Quanta Services Q3 Earnings Call Highlights

Quanta Services (NYSE:PWR) reported third-quarter 2026 results that exceeded management’s expectations, supported by double-digit growth in revenue, adjusted EBITDA and adjusted earnings per share, along with record backlog and cash flow.

President and Chief Executive Officer Duke Austin said the company’s broad portfolio, workforce flexibility and self-perform model supported demand across utility, power generation, renewable energy, large-load and technology-related infrastructure markets. Quanta reported record backlog of approximately $64 billion as of Sept. 30, up $10 billion from June 30.

“Inbound demand is accelerating,” Austin said, adding that Quanta is working with customers on multiyear infrastructure programs extending beyond 2030. He said the company sees opportunities in transmission, power generation and large-load markets that could add to its established utility-services base over the coming years.

Third-Quarter Results and Raised Outlook

Chief Financial Officer Jayshree Desai said third-quarter revenue rose 57% year over year to $12 billion, from $7.6 billion in the prior-year period. Adjusted EBITDA increased 69% to $1.4 billion, while the adjusted EBITDA margin expanded to 12.1%.

Adjusted diluted EPS increased 82% to $6.06, compared with $3.33 a year earlier. GAAP diluted EPS more than doubled to $4.55 from $2.24. The company also generated quarterly records of $1.5 billion in operating cash flow and $1.2 billion in free cash flow.

Following the quarter’s performance and expectations for further fourth-quarter strength, Quanta raised its full-year 2026 outlook:

• Revenue is now expected to be between $41.3 billion and $41.6 billion, approximately $1.9 billion higher at the midpoint than the previous outlook.
• Adjusted EBITDA is projected at $4.4 billion to $4.49 billion, implying a midpoint margin of 10.7%.
• Adjusted EPS is forecast at $17.90 to $18.30.
• Free cash flow is expected to range from $2.5 billion to $3 billion, representing more than 60% conversion of adjusted EBITDA at the midpoint.

Desai attributed favorable working-capital performance partly to contract terms on a significant share of revenue, particularly in Quanta’s mechanical, electrical and plumbing, engineering, procurement and construction, and renewable-energy businesses. She said the company’s days sales outstanding also continued to improve.

Backlog Growth Spans Markets

Austin said the sequential backlog increase was broad-based rather than driven by a single large project. He cited growth in renewable energy, transmission and distribution, along with work related to utility generation. He also referenced an expanded program with NiSource, including both transmission and distribution and power-plant work.

While Quanta has begun work under limited notices to proceed and supply-related agreements on certain projects, Austin said major 765-kilovolt transmission builds have not yet materially entered backlog. He said projects in Texas and Ohio could be among the earlier programs to move forward, with significant bookings potentially occurring in the first half of 2027.

Management said large transmission opportunities also remain in the Midwest Independent System Operator region. Austin emphasized that Quanta’s existing growth does not yet depend on the anticipated stacking of larger transmission and generation projects.

Labor, Supply Chain and Margins

Management said Quanta increased its workforce substantially during 2026, including organic growth of roughly 12,000 employees, according to Austin. The company added approximately 6,000 to 7,000 employees in each of the second and third quarters, he said, while noting seasonal shifts in headcount as workers move among projects and geographies.

Austin said the company’s expanded craft training programs allow employees to move among more types of work, including high-voltage electric, low-voltage electrical, plumbing, pipefitting and boiler-making roles. This flexibility helps Quanta deploy labor across utility, generation, data-center, pharmaceutical and other projects, he said.

He said training investments have created operating leverage, contributing to margin performance. However, Austin said Quanta does not view its strategy primarily as a margin-expansion story. He said the utility business, which accounts for roughly $20 billion of electric-segment activity, is designed to operate in a 10% to 12% margin range, reflecting the company’s long-term relationships with utility customers and focus on ratepayer costs.

Management expects margins in the underground infrastructure business to continue improving as work mix shifts toward mechanical and civil operations, with Austin saying the segment could reach double-digit margins in some quarters during 2027. He also said Quanta’s utility infrastructure business in Canada has room for improvement as older work is completed and newer work enters the portfolio.

Investment, Acquisitions and Technology Demand

During the quarter, Quanta expanded its revolving credit facility commitments to $2.98 billion and extended the facility’s maturity to July 2031. The company issued $2 billion in senior notes in August and repaid the remaining balance on its term loan in September.

Quanta ended the quarter with $2.3 billion of cash, $20 million drawn on its revolver and total liquidity of $5.2 billion. Its bank-defined leverage ratio was approximately 1.3 times.

Desai said Quanta completed two acquisitions after its second-quarter release for approximately $245 million, net of cash acquired. The acquired companies added engineering, fabrication and supply-chain capabilities, according to management.

Austin said Quanta is also investing in manufacturing and supply-chain capacity, including poles, transformers and breakers, where it sees potential constraints. He said the company is expanding manufacturing capabilities in roughly 10 states and is partnering with original equipment manufacturers while seeking long-term demand commitments before making investments.

On data centers and other technology-related projects, Austin said customers are engaging Quanta earlier in the development process, including on workforce and community planning. He said Quanta is expanding the amount of work it performs at individual sites, including balance-of-plant, balance-of-facilities, utility-scale generation and related infrastructure.

Management said it remains selective in pursuing work and acquisitions, prioritizing customers with strong balance sheets and multiyear capital programs. Austin said Quanta is not acquiring companies solely on the basis of data-center exposure and believes the company can continue growing across utility, generation, pharmaceutical and other infrastructure markets even if portions of data-center demand were to slow.

About Quanta Services (NYSE:PWR)

Quanta Services, Inc is an infrastructure solutions provider headquartered in Houston, Texas. The company designs, installs, repairs, maintains and upgrades essential infrastructure for the electric power, communications, pipeline, industrial and energy industries.

Its services include electric transmission and distribution construction, substation and renewable-energy infrastructure, storm restoration, fiber-optic and wireless communications networks, natural gas and pipeline construction, and related engineering and maintenance work.