Quanta Services Inc. Earnings: Margins Make a Turnaround After Four Quarters of Shrinking

S&P 500 (NYSE:SPY) component Quanta Services Inc. (NYSE:PWR) climbed to a profit in the first quarter and beat Wall Street’s expectations in the process. Quanta Services provides infrastructure and contracting solutions to the electric power, natural gas, oil, and telecommunications industries.

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Quanta Services Earnings Cheat Sheet for the First Quarter

Results: Reported a profit of $45.7 million (22 cents per diluted share) in the quarter. Quanta Services Inc. had a net loss of $17.6 million or a loss 8 cents per share in the year-earlier quarter.

Revenue: Rose 67.9% to $1.43 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Quanta Services Inc. reported adjusted net income of 27 cents per share. By that measure, the company beat the mean estimate of 16 cents per share. It beat the average revenue estimate of $1.26 billion.

Quoting Management: “The first quarter of 2012 was the most profitable first quarter in the company’s history,” said Jim O’Neil, president and chief executive officer of Quanta Services. “Our electric power segment was the major contributor to the strong first quarter performance, primarily due to safe, efficient execution on a record number of transmission projects. Based on our performance in this year’s first quarter, increased backlog, and improved visibility in the natural gas and pipeline segment, we have increased our full year 2012 guidance.”

Key Stats:

Revenue has increased for four quarters in a row. Revenue increased 36.8% to $1.51 billion in the fourth quarter of the last fiscal year. The figure rose 3.7% in the third quarter of the last fiscal year from the year earlier and climbed 16.1% in the second quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 29 cents versus a mean estimate of net income of 34 cents per share.

Margins rose in the fourth quarter of the last fiscal year after falling the quarter before. Gross margins grew to 13.7%, up 5.4 percentage points from the year-earlier quarter. In the third quarter of the last fiscal year, the figure rose 1.1 percentage points to 13.3% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 27 cents a share to 26 cents over the last ninety days. The average estimate for the fiscal year is $1.08 per share, down from $1.15 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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