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Quanta Services' CEO Discusses Q1 2011 Results - Earnings Call Transcript

Stocks in this article: PWR

John Colson

Good morning, everyone, and welcome to Quanta Services First Quarter 2011 Conference Call. To start the call this morning, I will provide a summary of the quarter results with added insight on the impact of current industry circumstances and overall economic conditions. My comments will be followed by an operational review by Jim O'Neil, President and Chief Operating Officer; and the review of financial results by James Haddox, Chief Financial Officer. Following our remarks, we'll welcome your questions.

Revenues for the first quarter increased [Audio Gap] is related to permitting and regulatory issues. This, coupled with other items, had a significant negative impact on operating income for the quarter. Our expectation at the time of our fourth quarter conference call was to achieve diluted earnings per share between $0.02 and $0.03. However, we are reporting today a first quarter of 2011 loss of $0.08 per diluted share. The first quarter shortfall was attributable to the following issues: 2 gas transmission pipeline projects underperformed; 1 project incurred cleanup costs of $10 million more than expected as the project schedule required it to be completed; and unpredictable winter weather. Restrictive regulations imposed by the Bureau of Land Management compounded this negative outcome. Another pipeline project was $16 million less profitable than forecasted. This project had been bid before we owned the company and was delayed 2 years, resulting an additional costs which are currently being negotiated under a change order. A small portion of the project was performed during the fourth quarter of 2010. However, the substantial majority of the work was performed and completed in the first quarter. The project was located northwest of Edmonton, Alberta, Canada and was significantly impacted by exceptional snowfall and warm weather, as well as complicated directional growth.

Also, construction start delays occurred on 3 major electric power transmission projects: Southern California Edison's Tehachapi project Segment 6 was delayed due to the prolonged permitting process for construction in the Angeles National Forest.

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