Quanta Services Inc (PWR) Q4 2020 Earnings Call Transcript

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Quanta Services Inc (PWR 2.60%)
Q4 2020 Earnings Call
Feb 25, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Quanta Services Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, Mr. Kip Rupp, Vice President and Investor Relations. Thank you, sir. Please go ahead.

Kip A. Rupp -- Vice President and Investor Relations

Great. Thank you, and welcome, everyone, to the Quanta Services Fourth Quarter and Full Year 2020 Earnings Conference Call. This morning, we issued a press release announcing our fourth quarter and full year results, which can be found in the Investor Relations section of our website at quantaservices.com, along with a summary of our 2021 outlook and commentary that we'll discuss this morning. Additionally, we will use a slide presentation this morning to accompany our prepared remarks, which is viewable through the call's webcast and is also viewable or available on the Investor Relations section of the Quanta Services' website. Please remember that information reported on this call speaks only as of today, February 25, 2021, and therefore, you're advised that any time-sensitive information may no longer be accurate as of any replay of this call. This call will include forward-looking statements intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These include all statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance or that do not solely relate to historical or current facts.

Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied. For additional information concerning some of these risks, uncertainties and assumptions, please refer to the cautionary language included in today's press release along with the company's periodic reports and other documents filed with the Securities and Exchange Commission, which are available on Quanta's or the SEC's website. You should not place undue reliance on forward-looking statements, and Quanta does not undertake any obligation to update such statements and disclaims any written or oral statements made by any third-party regarding the subject matter of this call. Please also note that we will present certain historical and forecasted non-GAAP financial measures in today's call, including adjusted diluted EPS, backlog, EBITDA and free cash flow.

Reconciliations of these measures to their most directly comparable GAAP financial measures are included in our earnings release. Lastly, if you'd like to be notified when Quanta publishes news releases and other information, please sign up for email alerts through the Investor Relations section of quantaservices.com. We also encourage investors and others interested in our company to follow Quanta IR and Quanta Services on the social media channels listed on our website.

With that, I would now like to turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services fourth quarter and full year 2020 earnings conference call. On the call today, I will provide operational and strategic commentary and will then turn it over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a review of our fourth quarter and full year results and full year 2021 financial expectations. Following Derrick's comments, we welcome your questions. As noted in our earnings release this morning, we have renamed both of our segments to include solutions, which we believe is an accurate word to describe the value-creating and collaborative approach we take to working with our customers. Additionally, we renamed our Pipeline and Industrial segment to Underground Utility and Infrastructure Solutions, which we believe is more reflective of the strategic changes we have made over the past five years to reposition the segment toward a greater level of resilient business services to our gas utility, pipeline integrity and industrial customers. These services tend to be more visible and recurring in nature and are driven by safety, reliability and environmental regulations.

We continue to expand our capabilities in both segments to provide comprehensive end-to-end solutions with craft skill labor at the core. We are proud of our successful focus on base business activity over the last five years, which now accounts for more than 90% of our revenues. We continue to view large projects as upside opportunities and are well positioned to safely execute them when they occur. Quanta performed well and delivered a solid year in 2020, which includes numerous accomplishments. This was due to the performance of our field leadership and the people of this organization who continue to be exceptional. Here are some of the accomplishments in 2020: Electric Power segment revenues achieved record levels, and we earned our best operating margin performance in six years, driven by strong execution across our operations. Included in these results were record storm response revenues from supporting our customers' efforts to restore power to millions of people adversely impacted by numerous severe weather events during the year. Our ability to quickly mobilize this level of resources to support our customers in times of need, even during a pandemic is unmatched in our industry.

After an 18-month competitive process, LUMA Energy, our joint venture with ATCO, was selected for a 15-year operation and maintenance agreement to operate, maintain and modernize PREPA's more than 18,000 mile electric transmission and distribution system in Puerto Rico. LUMA and PREPA are making good progress toward transitioning operations of the system this year, and we continue to believe this opportunity is transformative for Quanta. We grew our communication services revenue by more than 40%, meaningfully improved profit margins and ended the year with a total backlog of approximately $900 million. We substantially completed the exit of our Latin American operations, despite the significant challenges and impacts to these wind down activities from the effects of COVID-19. We continue to lead the industry in safety, which we believe starts with training. We continue to incrementally invest in our training efforts through our Northwest Line College and Quanta Advanced Training Center. Additionally, last year, we began site preparation for a new line worker training campus in Puerto Rico that will be operated by Northwest Line college.

