Q2 2024 Quanta Services Inc Earnings Call

Operator: 2nd quarter, 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Core earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: A brief question, and after session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your tolls on keypad. As a reminder, this conference is being recorded.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Kip Rupp: It is now my pleasure to introduce your host, Kip Rupp, Vice President of Best Relations. Thank you sir, you may begin.

Speaker Change: It is now my pleasure to introduce your host Kip Rupp, Vice President of Investor Relations. Thank you Sir you may begin.

Kip Rupp: Thank you and welcome everyone to the Quanta Services 2nd quarter 2024 earnings conference call. This morning we issued a press release announcing our 2nd quarter, 2024 results, which can be found in the Investor Relations section of our website at quanta services dot com. This morning, we also posted our 2nd quarter 2024 operational and financial commentary and our 2024 outlook expectation summary on Quanta's Investor Relations website.

Kip Rupp: Thank you and welcome everyone to the Quanta services second quarter 2024 earnings Conference call.

Speaker Change: Morning, We issued a press release announcing our second quarter 2024 results, which can be found in the Investor Relations section of our website at Quanta services Dotcom.

Kip Rupp: While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community. Please remember the information reported on this call speaks only as of today, August 1, 2024. And therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call.

Kip Rupp: This call will include forward-looking statements and information intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements reflecting expectations, intentions, assumptions. Or beliefs about future events or financial performance that do not solely relate to historical or current facts. You should not place undue reliance on these statements. They involve certain risks, uncertainties, and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied.

Unknown Speaker: You should not place undue reliance on these statements as they involve certain risks, uncertainties, and assumptions that are difficult to predict or beyond quanta's control, and actual results may differ materially from those expressed or implied.

Kip Rupp: We will also present certain historical and forecasted non-GAAP financial measures; reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward-looking statements and non-GAAP financial measures.

Speaker Change: For additional information regarding our forward looking statements and non-GAAP financial measures Lastly, please sign up for E mail alerts through the Investor Relations section of Quanta Services' Dot com to receive notifications of news releases and other information and follow Quanta IR and Quanta services on the social media channels listed.

Kip Rupp: Lastly, please sign up for email alerts through the InvestRelations section of QuantumServices.com to receive notifications of news releases and other information. And follow Quanta IR and Quanta Services on the social media channels listed on our website.

Speaker Change: On our website.

Kip Rupp: With that, I would like to now turn the call over to Duke Austin, Quanta's President and CEO. Duke.

Speaker Change: With that I would like to now turn the call over to Duke Austin, <unk>, President and CEO Duke.

Duke Austin: Thanks, Duke.

Duke Austin: Thanks, Kip good morning, everyone and welcome to the Quanta services second quarter 2024 earnings Conference call.

Duke Austin: Good morning, everyone. Welcome to the Quanta Services Second Quarter 2024 earnings conference call. Quanta's first half of the year is off to a good start. Their second quarter results highlighted by another quarter of double digit growth in revenue, adjusted EBITDA and adjusted earnings per share, record total backlog of 31.3 billion, and strong cash flow. We believe our results reflect the power of our portfolio, sound execution, and continued demand for our services driven by our customers, multi-year programs to build the renewable generation and power grid infrastructure necessary to support North America's energy transition, load growth, security, and reliability.

Duke Austin: <unk> first half of the year is off to a good start for our second quarter results highlighted by another quarter of double digit growth in revenue adjusted EBITDA and adjusted earnings per share record total backlog of $31 3 billion and strong cash flow.

Unknown Speaker: driven by our customers' multi-year programs to build the renewable generation and power grid infrastructure necessary to support North America's energy transition, load growth, security, and reliability.

Duke Austin: We recently completed the acquisition of Cupertino Electric, or C.E.I., which provides a platform of new service lines and a dynamic customer base, which includes technology companies driving load growth and demand for renewable energy. C.E.I brings an exceptional management team and a premier craft skilled workforce that complements Quanta's culture and will create a comprehensive, self-perform, electric infrastructure solution offering for renewable developers, utilities, and large power consumers, from the electron generation to transmission to consumption. Utilities across the United States are experiencing and forecasting meaningful increases in power demand for the first time in the years driven by the adoption of new technologies and related infrastructure, including artificial intelligence and data centers, as well as federal and state policies designed to accelerate the energy transition, and policies intended to strategically reinforce the domestic manufacturing and supply chain resources.

Duke Austin: There is momentum building across our portfolio of solutions, but the complexities of the energy transition, its impact on the power grid, and the significant upgrades and enhancements required to facilitate load growth. Our collaborative solution-based approach is valued by our clients more than ever. We continue to look forward to the realization of our multi-year strategic initiatives and the goals we expect to achieve in the coming years. We are positioning Quanta for decades of expected necessary infrastructure investment and believe our service line diversity creates platforms for growth that expand our total adjustable market. Our portfolio approach and focus on craft school labor strategic is a strategic advantage that we believe provides us the ability to manage risk and shift resources across service lines and geographies, which is increasingly important as the energy transition and new technology add complexity to infrastructure programs. We believe our diversity and portfolio approach has also improved our cash flow and returns profile and positions us well to allocate resources to the opportunities we find the most economically attractive and to achieve operating efficiencies and consistent financial results.

Speaker Change: Assistant and actual results.

Duke Austin: I will now turn the call over to J.S.P. Decide.

Jason: I will now turn the call over to Jason who decide Qantas CFO to provide a few remarks about our results in 2024 guidance and then we'll take questions fishery.

Jayshree Desai: Quanta CFO to provide a few remarks about our results in 2024 guidance, and then we'll take our questions.

Jayshree Desai: So, Sri. Thanks, Duke, and good morning, everyone. This morning we reported second quarter revenues of $5.6 billion, net income attributable to common stock of $188.2 million, or $1.26 per diluted share, and adjusted diluting earnings per share of $1.90. Adjusted EBITDA was $523.2 million, or 9.4% of revenues. We generated healthy cash flows in the second quarter, with cash flow from operations of $391.3 million and free cash flow of $258.6 million. This earnings and cash flow performance allowed us to end the second quarter with ample liquidity and a balance sheet that supports both our organic growth expectations and the opportunistic deployment of capital to generate incremental returns for our stockholders.

Duke: Thanks Duke, and good morning everyone. This morning we reported second quarter revenues of 5.6 billion dollars, net income attributable to common stock of 188.2 million dollars, or $1.26 per diluted share, and adjusted diluting earnings per share of $1.90.

Jason: Thanks, <expletive> and good morning, everyone. This morning, we reported second quarter revenues of $5 6 billion net income attributable to common stock of $188 $2 million or $1 26 per diluted share and adjusted diluting earnings per share of $1 90.

Jason: Adjusted EBITDA was $523 2 million or nine 4% of revenues, we generated healthy cash flows in the second quarter with cash flow from operations of $391 $3 million and free cash flow of $258 $6 million.

Jayshree Desai: To that end, and as Duke commented, subsequent to the end of the second quarter, we completed the acquisition of CEI for upfront consideration of approximately $1.5 billion, excluding cash acquired and subject to customary adjustments. We funded $1.3 billion of the transaction with a combination of cash on hand, borrowings under our existing commercial paper program, and a new short-term loan facility, and we are currently evaluating debt refinancing options.

Jayshree Desai: This morning, we also provided an update to our full-year 2024 financial expectations, which calls for another year of profitable growth, with record revenues and opportunity for double-digit growth in adjusted EBITDA, adjusted earnings for share, and free cash flow. Of note, our increased guidance for revenues, adjusted EBITDA, and adjusted duly the earnings for share was attributable to the expected contributions from CEI, but otherwise our prior guidance for these financial metrics remains unchanged. We believe our expectations demonstrate the strength of our portfolio approach to the business, our commitment to our long-term strategy, favorable end market trends, and our competitive position in the marketplace.

Jayshree Desai: Additional details and commentary about our 2024 financial guidance can be found in our operational and financial commentary and outlook expectation summary, both of which are posted on our IR website.

Kip Rupp: With that, we are happy to answer your questions. Operator? Thank you.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press store 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press store 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the store keys. When moment please, while we pull for questions. Thank you.

Speaker Change: Telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Thank you. Our first question comes from the line of Justin Hockey with Baird. Please proceed with your question.

Justin Hauke: Our first question comes from a line of Justin Hawke with Baird. Please proceed with your question.

Justin Hauke: Oh, great. Thank you very much.

Justin Hockey: Oh great.

Justin Hockey: Thank you very much good morning, everybody.

