Quanta Services Reports Third Quarter Results

Diluted EPS from Continuing Operations Increased from $0.17 to $0.30

HOUSTON, Nov. 8 /PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three and nine months ended September 30, 2007. On August 30, 2007, Quanta completed the acquisition of InfraSource Services, Inc. (InfraSource) through an all-stock merger. Therefore, these reported results of operations include the results of InfraSource for the month of September 2007 and are compared to the pre-merger historical results of Quanta for prior fiscal periods.

Revenues in the third quarter of 2007 were $655.9 million compared to revenues of $523.6 million in the third quarter of 2006. For the third quarter of 2007, income from continuing operations was $47.0 million or $0.30 per diluted share as compared to income from continuing operations of $22.3 million or $0.17 per diluted share for the third quarter of 2006. Included in income from continuing operations for the third quarter of 2007 is $17.9 million of income, or a benefit of $0.11 per diluted share, from the release of income tax contingencies due to the expiration of various statutes of limitations related to federal and state tax returns. This benefit was partially offset by $4.2 million or $0.02 per diluted share of amortization expense related to the intangible assets acquired in the InfraSource merger and $1.4 million or $0.01 per diluted share of integration expenses associated with the InfraSource merger.

"The third quarter was historic for Quanta as we completed the InfraSource acquisition and began the integration process," said John R. Colson, chairman and chief executive officer of Quanta Services. "Financial and operating results continue to be strong, assisted by a partial quarter contribution from InfraSource. Operating synergies are already being realized and our customers are recognizing the capabilities of the enhanced, combined company as demonstrated by the $750 million memorandum of understanding we recently signed with Northeast Utilities. We continue to feel confident about our prospects for double-digit revenue growth with improving margins in 2008."

Revenues for the first nine months of 2007 were $1.78 billion compared to $1.52 billion for the first nine months of 2006. For the first nine months of 2007, the company reported income from continuing operations of $99.6 million or $0.70 per diluted share as compared to income from continuing operations of $47.4 million or $0.38 per diluted share for the first nine months of last year. In addition to the above items impacting income from continuing operations for the quarter, the first nine months of 2007 were favorably impacted by $15.3 million of income, or a benefit of $0.10 per diluted share, primarily due to the settlement of a multi-year audit by the Internal Revenue Service in the first quarter of 2007.

On August 31, 2007, Quanta sold the operating assets associated with the business of Environmental Professional Associates, Limited (EPA), a Quanta subsidiary. Quanta has presented EPA's income statement for the current and prior periods as a discontinued operation in the accompanying consolidated income statements. A gain of approximately $2.3 million, net of tax, was recorded in the three and nine months ended September 30, 2007 and included as income from a discontinued operation in the condensed consolidated income statement for such periods.

    RECENT HIGHLIGHTS -
    -- Expanded Relationship with Northeast Utilities to Strengthen
       Transmission Grid - Quanta recently signed a memorandum of
       understanding (MOU) with Northeast Utilities (NYSE: NU).  The MOU
       establishes the general framework for a contract under which Quanta
       will provide transmission infrastructure services related to NU's
       transmission build out.  The contract intended by the MOU, which is
       expected to be finalized by the end of the year, will be valued at
       approximately $750 million starting in 2008 and extending through 2013.
    -- Added Resources and Services Through Acquisition - In the third
       quarter, Quanta completed the acquisition of InfraSource Services, Inc.
       through an all-stock merger.  As a result of the merger, InfraSource
       became a wholly owned subsidiary of Quanta.  The acquisition provides
       Quanta with expanded tools and resources to build the infrastructure
       required to meet the growing demand for electric power, gas and
       telecommunications services. Specifically, the acquisition enhances the
       company's engineering, distribution and transmission capabilities,
       substation construction services, gas distribution capabilities and
       industrial service offerings and adds a unique dark fiber leasing
       business.
    -- Strengthened Financial Flexibility - During the third quarter, Quanta
       repaid the remaining $33.3 million balance of its 4.0% convertible
       subordinated notes and $35.3 million of existing InfraSource debt, net
       of cash acquired.  Following these payments, Quanta ended the quarter
       with $371.5 million of cash.  In addition, Quanta amended its credit
       facility with a syndicate of lenders led by Bank of America, N.A. The
       amendment, which was completed last month, expands the company's senior
       secured revolving credit facility to $475 million from $300 million and
       extends the maturity date by more than one year to Sept. 19, 2012. The
       amended facility also provides opportunities for lower pricing, more
       flexible share and dividend repurchase options, and increased
       investment capabilities.

OUTLOOK

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential effects of any business combinations or divestitures that may be completed after September 30, 2007.