The facility will provide world-class training to LUMA's employees and develop Puerto Rico's future craft skill workforce. Our industry-leading training and recruiting initiatives are driving improved productivity in the field and ensures that we have the very best craft skill labor. This enhances our ability to collaborate with customers and labor affiliations on future workforce needs and further differentiate us in the marketplace as a strategic solutions provider. We invested approximately $400 million in strategic acquisition of seven high-quality companies with great management teams that expand or enhance our ability to provide solutions to our customers, are additive to our base business and advance our strategic initiatives. These companies add to our self-perform capabilities, which typically accounts for approximately 85% of our work and are key to providing cost certainty to our customers. We believe our approach to acquisitions and our operating model helps derisk our work portfolio through improved execution and results in more consistent earnings.

We strengthened our financial position with the closing of our $1 billion investment-grade senior notes offering, which we believe points to the resiliency and sustainability of our business model and positive multiyear outlook. We demonstrated our commitment to stockholder value and confidence in Quanta's financial strength and continued growth opportunities through the acquisition of approximately $250 million of common stock and a 25% increase in our dividend. And finally, the diversity of our services, proactive cost management and execution through significant uncertainty caused by the pandemic and challenged energy markets, allowed our Underground Utility and Infrastructure Solutions operations to perform well under the circumstances. We are optimistic that the most challenging market conditions are behind us, and we see opportunity for revenue and margin improvement in 2021 and continue to believe the segment can achieve upper single-digit operating income margin as operating conditions further normalize over time. We believe our strategic position in the marketplace remains strong, and we are well positioned for continued profitable growth over the near and longer term. Despite unprecedented operating conditions and uncertainties caused by the global pandemic proportions of our business, the strong performance of our Electric Power and Communications Operations resulted in record adjusted EPS, adjusted EBITDA, cash flow and backlog in 2020.

While we are proud of the achievements last year, we remain focused on getting better to ensure that Quanta continues to evolve to effectively collaborate with our customers and business partners and helping them achieve their goals and to capitalize on the opportunities ahead of us. The recent severe weather conditions that impacted living conditions in Texas and other parts of the country shows how a critical infrastructure that we design, build and maintain is to our everyday well being. The solutions Quanta provides supports our customers' efforts to increase reliability, safety, efficiency and connectivity, all of which have a favorable environmental and social impact on both the markets that we serve and society. Additionally, our solutions facilitate policies and goals aimed at the adoption of new technologies and transitioning toward a carbon-neutral economy.

As a result, we believe our business is levered to favorable and sustainable long-term goals. Our utility customers, who account for more than 70% of our 2020 revenues, are leaders in the effort to reduce carbon emissions with aggressive efforts to modernize and harden their systems, expand their renewable generation portfolios and implement new technologies for current and future needs. A number of utilities have committed to providing 100% of their power by clean energy or achieving net-zero carbon emissions by 2050. Achieving these goals will require substantial incremental investment in transmission, substation and distribution infrastructure to interconnect new renewable generation facilities to the power grid and to ensure grid reliability due to the significant increase of intermittent power added to the system. Further, developed economies are expected to be increasingly driven by electricity to meet carbon reduction goals over time. Vehicle electrification offers a large carbon reduction opportunity, in addition to residential and commercial space and water heating and industrial and agricultural electrification.

According to a report from the WIRES Group, increased electrification and electric vehicle adoption in the United States could require 70 to 200 gigawatts of new power generation by 2030. The majority of which is expected to be renewables and could require incremental transmission investment of $30 billion to $90 billion by 2030. We believe these investment requirements associated with electrification are in addition to the significant multiyear investment programs already in place for the coming years to modernize the existing power grid, to ensure reliable power delivery under current market conditions. The outlook for our communications operations, which is within the Electric Power segment, remains bright. We expect to generate approximately $700 million in revenue this year, which would represent approximately 30% growth over 2020. Our communications services support the technology we use every day for work, education, entertainment, connecting with friends and family, all of which are critically important. To that end, the effects of COVID-19 have caused communication providers to increase investment in the fiber networks to ensure adequate speed, capacity and reliability to meet these needs.