Justin Hauke: Good morning, everybody. I get to start with just kind of a question of maybe the moving pieces, positives and negatives within your DNA outlook. You said you're back here to unchanged. I guess you know, it seems like some of your peers would maybe say that some of the base kind of low voltage, I don't know if you want to call it more like retail market demand, maybe in your underground business too, is a little bit weaker in pressure with the utilities. Offsetting, storm was pretty good here. I guess you had hurricane barrel. You know, obviously, locally to you for a couple of weeks of this month.

Speaker Change: Hum.

Justin Hockey: To start with just kind of a question of.

Justin Hockey: Maybe the moving pieces positives and negatives within kind of your organic outlook, you said you're back here to unchanged.

Unknown Speaker: I guess, you know, some of your peers would maybe say that, you know, some of the base kind of low voltage, I don't know if you want to call it more like retail market demand, maybe in your underground business too, is a little bit weaker, under some pressure from utilities.

Speaker Change: I guess it seems like you know some of your peers would maybe say that that.

Speaker Change: Some of the base kind of low voltage I don't know if you had a couple more like retail market demand maybe in your underground business too was a little bit weaker some pressure with the utilities.

Justin Hockey: Offsetting.

Speaker Change: No storm was pretty good here and I guess, you had hurricane barrel.

Speaker Change: Locally to you.

Duke Austin: I guess, you know, can you just give us a little bit of the lay of the land of, you know, maybe what's moving a little bit stronger and what's a little bit weaker overall, getting you back to the same, same place for your outlook for the year.

Duke Austin: Yeah, thanks, Chelsea. You know, I think we've said all along that we want to portfolio, and we look at it as a portfolio. So, you know, the portfolio performance expected not expected to continue. When we think through just the pushes and pull that, you know, for the most part, the business performing well better than what we anticipated in many cases, but, you know, I do think you see some. The limitation between segments where you can have a segment that's a little off here, there. I would point out that our UIs, you know, when we forecast to the outlook on it, certainly there's a mix and shift of work there until these.

Duke Austin: When you think about their capex budgets, as they look at their own budgets, especially ones that have gas and electric. Many of them are ahead of their liquid placements or don't have the capital there, so they need to capital over into on the ground distribution transmission, whatever may be in all systems to another segment for us. So that shift of work there, there's a lot of the projects that move back and forth.

Unknown Speaker: When you think about their CapEx budgets, as they look at their own budgets, especially ones that have gas and electric, many of them are ahead of their leak replacements or don't have the capital there, so they move the capital over into underground distribution, transmission, whatever it may be, and it offsets into another segment for us. We've always said we've got the $500 million, and we don't need it to make it. So I stand by that.

Duke Austin: We like the underground business; it's healthy; it'll continue. We'll certainly take a conservative approach to how we look at that segment, start and stop on our large standard pie into that nature. We've always said when you guide the 500 million, and we don't need it to make it so I stand by that. I don't need it to make the midpoint of the range. The midpoint range is 860, and it's also 15% organic growth at the midpoint of NPS. So I'll say that again: 15% organic growth at the midpoint.

Unknown Speaker: We don't need it to make the midpoint of the range. The midpoint of the range is $860. And it's also 15% organic growth at the midpoint of EPS. So I'll say that again, 15% organic growth at the midpoint.

Speaker Change: 60.

Speaker Change: And it's also 15% organic growth at the midpoint of EPS, So I'll say that again, 15% organic growth at the midpoint.

Justin Hauke: Okay, great. Thanks.

Speaker Change: Okay, great. Thanks, and then I guess, maybe the second one is trajectory.

Sangita Jain: And then I guess maybe the second one is for Jayshree. So, on the renewables, margins were really strong here in the quarter, but you mentioned there was still the drag from the handful of projects that you called out in the first quarter. I think in the queue last quarter that the hit from those was about 22 million. Do you have a similar number for two queue, just so we can kind of have an understanding of what the margins would have been, kind of excluding that. Drag yeah, we had a little bit of a drag continues from one of those projects into the second.

Speaker Change: So on the renewables margins were really strong here in the quarter, but you mentioned there was still the drag from the handful of projects that you called out in the first quarter.

Speaker Change: And the Q last quarter that the hit from those was about $22 million do you have a similar number for <unk>. Just so we can kind of have an understanding of what the margins would have been kind of excluding that drag.

Speaker Change: Yeah, we we had a little bit of a drag continues.

Speaker Change: I'm one of those projects into the second.

Jayshree Desai: You'll see in the queue it's around 20 million, but the overall segment performed very well, better than we expected, and overcame those challenges from the projects we mentioned in the first quarter. So we're pleased at where that segment is heading. Yeah, no, we're performing really well there. There is the 95% or 99.9% of the projects that perform above what we thought as well. We just don't get the point those out. Yeah, yeah, no, the margins were strides. So it sounds like 20 million was still kind of the same same source of pressure in the segment.

Speaker Change: You'll see in the Q, it's around $20 million, but the overall segment performed very well better than we expected overcame those challenges from those from the projects. We mentioned in the first quarter. So we're pleased where that segment is heading.

Speaker Change: No.

Speaker Change: One of them really well there.

Unknown Speaker: There are the 95% or 99.9% of the projects that performed above what we thought as well. We just don't get to point those out.

Jayshree Desai: So okay, great. We've stayed at three projects. It's the same. It's the same, and there was some drag, and the segment some drag on it. But as you clear out, you can see the performance. Double digit ranges on the way out. Yeah, going forward, let's make the direct expectations. That's what you're seeing with the back half strength. And we feel like we've got the execution on those things under control and the confidence or back half expectations on the mobile.

Unknown Speaker: Yeah, going forward, that's baked into our expectations. That's what you're seeing with the back half strength, and we feel like we've got the execution on those things under control. And we're confident in our back half expectations on renewables.

Sangita Jain: Great. Okay, thank you.

Unknown Speaker: Okay, thank you. Thank you for taking my question.

Sangita Jain: Thank you for taking my questions. Our next question comes from a line of San Gita Jane with Key Bank Capital Markets. Please give me your question. Yeah, thanks. Good morning for taking my questions.

Duke Austin: So Duke, if I can go back to the earlier question early this year, you had talked about a shift between transmission and distribution spending. And so far, we are seeing that utility capital budgets are under 50% for the first half. So can you help us understand what you're seeing now for the second half if we should see a ramp back in that distribution spend? Or are you still seeing kind of like air pockets there? I mean, I think when you look at our transition distribution as a service line and not as a segment, we're up 9% of the year.

Duke Austin: So we haven't seen too much of a drag. Whether it be TRD, we're able to shift from one to the other. So you get some segmentation to any actions we said last time, but we're up 9% if you just look at the work itself. So that said, yes, there's movements around utilities and whether they're at TRD. Great deal of ED penetration out west. And so you're seeing some distributions spend there on coming to the budgets because of the penetration. So before 70% of EV cells are in California and states. And so that's pushing. I will say that you can see the push on the distribution system and invalidates what we've been saying.

Duke Austin: As that push, I can't tell you the pace of it. You know, if it slows down, certainly it'll slow down. But nevertheless, as it pushes through, it certainly impacts our distribution systems, as you're seeing in California where the load's substantial. There's a rebuild ongoing out there. And I think that will continue as you push into EV. So it doesn't; you have storm hardening areas. If you're coming in to play, we're strengthening certainly in the back half. You can see the numbers, and we like what we sit, and you know, we're able to propose a lot of us to go through the transition.

Duke Austin: There is ups and downs. But different utilities, regulatory impacts, things of that nature, we're ahead of those things. We know what's coming. So the company's done a really nice job of putting ourselves in great positions to take advantage of our portfolios and move through the year.

Sangita Jain: Great, that's very helpful. Thanks.

Jayshree Desai: And if maybe this one is for Jayshree, on the renewables book to bill in the quarter, how much do you think was the result of Sun Zia burning at high rates and how much was it an actual lag in booking renewables maybe? Yes, for sure, the Sun Zia burn has an impact on that burn, but we are booking work. In fact, as we pointed out, we're booking additional work past the quarter. We are held to a higher comp, because of that Sun Zia impact from last year, no doubt about it. But work is coming; we still feel very good about the year, and we continue to book work in that segment.

Jayshree Desai: Yeah, I don't think I would add that the top line is one thing, but I also think that there's margin of creation in the second as well, that will certainly look differently in next year as we operate better and execute better to do this work, and I'm not concerned at this point around the top as well. We see growth, we see growth in 25 that Sun Zia will be there in 25, and we've always said we'll have some stacking effect along the way as you cater the growth and multi year outlook. We've talked about it over and over and over again, that you will stack on top of your base, your base goes, your growth monthly, we stack some larger projects on top. That stacking effect certain there and we'll continue.

