Quanta Services Inc. PWR reported first-quarter 2015 adjusted earnings per share of 31 cents, which fell short of the year-over-year tally of 44 cents. Adjusted earnings (including stock-based compensation) for first quarter 2015 was 29 cents a share. The Zacks Consensus Estimate for first-quarter 2015 earnings per share stood at 38 cents.
The decline in the bottom-line was triggered by increase in cost of sales, selling expenses and interest expenses as well as fall in interest and other incomes resulted in the bottom-line decline.
Inside the Headlines
Total revenue for the quarter came in at $1,887 million, up 7.1% on a year-over-year basis. Revenues also surpassed the Zacks Consensus Estimate of $1,869 million. The company benefited from high backlog levels in the oil and gas segment, strong position in the energy infrastructure market and a diligent operational execution.
Of total first-quarter 2015 revenue, Electric Power Infrastructure segment accounted for 65%, Oil and Gas Infrastructure segment represented 32.9% and Fiber Optic Licensing and Other segment contributed 2.1%.
Segment-wise, revenues from Electric Power Infrastructure declined 4.1% year over year to $1,225.7 million.
Oil and Gas Infrastructure segmental revenues recorded robust growth of 39.2% to stand at $621.1 million.
Revenues from the Fiber Optic Licensing and Other segment improved 4.1% to $40.1 million.
For first-quarter 2015, selling, general and administrative expenses (SG&A) stood at $150.2 million as against $134.5 million in the comparable last-year quarter. Operating income in the quarter was $93.7 million compared with $90.5 million in the prior-year quarter.
Liquidity
Quanta Services exited the quarter with cash and cash equivalents of $135.5 million, declining from $190.5 million as of Dec 31, 2014. Moreover, shareholders’ equity came in at $4,297.5 million, down from $4,514.5 million as of Dec 31, 2014. On Mar 31, 2015, the company’s long-term debt and notes payable stood at $115 million, rising from $72.5 million as of Dec 31, 2014.
Shares Repurchases
During the first-quarter of 2015, Quanta Services bought back around 6.7 million common shares for about $182 million.
2015 Outlook
Quanta Services expects second-quarter 2015 adjusted earnings per share in the range of 42–48 cents and revenues within $1.95–$2.05 billion. The amortization of intangibles is anticipated at about $8.9 million, while non-cash stock-based compensation expense is projected to be approximately $10.6 million for the second quarter.
For 2015, the company expects adjusted earnings per share in the range of $1.94–$2.14 and revenues in the band of $8.1–$8.5 billion. Management has reduced its 2015 earnings expectations (previously projected within $2.04–$2.29) on account of higher effective tax rate for the year. However, outlook for 2015 revenues remains unchanged.
For full-year 2015, the company anticipates the amortization of intangibles to be about $35.5 million, while non-cash stock-based compensation expense is projected at approximately $41.5 million.
Quarter Highs
Quanta Services acquired two major companies in the current quarter, a U.S.-based power line construction contractor and a Canadian electrical engineering company, for a total sum of $25.4 million. Additionally, the company inked a definitive agreement with Crown Castle International Corp. CCI to sell its fiber optic licensing operations, and expects to reap after-tax net proceeds of approximately $800 million.
Quanta Services remains optimistic regarding its mainline contract wins, hoping that these will drive an improvement in backlog levels, which in turn, will propel growth, going forward.
Zacks Rank
Quanta currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Capstone Turbine Corp. CPST and Great Lakes Dredge & Dock Corp. GLDD. Both stocks carry a Zacks Rank #2 (Buy).
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