Additionally, we believe Quanta is well positioned to leverage our Electric Power and communication Solutions capabilities to assist many of our rural and municipal electric customers, who are expected to participate in the rural digital opportunity fund. This fund provides more than $20 billion to bridge the digital divide that exist for millions of people living in rural America without access to adequate broadband connectivity. Further, we expect 5G deployments to accelerate in 2021, which we remain well positioned to continue to participate in. Our Underground Utility and Infrastructure Solutions segment experienced meaningful challenges during the year to the effects of COVID-19, such as shutdowns in certain cities that had short-term impacts on our gas utility services and a significant reduction in demand for refined products that materially impacted our industrial service customers.

As discussed previously, we believe the greatest impact from these dynamics are behind us. Going forward, we expect to continue our focus on our gas utility, pipeline integrity and industrial services businesses, consistent with our strategy over the last five years due to the favorable long-term trends, driven by safety, reliability and environmental regulations. Our gas utility services supported with regulated programs that will replace and modernize aging infrastructure, which can be leak prone and post potential safety concerns. They also support customer efforts to reduce methane emissions and position their gas distribution systems to potentially deliver hydrogen to users in the future. Our pipeline integrity services seek to ensure that existing pipelines operate safely and in an environmentally friendly manner. And many of our industrial services support customers compliance with regulations aimed at minimizing environmental impacts caused by methane gas release and increased operational efficiency and safety. We believe these favorable, safety, reliability and environmental initiatives and long-term industry trends, such as electrifications and technology implementations, will continue to drive growth opportunities for Quanta for the foreseeable future. Quanta is actively engaged in collaborative conversations with many of our customers about their multiyear, multibillion-dollar programs extending as far as 10 years, regarding how Quanta can provide solutions throughout our customers' value chain to meet their strategic infrastructure investment goals and support of these initiatives. In our earnings release this morning, we provided our 2021 guidance.

We believe -- which we believe demonstrates the strength and sustainability of our business and long-term strategy, favorable end market trends, our ability to safely execute in our strong competitive position in the marketplace. Our expectations call for growth in revenues, adjusted EBITDA and earnings per share and improved profit margins. Additionally, we see opportunity to achieve new record levels of backlog in 2021. In summary, we generated solid results in 2020 that we believe will reflect the resiliency and sustainability of our business, the benefit of our strong financial position, the successful execution of our strategic initiatives and the excellence of our people. The challenges we faced and the way we continue to support and collaborate with our customers last year, particularly as it relates to the pandemic, brought out the best of this organization, and I believe, make Quanta stronger. Overall, our end markets and multiyear visibility are solid, and we have built a strong platform that positions us well to capitalize on favorable long-term trends, particularly the transition toward a carbon-neutral economy and the adoption of new technologies. Considering our organic growth opportunities and the levers available to us to allocate future cash flow generation into creating opportunities such as stock repurchases, acquisitions, strategic investments and dividends, we believe Quanta will continue to generate meaningful stockholder value going forward.

Quanta is a portfolio of exceptional businesses with geographic and service line diversity. We are anchored by our commitment to craft skilled labor and our self-perform capabilities. We are focused on operating the business for the long-term and expect to continue to distinguish ourselves through safe execution and best-in-class build leadership. We will pursue opportunities to enhance Quanta's base business and leadership position in the industry and provide innovative solutions to our customers. We believe Quanta's diversity, unique operating model and entrepreneurial mindset form the foundation that will allow us to continue to generate long-term value for all our stakeholders.

I will now turn the call over to Derrick Jensen, our CFO, for his review of the fourth quarter and full year results and 2021 expectations. Derrick?

Derrick A. Jensen -- Chief Financial Officer

Thanks, Duke, and good morning, everyone. Today, we announced fourth quarter 2020 revenues of $2.9 billion. Net income attributable to common stock was $170.1 million or $1.17 per diluted share and adjusted diluted earnings per share, a non-GAAP measure, was $1.22. Overall, the fourth quarter closed out another exceptional year of operational performance for Quanta, a year in which we delivered record results across multiple metrics despite headwinds faced related to the pandemic. Our Electric Power revenues, excluding Latin America, were $2.11 billion, a 15.7% increase when compared to the fourth quarter of 2019. This increase was driven by mid single-digit growth in our base business, increased contributions from the timing of certain larger projects and $75 million in revenues from acquired businesses. Contributing to the base business growth was approximately 13% growth from our communications operations and record fourth quarter demand for our emergency restoration services of approximately $150 million, primarily associated with efforts to restore infrastructure in the Southeastern and Midwestern United States, although it came at the expense of certain other work in progress. Partially offsetting these increases was the expected reduction in fire hardening work in the Western United States during 4Q '20 as compared to 4Q '19.

