Quanta Services Management Discusses Q2 2012 Results - Earnings Call Transcript

Quanta Services (PWR)

Q2 2012 Earnings Call

August 02, 2012 9:30 am ET

Executives

Kip A. Rupp - Founder and Managing Partner

James F. O'Neil - Chief Executive Officer, President and Director

Derrick A. Jensen - Chief Accounting Officer and Senior Vice President of Finance & Administration

Analysts

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

Daniel J. Mannes - Avondale Partners, LLC, Research Division

Jamie L. Cook - Crédit Suisse AG, Research Division

Will Gabrielski - Lazard Capital Markets LLC, Research Division

Saagar Parikh - KeyBanc Capital Markets Inc., Research Division

Zach Larkin - Stephens Inc., Research Division

Scott J. Levine - JP Morgan Chase & Co, Research Division

Jeffrey L. Beach - Stifel, Nicolaus & Co., Inc., Research Division

Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division

Shawn E. Lockman - Piper Jaffray Companies, Research Division

William D. Bremer - Maxim Group LLC, Research Division

Craig E. Irwin - Wedbush Securities Inc., Research Division

Adam R. Thalhimer - BB&T Capital Markets, Research Division

Joseph Ritchie - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Quanta Services Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Following the presentation, the conference will be opened for question. [Operator Instructions] This conference is being recorded today, August 2, 2012. I would now like to turn the conference over to Kip Rupp, VP of Investor Relations. Please go ahead, sir.

Kip A. Rupp

Great. Thank you, Arianne, and welcome, everyone, to the Quanta Services conference call to review second quarter 2012 results.

Before I turn the call over to management, I have the normal housekeeping details to run through. If you would like to have Quanta news releases and other information e-mailed to you when they occur, please sign up for e-mail information alerts by going to the Investors & Media section of Quanta Services' website at quantaservices.com.

A replay of today's call will be available on Quanta's website at quantaservices.com. In addition, a telephonic recorded instant replay will be available for the next 7 days, 24 hours a day that can be accessed as set forth in the press release. Please remember that the information reported on this call speaks only as of today, August 2, 2012, and therefore, you're advised that any time-sensitive information may no longer be accurate as of the time of any replay of this call.

This conference 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. These forward-looking statements include all statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance or that do not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or are beyond Quanta's control, and actual results may differ materially from those expected or implied as forward-looking statements. Management cautions that you should not place undue reliance on Quanta's forward-looking statements, and Quanta does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after this call.

For additional information concerning some of the risks, uncertainties and assumptions that could affect Quanta's forward-looking statements, please refer to the company's annual report on Form 10-K for the year ended December 31, 2011, its quarterly reports on Form 10-Q, and its other documents filed with the Securities and Exchange Commission, which may be obtained on Quanta's website or through the SEC's website at sec.gov.

With that, I would like to now turn the call over to Mr. Jim O'Neil, Quanta's President and CEO. Jim?

James F. O'Neil

Thanks, Kip. Good morning, everyone, and welcome to Quanta Services Second Quarter 2012 Earnings Conference Call. I will start the call with an operational overview before turning it over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a detailed review of our second quarter financial results. Following Derrick's comments, we will welcome your questions.

Our second quarter results demonstrate continued solid execution by our operations and reflects strong demand for our services. Our revenues in the second quarter grew 50% compared to the second quarter of 2011, and revenues for the first 6 months of this year have increased 58% compared to the same period last year. Our GAAP diluted earnings per share of $0.31 in the second quarter increased 107% compared to the second quarter of last year.

Our second quarter results were driven by strong performance in our electric power segment due to the significant volume of electric transmission projects underway and our ability to safely execute on those projects. Quarter over quarter and sequentially, improved performance from our natural gas and pipeline segment also contributed to the strong results.

Our employee count at the end of this year's second quarter was approximately 19,300, up 30% compared to the second quarter of last year and up 10% since the end of 2011.

Our electric power segment revenues increased approximately 52% in this year's second quarter compared to the same period last year. At the end of the second quarter, 12-month backlog for the electric power segment increased 27.4%, and total backlog for this segment increased 4.1% compared to the second quarter of 2011.

In the second quarter, Quanta completed the installation of San Diego Gas and Electric Sunrise Powerlink transmission line, which was energized on June 17. This was an extremely challenging project due to the environmental sensitivities, difficult geology and geography, and an accelerated construction timeline. For environmental reasons, nearly 75% of the project's towers we're set by helicopters, resulting in more than 28,000 flight hours being logged to complete the aerial construction. The timely completion of the Sunrise Powerlink transmission line was critical due to the recent shutdown of the San Onofre nuclear plant. Because this plant supplied a significant amount of electricity to San Diego, energizing the Sunrise Powerlink line on the accelerated schedule was critical. This project, in almost every aspect, is an excellent example of Quanta's industry-leading transmission capabilities and our ability to meet our customer's expectations under challenging circumstances.

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