Quanta Services Shares Down After Q2 Results, Narrows FY22 EPS Forecast

  • Quanta Services Inc PWR reported second-quarter revenue growth of 41.1% year-over-year to $4.23 billion, beating the consensus of $4.04 billion.
  • Adjusted EPS improved to $1.54 from $1.06 in 2Q21, beating the consensus of $1.52.
  • The gross margin declined 17 bps to 14.8%. The operating income was $208.36 million (+28.9% Y/Y), and the margin contracted by 50 bps to 4.9%.
  • Revenue by segment: Electric Power Infrastructure Solutions $2.19 billion (+21.1% Y/Y); Renewable Energy Infrastructure Solutions $924.24 million (+178.4% Y/Y); and Underground Utility and Infrastructure Solutions $1.11 billion (+30.1% Y/Y).
  • Adjusted EBITDA improved by 50% Y/Y to $422 million, and margin expanded by 60 bps to 10%.
  • Quanta's backlog at the end of Q2 was $19.9 billion (+16.2% Y/Y).
  • It generated a YTD operating cash flow of $203.82 million, compared to $314.56 million a year ago.
  • Quanta repurchased 731,381 shares of its outstanding common stock in the open market for $84.9 million.
  • The company states that the long-term outlook for its business is positive. However, it expects weather, regulatory, permitting, supply chain challenges, and other factors impacting project timing and execution to have an impact on its future financial results.
  • FY22 Outlook: Quanta expects revenues of $16.60 billion - $17 billion (prior view $16.20 billion - $16.70 billion) versus the consensus of $16.47 billion and Adjusted EPS of $6.10 - $6.44 (prior view $6.00 - $6.50).
  • It expects Adjusted EBITDA of $1.64 billion - $1.71 billion and Free cash flow of $550 million - $750 million.
  • Price Action: PWR shares are trading lower by 2.10% at $134.18 on the last check Thursday.
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