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From Motley Fool Transcribing, Apr. 30:
CALL PARTICIPANTS
President & Chief Executive Officer — Earl Austin
Chief Financial Officer — Jayshree Desai
Vice President, Investor Relations — Kip RuppTAKEAWAYS
- Revenue -- $7.9 billion reported for the quarter, reflecting double-digit growth according to management.
- Net income attributable to common stock -- $221 million, or $1.45 per diluted share.
- Adjusted diluted EPS -- $2.68 for the quarter, with management highlighting margin improvements in the Underground Utility and Infrastructure Solutions (UI) segment.
- Adjusted EBITDA -- $686 million, representing double-digit growth per management's commentary.
- Backlog -- Record $48.5 billion at quarter-end, with increases observed broadly across all segments, not driven by any single project.
- Full-year 2026 guidance -- Revenue expected between $34.7 billion and $35.2 billion; adjusted EBITDA guidance raised to a range of $3.49 billion to $3.65 billion; adjusted EPS projected at $13.55-$14.25.
- Power transformer manufacturing investment -- Management reiterated an ongoing $500 million to $700 million multi-year capital program to double transformer manufacturing capacity.
- Off-site manufacturing expansion -- Near doubling of off-site fabrication, manufacturing, and logistics facilities underway, targeting roughly 6.7 million square feet in aggregate.
- Technology and load center revenue outlook -- Management noted technology and load center revenue growth expectation moved from 70% to 110%; acquisitions and organic growth both contributing.
- Adjusted EPS growth target -- Company targets 15%-20% adjusted EPS growth annually, with an aim to more than double earnings power by 2030.
- Leverage policy -- Quanta Services intends to maintain an investment-grade balance sheet with a leverage profile of 1.5x-2x, prioritizing returns over repurchases.
- Acquisition strategy -- No acquisitions in the quarter, but management stated, "I expect us to do some M&A over the next 9 months," with future acquisitions to be additive to current guidance.
- Order trends -- Management emphasized a shift toward negotiated, programmatic contracts and noted daily inbound opportunities in data centers, transmission, and generation.
SUMMARY
Quanta Services (PWR +15.50%) raised its full-year revenue, adjusted EBITDA, and adjusted EPS guidance, citing broad-based demand and a record backlog spanning all major business segments. The company detailed a significant capital commitment to double transformer manufacturing capacity and expand off-site fabrication, positioning for emerging opportunities in grid modernization and large-load customers. Management outlined that margin improvement in the Underground Utility and Infrastructure Solutions segment was a principal earnings driver, and that technology and load center markets are seeing accelerated growth fueled by both strategic acquisitions and organic expansion.
- President & CEO Austin said, "We are in the rooms where customers are planning their entire multiyear capital spend," highlighting growing direct negotiation of major projects.
- Chief Financial Officer Desai stated, "while we were pleased with the performance in the first quarter, it's just early," indicating that confidence in higher-end free cash flow will be reassessed as the year progresses.
- Management highlighted that a major portion of backlog growth was driven by Master Service Agreements (MSAs) rather than single large project awards.
- Strategic objectives through 2030 remain unchanged, with Austin clarifying, "We have outlined an opportunity to more than double the earnings power of this company by 2030."
- Quanta does not factor future M&A into current guidance, but leadership expects incremental acquisitions to supplement organic growth during the remainder of the year.
- The company maintains that future transformer supply chain capacity investments and fabrication expansion serve as major differentiators in supporting both utility and hyperscaler demand.
INDUSTRY GLOSSARY
- Master Service Agreement (MSA): A long-term contractual arrangement with a customer covering multiple projects or scopes of work, enabling streamlined execution and negotiation for ongoing services.
- CCGT (Combined Cycle Gas Turbine): Power plants utilizing gas turbines combined with steam turbines to generate electricity more efficiently, often referenced in discussions of new generation capacity.
- Balance of plant: All supporting components and auxiliary systems of a power plant, excluding the prime mover and generator, critical in data center and renewable project builds.
- Fungibility (labor): The capability of reallocating skilled labor resources fluidly across projects, segments, or geographies as market conditions and customer needs require.
Full Conference Call Transcript
Kip Rupp: Thank you, and welcome, everyone, to the Quanta Services First Quarter 2026 Earnings Conference Call. This morning, we issued a press release announcing our first quarter 2026 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our first quarter 2026 operational and financial commentary and our 2026 outlook expectation summary on Quanta's Investor Relations website. While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community.
