Quanta Services, Inc. (PWR)

PWR 
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Quanta Services (PWR)

Q3 2013 Earnings Call

October 31, 2013 9:30 am ET

Executives

Kip A. Rupp - Vice President of Investor Relations

James F. O'Neil - Chief Executive Officer, President, Director and President of Infrasource FI LLC

Derrick A. Jensen - Chief Financial Officer

Analysts

William D. Bremer - Maxim Group LLC, Research Division

Will Gabrielski - Lazard Capital Markets LLC, Research Division

Tahira Afzal - KeyBanc Capital Markets Inc., Research Division

Vishal Shah - Deutsche Bank AG, Research Division

Jamie L. Cook - Crédit Suisse AG, Research Division

Steven Fisher - UBS Investment Bank, Research Division

Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division

Daniel J. Mannes - Avondale Partners, LLC, Research Division

Adam R. Thalhimer - BB&T Capital Markets, Research Division

Craig E. Irwin - Wedbush Securities Inc., Research Division

John B. Rogers - D.A. Davidson & Co., Research Division

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division

Martin W. Malloy - Johnson Rice & Company, L.L.C., Research Division

Presentation

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Quanta Services Third Quarter 2013 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, Thursday, October 31, 2013 at 9:30 a.m. Eastern Time. I will now turn the conference over to Mr. Kip Rupp, Vice President, Investor Relations. Please go ahead, sir.

Kip A. Rupp

Great. Thank you, Ron. And welcome, everyone, to the Quanta Services conference call to review third quarter 2013 results. Before I turn the call over to management, I have the normal housekeeping details to run through. If you would like to have Quanta's -- Quanta news releases and other information emailed to you when they occur, please sign up for email information alerts by going to the Investors & Media section of Quanta Services' website at quantaservices.com. In addition, Quanta has an Investor Relations app for iPhone, iPad and Android mobile devices, which is available for free at Apple's App Store and at Google Play. The Quanta Investor Relations app allows users to navigate the company's Investor Relations materials, including the latest press releases, SEC filings, presentations, videos, audiocasts, conference calls and stock price information.

A replay of today's call will be available on Quanta's website at quantaservices.com. In addition, a telephonic recorded instant replay will be available for the next 7 days, 24 hours a day, that can be accessed as set forth in the press release. Please remember that information reported on this call speaks only as of today, October 31, 2013, and therefore, you are advised that any time-sensitive information may no longer be accurate as of the time of any replay of this call.

This conference call will include forward-looking statements intended to qualify under the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance, or that do not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or are beyond Quanta's control, and actual results may differ materially from those expected or implied as forward-looking statements. Management cautions that you should not place undue reliance on Quanta's forward-looking statements, and Quanta does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after this call. For additional information concerning some of the risks, uncertainties and assumptions that could affect Quanta's forward-looking statements, please refer to the company's annual report on Form 10-K for the year ended December 31, 2012, and its other documents filed with the Securities and Exchange Commission, which may be obtained on Quanta's website or through the SEC's website at sec.gov.

With that, I would now like to turn the call over to Mr. Jim O'Neil, Quanta's President and CEO. Jim?

James F. O'Neil

Thank you, Kip. Good morning, everyone, and welcome to the Quanta Services Third Quarter 2013 Earnings Conference Call. I will start the call with an operational overview before turning it over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a detailed review of our third quarter results. Following Derrick's comments, we will welcome your questions.

For the quarter, revenues increased approximately 7% and GAAP diluted earnings per share from continuing operations increased 10% compared to the same quarter last year. Our 12-month and total backlog increased both sequentially and on a year-over-year basis, and both are at record levels.

Our Electric Power segment continues to experience strong demand for electric transmission and distribution services. The electric power industry continues to make significant investments in North America's power grid to improve reliability, address congestion issues, create renewable interconnections and upgrade and replace aging transmission and distribution infrastructure. There are several near-term drivers of transmission spending.

As coal generation is retired to comply with the Environmental Protection Agency's Mercury and Air Toxics Standards, utilities will need to modify existing transmission infrastructure to handle changes in energy flow to maintain grid reliability. As a result, new transmission infrastructure will be required. For example, earlier this year, grid operator PJM, which manages grid reliability on an electric power system that serves more than 60 million people, identified the need for more than 130 grid updates to avoid reliability problems resulting from power plant retirements. PJM's estimate of $2.4 billion in expenditures to address this challenge includes equipment upgrades, new substation and substation upgrades, as well as rebuilding existing transmission lines and the construction of new lines.

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