Quanta Services Reports 2008 Fourth Quarter and Annual Results

Diluted EPS of $0.24 in 4Q08

Twelve-month Backlog at Record $2.58 Billion

Total Backlog at Record $5.19 Billion

HOUSTON, Feb. 24 /PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three and twelve months ended Dec. 31, 2008.

Revenues in the fourth quarter of 2008 were $921.5 million, compared to revenues of $879.0 million in the fourth quarter of 2007. For the fourth quarter of 2008, income from continuing operations was $47.1 million or $0.24 per diluted share as compared to $33.5 million or $0.18 per diluted share for the fourth quarter of 2007. For the fourth quarter of 2008, cash earnings per diluted share from continuing operations (a non-GAAP measure) were $0.27 as compared to cash earnings per diluted share from continuing operations of $0.23 for the fourth quarter of 2007. Cash earnings per diluted share from continuing operations are GAAP earnings per diluted share from continuing operations before amortization of intangible assets and non-cash compensation expense, both net of tax. See the attached table for a reconciliation of non-GAAP measures to the reported GAAP measures.

"A robust fourth quarter contributed to a year of record revenues and operating income, despite challenging economic conditions throughout the second half of the year," said John R. Colson, chairman and CEO of Quanta Services. "Diverse services and broad geographic scope enable Quanta to allocate our resources to meet growing demand in areas such as transmission infrastructure and renewable energy and support our customers' ongoing commitment to strengthening their infrastructure. Despite what appears to be a difficult first quarter, primarily related to slow telecommunications spending, our significant increase in twelve-month and total backlog contributes to our positive outlook for 2009."

Revenues for the twelve months of 2008 were a record high of $3.78 billion, compared to $2.66 billion for the twelve months of 2007. For the twelve months of 2008, the company reported income from continuing operations of $166.7 million, or earnings per diluted share of $0.88, compared to income from continuing operations of $133.1 million, or earnings per diluted share of $0.87 for the twelve months of 2007. The twelve months of 2007 were favorably impacted by $33.2 million or $0.20 per diluted share in tax benefits primarily associated with the release of tax contingencies. For additional information, see the attached table for a reconciliation of non-GAAP measures to the reported GAAP measures. In addition, on Aug. 30, 2007, Quanta completed the acquisition of InfraSource Services, Inc. (InfraSource) through an all-stock merger. Therefore, Quanta's results for the twelve months ended Dec. 31, 2008 are compared to its historical results for the twelve months ended Dec. 31, 2007, which included only four months of results from InfraSource.

RECENT HIGHLIGHTS

    --  Secured Letter of Intent to Strengthen New England Transmission
        Infrastructure - In January 2009, Quanta signed a letter of intent (LOI)
        with National Grid to provide engineering and installation services
        throughout the New England region.  Under the five-year contract
        contemplated by the LOI, the substation and transmission infrastructure
        services will be performed by New Energy Alliance, a joint venture
        between Quanta Services and Balfour Beatty Infrastructure, Inc.  The
        contract, expected to be signed by April 1, 2009, is part of National
        Grid's investment of up to $1.7 billion over five years in its
        power transmission system in New York and New England.
    --  Added $200 Million to Existing Contract with Northeast Utilities -
        Yesterday, Quanta announced the addition of $200 million in services to,
        and a two-year extension of, its existing multi-year contract with
        Northeast Utilities (NYSE: NU) under which Quanta is providing
        transmission infrastructure services related to NU's transmission
        build-out through 2015.  The anticipated value of the original contract,
        signed in December 2007, was $750 million and ran from 2008 to 2013. 
        With this recent expansion, the anticipated contract value is now $950
        million through 2015.  Under the eight-year contract, Quanta will
        provide labor, equipment and general management for NU's
        transmission projects throughout New England.
    --  Awarded Natural Gas Pipeline Project for Midcontinent Express Pipeline
        LLC - Last week, Quanta Services was awarded a project to install more
        than 70 miles of natural gas pipeline by the Midcontinent Express
        Pipeline LLC (MEP), a joint venture between Kinder Morgan Energy
        Partners, L.P. and Energy Transfer Partners, L.P.  Quanta will provide
        project management and installation for a segment of the 507-mile MEP
        pipeline in central Miss., which is designed to help meet future U.S.
        energy needs, contribute to energy independence and stability, and
        stimulate economic growth.  Work on the project will begin this month
        and is expected to be completed in the third quarter of 2009.
    --  Completed Installation of Solar Generation Facility - In the fourth
        quarter, Quanta completed the installation of a 10-megawatt (MW)
        photovoltaic power-generation facility near Boulder City, Nev.  The
        project is the largest operational thin-film, solar-power project in
        North America and at peak production, is expected to generate enough
        electricity to power approximately 6,400 homes.  Construction began in
        July 2008, and involved the installation of more than 167,000 solar
        modules on more than 80 acres of desert property designated as a
        renewable energy zone.