Electric segment margins in 4Q '20 were 11.6%. And excluding our Latin American operations, segment margins were 12.9% versus 9% in 4Q '19. The robust operating margins were driven by increased profit contributions from the elevated emergency restoration services, which typically present opportunities for higher margins due to higher equipment utilization and fixed cost absorption as well as improved margins in our Canadian operations, primarily associated with certain larger transmission projects. However, although difficult to calculate the direct incremental effects, excluding revenues and profit from storm response efforts, our margins were still comfortably in double digits, reflecting continued strong execution across all of our Electric Power operations. Of note, our communications margins continue to improve against the prior year with a margin of 9% during the quarter. Regarding our Latin American operations, included within the Electric segment, we have substantially completed the wind down activities required to exit those markets.

Our year-long effort to shut down our operations across the region was significantly impacted by COVID-19 dynamics as well as political and regulatory uncertainties and customer challenges, all of which contributed meaningfully higher losses than anticipated. In the fourth quarter, we took the additional step of reserving remaining property, equipment and inventory assets as the uncertain market conditions minimize likely recoveries upon disposition. As a reminder, we currently receive no tax benefit for losses in Latin America, so the $27 million in losses impacted the quarter by approximately $0.19. With minimal contractual obligations remaining, we feel comfortable that other than arbitration updates on the terminated Peruvian Communications Network Project, we will no longer provide commentary on Latin America. Revenues from our underground utility and infrastructure Solutions segment were $806 million, 36% lower than 4Q '19. Similar to prior quarters, expected reduced contributions from larger diameter pipeline projects contributed to the decline.

The variability attributable to larger pipeline projects is why we've taken strategic steps to reposition our service offerings around more predictable utility-backed revenue streams. While we remain well positioned to opportunistically deploy resources for larger pipeline projects, we expect most future work will consist of smaller pipeline transmission and integrity-oriented projects. Additionally, the lingering negative impacts of COVID-19 have reduced some level of demand for broader services across the segment with the reduction in demand for refined products substantially contributing to reduced quarter-over-quarter revenues from our industrial operations. Operating margins for the segment were 5.1%. these margins were 190 basis points lower than 4Q '19, primarily due to reduced revenues as well as some degree of execution challenges during the quarter and costs associated with the exit of certain ancillary pipeline operations. These negative impacts were partially offset by net positive project closeouts, primarily driven by the recognition of previously deferred suspension and milestone payments and the reduction of remaining contingency balances associated with the Atlantic Coast pipeline project, which was officially terminated on December 31, 2020.

Our total backlog was $15.1 billion at the end of the fourth quarter, slightly higher than 4Q '19 and comparable to the third quarter of 2020, yet remains at record levels. 12-month backlog of $8.3 billion is an increase from both the fourth quarter of 2019 and the third quarter of 2020. As a reminder, the LUMA joint venture is accounted for as an equity method investment, and therefore, does not contribute to revenue and is not included in backlog. However, assuming an operating margin profile consistent with our Electric Power operations, LUMA's contribution over the 15-year operation and maintenance agreement would imply a backlog equivalent of more than $6 billion for Quanta. For the fourth quarter of 2020, we generated free cash flow, a non-GAAP measure of $200 million. And although $381 million lower than 4Q '19, it was higher than we anticipated, driven by stronger profits in the quarter and a cash cycle consistent with our third quarter results. For the year, we generated record free cash flow of $892 million.

Days sales outstanding, or DSO, measured 83 days for the quarter, which was comparable to the third quarter of 2020 and fourth quarter of 2019. Cash flows in the fourth quarter and full year 2020 did partially benefit from the deferral of $37 million and $109 million of employer payroll tax payments permitted by the CARES Act with the payments due in equal installment at the end of 2021 and 2022. We had $185 million of cash at the end of the year with total liquidity of $2.2 billion and a debt-to-EBITDA ratio, as calculated under our credit agreement, of approximately 1.2 times. Turning to guidance. We continue to deal with some level of COVID-19 uncertainty as we assess the near-term prospects of our operations, primarily in our underground utility and Infrastructure Solutions segment, and we remain prudent with our expectations for 2021. However, as we look ahead to 2021 and beyond, we see the base business propelling multiyear growth opportunities for both segments. Electric segment revenues grew to $7.8 billion at the end of 2020, and we continue to see our base business providing mid-single to double-digit growth opportunities, coupled with some degree of increased contributions from larger projects, primarily associated with previously announced projects in Canada.

