Quanta Services, Inc. (PWR)

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Quanta Services (PWR)

Q3 2012 Earnings Call

October 31, 2012 9:30 am ET


Kip A. Rupp - Founder and Managing Partner

James F. O'Neil - Chief Executive Officer, President and Director

Derrick A. Jensen - Chief Financial Officer


Tahira Afzal - KeyBanc Capital Markets Inc., Research Division

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

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

Will Gabrielski - Lazard Capital Markets LLC, Research Division

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

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

Rodney C. Clayton - JP Morgan Chase & Co, Research Division

Chris Godby - Stephens Inc., Research Division

Ahmar M. Zaman - Piper Jaffray Companies, Research Division

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

Andrew Buscaglia

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

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

Steven Fisher - UBS Investment Bank, Research Division



Ladies and gentlemen, thank you for standing by. Welcome to the Quanta Services Third Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, October 31, 2012. And I would now like to turn the conference over to Mr. Kip Rupp, Vice President, Investor Relations. Please go ahead.

Kip A. Rupp

Great. Thank you, Luke, and welcome, everyone, to the Quanta Services conference call to review third quarter 2012 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 news releases and other information e-mailed to you when they occur, please sign up for e-mail information alerts by going to the Investors & Media section of Quanta Services' website at quantaservices.com.

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, 2012, 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, 2011; its quarterly reports on Form 10-Q 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

Good morning, everyone, and welcome to Quanta Services third quarter 2012 earnings conference call. Before I begin the call, on behalf of the Quanta management team, we would like to express our concerns to our friends, analysts and shareholders that may have been impacted by Hurricane Sandy, many of whom may not be able to participate on the call today. You are in our thoughts and prayers.

After my operational overview, I will turn the call over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a detailed review of our third quarter financial results. Following Derrick's comments, we welcome your questions.

We continue to see market momentum in our infrastructure segments, particularly our electric transmission and pipeline services. In addition, because of the many nuances in building major infrastructure projects in today's challenging environment, our customers have become more selective in choosing a construction partner that can successfully manage safety and environmental concerns, project timelines and execution while meeting budget expectations.

Our third quarter performance reflects our customers' continued confidence in our ability to exceed expectations with consistent, safe and efficient execution. We are also -- we also expect strong demand for our services in the future from a broadening customer base as our infrastructure projects move forward.

Our revenues in the third quarter were a record $1.69 billion, a 35% increase compared to the third quarter of 2011, and revenues for the first 9 months of this year have increased almost 49% compared to the same period last year. Our 12-month backlog is at record levels.

Our employee count at the end of this year's third quarter was approximately 21,000, up 21% compared to the third quarter of last year and up 20% since the end of 2011.

Although emergency restoration service revenues were $81 million for the quarter, the highest quarterly level since Hurricane Rita hit the Gulf Coast in the third quarter of 2008, the quarter-over-quarter increase of $16 million was negligible relative to the overall revenue growth in the quarter.

Our third quarter results were primarily driven by a strong performance in our Electric Power segment due to the significant volume of electric transmission projects underway and our ability to safely execute those projects. Improved performance quarter-over-quarter and sequentially from our Natural Gas and Pipeline and Telecommunications segments also contributed to the strong results.

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