OUTLOOK

Quanta recognizes that it and its customers are operating in a challenging business environment with an economic downturn and volatile capital markets. Therefore, management cannot predict the timing or extent of the impact these trends may have on demand for its services, particularly in the near term. The following forward-looking statements are based on current expectations and actual results may differ materially.

Quanta expects revenues for the first quarter of 2009 to range between $750 million and $800 million and diluted earnings per share to be between $0.09 and $0.10. Quanta expects cash earnings per diluted share (a non-GAAP measure) for the first quarter of 2009 to range from $0.12 to $0.13. Amortization of intangibles, non-cash stock compensation expense and non-cash interest expense are forecasted to be approximately $10.2 million for the first quarter of 2009. These estimates include approximately $25.0 million of anticipated emergency restoration revenues for the first quarter of 2009, compared to $22.5 million in emergency restoration revenues recognized in the first quarter of 2008.

Quanta Services has scheduled a conference call for Feb. 24, 2009, at 9:30 a.m. Eastern time. To participate in the call, dial (303) 262-2004 at least 10 minutes before the conference call begins and ask for the Quanta Services conference call. Investors, analysts and the general public also will have the opportunity to listen to the conference call over the Internet by visiting the company's Web site at www.quantaservices.com. To listen to the call live on the Web, please visit the Quanta Services Web site at least fifteen minutes early to register and download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call on the company's Web site at www.quantaservices.com. A replay will be available through March 3, 2009, and may be accessed by calling (303) 590-3000 and using the pass code 11126526#. For more information, please contact Karen Roan at DRG&E by calling (713) 529-6600.

The non-GAAP measures in this press release and the attached table are provided to enable investors to evaluate performance excluding the effects of certain items that management believes impact the comparability of operating results between reporting periods. Reconciliations of other GAAP to non-GAAP measures not included in this press release can be found on the company's Web site at www.quantaservices.com in the "Financial News" section. Backlog data is as of Dec. 31, 2008 and represents the amount of revenue that Quanta expects to realize from work to be performed in the future on uncompleted contracts, including new contractual arrangements on which work has not begun.

Quanta Services is a leading specialized contracting services company, delivering infrastructure network solutions for the electric power, natural gas, telecommunications and cable television industries. The company's comprehensive services include designing, installing, repairing and maintaining network infrastructure nationwide. Additionally, Quanta provides point-to-point fiber optic telecommunications infrastructure and leasing in select markets and offers related design, procurement, construction and maintenance services. With operations throughout North America, Quanta has the manpower, resources and expertise to complete projects that are local, regional, national or international in scope.

Forward-Looking Statements

This press release (and oral statements regarding the subject matter of this release, including those made on the conference call and webcast announced herein) contains forward-looking statements intended to qualify for the "safe harbor" from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, projected revenues and earnings per share and other projections of financial and operating results and capital expenditures; growth or opportunities in particular markets; the impact of the Energy Policy Act of 2005, renewable energy initiatives and the recently enacted economic stimulus package on future spending by customers; the expected value of, and the scope, services, term and results of any related projects awarded under, agreements for services to be provided by Quanta, including the agreement with Northeast Utilities; statements relating to the business plans or financial condition of utilities and our other customers; and Quanta's strategies and plans, as well as statements reflecting expectations, intentions, assumptions or beliefs about future events, and other statements that do not relate strictly to historical or current facts. Although Quanta's management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements can be affected by inaccurate assumptions and by a variety of risks and uncertainties that are difficult to predict or beyond our control, including, among others, quarterly variations in operating results; continuing declines in economic and financial conditions, including the recent volatility in the capital markets; trends in relevant markets; delays, reductions in scope or cancellations of existing projects, including as a result of capital constraints that may impact our customers; ability of the parties to negotiate and finalize the definitive agreements contemplated by the letter of intent with National Grid; dependence on fixed price contracts and the potential to incur losses with respect to these contracts; estimates relating to the use of percentage-of-completion accounting; the successful performance and completion of contracts, including those referenced in this release; the ability to generate internal growth; the ability to effectively compete for new projects and market share; the failure of the Energy Policy Act of 2005, renewable energy initiatives or the recently enacted economic stimulus package to result in increased demand for Quanta's services; cancellation provisions within contracts and the risk that contracts are not renewed or are replaced on less favorable terms; the inability of customers to pay for services; the failure to recover on payment claims against project owners or to obtain adequate compensation for customer-requested change orders; the ability to attract skilled labor and retain key personnel and qualified employees; potential shortage of skilled employees; estimates and assumptions in determining financial results and backlog; the ability to realize backlog; the ability to successfully identify, complete and integrate acquisitions; the adverse impact of goodwill or other intangible asset impairments; growth outpacing infrastructure; unexpected costs or liabilities that may arise from lawsuits or indemnity claims related to the services Quanta performs; the failure to realize further expected synergies and benefits from the merger with InfraSource Services, Inc.; other potential adverse impacts on Quanta's business or its financial results as a result of the merger with InfraSource; liabilities for claims that are self-insured; risks associated with the implementation of an information technology solution; potential liabilities relating to occupational health and safety matters; risks associated with Quanta's dark fiber leasing business, including regulatory changes and the potential inability to realize a return on capital investments; beliefs and assumptions about the collectability of receivables; the cost of borrowing, availability of credit, fluctuations in the price and volume of Quanta's common stock, debt covenant compliance, interest rate fluctuations and other factors affecting financing and investment activities; the ability to obtain performance bonds; the impact of a unionized workforce on operations and the ability to complete future acquisitions; the ability to continue to meet the requirements of the Sarbanes-Oxley Act of 2002; potential exposure to environmental liabilities; risks associated with operating in international markets; requirements relating to governmental regulation and changes thereto; rapid technological and structural changes that could reduce the demand for services; the potential conversion of Quanta's outstanding convertible subordinated notes; and other risks detailed in Quanta's Annual Report on Form 10-K for the year ended December 31, 2007, Quanta's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008 and any other documents of Quanta filed with the Securities and Exchange Commission (SEC). Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Quanta does not undertake and expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of these risks, uncertainties and assumptions, investors are urged to refer to Quanta's documents filed with the SEC that are available through the company's Web site at www.quantaservices.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov.


