(RTTNews) - Specialized contracting services company Quanta Services Inc.
(PWR) on Thursday reported that it has turned around to profit in the fourth quarter, driven by 50.2% rise in revenues, owing to robust customer spending and higher backlog. On an adjusted basis, earnings from continuing operations climbed 31.9%, while per share earnings declined due to higher share count. Cash earnings for the quarter increased 15% and surpassed the Street consensus. Houston, Texas-based Quanta further provided first quarter earnings and revenue forecast, and said 2008 should continue its four-year trend of strong internal revenue growth and margin improvement.
Q4 Results
For the fourth quarter, the company posted net income of $33.59 million or $0.18 per share, compared to loss of $30.46 million or $0.26 per share in the previous year. The per share results of the 2007 fourth quarter was calculated on 201.53 million shares, compared to 117.2 million shares in 2006.
The most recent fourth quarter results included income from discontinued operations of $46 thousand or $0.00 per share, lower than profit of $703 thousand or $0.01 per share last year.
Income from continuing operations for the quarter was $33.54 million or $0.18 per share, compared to loss of $31.16 million or $0.27 per share last year.
The company's prior-year results included a non-cash goodwill impairment charge of $56.6 million or $0.46 per share, excluding which, adjusted income from continuing operations climbed to $33.54 million from $25.43 million a year ago. However, adjusted earnings per share declined to $0.18 from $0.19 in 2006, owing to higher share count.
The latest quarter results also included non-cash stock-based compensation of $2 million, and amortization of intangible assets of $7.58 million, higher than $866 thousand and $55 thousand, respectively in the last year.
Excluding these, adjusted income from continuing operations for calculation of adjusted cash earnings per share was $43.12 million, higher than $26.35 million a year earlier. Fourth- quarter cash earnings were $0.23 per share, compared to prior year's $0.20 per share.
Quanta estimated fourth-quarter earnings from continuing operations in the range of $0.11 - $0.12 per share, and cash earnings between $0.16 and $0.17 per share.
On average, four analysts polled by First Call/Thomson Financial expected the company to earn $0.13 per share for the quarter.
Sequentially, fourth-quarter net income and income from continuing operations fell from $49.32 million or $0.31 per share, and $46.95 million or $0.30 per share, respectively, in the third quarter.
The fourth-quarter revenue increased to $878.99 million from $585.23 million a year ago. The company was looking for revenues between $810 million and $840 million, while analysts estimated revenues of $833.05 million for the quarter.
Sequentially, revenues increased from third-quarter's revenues of $655.87 million.
Quarterly gross profit surged to $150.88 million from $91.37 million a year earlier, while operating income was $53.73 million, in comparison with operating loss of $14.03 million in 2006.
FY07 Highlights
For the fiscal year 2007, Quanta's net income surged to $135.98 million or $0.89 per share from $17.48 million or $0.15 per share a year earlier. Income from continuing operations grew to $133.14 million or $0.87 per share from $16.23 million or $0.14 per share in 2006.
Adjusted income from continuing operations increased to $99.92 million or $0.67 per share from $72.83 million or $0.58 per share last year.
Adjusted income from continuing operations for calculation of adjusted cash earnings per share was $117.07 million for the year, higher than $76.73 million a year earlier. Adjusted cash earnings increased to $0.78 from previous year's $0.60.
The company's annual revenues went up to $2.66 billion from $2.11 billion in 2006.
Analysts estimated earnings of $0.75 per share for the full year, on revenues of $2.62 billion.
Commenting on the strong results, Chairman and Chief Executive Officer John Colson said, '2007 was another good year for Quanta, finishing with a strong fourth quarter. Revenues, operating margins, and core business growth were all strong or improved over comparable periods. Customer spending remains robust and our ability to translate that spending to backlog continues.'
Quanta completed the acquisition of InfraSource Services, Inc. on August 30, 2007 through an all-stock merger, and the company's reported results of operations include the results of InfraSource from September 1, 2007 through December 31, 2007.
Peer Performance
EMCOR Group Inc.
(EME), a provider of mechanical and electrical construction services, is slated to release fourth quarter and fiscal 2007 earnings on Thursday. The company recently confirmed that its fiscal 2007 earnings will be within the guidance range of $1.75 to $1.80 per share from continuing operations, and may well exceed the upper end of the range, reflecting a year-over-year growth in earnings of around 30%.
Analysts expect fourth-quarter earnings of $0.66 per share on revenues of $1.62 billion, and full-year earnings of $1.78 per share on revenues of $5.82 billion.
Q1 Forecast
Looking ahead to the first quarter of 2008, Quanta said it expects earnings per share of around $0.10 to $0.11.
The company noted that the prior year earnings from continuing operations was $0.23 per share, which was favorably impacted by $15.3 million of income or a benefit of $0.10 per share, primarily due to the settlement of a multi-year audit by the Internal Revenue Service.
Quanta said it anticipates cash earnings per share, before amortization and non-cash compensation expenses, for the first quarter of 2008 to range from $0.15 to $0.16. Amortization and non-cash stock compensation expenses are forecasted to be approximately $15 million for the first quarter of 2008.
Revenue for the forthcoming quarter is expected to be $810 to $840 million, higher than 2007 revenues of $569.0 million, which included about $55 million in emergency restoration revenues.
Colson added, 'Now that the integration of InfraSource is substantially complete, we believe 2008 should continue our four-year trend of strong internal revenue growth and margin improvement. Our 12-month backlog of $2.355 billion at year-end represents an increase of $297 million or 14%, when compared to last year- end's pro forma 12-month backlog including InfraSource. Since the end of the third quarter of 2007, our total backlog has increased approximately $880 million or 23% to a record level of $4.67 billion at year-end.'
Stock Quote
PWR closed Wednesday's regular trading session at $23.22, down $0.38, on a volume of 3.1 million shares. In the past 52 weeks, shares have been trading in a broad range of $18.38 -$33.42.
On January 30, research firm JP Morgan upgraded PWR stock to 'Overweight' from 'Neutral'.
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