Quanta Services Reports First Quarter Results

GAAP Diluted EPS of $0.14

Cash Diluted EPS of $0.18

HOUSTON, May 7 /PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three months ended March 31, 2008. On August 30, 2007, Quanta completed the acquisition of InfraSource Services, Inc. (InfraSource) through an all-stock merger. Therefore, these results include InfraSource for the first quarter of 2008 and are compared to Quanta's pre-merger historical results for the first quarter of 2007.

Revenues in the first quarter of 2008 were $844.4 million, and income from continuing operations was $24.3 million or $0.14 per diluted share. For the first quarter of 2008, cash earnings per diluted share from continuing operations (a non-GAAP measure) were $0.18. Revenues in the first quarter of 2007 were $569.0 million, and income from continuing operations was $30.9 million. The first quarter 2007 results include the effect of $15.3 million in tax benefits primarily associated with the settlement of a multi-year audit by the Internal Revenue Service. For the first quarter of 2007, earnings per diluted share from continuing operations were $0.23, which includes $0.11 per diluted share from the tax benefits described above. For the first quarter of 2007, cash earnings per diluted share from continuing operations, adjusted to exclude the tax benefits described above (a non-GAAP measure), were $0.14. Cash earnings per diluted share from continuing operations are 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.

"The first quarter of 2008 has set the stage for another outstanding year for Quanta. Internal revenue growth was approximately 15 percent over the first quarter of 2007 including InfraSource and excluding emergency restoration revenues from both periods. In addition, gross margins improved and backlog continues to grow," said John R. Colson, chairman and chief executive officer of Quanta Services. "Our results in the first quarter were minimally affected by macroeconomic issues and declining housing starts. We are focused on maintaining our leading market position and financial strength by leveraging the diversity of our service portfolio, geographic reach and customer base as well as our competitive advantages in the industries we serve."

    Recent Highlights
    -- Secured Contracts to Support Renewable Power Generation - In recent
       months, Quanta expanded its renewable energy services portfolio with
       the addition of several contracts and the initiation of work under
       existing contracts related to the installation of wind and solar energy
       systems.  Under these contracts, Quanta will perform a variety of
       renewable energy installation services in Colorado, Illinois, Minnesota
       and Oregon.

    -- Expanded Telecom Services in Southwest Region - Through the acquisition
       of Arizona-based Pauley Construction Inc. on April 25, 2008, Quanta has
       expanded its telecommunications and cable capabilities in the Southwest
       Region.  Pauley Construction provides design, project management and
       fiber and cable installation and repair services to telecommunications
       companies throughout the region.

OUTLOOK

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Quanta expects revenues for the second quarter of 2008 to range from $880 million to $910 million, with earnings per diluted share of approximately $0.17 to $0.19. Quanta expects cash earnings per diluted share for the second quarter of 2008 to range from $0.22 to $0.24. Amortization of intangible assets and non-cash stock compensation expenses are forecasted to be approximately $13.6 million for the second quarter of 2008.

Quanta Services has scheduled a conference call for May 7, 2008, at 9:30 a.m. Eastern Time. To participate in the call, dial (303) 262-2191 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 http://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, 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. A replay will also be available through May 21, 2008, and may be accessed by calling (303) 590-3000 and using the pass code 11113666. 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 http://www.quantaservices.com in the "Financial News" section.

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 dark fiber construction 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, capital expenditures, growth in particular markets, benefits of the Energy Policy Act of 2005, 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; adverse changes in economic conditions and trends in relevant markets; the failure to realize expected synergies and benefits from the merger and other potential adverse impacts on Quanta's business or its financial results as a result of the merger with InfraSource Services, Inc., including unexpected costs or liabilities; delays or cancellations of existing projects and our ability to compete for new projects; 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; the ability to generate internal growth; the ability to effectively compete for market share; potential failure of the Energy Policy Act of 2005 to result in increased spending on the electrical power transmission infrastructure; the ability to attract skilled labor and retention of key personnel and qualified employees; potential shortage of skilled employees; growth outpacing infrastructure; the ability to successfully identify, complete and integrate acquisitions; the adverse impact of goodwill impairments; estimates and assumptions in determining financial results; unexpected costs or liabilities that may arise from lawsuits or indemnity claims related to the services Quanta performs; liabilities for claims that are self-insured or for claims that Quanta's casualty insurance carrier fails to pay; the financial distress of Quanta's casualty insurance carrier that may require payment for losses that would otherwise be insured; 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; cancellation provisions within contracts and the risk that contracts are not renewed or are replaced on less favorable terms; the ability to realize backlog; the inability of customers to pay for services; beliefs and assumptions about the collectibles of receivables; 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 cost of borrowing, availability of credit, debt covenant compliance and other factors affecting financing activities; the potential conversion of outstanding convertible subordinated notes; and other risks detailed in Quanta's Annual Report on Form 10-K for the year ended December 31, 2007 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 http://www.quantaservices.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov.