In the aggregate, we expect Electric Power revenues to range between $8.3 billion and $8.5 billion, which includes expected revenues from our communications operations of around $700 million. As it relates to Electric Power segment revenue seasonality, we expect revenue growth in each quarter of '21 compared to 2020, with quarter-over-quarter growth in the first and second quarters, potentially exceeding 10%. We expect first quarter revenues to be the lowest of the year due to normal seasonal weather dynamics impacting certain construction activities. We expect the high end of our revenue range to represent greater revenue growth opportunities in the third and fourth quarters relative to 2020. We expect 2021 operating margins for the Electric Power segment to range between 10.1% and 10.9%, which includes contributions of approximately $29 million or $0.20 per share from the LUMA joint venture and earnings from other integral unconsolidated affiliates. LUMA is expected to contribute around $9 million in the first half of the year and then increasing in the back half of the year as we exit the front-end transition services period. Although we are proud of our overall Electric Power performance in 2020, our 11.6% margins, excluding Latin America, are above historical averages and are the highest since 2013, due in part to record annual emergency restoration service revenues of $450 million.

As outlined in our accompanying slides, our 2021 expectation for margins for this segment are consistent with historical averages and are also based on expectations for more normalized emergency restoration service revenues of approximately $200 million, also in line with historical averages. As is typically the case, we expect that first quarter operating margins will be the lowest for the year, possibly slightly below 10%. However, we expect margin to increase into the second and third quarters and then slightly decline in the fourth quarter. We believe communications operating income margins, which have been dilutive to segment margins in prior periods, could be at parity with electric operations on a full year basis. The underground utility and Infrastructure Solutions segment continues to be impacted by COVID-19 and the challenging energy market conditions. However, we are anticipating upper single-digit to double-digit revenue growth off of 2020 with full year revenues expected to range between $3.65 billion to $3.85 billion. Over 90% of our revenue expectations for 2021 represent base business with larger projects representing their lowest level of contributions in the last seven years. From a seasonality perspective, we see first quarter revenues being our lowest for the year, likely more than 20% lower than the first quarter of 2020.

This decline is primarily due to significantly reduced industrial service revenues compared to the record results in 1Q '20, as industrial customers are still dealing with lower demand stemming from decreased global travel activity associated with the pandemic as well as reduced contributions from larger pipeline projects. Revenue should then increase sequentially into the third quarter than seasonally decline in the fourth quarter. Quarterly revenues for the second through the fourth quarters are expected to be higher on a quarter-over-quarter basis as compared to 2020 with double-digit growth expected for each quarter. Operating margin improvement for the segment continues to be a focus for us. We see segment margins ranging between 5.5% and 6%, led primarily by continued execution within our gas LDC operations. Our full year margin expectations include a breakeven contribution from our industrial services operations in 2021 due to the continued challenging environment.

However, to put our current segment margin guidance in context, if our industrial operations contributed at historical pre-COVID margin levels, our segment margin guidance would increase by over 100 basis points. Consistent with years past and similar to Electric Power, our first quarter traditionally has lower activity in the segment due to weather seasonality, which impacts our revenues and pressures margins. With current inclement weather across much of the U.S., further pressuring those operations, we expect first quarter margins between breakeven and a small loss. However, we expect solid improvement into the second and third quarters with a seasonal decline in the fourth quarter. These segment operating ranges support our expectation for 2021 annual revenues of $11.95 billion to $12.35 billion, and adjusted EBITDA, a non-GAAP measure, of between $1.09 billion and $1.19 billion. This represents 8% growth at the midpoint of the range when compared to 2020's record adjusted EBITDA. With these operating results, we estimate our range of GAAP diluted earnings per share attributable to common stock for the year to be between $3.16 and $3.66, and anticipate non-GAAP adjusted diluted earnings per share to be between $4.02 and $4.52.