Unknown Speaker: Yeah, and also, I would add that the top line is one thing, but I also think that there's margin of creation in the segment as well, that will certainly look differently in the next year as we operate better through and execute better to do this work. And I'm not concerned at this point around the top line, either. We see growth; we see growth in 25. You know, Sunday, you'll be there in 25.

Unknown Speaker: And we've always said you'll have some stacking effect along the way, as you cater for growth and a multi-year outlook. We've talked about it over and over and over again, that you will stack on top of your base, your base grows nicely, we stack some larger projects on top, that stacking effect is certainly there and will continue.

Speaker Change: The growth in multiyear outlook, we talked about it over and over and over again.

Speaker Change: We'll stack on top of your base. Your base grows grows nicely we start some larger projects on top of that stacking effect, certainly there and we'll continue.

Sangita Jain: Hopefully, thank you.

Speaker Change: Helpful. Thank you.

Brian Brophy: Our next question comes from a line of Brian Brophy with Steve Old. Please proceed with your question.

Speaker Change: Our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.

Brian Brophy: Yeah, thanks. Good morning, everybody. Just wanted to stick with renewable energy here. Obviously, there's some trade uncertainty out there, election uncertainty out there. Are you guys seeing any impact from this from customers or customers pulling back away at all as we await some clarity? Just curious what you're hearing and saying there, thanks. A couple things on on that on the removal side, I think you have a technology sector that is certainly backstopping most everything when you consider elections and. The way the budgets are and from our standpoint, technology continues to want renewable generation and they're driving on whether it be chips or.

Brian Brophy: Yeah. Thanks, Good morning, everybody just wanted to stick with renewable energy here, obviously, there's some trade uncertainty out there election uncertainty out there are you guys seeing any impact from this from customers our customers pulling back away at all as we await some clarity just curious what you're hearing and seeing there. Thanks.

Speaker Change: A couple of things on the on the renewable side I think you have the technology sector that is certainly backstopping. Most most everything when you consider the election.

Speaker Change: The way the budgets are and from our standpoint technology continues to want renewable generation and driving on whether it'd be chips or.

Duke Austin: Data centers or hyper scalers or whatever they're driving the renewable business behind the what you would consider policy from road switching so that drive will continue to, you know, as far as I'm concerned, the Republican or Democratic has done well in both been pretty agnostic to what parties and our.

Speaker Change: Data centers or hyperscale or whatever they're driving the renewable business behind the.

Unknown Speaker: Republican or Democratic, we've done well in both. It's been pretty agnostic to what parties empower. And that drive and the backstop of technology is what's driving the load growth, which continues, and whether it

Duke Austin: And that that drives in the backstop of technology is what's driving the load growth continues and whether it whether it's renewables or gas fire generation to back it, you know, all those things planned, you know, certainly in the world where we're at cheap, you know, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at cheap, we're at in the last year, thanks.

Duke Austin: Thanks.

Duke Austin: Yeah, that's a small investment there, line that really, to understand kind of where we're at, and we like the technology. We think it's helpful when you're talking about, we do a lot of undergraduate conducting or re-conducting in these core doors and being a part of that solution, great customer base in there that's invested as well.

Lyman: Yeah, but you have small investments there, Lyman.

Duke Austin: So we invested alongside our customers as well, and we'd like the technology to know a lot about it.

Duke Austin: I've worked, worked many, many years. Well, I think after, so we think it's a good technology, it has some solution to cross the board and certainly something that we want to be a part of.

Speaker Change: I mean, many years falling conductor so.

Speaker Change: We think it's a good good technology that has some solutions across the board and certainly something that we're going to be a part of it.

Brian Brophy: Appreciate it. I'll pass it on, thank you.

Speaker Change: I appreciate it I'll pass it on thank you.

Speaker Change: Yeah.

Jamie Cook: Our next question comes from line of Jamie Cook with Truist. Please just hear with your question. Hi, good morning. My first question, just on undergraduate and utility, I think in the quarter you mentioned a mixed issue, if you could elaborate on that. And I think you owe your margin target just why and wondering how Stronghold is performing given some, you know, you're hearing industrial weakness and other parts of the industrial landscape.

Operator: Our next question comes from the line of Jamie Cook with Truist. Please send along your question.

Speaker Change: Our next question comes from the line of Jamie Cook with Trust. Please proceed with your question Hi.

Jamie Cook: Hi, good morning. My first question is just on underground and utility. I think in the quarter, you mentioned a mix issue. Could you elaborate on that? And I think you lowered your margin target. Just why?

Jamie Cook: Hi, Good morning, My first question.

Jamie Cook: Just on underground utility I think in the quarter you mentioned the mix issue. If you could elaborate on that and I think you've lowered your margin target I'm, just just why and I'm wondering how strong hold is performing given some you know your ear hearing industrial weakness in other parts of the industrial landscape and then my second question do you get for you just strip.

Unknown Speaker: I'm wondering how Stronghold is performing, given some, you know, you hear industrial weakness in other parts of the industrial landscape. And then my second question is for you just strategically. You've had some pretty good success recently with M&A. And some of the questions I get from investors are,

Jamie Cook: And then my second question: do you get for you just strategically? You've had some pretty good success recently, you know, with M&A, and some of the questions I get from investors are, you know, it's going to be harder for Quanta to continue to grow organically just because of the law. Our number starts to work against them and with your success and acquisitions, I'm just wondering, you know, going forward to expect, you know, greater balance or even potentially more growth or the portfolio driven by M&A versus organic growth. It's been mixed shifts more to M&A versus organic growth for those reasons.

Speaker Change: <unk> you've had some pretty good success recently with M&A and some of the questions I get from investors are.

Speaker Change: You know it can be harder for quanta to continue to grow organically just because of the law of large numbers starts to work against them in with your success in acquisitions I'm. Just wondering you know going forward should we expect you know greater balance or even potentially more growth or are the portfolio driven by M&A versus organic growth if the mix shifts more to add.

Speaker Change: [noise] versus organic growth for those reasons. Thank you.

Jamie Cook: Thank you.

Duke Austin: Thanks, Jimmy.

Jamie Cook: Okay.

Duke Austin: I'll go to the U.I. segment. The industrial business performed great. I think several records there. I continue to believe that it will go on for. So we like the business. We invested in every grain, and we like that business as well. So early in the year, we continue to see good margins; it stabilizes a lot of the fluctuations in it. We did have some shift and business and larger work. We can't predict when it's being started. We never liked you. So I would just say some of it just pushed our, you know, from my standpoint, I'm willing to put it in.

Speaker Change: Although the U S.

Speaker Change: The industrial business performed great.

Duke Austin: And the forecast it may come back in, but we're going to be pretty about how we look at it. We are facing an election year, and things of that nature. So we're going to be pretty about how we guide.

Duke Austin: I didn't like the way it looked and make some decisions on the U.I. segment. And then we had some MSA movement within the distribution business LDC business where he had some consolidated utilities move capital from LEC and to underground electric or storm hardening or whatever may be. So it picked it up on the other side. We also moved those crews to the other side. It shows up in renewables and electric segments. So most of the resources and things like that will move over. We're not really our head counts 58,000 plus today. So we're our head counts up.

Unknown Attendee: [inaudible] Unknown Attendee, Steven Fisher, Brett Castelli, Jean Ramirez, Quanta Services Inc. Unknown Attendee, Steven Fisher, Brett Castelli, Jean Ramirez, Quanta Services Inc.

Duke Austin: It was just a segment movement as well.

Duke Austin: So some shift there, some shift and outward work on bigger projects, but the industrial business we like and it's growing nicely. Now I'm insurgent of on guidance there. So M&A, I think you know that you can't predict M&A when we look at it. I will say organically, over the past two years, you're growing at least at the EPS on 15% at the midpoint of our guy this year and what we've done last year and probably the year before when surprising. I didn't look that far back, but we've been able to grow the business organically, and I know a lot of big numbers and not look at them.

Unknown Speaker: So M&A, I think you can't predict M&A when we look at it. I will say, organically, over the past two years, you're growing at least at the EPS line, 15% at the midpoint of our guide this year, and what we did last year and probably the year before wouldn't surprise me. I didn't look that far back, but we've been able to grow the business organically, and I know a lot of big numbers, and I look at them too.