Quanta expects revenues for the fourth quarter of 2007 to range between $810 million and $840 million and diluted earnings per share from continuing operations to be from $0.11 to $0.12. Cash earnings per share, which represent diluted earnings per share from continuing operations before amortization and non-cash stock compensation expenses (both net of tax), are expected to be from $0.16 to $0.17. Amortization and non-cash stock compensation expenses are forecasted to be approximately $15.5 million. The purchase price allocation in connection with the InfraSource acquisition is preliminary and likely to change, particularly with respect to property and intangible asset values which may materially impact depreciation and amortization expenses. These estimates include approximately $10 million of anticipated emergency restoration revenues for the fourth quarter of 2007, versus $62 million of actual emergency restoration revenues in the fourth quarter of 2006.

Expected cash earnings per share is a non-GAAP measure, which is provided to enable the evaluation of future performance excluding the effects of items that management believes impact the comparability of operating results between periods.

Quanta Services has scheduled a conference call for November 8, 2007, at 9:30 a.m. Eastern time. To participate in the call, dial (303) 205-0033 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, 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 website. A replay will also be available and may be accessed through November 15 by calling 303-590-3000 and using the pass code 11099733. For more information, please contact Karen Roan at DRG&E by calling (713) 529-6600.

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 engineering, designing, installing, repairing and maintaining network infrastructure nationwide. With operations in all 50 states and Canada, 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 subjects of this release, including the conference call 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 intention and ability of the Quanta and Northeast Utilities to enter into definitive documentation that will encompass the general framework set forth in the non-binding MOU, the scope, services, term and results of any arrangements between Quanta and Northeast Utilities or any related projects, 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 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; unexpected costs or unexpected liabilities that may arise from the merger with InfraSource Services, Inc.; the potential adverse impact as a result of the merger, including the inability to retain key personnel; the potential the ability to successfully identify, complete and integrate acquisitions, including InfraSource; estimates and assumptions in determining financial results; dependence on fixed price contracts and the potential to incur losses with respect to these contracts; the ability of the parties to negotiate and finalize definitive agreements with respect to the matters covered by the MOU; ability to obtain regulatory or other approvals or consents that may be necessary for the arrangement contemplated by the MOU or related projects; the failure to realize the anticipated value of the intended contract with Northeast Utilities; the financial distress of Quanta's casualty insurance carrier that may require payment for losses that would otherwise be insured; potential exposure to environmental liabilities; liabilities for claims that are self-insured or for claims that Quanta's casualty insurance carrier fails to pay; potential liabilities relating to occupational health and safety matters; estimates relating to the use of percentage-of-completion accounting; beliefs and assumptions about the collectibility of receivables; the inability of customers to pay for services; rapid technological and structural changes that could reduce the demand for services; the ability to obtain performance bonds; the successful performance and completion of contracts, including the contract intended by the MOU; cancellation provisions within contracts and the risk that contracts are not renewed or are replaced on less favorable terms; the ability to attract skilled labor and retention of key personnel and qualified employees; the impact of a unionized workforce on operations and the ability to complete future acquisitions; potential shortage of skilled employees; growth outpacing infrastructure; potential exposure to environmental liabilities; risks associated with operating in international markets; requirements relating to governmental regulation and changes thereto; the ability to continue to meet the requirements of the Sarbanes-Oxley Act of 2002; the cost of borrowing, availability of credit, debt covenant compliance and other factors affecting financing activities; the ability to generate internal growth; the adverse impact of goodwill impairments; 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, 2006, Quanta's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 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 www.quantaservices.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov.

                             - Tables to follow -


     Quanta Services, Inc. and Subsidiaries
     Consolidated Statements of Operations
     For the Three and Nine Months Ended September 30, 2007 and 2006
     (In thousands, except per share information)
     (Unaudited)

                            Three Months Ended        Nine Months Ended
                               September 30,            September 30,
                             2007        2006        2007          2006
    Revenues              $655,865     $523,606   $1,777,044   $1,524,403
    Cost of services
    (including
     depreciation)         540,812      440,864    1,499,172    1,303,052
     Gross profit          115,053       82,742      277,872      221,351
    Selling, general &
     administrative
     expenses               59,816       44,768      155,793      132,988
    Amortization of
     intangible assets       4,868           91        6,332          272
     Operating income       50,369       37,883      115,747       88,091
    Interest expense        (5,165)      (5,736)     (16,261)     (21,414)
    Interest income          5,389        4,297       15,341       10,312
    Gain (loss) on early
     extinguishment of
     debt, net                 (11)           -          (11)       1,598
    Other income (expense),
     net                      (702)          59         (591)         387
     Income from continuing
      operations before
      income tax provision  49,880       36,503      114,225       78,974
    Provision for income
     taxes                   2,930       14,204       14,626       31,580
    Income from continuing
     operations             46,950       22,299       99,599       47,394
    Income from
     discontinued operation  2,371          124        2,791          547
     Net income            $49,321      $22,423     $102,390      $47,941