                          - Tables to follow -

    Contacts:  James Haddox, CFO        Ken Dennard / ksdennard@drg-e.com
               Reba Reid                Kip Rupp / krupp@drg-e.com
               Quanta Services Inc.     DRG&E
               713-629-7600             713-529-6600


    Quanta Services, Inc. and Subsidiaries
    Consolidated Statements of Operations
    For the Three and Twelve Months Ended December 31, 2008 and 2007
    (In thousands, except per share information)

                               Three Months Ended     Twelve Months Ended
                                   December 31,            December 31,
                                  2008      2007        2008        2007

    Revenues                   $921,534  $878,992  $3,780,213  $2,656,036
    Cost of services
     (including
     depreciation)              754,801   728,117   3,145,347   2,227,289
      Gross profit              166,733   150,875     634,866     428,747
    Selling, general &
     administrative
     expenses                    82,265    84,715     309,399     240,508
    Amortization of
     intangible assets            6,836    12,427      36,300      18,759
      Operating income           77,632    53,733     289,167     169,480
    Interest expense             (1,863)   (5,254)    (17,505)    (21,515)
    Interest income               1,660     4,636       9,765      19,977
    Loss on early
     extinguishment of
     debt, net                        -       (23)         (2)        (34)
    Other income (expense),
     net                            (66)       45         342        (546)
      Income from continuing
       operations before
       income tax provision      77,363    53,137     281,767     167,362
    Provision for income
     taxes                       30,250    19,596     115,026      34,222
      Income from continuing
       operations                47,113    33,541     166,741     133,140
    Income from
     discontinued operation           -        46           -       2,837
      Net income                $47,113   $33,587    $166,741    $135,977

    Basic earnings per
     share:
      Income from continuing
       operations                 $0.24     $0.20       $0.94       $0.98
      Income from
       discontinued operation         -         -           -        0.02
        Net income                $0.24     $0.20       $0.94       $1.00
      Weighted average basic
       shares outstanding       194,232   169,717     176,790     135,793

    Diluted earnings per
     share:
      Income from continuing
       operations                 $0.24     $0.18       $0.88       $0.87
      Income from
       discontinued operation         -         -           -        0.02
        Net income                $0.24     $0.18       $0.88       $0.89
    Weighted average
     diluted shares
     outstanding                202,793   201,529     202,363     167,260

    The calculation of earnings per share is provided in the following table.


    Quanta Services, Inc. and Subsidiaries
    Calculation of Earnings Per Share
    For the Three and Twelve Months Ended December 31, 2008 and 2007
    (In thousands, except per share information)

                                      Three Months Ended   Twelve Months Ended
                                          December 31,         December 31,
                                         2008      2007       2008       2007
    Income for basic earnings per share:
      From continuing operations       $47,113   $33,541   $166,741   $133,140
      From discontinued operation            -        46          -      2,837
      Net income                       $47,133   $33,587   $166,741   $135,977

    Weighted average shares outstanding
     for basic
     earnings per share                194,232   169,717    176,790    135,793

    Basic earnings per share:
      From continuing operations         $0.24     $0.20      $0.94      $0.98
      From discontinued operation            -         -          -       0.02
        Net income                       $0.24     $0.20      $0.94      $1.00