Duke Austin: They were big when it was a billion-dollar company. They're big ones five, and they're big ones 20. So we just have to put our heads down and go to work and execute. I'm not worried about what everyone else is doing. We want on each to focus on solutions, and we really have a good strategy on M&A. I like what we see. We acquired a great platform that provides multi verticals off of it. So I think we actually put ourselves in position to have more M&A opportunities. Now whether we do it or not. It depends on the company.

Unknown Speaker: They were big when it was a billion-dollar company; they're big when it's five, and they're big when it's 20. So we just have to put our heads down and go to work and execute. I'm not worried about what everyone else is doing. Quanta needs to focus on solutions, and we really have a good strategy for M&A. I like what we see. We acquired a great platform that provides the past decade; I like our chances going forward.

Duke Austin: It depends on timing. We're going to be conservative with the balance sheet like they have been leverage it. But I think you're investing quite a couple of reasons. One way we're going to execute on macro markets and lastly how we deploy free cash. And if we deploy free cash the way we have the past decade, I like our chances going forward.

Jamie Cook: Thank you. That's my name.

Michael Dudas: Our next question comes from a line of Michael Dudas with Vertical Research Partners. Please visit with your question. Morning, Kip, Duke, Jayshree. Morning.

Unknown Speaker: Morning.

Michael Dudas: Do we need to update us on the communications business? You highlighted the 900 million or so revenue this year. What's the tone of that business? Seems like you're probably targeting more value on the margin side relative to growth? And do you see some visibility as move out the next couple of years? Any trends or, you know, client discussions that could give it some improved traction going forward? Yeah, we like the business. I mean, I think, you know, it's not something that the company certainly has some nice clients, and we continue to invest with them in our resources.

Speaker Change: The company certainly has some nice clients and we continue to invest with them.

Jamie Cook: And our resources.

Duke Austin: The business has always been fairly dynamic and moves quickly, and budgets move in and out. And so we're pretty, what I would call prudent about how we invest in the business. We can grow it or not grow it and physically impact us too much so that the growth hasn't come from the segment at this point and not to say it won't. We just haven't really pushed on it. You know, I really look at customer bases whether they're regulated, non-regulated, how much exposure we want to communications, and how we invest and allocate capital. So, as we see that, you know, we make adjustments here, there, to support our clients.

Jamie Cook: The business has always been fairly dynamic and moves quickly and budgets move in and out and so we're pretty.

Jamie Cook: What I would call prudent about how we invest in the business we can grow it.

Speaker Change: Not really.

Jamie Cook: Does it really impact us too much so that the growth has to come from this segment at this point and not to say it won't we just haven't really pushed on it.

Speaker Change: I really look at customer basis, whether they're regulated and nonregulated, how much exposure, we want to communications and how we invest and allocate capital so as we see that.

Speaker Change: We make adjustments here or there to support our clients, but the business was fine.

Duke Austin: But the business is fine. I, you know, the art off money or whatever the culture is these days, you know, they say it's coming, it's coming, it's coming, it's coming, it's expanding, it's expanding. I've seen it yet.

Speaker Change: Art off money or.

Speaker Change: Whatever whatever nomenclature is these days.

Speaker Change: Like they say its covenants covenants come in a big spend big spends I haven't seen it yet when it gets there I'm sure we will growth.

Michael Dudas: I want to get started. I'm sure we'll grow. That's great.

Stu: Got it. That's great. Thanks, Stu.

Speaker Change: Got it that's great. Thanks, Steve.

Michael Dudas: Thanks too.

Speaker Change: Okay.

Alex Rygiel: Our next question comes from a line of Alex Raigel with B. Riley Securities.

Speaker Change: Our next question comes from the line of Alex Rigel with B Riley Securities. Please proceed with your question.

Alex Rygiel: Please receive with your question. Thank you.

Alex Rigel: Thank you and good morning <expletive>.

Duke Austin: Good morning, Dick. A lot of tailwinds here driving your business. Any chance you could rank which ones might have the greatest impact on your business over the next three years? Yeah, like so I think the customer base, the technology customer base, is what drives and what really gives me what I believe is something that we can point to. The back stops most everything, the amount, the demand side of that. And you know, no matter how you think about it, if it's even half what we're talking about from a Douglas standpoint, substantial, substantially, whether it anyone thought, the capital budgets of our customers continue to rise, whether it be technology, whether it be utilities.

Speaker Change: A lot of tailwind here driving your business.

Unknown Speaker: Any chance you could

Alex Rigel: Any chance you could rank, which ones might have the greatest impact on your business over the next three years.

Alex: Yeah, Alex, I think the customer base, the technology customer base, is what's driving low growth. And what really gives me something that we can point to, that backstops most everything, the amount, the demand side of that. And, you know, no matter how you think about it, if it's even half what we're talking about, from a gigawatt standpoint, it's substantial, substantially more than anyone thought. The capital budgets of our customers continue to rise, whether it be technology or utilities.

Speaker Change: Yeah, Alex I think the customer base, the technology customer basis, what's driving more growth.

Speaker Change: What really gives me.

Speaker Change: What I believe is something that we can point to the backstops, most everything the amount and the demand side of that.

Speaker Change: No matter, how you think about it if it's even half of what we're talking about from a gigawatt standpoint substantial substantially more than anyone thought.

Speaker Change: The capital budgets of our customers continue to rise whether it's the technology, whether the utility so that rise.

Alex: So that rise is certainly something that we can point to. But I would just say the backstop of technology against all things, power or data center, whatever it may be, is there, and then you roll it back and go, well, do they have a product to sell? And they absolutely do.

Duke Austin: So that rise is certainly something that we can point to. But I would just say the backstop of technology against all things power or data center, whatever it may be, is there.

Speaker Change: Certainly something that we can point to but I would just say the backstop of technology against all things power or data center or whatever it may be.

Duke Austin: And then you roll it back and go, well, do they have a product to sell? And they absolutely do. I mean, I think people are willing to spend money on AI; people are willing to spend. So, you know, there is a product against the infrastructure that's necessary to be put in place. So I do believe the bill would have necessary to backstop generation are really being driven by technology.

Unknown Speaker: I mean, I think people are willing to spend money on AI. People are willing to spend money. So, you know, there is a demand for the infrastructure that's necessary to be put in place. So I do believe the bills that are necessary to backstop generation are really being driven by technology. So I would point to that at this point as the driver of growth. And then, with sort of this new backdrop of technology driving your business, are you going to market and selling a broader portfolio of services in a different way today than maybe you did in the past?

Duke Austin: So I was the point to that at this point for the driver of And then let's sort of this new big backdrop of technology driving your business.

Duke Austin: Are you going to market and selling a broader portfolio of services in a different way today than maybe you did in the past? Yeah, I mean, I think we're more solution-based in trying to understand what a client said and trying to have an in-solution, whether at the front side of the business and provide the solution to the client. You know, as clients start moving faster, if you want to go faster, you really need to be inclusive, and we have to understand what the bottlenecks are from transformers, you know, all the way through it. And so our ability to really take out the bottlenecks that go faster to market is something that the company projects itself on.

Speaker Change: They go faster to market is something that the company prides itself on I think everyone that we deal with once they go faster today can we do it faster than we do it faster so.

Duke Austin: I think everyone that we deal with wants to go faster today. Can we do it faster? So our ability to get at the market quicker and on time, relatively in line with budget, is something that people want and we're able to provide that.

Speaker Change: Our ability to get it to market quicker and on time in relatively in line with budget.

Speaker Change: Something that people want and we're able to provide that.

Speaker Change: Thank you.

Duke Austin: Thank you.

Steven Fisher: Our next question comes from line of Steven Fisher with UBS. Please receive with your question. Thanks. Good morning.

Operator: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.

Speaker Change: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.

Steven Fisher: Thanks. Good morning.

Steven Fisher: Thanks. Good morning, just a question on on cash flow related to the Canadian receivable it sounds like you're still pretty confident in the position that you have there maybe if you could just give us a little more color on the timing of collection.

Steven Fisher: It's just a question on cash flow related to the Canadian receivable. Sounds like you're still pretty confident in the position that you have there.

Unknown Speaker: Just a question on cash flow related to the Canadian receivable. Sounds like you're still pretty confident in the position that you have there. Maybe if you could just give us a little more color on the timing of collection and thoughts around the guidance raised or the guidance maintaining there against the general guidance raised and how tied is your deleveraging post-CEI to the collection of that Canadian receivable?

Jayshree Desai: Maybe if you could just give us a little more color on the timing of collection and thoughts around the guidance raise or the guidance maintaining there against the general guidance raise.

Speaker Change: And thoughts around the guidance raise or the guidance maintaining their against the general guidance.

Speaker Change: Guidance raise.

