Quanta Services Inc. PWR reported second-quarter 2015 adjusted earnings from net income attributable to common stock of 26 cents per share, which came substantially below the year-ago quarter figure of 42 cents.
The decline in the bottom line was triggered by persisting adverse weather conditions. This apart, increase in cost of sales, selling expenses and interest expenses added to the woes. Unimpressively, the company cut its 2015 earnings and revenues guidance.
Inside the Headlines
Total revenue for the quarter came in at $1.9 billion, up 1.9% on a year-over-year basis. The company benefited from high backlog levels in the oil and gas segment. However, project delays resulted in revenue shortfalls.
Of the total second-quarter 2015 revenue, Electric Power Infrastructure segment accounted for 65.3% and the Oil and Gas Infrastructure segment represented 34.7%. Quanta Services has divested its Fiber Optic Licensing segment and listed its second-quarter revenues under discontinued operations.
Segment-wise, revenues from Electric Power Infrastructure declined 2.4% year over year to $1.2 billion. On the other hand, Oil and Gas Infrastructure segmental revenues recorded robust growth of 11% to stand at $650 million.
For second-quarter 2015, operating income in the quarter was $68.9 million compared with $120.8 million in the prior-year quarter.
Liquidity
Quanta Services exited the quarter with cash and cash equivalents of $65.4 million, declining from $190.5 million as of Dec 31, 2014. Moreover, total shareholders’ equity came in at $4.2 billion, down from $4.5 billion as of Dec 31, 2014. On Jun 30, 2015, the company’s long-term debt and notes payable stood at $214.3 million, rising from $72.5 million as of Dec 31, 2014.
Shares Repurchases
During the second-quarter of 2015, Quanta Services bought back around 5.8 million common shares for about $172 million. Subsequent to the quarter-end, the company bought roughly 1.8 million common shares for around $52 million, which led to the completion of its previous share repurchase program worth $500 million.
2015 Outlook Trimmed
On account of dismal quarterly results in the first half of the year, Quanta Services has curtailed its outlook for 2015 adjusted earnings and revenues. The company now anticipates per share from continuing operations to be in the range of $1.32 to $1.47, as opposed to $1.94–$2.14 guided earlier. Also, revenues are now projected to be in the band of $7.5 billion and $7.7 billion, from the previous range of $8.1–$8.5 billion.
On the other hand, Quanta Services expects third-quarter 2015 adjusted earnings per share from continuing operations in the range of 40–46 cents and revenues within $1.9–$2.0 billion.
Subsequent to Quarter-end Activities
On Aug 4, 2015, Quanta Services concluded the divestiture of its fiber optic licensing operations to Crown Castle International Corp. CCI for around $1 billion and reaped after-tax net proceeds of approximately $830 million.
Also, during the ongoing third quarter, Quanta Services finished three acquisitions for around $28.8 million, which includes an electrical engineering company of Australia, an electrical infrastructure services contractor and foundation services company, both in the U.S.
Additionally, concurrent with the earnings release, the company authorized a share repurchase program of $1.25 billion. As per this, Quanta Services will buy shares from time to time through Feb 28, 2017.
Looking Forward
Going forward, Quanta Services anticipates the continuation of sluggishness in oil and gas infrastructure segment and Canadian electric power infrastructure services as well as high effective tax rate and delay in Canadian projects. However, the company remains optimistic regarding its mainline contract wins, hoping that these will drive an improvement in backlog levels, which in turn, will propel growth.
We are now looking forward to the earnings release of others stocks in engineering/ research & development services industry such as AECOM ACM and Willdan Group, Inc. WLDN that are expected to come next week.
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