Quanta Services Reports 2009 Second Quarter Results

Gross Margins Continued to Improve Diluted EPS of $0.17 Adjusted Diluted EPS of $0.20


HOUSTON, Aug. 5  /PRNewswire-FirstCall/ -- Quanta Services, Inc. (NYSE: PWR) today announced results for the three and six months ended June 30, 2009.

Revenues in the second quarter of 2009 were $813.4 million compared to revenues of $960.9 million in the second quarter of 2008.  For the second quarter of 2009, net income attributable to common stock was $33.4 million or $0.17 per diluted share as compared to $37.7 million or $0.21 per diluted share in the second quarter of 2008. Adjusted diluted earnings per share (a non-GAAP measure) was $0.20 for the second quarter of 2009 as compared to $0.26 for the second quarter of 2008. Adjusted diluted earnings per share is GAAP earnings per diluted share before amortization of intangible assets, non-cash interest expense and non-cash compensation expense, all net of tax.  See the attached table for a reconciliation of non-GAAP measures to the reported GAAP measures.

"Despite an environment of economic turmoil, with customers awaiting government funding and most of the country still struggling with uncertainty, our market outlook shows improvement for the second half of this year," said John R. Colson, chairman and CEO. "Our focus on effectively maintaining margins during the current economic environment should position us well as spending by our customers returns. We continue to receive indications from our customers that 2010 and 2011 will reflect further strengthening in our end markets."

Revenues for the first six months of 2009 were $1.55 billion compared to $1.81 billion for the first half of 2008.  For the first six months of 2009, Quanta reported net income attributable to common stock of $54.8 million or $0.28 per diluted share, compared to $59.1 million or $0.34 per diluted share for the first six months of last year. Adjusted diluted earnings per share was $0.34 for the first six months of 2009 as  compared to $0.44 for the first six months of 2008. See the attached table for a reconciliation of non-GAAP measures to the reported GAAP measures.

See Note (a) to the attached Consolidated Statements of Operations for an explanation of 2008 amounts that have been retrospectively restated as a result of the adoption of new accounting pronouncements effective Jan. 1, 2009.

OUTLOOK

Quanta recognizes that it and its customers continue to operate in a challenging business environment with the economic downturn and weak capital markets. Therefore, management cannot predict the timing or extent of the impact these conditions may have on demand for Quanta's 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 third quarter of 2009 to range between $840 million and $870 million. This estimate includes a forecast of emergency restoration service revenues of $21 million versus approximately $114.7 million in emergency restoration service revenues being earned in the third quarter of 2008. Diluted earnings per share for the third quarter of 2009 are estimated to be between $0.20 and $0.21. Quanta expects adjusted diluted earnings per share (a non-GAAP measure calculated on the same basis as the historical adjusted earnings per diluted share presented in this release) for the third quarter of 2009 to range from $0.23 to $0.24.  Amortization of intangibles, non-cash interest expense and non-cash stock compensation expenses are forecasted to be approximately $11.2 million for the third quarter of 2009.

Quanta Services has scheduled a conference call for Aug. 5, 2009, at 9:30 a.m. Eastern time.  To participate in the call, dial [phone] at least ten 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 at http://www.quantaservices.com/.  A replay will also be available through Aug. 12, 2009, and may be accessed at [phone] and using the pass code 4125867#.  For more information, please contact Karen Roan at DRG&E by calling [phone] or email .