Jayshree Desai: And how tied is your deleveraging post CEI to the collection of that Canadian receivable? Yeah, so there was out just to get to the numbers, but there was still a lot of confidence in our position. You know, we're start, we said it would start to happen in the second half of the year. So part of this is just the whole way the settlement works and the way we're working through it with the client. I expected to be in chunks like you've seen today, but you know, we're getting closer and closer every day. If it's not by the end of the year, it's very shortly thereafter.

Speaker Change: And how tied is your deleveraging post cei.

Speaker Change: Due to the collection of that Canadian receivables.

Unknown Speaker: Yeah, so there's, I'll let Jayshree get to the numbers, but the resale itself, we're confident in our position. You know, we're starting, we said it would start to happen in the second half of the year. So part of this is just the whole, the way the settlement works and the way we're working through it with the client. I expect it to be in chunks like you've seen today, but you know, we're getting closer and closer every day.

Speaker Change: Yeah. So there is a oh.

Speaker Change: They should get to the numbers, but the receivable itself, but we're confident in our position.

Speaker Change: Yeah.

Speaker Change: We said it would start to happen second half of the year. So part of this is just the whole way the settlement works and the way we're working through it with the client and I expect it to be in chunks like you've seen today, but yeah. It.

Speaker Change: It Didnt closer and closer every day, if it's not by the end of the year is very shortly thereafter, so we're making great progress working with the client and collaborative manner I see no issue.

Jayshree Desai: So we'll make a great progress working with the client in a collaborative manner. I see no issue. What that would see, as you can see, some of it starting to move forward now.

Speaker Change: With that receivable as you can see some of it starting to move forward now so I like where we sit there.

Jayshree Desai: So I like what we sit there; on the contrary, comment on the rest. Yeah, I mean, we'll be under two times our expectations, under two times leverage by the end of the year. And even without its for whatever reason, we weren't able to collect, which again, we don't expect that. But to answer your question, we will still be below two times.

Speaker Change: Comment on the rest yeah, I mean, it will be under two times, our expectations under two times leverage.

Speaker Change: By the end of the year.

Speaker Change:

Speaker Change: And even without it for whatever reason, we weren't able to collect which again, we don't expect that to answering your.

Speaker Change: We'd still be below two times.

Jayshree Desai: Okay, excellent.

Speaker Change: Okay excellent and then just a bigger picture question to follow up on the M&A I mean, you've really broaden the capabilities of the company over the last several years, what does service line diversity mean for you going forward is it just sort of tweaks from here do you think theres still a lot more you can do to kind of a diversed.

Jayshree Desai: And then do just a bigger picture question to follow up on the M&A.

Jayshree Desai: I mean, you've really brought in the capabilities of the company over the last several years.

Duke Austin: What does service line diversity mean for you going forward? Is it just sort of tweaks from here? Do you think there's still a lot more you can do to kind of diversify the service lines? I think we really understand craft skill and how they think and how we think about it and how we respect that trade. So we have a workforce development. We have training that we've invested in a significant amount in across craft. And I can actually believe it doesn't matter what craft it is. So if it's inside electric, it gives us a whole new craft skill workforce because the high voltage and low voltage, you know, the transfer ability between the two is not bail.

Speaker Change: Five of the other service lines.

Unknown Speaker: I think we really understand craft skills and how they think and how we think about it and how we respect that trade. So we have workforce development, and we have training that we've invested a significant amount in across craft. And I truly believe it doesn't matter what craft it is, if it's inside electric, it gives us a whole new workforce because the high voltage and low voltage, you know, the transferability between the two is not, I mean, you have to be trained on both sides of that. And so you can't move them across a little bit; you can, some can, some can't, it's not as easy as it sounds.

Duke Austin: I mean, you have to be trained on both sides of that until you can't move them across a little bit. But you can in some can and some can, but it's not as easy as it sounds. So there is extra training required on both sides of that movement. So I do believe that the voltage workforce gives us a whole venue there. And then the things that we can do to meet customer demand across that from from across standpoint or there, we like the front side of our business as we've discussed before. We need to get, we need to, you know, basically give more scale out of the front side of the business.

Duke Austin: And so we'll continue to try to, you know, gain up with that or make acquisitions on that side of the business. So we're not afraid to make acquisitions that make sense. I think we, we tried to be prudent about that. And we're patient. We're not. There's nothing imminent ever.

Duke Austin: We talked to Cupertino, probably over seven or eight years. And it happens when it happens. And I think we're patient.

Duke Austin: And I want to make my world class companies. And I think we have the very dust in the business and graph. So we want to lead the way there, and we'll be patient until we see the right kind of opportunities to add to the comprehensive solutions that we already have. That's good.

Speaker Change: And so we want to lead the way there and we'll be patient until we see the right kind of opportunities to add to the comprehensive solutions that we already have.

Speaker Change: Sounds good thank you.

Duke Austin: Thank you.

Speaker Change: Sure.

Neil Mehta: Our next question comes from a line of Neil Meadow with Goldman Sachs. Please proceed with your question.

Speaker Change: Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Neil Mehta: Yeah. Good morning, Duke and Jay Tree. First question is more of a big picture.

Neil Mehta: Yeah, Good morning, Duke and Jay treat our first question is just more of a big picture.

Duke Austin: Big one, Jay tree, big picture question around the regulatory environment. There is no doubt there's an enormous demand for your services and the need for utility catbecks to upgrade the grid. But as we've seen in some tough regulatory outcomes, including in places like Illinois, sometimes questions about the commitment of the regulator to push those capital increases through. And so we just love your perspective on the regulatory environment. The position of the enormous need for the services relative to the constraints from a regulatory perspective. Yeah, I think it's a couple of things that I do believe the energy is top of on everyone's mind. Affordability is on top of everyone's mind.

Neil Mehta: They can come on January Big picture question around the regulatory environment. There is no doubt there is an enormous demand for your services and the need for utility capex to upgrade the grid, but as we've seen in some tough regulatory outcomes, including in places like Illinois.

Speaker Change: Times are questions about the commitment of the regulator to push those capital increases through and so but just love your perspective on the regulatory environment and the juxtaposition of the enormous need for the services relative to the constraints from a regulatory perspective.

Speaker Change: Okay.

Speaker Change: Yeah, I think it's a couple of things.

Speaker Change: Believe the energies topic on everyone's mind affordability is on top of everyone's mind here in a political environment.

Duke Austin: You're in a political environment. You know, sitting here in Houston watching, you know, the hurricane and what their own customer knowing that they did a really nice job getting people in here and in the political outcry on day two of a 27 2.7 million people out with pine trees 100 foot tall phone across wire all throughout to expect them to have service back in two days. And the outcry and what what it's done politically is not even close to fair for the money that's been if you want that you want certainly want it up in two days in a trillion dollars and underground it you'll fix it.

Speaker Change: I'm sitting here in Houston watching.

Speaker Change: The hurricane and what their own customer knowing that they did a really nice job getting people in here and in the political outcry on day two of our 27 $2 7 million people out with <unk>.

Unknown Speaker: They did a really nice job getting people in here, and the political outcry on day two of a 27, 2.7 million people out with pine trees 100 feet tall falling across wire all throughout to expect them to have service back in two days is not even close to fair. For the money that's spent, if you want that and you want certainty, and you want it up in two days, spend a trillion dollars, and underground it; you'll fix it. It doesn't matter where you're at.

Speaker Change: She is 100 foot telephone across wired all through all to expect them to have service back in two days and the outcry and what it's done politically is not even close to fair for the money that spend if you. If you want that and then certainly we ended up in two days to spend a trillion dollars in underground it.

Speaker Change: You'll fix it.

Duke Austin: Until you do, no matter what point you put in that, when you put 100 foot tree across a lot, it's coming down. And so I just that outcry that we see from a regulatory standpoint, it doesn't match where the country wants to move and expensive the cost money to that affordability is something that every single customer we have whether it doesn't matter where you're at. But we all face it; we have to help, and we have to be out there and try to be pretty about how we look at costs while we're looking at solutions that are different, where we're certainly there to help and try to make this smoother, and they depend on us to do so.

Speaker Change: So you do doesn't matter what you put in in that when you put 100.

Speaker Change: The tree across a lot of it's coming down and so I just that outcry that we see from a regulatory standpoint, it doesn't match, where the country wants to move and it's expensive the cost money. So that affordability is something that every single customer we have weather doesn't.

Unknown Speaker: We all face it. We have to help each other. I mean, I have to be out there and, you know, try to be prudent about how we look at costs as well. We're looking at solutions that are different. We're certainly there to help and try to make this smoother, and they depend on us to do so. So I do believe, whether it's political or whether you're in, you know, we're in political season, so it's fun times around.