Turning to cash flow. We expect free cash flow for 2021 to range between $400 million and $600 million with the standard disclaimer that quarterly free cash flow is subject to sizable movements due to various customer and project dynamics that occur in the normal course of operations. Included in our free cash flow expectation is the anticipated payment of $54 million in the fourth quarter related to payroll taxes that were deferred in 2020. As we have discussed during prior investor events, our cash flow generation moves counter to our revenue growth rate. For instance, a large driver of our significant free cash flow in 2020 was reduced revenues of approximately $900 million compared to 2019, decreasing working capital needs. However, higher revenue growth, like we're guiding for 2021, will like to require a meaningful investment in working capital to support the growth. While our 2021 free cash flow may be negatively impacted by increased working capital required to support our return to 2019 revenue levels, we believe the consistent, sustainable growth profile and solid margins of our base business provides for repeatable levels of free cash flow generation in line with our 2021 guidance in future periods.

For additional information, please refer to our outlook summary, which can be found on the IR website at quantaservices.com. Looking back on our 2020 performance, although there were headwinds to the year, we ended the year with $11.2 billion in revenues, which represents an 8.1% revenue CAGR since 2015. More importantly, we ended the year with slightly over $1 billion of adjusted EBITDA, a record for Quanta and equal to our goal established five years ago, which represents a nearly 15% CAGR since 2015. Lastly, our record adjusted EPS of $3.82 represents a 28% CAGR since 2015, with our adjusted EPS growing faster than profits, which are growing faster than revenues. Over the last five years, we have deployed approximately $1.4 billion in cash for M&A and strategic investments and $760 million for stock repurchases. While we acquired $250 million of common stock in 2020 and $7 million of common stock through February 24, 2021, we have approximately $530 million of availability remaining on our current stock repurchase program. Our first capital priority remains supporting the growth of our business through working capital and capital expenditures, however, we remain committed to the deployment of remaining available capital to stockholders through our stock repurchase and dividend programs, and we continue to expect opportunistic acquisitions.

Our $1 billion bond offering in 2020 established a fixed level of debt that nicely complements our current EBITDA profile, which we believe is a repeatable, sustainable baseline of earnings. Simultaneously, we secured an expanded credit facility, further enhancing our ability to meet incremental capital needs. Overall, we remain confident in the strength of our operations, our prospects for profitable growth and the repeatable and sustainable nature of our core markets. We've developed a platform for Quanta to capitalize on the trends driving the spend in our markets, and we firmly believe delivering base business solutions through world-class craft skill labor, opportunistic larger project deployments and continued balance sheet strength will be the key to delivering long-term shareholder value.

This concludes our formal presentation, and we'll now open the line for Q&A. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question is coming from Noelle Dilts of Stifel. Please go ahead.

Noelle Dilts -- Stifel -- Analyst

Good morning and congrats on a great quarter. Could you just expand a little bit on how things are progressing in Puerto Rico, how we're looking at the transition over to kind of full-scale operations there? And any change in how you're thinking about some of the opportunities around construction projects in the region? Thanks.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. In Puerto Rico, we're making progress. We're staying on task on the timeline that we set forward within our bid process. And so I think we're making great strides there. We're continuing to transition the labor force as well as everything that comes with that from remediation plans and capital plans on the PREPA side of the business. And from my standpoint, I think the third quarter some time is when we expect to fully transition over into commencement. If not, it will just -- we have a supplemental agreement that will continue, and we'll stay in the supplemental agreement, but the numbers and what we put forth does not change. We continue to be optimistic about the progress we're making as well as what we're doing for the Island, the people, where we've got our training facility very close to opening. So we're seeing a lot of progress there and momentum around what we can do for the Island as far as the people as well as the economics for the Island. So everything is on track, going well.

Noelle Dilts -- Stifel -- Analyst

Okay. Great. And then obviously, kind of a lot of positive drivers on the electric T&D side. I guess, a couple of questions there. First, I think some of the grid hardening work that was particularly around fires that was kind of planned for 2020 has maybe been pushed off. Could you -- had been pushed off, can you comment on how you're thinking about that for 2021? And then just kind of any thoughts on some of The Biden Administration's goals around renewable energy and the potential for an Infrastructure Bill, sort of how are you thinking about: One, the potential for an Infrastructure Bill, and if you could see some grid-related initiatives there, given the administration's initiatives? Thanks.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. So I'll take the wild part of question to the West first. When we looked at it last year, we knew in our mind, one of our larger utilities out there was coming out of bankruptcy as well as putting a management team in. They're still putting that management team in place. We said all along that we -- if we weren't working on that, we would be working somewhere in the west, that's still the case. It has not -- the demand for our services and what we're doing there from a solution provider to the wildfire assessment as well as the construction thereafter still remains. I think it's a long-term build in the west around hardening, modernization and all the things that are necessary when you want to move to more of a carbon-free environment. And when we look at that to the west, I think they're a little farther along in their anticipation of being there. So you're still backed up by quite a bit of gas in the region.