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 and certain other items to be discussed during the conference call 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 licenses point-to-point fiber optic telecommunications infrastructure 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, the recently enacted economic stimulus package and other potential legislative actions 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; 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 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; 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 negotiation, execution, performance and completion of pending and existing contracts; 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, the recently enacted economic stimulus package or other potential legislative actions 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; 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; the potential that participation in joint ventures exposes us to liability and/or harm to our reputation for failures of our partners; risks associated with operating in international markets; risks associated with our dependence on suppliers, subcontractors and equipment manufacturers; risks associated with Quanta's dark fiber licensing 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; requirements relating to governmental regulation and changes thereto; rapid technological and structural changes that could reduce the demand for services; the ability to access sufficient funding to finance desired growth and operations; the potential conversion of Quanta's outstanding convertible subordinated notes; provisions of our corporate governing documents could make an acquisition of our company more difficult; and other risks detailed in Quanta's Annual Report on Form 10-K for the year ended December 31, 2008, Quanta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, and any other documents that Quanta files 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 http://www.sec.gov/.

  Contacts:  James Haddox, CFO         Ken Dennard / 
             Reba Reid                 Kip Rupp / 
             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 Six Months Ended June 30, 2009 and 2008
  (In thousands, except per share information)
  (Unaudited)

                             Three Months Ended         Six Months Ended
                                  June 30,                  June 30,
                         -------------------------    ----------------------
                           2009           2008         2009          2008
                           ----           ----         ----          ----
                                      Restated(a)                Restated(a)

  Revenues               $813,379       $960,882   $1,551,909    $1,805,324
  Cost of services
   (including
   depreciation)          675,597        802,192    1,296,996     1,522,757
                          -------        -------    ---------     ---------
     Gross profit         137,782        158,690      254,913       282,567
  Selling, general
   &
   administrative
   expenses                72,970         76,292      146,573       147,008
  Amortization of
   intangible
   assets                   4,906          9,876        9,812        20,466
                            -----          -----        -----        ------
     Operating income      59,906         72,522       98,528       115,093
  Interest expense         (2,803)        (9,722)      (5,621)      (19,316)
  Interest income             628          2,088        1,709         6,083
  Other income
   (expense), net             158            278          234           482
                              ---            ---          ---           ---
     Income before
      income taxes         57,889         65,166       94,850       102,342
  Provision for
   income taxes            24,245         27,498       39,716        43,203
                           ------         ------       ------        ------
     Net income            33,644         37,668       55,134        59,139
  Less: Net income
   attributable to
   noncontrolling
   interest                   217              -          353             -
                              ---            ---          ---           ---
     Net income
      attributable to
      common stock        $33,427        $37,668      $54,781       $59,139
                          =======        =======      =======       =======

   Earnings per
    share
    attributable to
    common stock:
     Basic earnings
      per share             $0.17          $0.22        $0.28         $0.34
                            =====          =====        =====         =====
     Diluted earnings
      per share             $0.17          $0.21        $0.28         $0.34
                            =====          =====        =====         =====

   Weighted average
    shares used in
    computing
    earnings per
    share:
     Basic                198,300        172,393      198,365       171,681
                          =======        =======      =======       =======
     Diluted              198,379        197,021      198,431       172,112
                          =======        =======      =======       =======

  (a) Effective Jan. 1, 2009, we adopted two new accounting pronouncements
      that each required retrospective application.  One of these
      pronouncements was FASB Staff Position No. APB 14-1, "Accounting for
      Convertible Debt Instruments That May Be Settled in Cash upon
      Conversion (Including Partial Cash Settlement)" (FSP APB 14-1).  FSP
      APB 14-1 requires us to bifurcate and separately value the debt and
      equity components of our convertible subordinated notes on our balance
      sheet.  The recorded value of the equity component of our convertible
      notes is offset by the recognition of an adjustment to the carrying
      value of the convertible subordinated notes in the form of an original
      issuance discount which is amortized over the expected life of the
      convertible subordinated notes as a non-cash interest charge.  As a
      result of the adoption of FSP APB 14-1, we recorded non-cash interest
      expense of $1.1 million and $2.2 million for the three and six months
      ended June 30, 2009 and $4.5 million and $8.9 million for the three
      and six months ended June 30, 2008.  The additional non-cash interest
      expense in 2008 reduced our previously reported diluted earnings per
      share from $0.22 to $0.21 for the three months ended June 30, 2008 and
      from $0.35 to $0.34 for the six months ended June 30, 2008.  In
      addition, we adopted FASB Staff Position No. EITF 03-6-1, "Determining
      Whether Instruments Granted in Share-Based Payment Transactions are
      Participating Securities" (FSP EITF 03-6-1).  Under FSP EITF 03-6-1,
      we are required to treat unvested share-based payment awards that
      contain non-forfeitable rights to dividends or dividend equivalents
      (whether paid or unpaid) as participating securities and for such
      awards to be included in the computation of both basic and diluted
      earnings per share.  The adoption of FSP EITF 03-6-1 did not have a
      material impact on basic and diluted earnings per share in the three
      or six months ended June 30, 2009 or 2008.  As a result of
      retrospectively applying both of these FSPs, our consolidated balance
      sheet as of Dec. 31, 2008 and consolidated statements of operations
      for the three and six months ended June 30, 2008 have been
      retrospectively restated herein to reflect the impact of the adoption
      of these standards.



