Quanta Services Inc. PWR reported better-than-expected results for fourth-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.

The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.

Shares of this leading national provider of specialty contracting services gained 3.2% following the release on Feb 22.

Detailed Discussion

Quanta’s adjusted earnings per share (EPS) of $2.04 beat the consensus estimate of $1.97 by 3.6% and increased 21.4% from the year-ago quarter’s $1.68. The growth was supported by robust demand for its services, propelled by customers' multi-year initiatives aimed at modernizing and fortifying utility infrastructure, expanding renewable energy generation and transmission infrastructure, and transitioning toward a low-carbon economy.
 
Total revenues of $5.78 billion surpassed the consensus mark of $5.15 billion by 12.3% and increased 31% year over year.

The operating margin for the quarter contracted 30 basis points (bps) to 5.6% from a year ago. Adjusted EBITDA of $550.2 million improved 22.3% from the year-ago quarter. We expected operating margin to be 6.5% and adjusted EBITDA to be up 19.1%.

The company reported a 12-month backlog of $17.23 billion and a total backlog of $30.11 billion at December 2023-end. This compares favorably with the December 2022-end’s 12-month backlog of $13.79 billion and the total backlog of $24.09 billion. Our model suggested a total backlog of $24.01 billion.

Quanta Services, Inc. Price, Consensus and EPS Surprise

Quanta Services, Inc. price-consensus-eps-surprise-chart | Quanta Services, Inc. Quote

Segment Details

The company reports results under three segments: Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.

Revenues from Electric Power Infrastructure Solutions totaled $2.46 billion, increasing 5.9% year over year. The upside was primarily backed by growth in spending by utility customers on grid modernization and hardening, as well as revenue growth from acquired businesses.

The operating margin contracted 100 bps to 10.5%. The segment’s 12-month backlog was $8.36 billion, up from $7.54 billion a year ago. The total backlog of $15.50 billion grew from $13.08 billion reported in the prior-year quarter.

Revenues from Renewable Energy Infrastructure Solutions totaled $2.03 million, up 102.6% year over year. This was driven by increased renewable infrastructure project activity and its customers' ability to move forward with construction activities in the current favorable regulatory environment and through acquisitions.

Operating margins expanded 250 bps to 8.9% from a year ago due to the increase in project activity.

The segment’s 12-month backlog was $5.63 billion, up from $2.24 billion a year ago. The total backlog of $8.13 billion increased from $4.72 billion reported in the year-ago period.

Within the Underground Utility and Infrastructure Solutions segment, revenues rose 18.7% from the prior-year quarter’s levels to $1.30 billion.

The operating margin of 6.6% was down 50 bps from the prior-year quarter. Segment’s 12-month backlog totaled $3.24 billion, up from $3.01 billion a year ago. The total backlog increased to $6.48 billion from $6.29 billion in the prior-year quarter.