Quanta Services Reports 2008 Third Quarter Results

Record Revenues of $1.05 billion

GAAP Diluted EPS of $0.29

Cash Diluted EPS of $0.32

HOUSTON, Nov. 5 /PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three and nine months ended September 30, 2008. On August 30, 2007, Quanta completed the acquisition of InfraSource Services, Inc. (InfraSource) through an all-stock merger. Therefore, Quanta's results for the three and nine months ended September 30, 2008 are compared to its historical results for the three and nine months ended September 30, 2007, which included only one month of results from InfraSource.

Revenues in the third quarter of 2008 were $1.05 billion and income from continuing operations was $54.9 million or $0.29 per diluted share. Revenues in the third quarter of 2007 were $655.9 million and income from continuing operations was $47.0 million, which includes the effect of $17.9 million of tax benefits from the release of income tax contingencies. For the third quarter of 2007, earnings per diluted share from continuing operations were $0.30, which includes $0.11 per diluted share from the tax benefits described above.

For the third quarter of 2008, cash earnings per diluted share from continuing operations (a non-GAAP measure) were $0.32. For the third quarter of 2007, cash earnings per diluted share from continuing operations, adjusted to exclude the tax benefits described above (a non-GAAP measure), were $0.22. 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.

"As reflected in Quanta's revenue growth in the third quarter, many of our customers continue to invest in infrastructure despite a challenging economic environment," said John R. Colson, chairman and chief executive officer of Quanta Services. "For the quarter, internal revenue growth was approximately 27 percent compared to the third quarter of 2007, pro forma to include revenues from all acquisitions in both periods. We generated a record $115 million in emergency restoration revenues during the quarter, primarily as a result of hurricane damage. Excluding emergency restoration revenues, we produced solid internal revenue growth of 15 percent in the third quarter of 2008 versus the third quarter of 2007."

Revenues for the first nine months of 2008 were $2.86 billion compared to $1.78 billion for the first nine months of 2007. For the first nine months of 2008, Quanta reported income from continuing operations of $119.6 million or $0.64 per diluted share, compared to income from continuing operations of $99.6 million or $0.70 per diluted share for the first nine months of last year. The first nine months of 2007 were favorably impacted by $33.2 million or $0.21 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.

RECENT HIGHLIGHTS -

-- Promoted James F. O'Neil to President and COO - Quanta recently promoted James F. O'Neil to president and chief operating officer of the company. In this new position, O'Neil, who joined Quanta in 1999, will oversee the company's operations and strategic initiatives across the electric power, natural gas, renewable energy, telecommunications, broadband cable and wireless industries. Throughout his tenure at Quanta, O'Neil has had various responsibilities: the company's renewable energy strategy; commercial and industrial operations; internal audit; and its mergers and acquisitions program, including oversight of the acquisition and integration of InfraSource Services, Inc.

-- Secured Contract for Oklahoma Transmission Line - Quanta has been awarded a contract by Oklahoma Gas and Electric for the construction of approximately 120 miles of 345,000-volt transmission infrastructure just outside of Oklahoma City. Under the contract, Quanta will provide all installation services including foundation construction, structure installation, aerial and ground construction and power line stringing. Work is projected to begin in the fourth quarter of 2008 with completion estimated in the fourth quarter of 2009.

-- Supported Emergency Restoration Efforts - In the third quarter of 2008, Quanta deployed personnel to support utilities in restoring power and communications in the aftermath of Hurricanes Edouard, Fay, Gustav and Ike. Hurricane Ike alone impacted more than a dozen states and caused power outages for more than 3 million power consumers across the states most heavily impacted.

-- Redeemed 4.5 Percent Convertible Subordinated Notes - Following the August 2008 issuance of Quanta's notice to redeem all of its outstanding 4.5% Convertible Subordinated Notes, $269.8 million aggregate principal amount of the notes, or 99.9%, converted to shares of Quanta Services common stock prior to the redemption date in October 2008, resulting in the issuance of approximately 24.2 million shares of Quanta's common stock. None of the 4.5% Convertible Subordinated Notes remain outstanding.