    Basic earnings per share:
     Income from continuing
      operations             $0.34        $0.19        $0.80        $0.41
     Income from discontinued
      operation              $0.02        $   -        $0.02        $   -
      Net income             $0.36        $0.19        $0.82        $0.41
     Weighted average basic
      shares outstanding   136,279      117,202      124,362      116,959

    Diluted earnings per share:
     Income from continuing
      operations             $0.30        $0.17        $0.70       $ 0.38
     Income from discontinued
      operation              $0.01         $  -        $0.02       $    -
      Net income             $0.31        $0.17        $0.72       $ 0.38
     Weighted average
      diluted shares
      outstanding          167,869      148,534      155,828      141,939

  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 Nine Months Ended September 30, 2007 and 2006
     (In thousands, except per share information)
     (Unaudited)

                                  Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                 2007         2006       2007         2006
    Income for basic earnings
     per share:
     From continuing
      operations               $46,950      $22,299     $99,599     $47,394
     From discontinued
      operations                 2,371          124       2,791         547
     Net income                $49,321      $22,423    $102,390     $47,941

    Weighted average shares
     outstanding for basic
     earnings per share        136,279      117,202     124,362     116,959

    Basic earnings per share:
     From continuing operations  $0.34        $0.19       $0.80       $0.41
     From discontinued operation  0.02            -        0.02           -
      Net income                 $0.36        $0.19       $0.82       $0.41

    Income for diluted earnings
     per share:
     Income from continuing
      operations               $46,950      $22,299     $99,599     $47,394
     Effect of convertible
      subordinated notes
      under the "if-converted"
      method - interest
      expense addback, net
      of taxes                   3,198        3,198       9,596       6,689

    Income from continuing
     operations for diluted
     earnings per share         50,148       25,497     109,195      54,083
    Income from discontinued
     operation                   2,371          124       2,791         547
    Net income for diluted
     earnings per share        $52,519      $25,621    $111,986     $54,630


    Calculation of weighted
     average shares for diluted
     earnings per share:

    Weighted average shares
     outstanding for basic
     earnings per share        136,279      117,202     124,362     116,959
    Effect of dilutive stock
     options and restricted
     stock                         939          681         815         743
    Effect of convertible
     subordinated notes under
     the "if-converted" method -
     weighted convertible
     shares issuable            30,651       30,651       30,651     24,237
    Weighted average shares
     outstanding for diluted
     earnings per share        167,869      148,534      155,828    141,939

    Diluted earnings per share:
     From continuing operations  $0.30        $0.17        $0.70      $0.38
     From discontinued operation  0.01            -         0.02          -
      Net income                 $0.31        $0.17        $0.72      $0.38


     Quanta Services, Inc. and Subsidiaries
     Condensed Consolidated Balance Sheets
     (In thousands)
     (Unaudited)

                                                  September 30,  December 31,
                                                      2007           2006
                        ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                       $371,470      $ 383,687
    Accounts receivable, net                         721,224        507,761
     Costs and estimated earnings in excess of
     billings on uncompleted contracts                63,264         36,113
    Inventories                                       26,763         28,768
    Prepaid expenses and other current assets         55,741         34,300
      Total current assets                         1,238,462        990,629
    PROPERTY AND EQUIPMENT, net                      503,474        276,789
    ACCOUNTS AND NOTES RECEIVABLE, net                 6,970          7,815
    OTHER ASSETS, net                                 35,183         31,981
    OTHER INTANGIBLES, net                           167,840          1,448
    GOODWILL, net                                  1,322,745        330,495
      Total assets                               $ 3,274,674     $1,639,157


    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Current maturities of long-term debt                $151        $34,845
    Accounts payable                                 135,334         83,052
    Accrued expenses                                 257,014        187,845
    Billings in excess of costs and estimated
     earnings on uncompleted contracts                45,342         28,714
      Total current liabilities                      437,841        334,456
    CONVERTIBLE SUBORDINATED NOTES                   413,742        413,750
    DEFERRED INCOME TAXES AND OTHER
     NON-CURRENT LIABILITIES                         288,380        161,868
      Total liabilities                            1,139,963        910,074
    STOCKHOLDERS' EQUITY                           2,134,711        729,083
     Total liabilities and stockholders' equity   $3,274,674     $1,639,157


     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 / 404-872-6764

SOURCE Quanta Services, Inc.