So I continue to believe that we'll continue to see modernization of that infrastructure as well as hardening for wildfires to the west. And the way we looked at it this year is, we took a normal approach that we -- the same one we've taken in years past. And I -- if we're not busy on the wildfire piece of it, we'll be busy doing other things in the west. So I think all that's anticipated. If we start to move and expedite that, it would be in the later half of the year. And we comment on it as it moves forward, move upward. So we took a prudent approach to that. As far as The Biden Administration, we've done well under both administrations. It doesn't -- whether it be Republican or Democrat we're really agnostic to that. When we look at it, I think if they follow the energy plan of the 2030, 2050 type time frame as far as moving to a more carbon-free footprint, it certainly drives our business. I don't think that sentiment is going away. So we continue to see momentum around renewables and carbon-free types of environment, whether it be hydrogen, batteries, whatever it may be. We've got sentiments there. Administration certainly pushing that, and I think it's beneficial for Quanta on all fronts. So that's where we stand.

Noelle Dilts -- Stifel -- Analyst

Great. Thank you.

Operator

Our next question is coming from Sean Eastman of KeyBanc Capital Markets. Please go ahead.

Sean Eastman -- KeyBanc Capital Markets -- Analyst

Hi gentlemen. Nice work all around, great job. I wanted to start on the Underground Utility margins. So they're set at 5.5% to 6% for '21, I think you said it would be 100 basis points better if we had a normalized contribution from industrial services. So I guess, firstly, does that just mean we'd be 100 basis points higher if demand for refined products was normalized around the reopening? And second, I mean, what is the sort of longer-term trajectory in this segment? Maybe you could just refresh us on, beyond just a normalization and the reopening of the economy, what the longer-term target is for this business?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. So I think when we look at the segment and look at what we're trying to accomplish there, we moved it away from large projects into more of a base business, and you see that happening, as we sit today. When we look at the industrial business, we have it as flat for the year. We do see signs of life there. If the economy comes back, we will get into a more normalized industrial sector and see more of the same type of work we've seen over our historical. So if you go back to '08 and '09 and you look, '08 and '09, after '08 and '09, we have very busy years in the industrial space. I expect that, that will happen. Nothing's changed there. I really like that business unit. I think we'll grow out of it. We have opportunities where others have left the space. So we continue to see greater opportunity we've ever had there on a go-forward basis. We like it, and we'll continue to stay in it.

So again, as Derrick commented, we do believe, if that gets back and you get in the upper single digits there like it's operated in the past, it will move the whole segment up. And that's what we see. So I -- we're committed to operating the segment in upper single digits. We're making strides to get there every day based on base business and repetitive and resilient type framework with growth to our LDC markets in our regulated markets, and that's backing that segment. I will say that the company itself is in a portfolio. And when you look at those individual segments or operating units that perform that work, it's not -- they can go perform electric work and do. They perform telecom work and do. So while it looks like, in a segment, you get -- you see it one way, it doesn't mean that we're not fully utilized as a company and we're not moving forward as a portfolio. So you see the overall margins of the company's lift, and we've always said that our goal for the company is to be double-digit adjusted EBITDA.

Sean Eastman -- KeyBanc Capital Markets -- Analyst

Okay. Got it. That's helpful, Duke. And maybe just continuing on the margin discussion with Electric Power. I guess, firstly, is the trajectory from the 11.6% ex-Latam in 2020 to the 10.1% to 10.9% in the guidance for '21, all just a normalization in storm revenue run rates? And second, I mean, relative to the 10.1% to 10.9%, I mean it seems like LUMA in the out-year a full transition contribution in the out-year is a tailwind. It seems like telecom is exit-ing -- is going to exit '21 at a higher run rate in terms of margin. So is there potential for expansion beyond this 2021 guidance range for Electric Power margins around those factors?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. I mean when we look at the margins and you look at it on a CAGR basis, you go back 20 years, we've operated kind of double digits. And so for us, that's what we see historically. We have operated above that. We've talked about that. I think when we look at our guidance, we take a prudent approach to it. It's very early. We have seasonality. We have all kinds of events. We did pull back to $200 million of storm guidance. So if that's more, obviously, that would pick up the segment. We're operating really well there. And I think, certainly, there's opportunity. But as far as where we sit, the guidance that we gave is prudent. And I think it's -- if you look at it over time, that's where we will sit over time on a CAGR basis. So yes, there's always opportunity for us, and we're going to do everything we can to operate above that.