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 fourth quarter of 2008 to range between $875 million and $930 million and diluted earnings per share to be between $0.18 and $0.20. Quanta expects cash earnings per diluted share for the fourth quarter of 2008 to range from $0.21 to $0.23. Amortization of intangibles and non-cash stock compensation expenses are forecasted to be approximately $10.7 million for the fourth quarter of 2008. These estimates include approximately $25 million of anticipated emergency restoration revenues for the fourth quarter of 2008, compared to $54 million in emergency restoration revenues earned in the fourth quarter of 2007.

Quanta Services has scheduled a conference call for Nov. 5, 2008, 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, 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 Nov. 12, 2008 and may be accessed by calling (303) 590-3000 and using the pass code 11122061#. 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.

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, capital expenditures, growth and trends in particular markets, benefits of the Energy Policy Act of 2005 and renewable energy initiatives, 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 and financial conditions, including the recent volatility in the capital markets; trends in relevant markets; the failure to realize expected synergies and benefits from the merger with InfraSource Services, Inc., and other potential adverse impacts on Quanta's business or its financial results as a result of the merger, including unexpected costs or liabilities; delays, reductions in scope or cancellations of existing projects, including as a result of capital constraints that may impact our customers; our ability to compete for new projects and for market share; 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; potential failure of the Energy Policy Act of 2005 or renewable initiatives 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 or other intangible asset impairments; estimates and assumptions in determining financial results and backlog; 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; 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 collectibility 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, interest rate fluctuations and other factors affecting financing and investment activities; 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 and June 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.

     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 and Nine Months Ended September 30, 2008 and 2007
                 (In thousands, except per share information)
                                 (Unaudited)

                              Three Months Ended      Nine Months Ended
                                 September 30,           September 30,
                                2008       2007        2008         2007
    Revenues                $1,053,355   $655,865  $2,858,679   $1,777,044
    Cost of services
     (including
      depreciation)            867,789    540,812   2,390,546    1,499,172
     Gross profit              185,566    115,053     468,133      277,872
    Selling, general &
     administrative expenses    80,126     59,816     227,134      155,793
    Amortization of
     intangible assets           8,998      4,868      29,464        6,332
     Operating income           96,442     50,369     211,535      115,747
    Interest expense            (5,223)    (5,165)    (15,642)     (16,261)
    Interest income              2,022      5,389       8,105       15,341
    Loss on early
     extinguishment of debt         (2)       (11)         (2)         (11)
    Other income (expense), net    (74)      (702)        408         (591)
     Income from continuing
      operations before income
      tax provision             93,165     49,880     204,404      114,225
    Provision for income taxes  38,307      2,930      84,776       14,626
     Income from continuing
      operations                54,858     46,950     119,628       99,599
    Income from discontinued
     operation                       -      2,371           -        2,791
     Net income                $54,858    $49,321    $119,628     $102,390

    Basic earnings per share:
     Income from continuing
      operations                 $0.32      $0.34       $0.70        $0.80
     Income from discontinued
      operation                      -       0.02           -         0.02
      Net Income                 $0.32      $0.36       $0.70        $0.82
     Weighted average basic
      shares outstanding       171,693    136,279     170,938      124,362

    Diluted earnings per share:
     Income from continuing
      operations                $ 0.29      $0.30       $0.64        $0.70
     Income from discontinued
      operation                      -       0.01           -         0.02
      Net Income                 $0.29      $0.31       $0.64        $0.72
     Weighted average diluted
      shares outstanding       203,131    167,869     202,292      155,828


    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, 2008 and 2007
                 (In thousands, except per share information)
                                 (Unaudited)

                                Three Months Ended     Nine Months Ended
                                  September 30,          September 30,
                                 2008       2007        2008        2007
    Income for basic earnings
     per share:
     From continuing
      operations               $54,858    $46,950     $119,628     $99,599
     From discontinued
      operation                      -      2,371            -       2,791
     Net income                $54,858    $49,321     $119,628    $102,390

    Weighted average shares
     outstanding for basic
     earnings per share        171,693    136,279      170,938     124,362

    Basic earnings per share:
     From continuing operations  $0.32      $0.34        $0.70       $0.80
     From discontinued operation     -       0.02            -        0.02
     Net income                  $0.32      $0.36        $0.70       $0.82