  Quanta Services, Inc. and Subsidiaries
  Calculation of Earnings Per Share
  For the Three and Six Months Ended June 30, 2009 and 2008
  (In thousands, except per share information)
  (Unaudited)

                                  Three Months Ended   Six Months Ended
                                      June  30,            June  30,
                                      ---------            ---------
                             2009         2008        2009         2008
                             ----         ----        ----         ----
                                       Restated(a)          Restated(a)

  Income for diluted
   earnings per
   share:
     Net income
      attributable to
      common stock         $33,427      $37,668     $54,781      $59,139
     Effect of
      convertible notes
      under the
      "if-converted"
      method - interest
      expense addback,
      net of taxes               -        4,532           -            -
                               ---        -----         ---          ---

     Net income
      attributable to
      common stock for
      diluted earnings
      per share            $33,427      $42,200     $54,781      $59,139
                           =======      =======     =======      =======

  Calculation of
   weighted average
   shares for
   diluted earnings
   per share:
     Weighted average
      shares
      outstanding for
      basic earnings
      per share            198,300      172,393     198,365      171,681
     Effect of dilutive
      stock options             79          393          66          431
     Effect of
      convertible
      subordinated
      notes under the
      "if-converted"
      method - weighted
      convertible
      shares issuable            -       24,235           -            -
                               ---       ------         ---          ---
     Weighted average
      shares
      outstanding for
      diluted earnings
      per share            198,379      197,021     198,431      172,112
                           =======      =======     =======      =======

  Diluted earnings
   per share:
     Net income
      attributable to
      common stock           $0.17        $0.21       $0.28        $0.34
                             =====        =====       =====        =====


  (a) See Note (a) to the Consolidated Statements of Operations.




  Quanta Services, Inc. and Subsidiaries
  Non-GAAP Financial Measures
  For the Three and Six Months Ended June 30, 2009 and 2008
  (In thousands, except per share information)
  (Unaudited)

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

                                 Three Months Ended   Six Months Ended
                                      June 30,            June 30,
                                      --------            --------
                                    2009         2008    2009         2008
                                    ----         ----    ----         ----
                                            Restated(a)          Restated(a)
  Adjusted net income
   attributable to common
   stock for adjusted
   diluted earnings per
   share:
  Net income attributable
   to common stock (GAAP as
   reported)                     $33,427     $37,668   $54,781    $59,139
     Non-cash stock-based
      compensation, net of tax     3,028       2,796     5,896      5,099
     Non-cash
      interest expense, net of
      tax(a)                         697       3,003     1,381      5,935
     Amortization of
      intangible assets, net
      of tax                       2,993       6,024     5,986     12,484
                                   -----       -----     -----     ------
  Adjusted net income
   attributable to common
   stock                         $40,145     $49,491   $68,044    $82,657
  Effect of convertible
   subordinated notes under
   the "if-converted"
   method - interest expense
   addback, net of tax               948       3,122     1,897      6,245
                                     ---       -----     -----      -----
  Adjusted net income
   attributable to common
   stock for adjusted
   diluted earnings per
   share                         $41,093     $52,613   $69,941    $88,902
                                 =======     =======   =======    =======