Speaker Change: It doesn't matter, where you're at that we all face it we have to help them.

Speaker Change: I have to be out there and try to be prudent about how we look at costs. That's why we're looking at solutions that are different.

Speaker Change: We're we're certainly there to help and try to make this a smoother and they depend on us to do so and so I do believe whether it's political or whether you're in.

Duke Austin: So I do believe whether it's political, whether you're in political season, so fun times around. Once we get through that, I think some of this will tie down and we can get the country moving the right direction towards a transition, and if it's not, if we don't believe it TV, if we don't believe it's renewals in the heat will continue and you have 114 15 and we'll need another air conditioner every house. So either way, you're going to push loads.

Speaker Change: Political season.

Speaker Change: Fun times around once we get through that I think some of this will die down and we can get the country in right direction towards a transition and if it's not if we don't believe the T V. If we don't believe it's renewables and the heat will continue and you'll have a 114 15, and we'll need another air conditioner in every house, so either way you're going to push load.

Unknown Speaker: Once we get through that, I think some of this will die down, and we can get the country moving in the right direction towards a transition. And if it's not, if we don't believe in EV, if we don't believe in renewables, then the heat will continue, and you'll have 114-15, and we'll need another air conditioner in every house. So either way, you're going to push the limit

Speaker Change: Yes.

Neil Mehta: Yeah, thanks, Duke. And then the follow-up is Krippartino, really built on your data center platform.

Duke: Thanks, Duke. And then the follow-up is Gruppertino really built on your data center platform. But as you think about what data center-focused opportunities could look like five years from now, how could you imagine Quanta really scaling that business? And what could success look like to capture the 15% type of growth and CAGR that you allude to in your slides?

Speaker Change: Thanks, Derek and then the follow up is Ah corporate Tino.

Speaker Change: Built on your data center platform, but as you think about.

Duke Austin: But as you think about what data center focused opportunities could look like five years from now, how could you envision Quanta really scaling that business and what could success look like to capture the 15% type of growth and Keger that you would do in your slides? Yeah, they're a real nice, renewable business as well. So I was in this town with they're doing there with batteries and solar. So I do think they're doing a nice show there as well, and you can see it show up in the solar and the guidance. We like that as well, but the data center piece and on showing us chips and all those kind of things, factories, right down the will house where we think Kipartino can grow.

Speaker Change: What data center focus opportunities could look like five years from now how could you envision quanta really scaling that business and what could what could success look like to capture the 15% type of ROE.

Speaker Change: The CAGR that you've alluded to in your slides.

Unknown Speaker: Yeah, they're a real nice renewable business as well, so I wouldn't discount what they're doing there with batteries and solar. I do think they're doing a nice job there as well, and you can see it show up in the solar and the guidance, and we like that as well, but the data center piece and onshoring of chips and, you know, all those kind of things, factories, right down the wheelhouse of where we think They were limited by resources, bonding capacity, and things of that nature.

Speaker Change: Yeah, Theres, a real nice renewable business as well, so I wouldn't discount what they're doing there with batteries.

Speaker Change: Solar so I do think they're doing a nice job there as well and you can see it show up in the solar and the guidance.

Speaker Change: We like that as well, but.

Speaker Change: The data center piece and onshoring of chips.

Speaker Change: All those kind of things factories.

Speaker Change: Right down the wheelhouse of where we think cupertino can grow they were limited by resources bonding capacity things of that nature.

Duke Austin: They were limited by resources, bonding capacity, things of that nature. I do think our solution base, you know, more comprehensive solutions to their client base and balance sheet, speed to market, ability to manufacture transformers, you know, just everything that we're trying to accomplish to speed to market is something that their client base values. So I like where we sit. We're early, I know there's synergies in the market and, you know, we were talking around doing that kind of an eight person. I know it's better. I know we can do better than that. I know they know we can do better than that.

Unknown Speaker: I do think our solution base, you know, is a more comprehensive solution to their client base and balance sheet speed to market. You know, just everything that we're trying to accomplish, Unknown Attendee Speed to market is something that their client base Unknown Attendee, Michael Dudas, Sean Eastman, Andrew Kaplowitz, Kevin Gainey, Charles Dillard, If you look at our returns, they look different, so we continue to push the company in the right spot, and the macro markets that we're in, they want solutions. We continue to say we're a solution provider, so here it is.

Speaker Change: I do think our solution base.

Speaker Change: A more comprehensive solution to their client base and balance sheet speed to market.

Speaker Change: Totally a manufacturer of Transformers.

Speaker Change: Just everything that we're trying to accomplish two things.

Speaker Change: Our speed to market is something that their client base.

Speaker Change: So I like where we sit.

Speaker Change: We're early I know there are synergies in the market.

Speaker Change: We were talking around.

Speaker Change: Kind of an 8% I know, it's better I know, we can do better than that and I know they know we can do better than that so we'll continue to find synergies and I think you'll see the growth not only in the top line, but also in the bottom line of the company.

Duke Austin: So we'll continue to find synergies, and I think you'll see the growth, not only in the top line, but also in the bottom line of the company, our cash flow. So if I look at our returns, they look different. So we're going to continue to push the company in the right spot, and macro markets that we're in, they want solutions. We continue to save our solution providers. So here it is.

Speaker Change: Our cash flow.

Speaker Change: Profile looks different.

Speaker Change: If you look at our returns they look different so.

Speaker Change: We continue to push the company right right spot macro markets that were in and they want solutions. We continue to say we're solution providers. So there is.

Charles Dillard: Thank you, Duke. Our next question comes from line of chat.

Speaker Change: Thank you <expletive>.

Operator: Our next question comes from the line of Chad Dillard with Bernstein. Please answer your question.

Speaker Change: Our next question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.

Charles Dillard: Dillard with Bernstein.

Charles Dillard: Please receive your question.

Chad Dillard: Hey, good morning, everyone. Good morning.

Charles Dillard: Good morning, everyone. Morning.

Chad Dillard: Hey, good morning, everyone.

Chad Dillard: Good morning.

Chad Dillard: So a couple of questions for you on the implied second half guidance. So first in your electric business seems like the second half, there's going to be a pretty significant rent and revenues half over half or you're even if you factor out the recent acquisition. So I'm hoping you can help us bridge that and get comfortable with that. And then secondly, in the renewables business, it looks like based on the guide again, like excluding the C.E.I. It looks like growth starts to flatten out as the exit of the year.

Unknown Speaker: So, a couple of questions for you on the implied second half guidance. So, first, in your electric business, it seems like the second half is going to be a pretty significant ramp in revenues over the half or year on year, even if you factor out the recent acquisition. So, I was hoping you could, you know, help us bridge that and get comfortable with that. And then, secondly, in the renewables business, at least based on the guide, again, excluding CEI, it looks like growth starts to flatten out as we exit the year. So, I just want to get some, you know, color on how confident you feel about the re-acceleration of that growth in that business.

Chad Dillard: So a couple of questions for you on the implied second half guidance for first time in your electric business.

Chad Dillard: It seems like the second half, there's going to have pretty significant ramp in revenues half over half or year on year, even if you factor out the recent acquisition.

Speaker Change: Was hoping you could help us bridge that and get comfortable with that.

Speaker Change: And then secondly, and renewables.

Speaker Change: Based on the guide again like excluding Cei.

Speaker Change: It looks like gross starts to flatten out as we exit the year. So I just wanted to get some.

Chad Dillard: So I just want to get some color on how confident you feel about the acceleration of that growth in that business. Yeah.

Speaker Change: Any color on how confident you feel about the reacceleration of that growth in that business.

Unknown Speaker: Hey Chad, let me start with renewable energy. Again, we are sitting in a good spot. We feel good about where our customers are headed, as Duke pointed out. No concerns yet from our major customers around election noise, etc. I do think again that the quality of the customer base matters a lot in the renewable market, so we still feel very confident about our end of year expectations there. We are, of course, as you know, we tend to be conservative; we want to see the market develop over the next six months. So any sort

Speaker Change: Yeah, Hey.

Jayshree Desai: Hey, Chad, on the on the start was renewables. Again, we are sitting in a good spot. We feel good about where our customers are headed. As Duke pointed out, we're not seeing any. Concerns yet from our major customers around election, bullies, etc. I do think again the quality of the customer base matters a lot in the renewable market. So we still feel very confident about our end-of-year expectations there. We are, of course, as you know, we tend to be conservative. We want to see the market develop over the next six months. So any sort of perceived pullback is only that.