    Income for diluted earnings per
     share:
      Income from continuing
       operations                      $47,113   $33,541   $166,741   $133,140
      Effect of convertible subordinated
       notes under the "if-converted"
       method  -- interest expense
       addback, net of taxes             1,012     3,199     10,590     12,795

    Income from continuing operations
     for diluted earnings per share     48,125    36,740    177,331    145,935
    Income from discontinued operation       -        46          -      2,837
    Net income for diluted earnings per
     share                             $48,125   $36,786   $177,331   $148,772

    Calculation of weighted average
     shares for diluted earnings per share:
    Weighted average shares outstanding
     for basic                         194,232   169,717    176,790    135,793
     earnings per share
    Effect of dilutive stock options and
     restricted stock                      311     1,161        558        816
    Effect of convertible subordinated
     notes under the "if-converted"
     method -- weighted convertible
     shares issuable                     8,250    30,651     25,015     30,651
    Weighted average shares outstanding
     for diluted
     earnings per share                202,793   201,529    202,363    167,260

    Diluted earnings per share:
      From continuing operations         $0.24     $0.18      $0.88      $0.87
      From discontinued operation            -         -          -       0.02
        Net income                       $0.24     $0.18      $0.88      $0.89


    Quanta Services, Inc. and Subsidiaries
    Non-GAAP Financial Measures
    For the Three and Twelve Months Ended December 31, 2008 and 2007
    (In thousands except per share information)

              Reconciliation of GAAP Earnings per Diluted Share to
           Cash Earnings and Adjusted Cash Earnings per Diluted Share

                                  Three Months Ended     Twelve Months Ended
                                     December 31,           December 31,
                                    2008        2007       2008        2007
    As reported income
     from continuing
     operations                  $47,113     $33,541   $166,741    $133,140
    Adjustments:
     Impact of tax
      contingency releases (a)         -           -          -     (33,224)
    Adjusted income from
     continuing operations        47,113      33,541    166,741      99,916
      Non-cash stock-based
       compensation, net of tax    2,617       2,000     10,182       5,712
      Amortization of
       intangible assets,
       net of tax                  4,170       7,580     22,143      11,443
    Adjusted income from
     continuing operations for
     calculation of cash earnings
     and adjusted cash earnings
     per diluted share           $53,900     $43,121   $199,066    $117,071

    From continuing
     operations:
      As reported earnings per
       diluted share (b)           $0.24       $0.18      $0.88       $0.87
      As adjusted earnings per
       diluted share (b)           $0.24       $0.18      $0.88       $0.67(a)
      Cash earnings and adjusted
       cash earnings per diluted
       share (b)                   $0.27       $0.23      $1.04       $0.78(a)

    (a)  Reflects the elimination of tax benefits primarily associated with
    the expiration of various federal and state tax statutes of limitations
    during the third quarter of 2007 and the settlement of a multi-year audit
    by the Internal Revenue Service in the first quarter of 2007.

    (b)  As a result of applying the if-converted method for calculating
    diluted earnings per share, weighted average shares used in the above
    calculations have been adjusted assuming conversion of Quanta's
    convertible subordinated notes, and net income has been adjusted for an
    addback of related interest expense, net of tax.

    The non-GAAP measures in this press release are provided to enable
    investors to evaluate quarterly and annual performance excluding the
    effects of items that management believes impact the comparability of
    operating results between periods.


    Quanta Services, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets
    (In thousands)
                                                   December 31,   December 31,
                                                       2008           2007
                       ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                         $437,901        $407,081
    Accounts receivable, net                           795,251         719,672
    Costs and estimated earnings in excess of
     billings on uncompleted contracts                  54,379          72,424
    Inventories                                         25,813          25,920
    Prepaid expenses and other current assets           68,147          79,665
        Total current assets                         1,381,491       1,304,762
    PROPERTY AND EQUIPMENT, net                        635,456         532,285
    OTHER ASSETS, net                                   34,023          42,992
    OTHER INTANGIBLES, net                             140,717         152,695
    GOODWILL                                         1,363,100       1,355,098
        Total assets                                $3,554,787      $3,387,832

           LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Current maturities of long-term debt                $1,155        $271,011
    Accounts payable and accrued expenses              400,253         420,815
    Billings in excess of costs and estimated
     earnings on uncompleted contracts                  50,390          65,603
        Total current liabilities                      451,798         757,429
    CONVERTIBLE SUBORDINATED NOTES                     143,750         143,750
    DEFERRED INCOME TAXES AND OTHER
     NON-CURRENT LIABILITIES                           301,273         301,510
        Total liabilities                              896,821       1,202,689

    STOCKHOLDERS' EQUITY                             2,657,966       2,185,143

        Total liabilities and stockholders' equity  $3,554,787      $3,387,832

SOURCE Quanta Services, Inc.