  Calculation of weighted
   average shares for
   adjusted
   diluted earnings per
   share:
  Weighted average shares
   outstanding for basic
   earnings per share            198,300     172,393   198,365    171,681
  Effect of dilutive stock
   options                            79         393        66        431
  Effect of convertible
   subordinated notes under
   the "if converted"
   method - weighted
   convertible shares
   issuable                        6,415      30,650     6,415     30,650
                                   -----      ------     -----     ------
  Weighted average shares
   outstanding for adjusted
   diluted
   earnings per share            204,794     203,436   204,846    202,762
                                 =======     =======   =======    =======
  Adjusted diluted earnings
   per share                       $0.20       $0.26     $0.34      $0.44
                                   =====       =====     =====      =====

  (a) See Note (a) to the Consolidated Statements of Operations.




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.  More particularly, (i) amortization of intangible assets is impacted by Quanta's acquisition activity which can cause the amortization expense to vary period-to-period; (ii) non-cash interest expense results from the requirements of FSP APB 14-1 (see Note (a) to the Consolidated Statements of Operations) and varies from period-to-period depending on the amount of the convertible subordinated notes outstanding during the period, and (iii) non-cash compensation expense may vary due to acquisition activity and factors influencing the estimated fair value of performance based awards.

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

                                                June 30,    December 31,
                                                  2009         2008
                                                  ----         ----
                                                          Restated(a)
                      ASSETS

  CURRENT ASSETS:
  Cash and cash equivalents                     $524,356     $437,901
  Accounts receivable, net                       723,711      795,251
  Costs and estimated earnings in excess of
   billings on uncompleted contracts              49,007       54,379
  Inventories                                     27,967       25,813
  Prepaid expenses and other current assets       60,851       68,147
                                                  ------       ------
                Total current assets           1,385,892    1,381,491
  PROPERTY AND EQUIPMENT, net                    677,346      635,456
  OTHER ASSETS, net                               42,159       33,479
  OTHER INTANGIBLE ASSETS, net                   130,905      140,717
  GOODWILL                                     1,363,200    1,363,100
                                               ---------    ---------
                Total assets                  $3,599,502   $3,554,243
                                              ==========   ==========


              LIABILITIES AND EQUITY

  CURRENT LIABILITIES:
  Current maturities of long-term debt and
   notes payable                                      $2       $1,155
  Accounts payable and accrued expenses          364,514      400,253
  Billings in excess of costs and estimated
   earnings on uncompleted contracts              66,206       50,390
                                                  ------       ------
            Total current liabilities            430,722      451,798
  CONVERTIBLE SUBORDINATED NOTES, NET            124,400      122,275
  DEFERRED INCOME TAXES AND OTHER
   NON-CURRENT LIABILITIES                       310,902      308,955
                                                 -------      -------
            Total liabilities                    866,024      883,028
                                                 -------      -------
  TOTAL STOCKHOLDERS' EQUITY                   2,733,125    2,671,215
  NONCONTROLLING INTEREST                            353            -
                                                     ---          ---
  TOTAL EQUITY                                 2,733,478    2,671,215
                                               ---------    ---------
            Total liabilities and equity      $3,599,502   $3,554,243
                                              ==========   ==========

  (a) See Note (a) to the Consolidated Statements of Operations.


DATASOURCE: Quanta Services, Inc.



CONTACT:  James Haddox, CFO, or Reba Reid, Quanta Services Inc.,

[phone]; or Ken Dennard, , Kip Rupp,

, both of DRG&E, [phone], for Quanta Services, Inc.



Web Site:  http://www.quantaservices.com/ 

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