants (
), CLARCOR Inc. (
) and Federal Signal Corp. (
). All three carry a Zacks Rank #2 (Buy).
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