(PWR) Quanta - Ratings and Ratios

Quanta Services (NYSE:PWR) is a diversified infrastructure contractor serving electric and gas utilities, renewable-energy developers, communications firms, and pipeline operators across the United States, Canada, Australia, and other international markets. Its operations are organized into three primary segments: (1) Electric Power Infrastructure Solutions, which handles design, construction, upgrade, and maintenance of transmission, distribution, substation, and smart-grid assets; (2) Renewable Energy Infrastructure Solutions, focused on EPC and O&M for wind, solar, hydro, and battery-storage projects as well as related transmission work; and (3) Underground Utility and Infrastructure Solutions, which provides engineering, procurement, construction, and maintenance services for natural-gas pipelines, storage, and compression facilities.

In fiscal 2023 Quanta reported revenue of roughly $13.2 billion, a 9 % year-over-year increase, driven largely by higher demand for renewable-energy EPC contracts and a robust backlog that topped $20 billion at year-end-approximately 1.5 times its annual revenue. Adjusted EBITDA margin expanded to 7.8 % from 6.9 % in FY2022, reflecting improved pricing power and cost-control initiatives. The company’s free-cash-flow conversion remained strong at 55 % of net income, supporting its $1.5 billion share-repurchase program announced in Q2 2024. These figures assume continued execution of existing contracts and no material adverse impact from supply-chain disruptions.

Key macro drivers for Quanta include (a) the U.S. Infrastructure Investment and Jobs Act, which allocates roughly $65 billion to grid modernization and transmission upgrades-directly feeding the Electric Power segment; (b) the accelerating decarbonization agenda, with utility-scale renewable-energy capacity additions projected to grow at a 10 % CAGR through 2030, bolstering the Renewable Energy segment; and (c) steady natural-gas demand for heating and power generation, underpinning the Underground Utility segment, though this exposure is sensitive to commodity price volatility and regulatory shifts around methane emissions. If any of these drivers weaken-e.g., a slowdown in federal funding or a prolonged dip in renewable-energy capex-Quanta’s growth outlook would need to be revised downward.

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