     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

                             - Tables to follow -



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

                                                 Three Months Ended March 31,
                                                       2008            2007

    Revenues                                        $844,442        $568,959
    Cost of services (including depreciation)        720,565         491,387
      Gross profit                                   123,877          77,572
    Selling, general & administrative
     expenses                                         70,716          48,955
    Amortization of intangible assets                 10,590             772
      Operating income                                42,571          27,845
    Interest expense                                  (5,200)         (5,552)
    Interest income                                    3,995           4,298
    Other income (expense), net                          204              29
      Income from continuing operations before
       income tax provision                           41,570          26,620
    Provision (benefit) for taxes                     17,318          (4,247)
      Income from continuing operations               24,252          30,867
    Income from discontinued operation                     -             337
      Net income                                     $24,252         $31,204

    Basic earnings per share:
      Income from continuing operations                $0.14           $0.26
      Income from discontinued operation                   -               -
        Net income                                     $0.14           $0.26
      Weighted average basic shares outstanding      170,050         118,030

    Diluted earnings per share:
      Income from continuing operations                $0.14           $0.23
      Income from discontinued operation                   -               -
        Net income                                     $0.14           $0.23
    Weighted average diluted shares outstanding      195,020         149,608


  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 Months Ended March 31, 2008 and 2007
                 (In thousands, except per share information)
                                 (Unaudited)

                                                            Three Months Ended
                                                                March 31,
                                                              2008     2007
    Income for basic earnings per share:
      From continuing operations                            $24,252  $30,867
      From discontinued operation                                 -      337
      Net income                                            $24,252  $31,204

    Weighted average shares outstanding for basic
     earnings per share                                     170,050  118,030

    Basic earnings per share:
      From continuing operations                              $0.14    $0.26
      From discontinued operation                                 -        -
      Net income                                              $0.14    $0.26


    Income for diluted earnings per share:
      Income from continuing operations                     $24,252  $30,867
      Effect of convertible subordinated notes under
       the "if-converted" method - interest expense
       addback, net of taxes                                  2,230    3,199

      Income from continuing operations for diluted
       earnings per share                                    26,482   34,066
      Income from discontinued operation                          -      337
      Net income for diluted earnings per share             $26,482  $34,403


    Calculation of weighted average shares for
     diluted earnings per share:
      Weighted average shares outstanding for basic
       earnings per share                                   170,050  118,030
      Effect of dilutive stock options and restricted
       stock                                                    735      926
      Effect of convertible subordinated notes under
       the "if-converted" method - weighted
       convertible shares issuable                           24,235   30,652
      Weighted average shares outstanding for diluted
       earnings per share                                   195,020  149,608

    Diluted earnings per share:
      From continuing operations                              $0.14    $0.23
      From discontinued operation                                 -        -
      Net income                                              $0.14    $0.23



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

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

                                                        Three Months Ended
                                                             March 31,
                                                         2008        2007
    As reported income from continuing operations      $24,252     $30,867
    Adjustments:
      Impact of tax contingency releases                     -     (15,338)(a)
    Adjusted income from continuing operations          24,252      15,529

    Non-cash stock-based compensation, net of tax        2,303       1,128
    Amortization of intangible assets, net of tax        6,460         471
    Adjusted income from continuing operations for
     calculation of cash earnings and adjusted cash
     earnings per diluted share                        $33,015     $17,128


    From continuing operations:
      As reported earnings per diluted share(b)          $0.14       $0.23
      As adjusted earnings per diluted share(b)          $0.14       $0.12 (a)
      Cash earnings and adjusted cash earnings per
       diluted share(b)                                  $0.18       $0.14


    (a) Reflects the elimination of tax benefits primarily associated with 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, shares 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 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)
                                 (Unaudited)

                                                March 31,       December 31,
                                                   2008           2007
                       ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                    $372,194        $407,081
    Accounts receivable, net                      755,516         719,672
    Costs and estimated earnings in excess of
     billings on uncompleted contracts             74,979          72,424
    Inventories                                    24,980          25,920
    Prepaid expenses and other current assets      79,468          79,665
        Total current assets                    1,307,137       1,304,762
    PROPERTY AND EQUIPMENT, net                   561,168         532,285
    OTHER ASSETS, net                              32,349          42,992
    INTANGIBLE ASSETS, net                        142,105         152,695
    GOODWILL                                    1,355,300       1,355,098
        Total assets                           $3,398,059      $3,387,832

        LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Current maturities of long-term debt         $270,715        $271,011
    Accounts payable and accrued expenses         411,062         420,815
    Billings in excess of costs and estimated
     earnings on uncompleted contracts             58,473          65,603
        Total current liabilities                 740,250         757,429
    CONVERTIBLE SUBORDINATED NOTES                143,750         143,750
    DEFERRED INCOME TAXES AND OTHER NON-
     CURRENT LIABILITIES                          304,080         301,510
        Total liabilities                       1,188,080       1,202,689
    STOCKHOLDERS' EQUITY                        2,209,979       2,185,143
        Total liabilities and stockholders'
         equity                                $3,398,059      $3,387,832

SOURCE Quanta Services, Inc.