    Income for diluted earnings
     per share:
     Income from continuing
      operations               $54,858    $46,950     $119,628     $99,599
     Effect of convertible
      subordinated notes
      under the "if-converted"
      method - interest
      expense addback, net
      of taxes                   3,181      3,198        9,578       9,596

    Income from continuing
     operations for diluted
     earnings per share         58,039     50,148      129,206     109,195
    Income from discontinued
     operation                       -      2,371            -       2,791
    Net income for diluted
     earnings per share        $58,039    $52,519     $129,206    $111,986

    Calculation of weighted
     average shares for
     diluted earnings per
     share:
     Weighted average shares
      outstanding for basic
      earnings per share       171,693    136,279      170,938     124,362
     Effect of dilutive stock
      options and restricted
      stock                        801        939          709         815
     Effect of convertible
      subordinated notes under
      the "if-converted"
      method - weighted
      convertible shares
      issuable                  30,637     30,651       30,645      30,651
     Weighted average shares
      outstanding for diluted
      earnings per share       203,131    167,869      202,292     155,828

    Diluted earnings per share:
     From continuing operations  $0.29      $0.30        $0.64       $0.70
     From discontinued operation     -       0.01            -        0.02
     Net income                  $0.29      $0.31        $0.64       $0.72



                    Quanta Services, Inc. and Subsidiaries
                         Non-GAAP Financial Measures
       For the Three and Nine Months Ended September 30, 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      Nine Months Ended
                                 September 30,          September 30,
                                2008      2007         2008       2007
    As reported income from
     continuing operations     $54,858   $46,950     $119,628    $99,599
    Adjustments:
     Impact of tax contingency
      releases                       -   (17,886)(a)        -    (33,224)(b)
    Adjusted income from
     continuing operations      54,858    29,064      119,628     66,375
     Non-cash stock-based
      compensation, net of tax   2,466     1,504        7,565      3,712
     Amortization of intangible
      assets, net of tax         5,489     2,970       17,973      3,863

    Adjusted income from
     continuing operations for
     calculation of cash
     earnings and adjusted
     cash earnings per diluted
     share                     $62,813   $33,538     $145,166    $73,950

    From continuing operations:
     As reported earnings per
      diluted share(c)           $0.29     $0.30        $0.64      $0.70
     As adjusted earnings per
      diluted share(c)           $0.29     $0.19(a)     $0.64      $0.49(b)
     Cash earnings and adjusted
      cash earnings per diluted
      share(c)                   $0.32     $0.22(a)     $0.76      $0.54(b)

(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.

(b) 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 in addition to the elimination of tax benefits recorded in the third quarter of 2007 described in (a) above.

(c) 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 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)

                                                  September 30,  December 31,
                                                      2008          2007
                ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                      $266,429       $407,081
    Accounts receivable, net                        958,931        719,672
    Costs and estimated earnings in excess of
     billings on uncompleted contracts               71,492         72,424
    Inventories                                      26,335         25,920
    Prepaid expenses and other current assets        59,595         79,665
      Total current assets                        1,382,782      1,304,762
    PROPERTY AND EQUIPMENT, net                     640,079        532,285
    OTHER ASSETS, net                                35,772         42,992
    INTANGIBLE ASSETS, net                          144,262        152,695
    GOODWILL                                      1,359,674      1,355,098
    Total assets                                 $3,562,569     $3,387,832


       LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Current maturities of long-term debt           $268,847       $271,011
    Accounts payable and accrued expenses           459,989        420,815
    Billings in excess of costs and estimated
     earnings on uncompleted contracts               51,514         65,603
      Total current liabilities                     780,350        757,429
    CONVERTIBLE SUBORDINATED NOTES                  143,750        143,750
    DEFERRED INCOME TAXES AND OTHER
     NON-CURRENT LIABILITIES                        298,997        301,510
      Total liabilities                           1,223,097      1,202,689
    STOCKHOLDERS' EQUITY                          2,339,472      2,185,143
      Total liabilities and stockholders' equity $3,562,569     $3,387,832

SOURCE Quanta Services, Inc.