Speaker Change: Hey, Chad on the on the let me start with renewables.

Speaker Change: Again, we are sitting in a good spot we feel good about where our customers are headed as you pointed out.

Speaker Change: We're not seeing any.

Speaker Change: Concerns yet from our major customers around election noise et cetera, I do think again the quality of the customer base matters a lot in the renewable market and.

Speaker Change: So we still feel very confident about our end of your expectations there.

Speaker Change: We are of course as you know we tend to be conservative and we want to see the market develop over the next six months.

Speaker Change: Any sort of.

Speaker Change: Perceive pullback is only that and we will continue.

Jayshree Desai: We continue to enter contracts or continue to build projects. We don't see any concern sitting here today.

Speaker Change: To enter contracts are continuing to build projects you don't see any concern are sitting here today and on the electric side and it.

Jayshree Desai: And on the electric side, it is a strong back half. But that is, we do touched on it. We're seeing our utility customers continue to want to spend capital. We believe that capital has come in. We've got big programs that we're, we've entered into and that will start ramping towards the back half of the year. So all of those things give us confidence in our waiting expectations that we've laid out in our guide for both the electric and renewable community.

Speaker Change: It is a strong back half them, but that is did touched on it we're seeing higher utility.

Speaker Change: Utility customers.

Speaker Change: <unk> you want to spend capital, we believe that that capital has come in we got big programs that we are.

Speaker Change: We've entered into and that will start ramping towards the back half of the year.

Speaker Change: So all of those things give us confidence in our in our revenue expectations that we've laid out in our guide for both electric and renewables.

Unknown Speaker: I'll try to give you some color on that. I would say that, as we see it, it's difficult to build big solar. One of the reasons that we felt like we needed to lean into Blattner and give us the very best in the business was that we were concerned with building big solar projects. It's not easy. It looks easy. It's just not.

Speaker Change: That's helpful color to you on that but I would say that as we see it now.

Duke Austin: I would say that, as we see it, it's difficult to build big solar. One of the reasons that we felt like we needed to lean in the blackener and give us very best in the business was we're concerned with building big solar projects. It's not easy. It looks easy. It's just not. And so I think that is something that a lot of great little confidence in sort of the sort of the client base. So the need for the millables to support the tech growth gives you what we believe is, you know, visibility for the long haul here.

Speaker Change: It's difficult to build big solar.

Speaker Change: One of the reasons that we felt like we needed to win in the bladder and give us the very best in the business was we're concerned with building big solar projects its not easy it looks easy its just not and so I think that there's something there's a lot of a great deal of confidence instead of sort of the client base. So.

Unknown Speaker: And so I think that is something we have a lot, a great deal of confidence in, and so does the client. Yes, I think we've taken a prudent approach to guidance, and Jayshree's right. I mean, we are starting programs that give us a lot of visibility into the back half of the electric segment as well as the renewable segment. So, if we're confident, we just need to execute through here.

Speaker Change: Need for renewables to support protect growth gives you what we believe is visibility for the long haul here and continue.

Duke Austin: And continue. I'm not saying they won't build gas. I'm not saying it will be a new plan here, there, but you're backstopping renewables and you want redundancy in their system. So they, they don't build a day one; they'll build a day two, pushing the renewables into the system eventually. So I believe that will continue to like what we see them for under any administration.

Speaker Change: Continue I'm not saying they won't build gas without soon it will be a new plant or there about you're backstopping.

Speaker Change: Renewables you want redundancy in the system, so that if they don't do it day one day two.

Speaker Change: Pushing renewals into the system eventually so I do believe that.

Speaker Change: We like what we see going forward under any administration, yes, I think we've taken a prudent approach to guidance in dress shoes right. I mean, we are starting programs that gives us a lot of visibility into the back half on the electric segment was lower renewable segment. So we feel confident and we just need to execute.

Jayshree Desai: Yes, I think we've taken a pretty much the guidance and issues right. I mean, we are starting programs that give us a lot of visibility into the back app on the electric segment, as well as the renewable segment. So they feel confident. I'm just going to execute through here.

Chad Dillard: Great.

Speaker Change: Great Super helpful and I want just wanted to return to our conversation.

Chad Dillard: That's super helpful. And I just wanted to return to a conversation earlier in the call about the shift from distribution, both electric and gas, post, you know, transmission at your utility customers. So understand that, you know, that's what's happening, you know, today or like at least the 2024.

Speaker Change: Earlier in the call about the shift from our distribution in both electric and gas transmission.

Speaker Change: Utility customers.

Speaker Change: So I understand that you know that's that's what's happening today or like at least for 2024.

Duke Austin: But like any call you can give, you know, from your conversation for the customers about whether you'll see like incremental dollars of capital flowing back to the distribution side of the CapEx equation. I mean, it's regional; you had some movements in there. I didn't say our electric business was moving away the other, by the way. Like I said, we have the ability to move them around as necessary. I feel like our distribution on the electric side is fine. There is some push in certain regions, but it's growing in other. So I'm not too concerned there.

Speaker Change: But like any color you can get from your conversations with your customers about whether you'll see part of it.

Speaker Change: Incremental dollars of capital flowing back to the distribution side of the Capex equation.

Unknown Speaker: I mean, I.

Unknown Speaker: I mean, it's regional. You have some movements in there. I didn't say our electric business was moving one way or the other, by the way. I just said we have the ability to move them around as necessary. I feel like our distribution on the electric side is fine. There is some push in certain regions, but it's growing in others. So I'm not too concerned there.

Speaker Change: Yeah.

Speaker Change: Its regional you got some movements in there I Didnt say, our luxury business was moving when it goes the other way.

Speaker Change: Like I said, we have the ability to move them around as necessary.

Speaker Change: Our distributions on the electric side, it's fine there's some push in certain regions, but it's growing and others. So I'm not too concerned there.

Duke Austin: The gas side of the business, then we've got to move some capital off gas to electric where, you know, you're caught up in some gas things and nothing releases things like that. So they're moving over into electric for the year. It happens that they're able to move budget around. We're able to accommodate. So there is some movement, or always movement. I'll say it always. They're always moving in the substation. or Transmission Distribution. It doesn't matter. We're fundable. Our skillsets are fundable. We can live them around.

Speaker Change: The gas side of the business, the new catheter and some capital.

Unknown Speaker: The gas side of the business, they're moving some capital off gas into electric, where you're caught up in some gas things, and nothing releases, things like that. So they're moving it over into electric for the year. It happens.

Speaker Change: Gas into electric where you're caught up in some gas things and nothing new leases things like that so we're moving them over into electric for the year that it happens.

Unknown Speaker: They're able to move budgets around. We're able to accommodate. So there is some movement. There's always movement, though. I'll tell you, always.

Speaker Change: New budgets around we were able to accommodate so there is some movement there always movement.

Speaker Change: I'll say always.

Unknown Speaker: They're always moving the substations. Transmission Distribution. It doesn't matter.

Speaker Change: What is new in Substations are.

Unknown Speaker: We're fungible. Our skill sets are fungible. We can move them around. That's part of the solution that we provide to the client. It gives them the ultimate in what I consider flexibility. Our job is to provide that flexibility to the client and that solution, and we can give it to them. Great, thank you.

Speaker Change: Transmission distribution and it doesn't matter we are fungible.

Speaker Change: Skill sets are fungible, and we can move them around that's part of the solution that we provide to decline and gives it the ultimate.

Duke Austin: That's part of that solution that we provide to the client and gives the ultimate, what I consider, a flexibility. Our job is to provide that flexibility, the client, and that solution we can give it to them. Great.

Speaker Change: What I consider a flexibility and our job is to provide the flexibility to a client in that solution and we can give it to them.

Speaker Change: Great. Thank you.

Andy Kaplowitz: Thank you.

Andy Kaplowitz: Our next question comes from a line of Andy Kaplowitz with City. Please proceed with your question.

Operator: Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed with your question.

Speaker Change: Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed with your question.

Andy Kaplowitz: Good morning, everyone.

Andy Kaplowitz: Good morning, everyone.

Duke Austin: Andy. Do you talk about a bit of a law in contracting last quarter as your customers were trying to figure out how to deal with the higher load growth, but you obviously had a nice uptick and let your power back like this quarter said to that law effectively come to an end. And then, can you talk about your confidence level about going back from here? You started to see these larger MSA renewals accelerating again. Yeah, I think what we saw. You know, when I said law, I just think it's your reset a bit in this transition and continue to see that.

Andy Kaplowitz: Sandy.