Please remember that information reported on this call speaks only as of today, April 30, 2026, and therefore, you're advised that any time-sensitive information may no longer be accurate as of any replay of this call. This 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, including statements reflecting expectations, intentions, assumptions or beliefs about future events or financial performance. You should not place undue reliance on these statements as they involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied.
We also present certain historical and forecasted non-GAAP financial measures. Reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward-looking statements and non-GAAP financial measures. Lastly, please sign up for e-mail alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information and follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would like to now turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?
Earl Austin: Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services First Quarter 2026 Earnings Conference Call. I want to begin by thanking our employees for their continued absolute performance mindset, dedication to safety and commitment to delivering mission-critical infrastructure solutions for our customers. Your work and dedication is what makes everything possible. Quanta is off to a strong start of the year with our first quarter results reflecting robust double-digit growth in revenues, adjusted EBITDA and adjusted earnings per share, along with record backlog.
These results reflect the strength of our diversified solutions-based business model and our portfolio approach, enabling us to adapt to the evolving industry dynamics while consistently delivering execution certainty and profitable growth across varied market conditions. I want to spend a moment on what we shared at our Investor Day on March 31 because I think it is the right context for everything we are doing. Quanta has transformed, and our strategy for the next 5 years is firmly in place. What ran through everything we presented in our Investor Day was one word, certainty, execution certainty, labor certainty, supply chain certainty, schedule certainty.
That is what our customers need right now, and that is what this company is built to deliver. Utilities are being asked to double in size. Technology customers are demanding speed at scale they haven't dealt with before. Everything we have built over the past decade, our craft workforce, the integrated solutions model, the vertical supply chain investments, it all comes back to delivering that certainty at scale. And that is the conversation we are having with the customers every single day. We listen to our customers, and we are becoming more deeply embedded in the way they plan and execute their capital programs. We are in the rooms where customers are planning their entire multiyear capital spend.
We are negotiating much of the work directly. Our success is aligned with their success and with positive outcomes for the rate payer. That was not the case 5 years ago. We are there now. The trust we have built over decades, combined with the investments we have made in our craft workforce and integrated solutions model is how we created a durable compounding business that is well positioned to capitalize on large visible and durable market opportunities. To that end, on the fourth quarter call, we announced an investment of $500 million to $700 million over the next several years in our power transformer manufacturing facilities and vertical supply chain strategy, which will double our power transformer manufacturing capacity.
Additionally, we're nearly doubling our off-site manufacturing, fabrication and logistics facilities over the next several years for an aggregate of approximately 6.7 million square feet of facilities as part of our integrated fabrication and supply chain solutions. We are experiencing significant demand for these services, particularly for data centers, and these programs are just a couple of examples of Quanta's ability to provide total solutions across converging markets that are designed to deliver speed and certainty. The versatility of our craft workforce and our solution-based approach is what derisks all of us for our customers and for our investors.
That fungibility, the ability to move our people across a $2.4 trillion total addressable market converging around utility, generation and large load is what allows us to flex across markets, expand scope and keep delivering. We have outlined an opportunity to more than double the earnings power of this company by 2030. When we look at our 15% to 20% adjusted EPS growth target with the opportunity to stack above that. I want to be clear, this is not easy, and the strategy has to be in place to deliver those numbers. We believe it is. Our guidance is prudent. It has always been prudent.
And the results we reported this morning reflect exactly the kind of execution this plan is built on. I will now turn it over to Jayshree Desai, Quanta's CFO, to provide a few remarks about our results and 2026 guidance. And then we will take your questions. Jayshree?
Jayshree Desai: Thanks, Duke, and good morning, everyone. This morning, we reported first quarter results with revenues of $7.9 billion, net income attributable to common stock of $221 million or $1.45 per diluted share, adjusted diluted earnings per share of $2.68 and adjusted EBITDA of $686 million. Based on the continued momentum evidenced by our record $48.5 billion of backlog, the strong performance during the quarter and improved visibility into the remainder of the year, we are raising our full year financial expectations. We now expect revenues to range between $34.7 billion to $35.2 billion, adjusted EBITDA to range between $3.49 billion to $3.65 billion, and adjusted EPS to range between $13.55 and $14.25.
As Duke mentioned, we hosted an Investor Day on March 31 and outlined an opportunity to more than double the earnings power of this company by 2030. This quarter represents a great start to a 20-quarter stretch during which time we intend to deliver against that expectation along with continued improvement in our consolidated margins and returns. Over the course of our 5-year plan, we remain committed to maintaining an investment-grade balance sheet and an acquisition strategy that's governed by our target leverage profile of 1.5 to 2x, and the returns that we would otherwise generate by repurchasing our stock....
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