Quanta Services Earnings Cheat Sheet: Experienced Excessive Project Costs

S&P 500 (NYSE:SPY) component Quanta Services Inc. (NYSE:PWR) reported a swing to a loss in the first quarter driven by higher costs. Quanta Services, Inc. provides infrastructure and contracting solutions to the electric power, natural gas (NYSE:UNG), oil (NYSE:USO) and telecommunications industries.

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Quanta Services Earnings Cheat Sheet for the First Quarter

Results: Swung to a loss of $17.6 million (8 cents/diluted share) in the quarter. Quanta Services Inc. had a net income of $23.7 million or 11 cents per share in the year earlier quarter.

Revenue: Rose 13.5% to $849 million YoY.

Actual vs. Wall St. Expectations: PWR reported an adjusted net loss of of 5 cents/share. By that measure, the company fell short of mean estimate of 3 cents/share. Estimates ranged from 2 cents per share to 7 cents per share.

Quoting Management: “During the first quarter, our operations were negatively impacted by four major project delays caused by government permitting issues. Also, we experienced excessive project costs resulting from the unusually burdensome application of certain regulations, compounded by adverse weather conditions,” said John R. Colson, chairman and chief executive officer of Quanta Services. “We are currently negotiating change orders and claims exceeding $60 million in response to these and other circumstances. Although none of these change orders or claims were reflected in our first quarter results, we expect positive contributions to future earnings as these negotiations progress. Looking forward, we believe that several of the regulatory challenges will be overcome in the second half of the year, bringing increased activity to our electric power and telecommunications segments.”

Key Stats: PWR’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $33.7 million in the fourth quarter of the last fiscal year, a profit of $62.8 million in the third quarter of the last fiscal year and $33 million in the second of the last fiscal year.

Over the last five quarters, revenue has increased 17.7% on average year over year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 54.5% from the year earlier quarter.

Competitors to Watch: Dycom Industries, Inc. (NYSE:DY), EMCOR Group, Inc. (NYSE:EME), Pike Electric Corporation (NYSE:PIKE), Integrated Electrical Services, Inc. (NASDAQ:IESC), MasTec, Inc. (NYSE:MTZ), Comfort Systems USA, Inc. (NYSE:FIX), MYR Group Inc. (NASDAQ:MYRG), Pro-Tech Industries, Inc. (PTCK), The Shaw Group Inc. (NYSE:SHAW), and UniTek Global Services Inc. (NASDAQ:UNTK)

Stock Performance: Shares of PWR are trading at $19.30 as of May 4, 2011 at 9:00 AM ET, down 9% from the previous close.


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