Unknown Speaker: Do you talk about a bit of a lull in contracting last quarter as your customers were trying to figure out how to deal with the higher load growth, but you obviously had a nice uptick in electric power backlog this quarter. So did that lull effectively come to an end? And then can you talk about your confidence level about going forward from here? You're starting to see these larger MSA renewables accelerating again.

Andy Kaplowitz: Did you talked about a bit of a lull in contracting last quarter as your customers are trying to figure out how to deal with the higher load growth, but you obviously had a nice uptick in electric power backlog. This quarter. So did that lull effectively come to an end and then can you talk about your confidence level about growing backlog from here you're starting to see these.

Speaker Change: Larger MSA renewables accelerating again.

Unknown Speaker: Yeah, I think what we saw, you know, when I said law, I just think it's you reset a bit in this transition and continue to see that. I've been looking at their capital budgets, and you're talking about, you know, 15 gigawatts. Solar Land of the Low, for that matter.

Speaker Change: Yeah, I think what we saw you know when I said a lot I just think it's you reset a bit.

Speaker Change: Transitioning to continue to see that.

Duke Austin: Now, I'm looking at their capital budgets, and you're talking about 15 gigs of solar and the load for that matter again to see some movements across the segments consistently. I do you think, you know, everyone's maintaining their capital budgets. We continue to point to it. And they're going up because loads can work. And you can't, you can't do not a fact that if you're going to add 15 gigs, 10 gigs, seven gigs of generation, loads going up, capital is going up. How you do whether it's gaspired, whether it's renewals, it's still moving up. If we build gaspired across the system, it stabilizes renewables and it actually makes renewables faster and better.

Speaker Change: I'm looking at their capital budgets and you're talking about.

Andy Kaplowitz: <unk>.

Andy Kaplowitz: Solar wind or the load.

Andy Kaplowitz: For that matter.

Andy Kaplowitz: The Tennessee, some movements across the segments consistently.

Andy Kaplowitz: I do think you know.

Speaker Change: Everyone's maintaining their capital budgets, we continue to point to it and they're going up because loads going up you can't you can't deny the fact that if you're going to add 15 gig 10 gig seven days of generation loads going up capital is going up how you do whether it's gas bar, whether it's renewables.

Unknown Speaker: Again, I see some movements across the segment consistently. I do think, you know, everyone's maintaining their capital budgets, and we continue to pull into it. And they're going up because loads are going up. You can't deny the fact that if you're going to add 15 gigawatts, 10 gigawatts, seven gigawatts of generation, loads are going up, capitals are going up, how you do it, whether it's gas fired, whether it's renewables, it's still moving up.

Unknown Speaker: If we build gas fired across Unknown Attendee, we look at it. So I think transmission is something that's extremely important. We saw PGM yesterday on go out, and you can see the pricing in the capacity market. I just, and you can say okay, it's one time, but the fact is, demand is far outstripping supply. It's, 101 Economics.

Andy Kaplowitz: It's still moving up if we build gas fired across.

Andy Kaplowitz: The system it stabilizes renewables.

Andy Kaplowitz: Makes renewables faster and better so I wouldn't get too I mean, you'll see some of those movements across and uses of capital as well.

Duke Austin: So I wouldn't get to, I mean, you know, see some of those movements across and you know, those capital systems. We've got to be flexible with how we, we look at it.

Speaker Change: Just gotta be flexible with how we.

Andy Kaplowitz: We look at it so I think transmission is something that's extremely important.

Duke Austin: So I think transmission is something that's extremely important. We saw PGM yesterday on go out, and you can see the pricing at the capacity market. I just, and you can say, OK, it's one time. But the fact is the man's far out seeing supply. It's 101 Economics. And I, it's just in there. It's been there. It's been coming. We need transmission in this country. And we got to build it. Very helpful.

Andy Kaplowitz: We saw PJM yesterday on go out and you can see the pricing.

Andy Kaplowitz: The capacity market.

Andy Kaplowitz: I I just.

Andy Kaplowitz: And you can say, okay. It's one time, but the fact is demand far out see supply.

Unknown Speaker: And I think it just is there. It's been there. It's coming. We need transmission in this country, and we got to build it.

Andy Kaplowitz: 101, economics and it just is there its been there it's been common we need transmission in this country and they've got to build it.

Unknown Speaker: Very helpful. And then, could you give us a little more color on how your Canadian business is doing? I think it's been a drag on you guys for quite some time. I know you expected some improvement in the second half of this year. I think you had some positive commentary regarding still expecting improvement in Canada in your release, but could you update us on where you are in that chapter? I mean, it's certainly getting better.

Speaker Change: Very helpful. And then could you give us a little more color into how your Canadian business deal is doing I think it's been a drag on you guys for quite a while I know you expected some improvement in the second half of this year I think you had some positive commentary regarding still expecting improvement in Canada in your in your release, but could you update us on where you are.

Jayshree Desai: And then could you give us a little more color into how your Canadian business deal is doing? I think it's been a drag on you guys for quite a while. I know you expected some improvement in the second half of this year. I think you add some positive commentary regarding still expecting improvement in Canada, and you're in your release, but could you update us on where you are in that geography? I mean, it's certainly getting better. The macro markets getting better. We expected second half to increasingly better core of a quarter and into 25. Because the market's getting better.

Speaker Change: Or in that geography.

Unknown Speaker: I mean, it's certainly getting better. The macro market's getting better. We expect a better second half. Unknown Attendee, Steven Fisher, Brett Castelli, Sean Eastman, Andrew Kaplowitz, Quanta Services Inc., throughout the year

Speaker Change: I mean, its certainly getting better the macro market is getting better.

Speaker Change: We expect the second half.

Speaker Change: Increasingly better quarter over quarter and into 25 cars.

Speaker Change: The market's getting better candidates there was no single market.

Duke Austin: Canada is always, you know, physical market has higher high highs and low lows. And so you move along with it, but we were able to move a lot of resources into the state, still are in the state's health and supporting some of the growth in the states. And as we see Canada come back, we'll push in the Canada more and all straights and much business as well. It's been very, very nicely. So we like the business long term. It's we just got a right size on the back side of it, and we'll grow off that again and just be cautious about how we, how we look at that.

Andy Kaplowitz: High highs and lows and so you move along with it but we were able to move a lot of resources into the states still are in the study itself and supporting some of the growth in the states.

Speaker Change: We see Canada come backward pushing to kind of more of them in Australia as much business as well it's been very very nicely. So we liked the business long term and it's we just got to rightsize on the back side of it and we'll grow off that again.

Unknown Speaker: It's incremental, though; it's not all at once.

Operator: Thank you. We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

Speaker Change: Cautious about how we how we look at that and go forward basis, but I do think in the next year, we see the book to work and see where that will allow us to.

Duke Austin: We go for a basis, but I do think in the next year we see we booked the work and see where it will allow us, you know, the bringing margins of very close to parity with the rest of the segment throughout the year. It's incremental, though. It's not all at once. Appreciate all the color.

Speaker Change: To bring the margins are very close to parity.

Speaker Change: The rest of the segment.

Speaker Change: Throughout the year.

Speaker Change: Mental though it's not all at once.

Speaker Change: Appreciate all the color.

Operator: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you we have no further questions at this time I would like to turn the floor back over to management for closing comments.

Kip Rupp: We have no further questions at this time.

Kip Rupp: I would like to join the floor back over to management for closing comments. Yeah, so we appreciate that 58,000 close employees and their dedication to those clients and what they go through every day with the heat and rain. They work 16-hour days, 20 days in a row. It doesn't go on notice. This from management team clients, we appreciate you.

Unknown Speaker: Yeah, so we appreciate the 58,000 employees and their dedication to the clients and what they go through every day with the heat and rain. They work 16-hour days, 20 days in a row.

Speaker Change: Yeah. So we appreciate the 58000 plus employees and their dedication.

Unknown Speaker: It doesn't go unnoticed. It doesn't go unnoticed by the management team and clients. We appreciate you. And I'd like to thank all of you for participating in the conference call. We appreciate your questions, and your ongoing interest in Quanta Services. Thank you. This completes our call.

Speaker Change: The clients and what they go through every day with the heat and rain and they worked 16 hour days 20 days in a row.

Speaker Change: Doesn't go unnoticed. It doesn't go unnoticed from management to new clients. We appreciate you.

Kip Rupp: And I'd like to thank all you for participating in the conference call. Appreciate your questions. You're ongoing interest in one of services.

Speaker Change: I think all of you for participating in the conference call. We appreciate your questions and ongoing interest in Quanta services. Thank you this completes our call.

Operator: Thank you.

Operator: It's complete. That call. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.