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Quanta Services Announces Preliminary Third Quarter Results

The following excerpt is from the company's SEC filing.

Updates Guidance for the Third and Fourth Quarters of 2015

- Quanta Services, Inc. (NYSE: PWR) announced today that after an initial review of its third quarter operating results, the company now expects revenues slightly below the midpoint of its previously announced range of $1.9 billion to $2.0 billion and expects diluted earnings per share from continuing operations of $0.22 to $0.24. This compares to the companys previous expectation that diluted earnings per share from continuing operations would range between $0.34 and $0.40. In addition, Quanta expects several of th e factors which adversely impacted the companys third quarter results to continue and adversely impact the companys fourth quarter results versus prior expectations. Quantas actual third quarter 2015 results and an update to its full year financial guidance will be provided on November 5, 2015, and the company will hold its third quarter 2015 earnings conference call on the same day.

While we are disappointed in our performance, we consider 2015 to be a transition year and are committed to achieving segment operating margins consistent with our previous expectations, said Jim ONeil, president and chief executive officer of Quanta Services. We continue to have confidence in our multi-year outlook as the end market drivers in the electric power and oil and gas infrastructure markets remain strong, evidenced by our expectation for several major project announcements before year-end.

Although a contributing factor to the companys revised estimates are Electric Power Infrastructure Services segment revenues for the third quarter at the lower end of Quantas previously expected range, the revised estimates are largely due to operating margins below the companys previous expectations. As previously discussed, larger electric transmission projects across the industry have experienced significant delays. This has led to an increasingly competitive smaller transmission market, as

competitors more aggressively pursue work volume to absorb fixed costs. A greater mix of smaller transmission work also negatively impacts margins due to the inefficiency of transitions between smaller projects versus the continuous production on larger work. Quanta believes that the delay in larger transmission projects is temporary, as a number of large projects are awaiting permitting and other approvals. As such, Quanta has maintained a portion of its workforce and equipment in an underutilized capacity to ensure the company is strategically positioned to deliver on larger, more complicated electric transmission projects as they move forward.

Third quarter revenues for the Oil and Gas Infrastructure Services segment are anticipated to be slightly greater than the companys prior expectations; however, this segments operating margins are expected to be lower than previously forecasted. This is primarily due to higher than expected costs on two related projects, as well as delay on a mainline pipe project that will now not move to construction until 2016. The negative impact on revenue from the mainline pipe project delay in the third quarter was offset by an increase in revenues for other services that typically carry lower margins.

For the fourth quarter of 2015, we anticipate that consolidated revenues could be in the range of $200 million less than previously expected, due largely to the continued competitive environment in small and medium scale electric transmission and delays of certain mainline pipe projects, which have been pushed from the fourth quarter into 2016. These lower revenues, as well as many of the factors that impacted the third quarter 2015 operating margins, are expected to negatively impact operating results in the fourth quarter.

Stock Repurchases

On August 5, 2015, Quanta announced a new $1.25 billion stock repurchase program inclusive of a $750 million accelerated stock repurchase arrangement (ASR). On August 11, 2015, we received an initial delivery under the ASR of approximately 25.7 million shares, which represented approximately 80% of the total shares expected to be repurchased pursuant to the ASR. Separately, through September 30, 2015, Quanta repurchased an additional 15.6 million shares of its common stock in open market transactions for approximately $373 million. As a result, Quanta estimates its weighted average fully diluted share count to be approximately 189 million shares for the third quarter of 2015 and approximately 166 million shares for the fourth quarter of 2015, without taking into consideration any additional stock repurchases that could occur during the remainder of the year.


Quanta Services has scheduled a conference call for November 5, 2015, at 9:30 a.m. Eastern Time to review its third quarter 2015 financial results. To participate in the call, dial 1-913-312-0862 at least 10 minutes before the conference call begins and provide the conference call ID 4687052 or ask for the Quanta Services Third Quarter 2015 Conference Call. Investors, analysts

and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the companys website...