Derrick A. Jensen -- Chief Financial Officer

Yes. Sean, one other bit of color. I mean, no, it's not really right to look at '20 to '21 being all as the storm pullback. Clearly, that is a component of it, but that's where Duke, saying that the broader aspect of the operating model would average into that 10%. We've got a slide in there trying to illustrate that in the slide deck. And then relative to going forward, though, yes, as it relates to the back half of the year performance for '21 going into '22, to the extent that you saw more run rate type dynamics for LUMA in the back half of the year, then yes, that would be accretive to thinking about the model going into '22.

Sean Eastman -- KeyBanc Capital Markets -- Analyst

Okay. Terrific. Thanks for the color and again nice work. Thanks, guys.

Operator

Thank you. Our next question is coming from Andy Kaplowitz of Citigroup. Please go ahead.

Andy Kaplowitz -- Citigroup -- Analyst

Good morning, guys. Duke, can you update us on where you are in terms of your focus on capturing more of customers' programmatic spend? It looks like your estimated orders under MSAs within electric power are up dramatically, which is a major reason for the positive move in your Electric Power backlog in 2020. So would you expect that to continue to move up in '21? And are you generally seeing customers more willing to outsource more of their operations to you, given labor scarcity and job complexity?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

We're proud ourselves in self performance in class-scale labor. And I think it's right now that that is tight in the marketplace. And our training facilities and the things that we've done allow us to collaborate with our customers there. So it's really driving the front side of the business and our ability to capture in a more holistic manner, the full value chain that we see end-to-end solutions on the utility base. So yes, I think we're making great progress there. I think it's something that we said we were going to do and pride ourselves going forward, and it will drive the business forward. So the capital spends are also getting longer.

When we talk about it, when we're talking to customers, our MSAs are lengthening, not getting shorter. So we're seeing more multiyear-type MSAs versus one year basically to make sure that they have the craft skill labor and the ability to perform that capex OpEx on a go-forward basis. And I like our position. I think we're doing very well on the utility side of the business as far as capturing more of the front side.

Andy Kaplowitz -- Citigroup -- Analyst

Duke, that's helpful. And then you mentioned large projects from Canada and Electric Power contributing a little more in terms of revenue in '21, so could you talk about the duration of these projects? I think they'll burn revenue into '22. And then given all the focus on energy transition and renewables, are you at least having more conversations at this point regarding larger transmission work? So when your bigger Canadian projects and you should be able to replace them and/or further grow in large transmission?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

I mean when we look at North America, if the sentiment stays to renewables and we continue down the path, there's no way around not putting in large transmission to move low to low centers. I think it's -- whether it be Canada or North America, we'll continue to see those type dynamics stack on to the base business as we move forward. The projects that are in Canada are performing well, and I -- some parts of it will end in '22 and parts of it will end in '23. So it's a good base for us in Canada. We do see opportunities beyond that and in other areas as well. So we continue to kind of see that. And as far as kind of the magnitude, we still see it well above the $3 billion-type framework in large projects of opportunity. And I think that continues on. It's well above that. I'll just comment on that. So no one will get excited that it's not that above that as we move forward.

Andy Kaplowitz -- Citigroup -- Analyst

Good color. I appreciate it, Duke.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Sure.

Operator

Our next question is coming from Alex Rygiel of B. Riley FBR. Please go ahead.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you and good morning, gentlemen. With regard to the revenue guidance for 2021 of 7% to 10%, what's the anticipated contribution from acquisitions completed in 2020 as well as once completed early in 2021?

Derrick A. Jensen -- Chief Financial Officer

I would say that the incremental is probably around 200, 200-or-so for the full complement of acquisitions in '20.

Alex Rygiel -- B. Riley FBR -- Analyst

And then as you think about capital allocation in 2021, can you quantify a bracket sort of what you're targeting for acquisitions in the coming year either from a revenue contribution basis or capital to purchase those businesses?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. Alex, this is Duke. I think the strategy remains the same. You'll see us continue to -- obviously, we're valuing everything against the stock and what we can do with that and our organic growth. So we'll continue to make sure that we invest back in the business. As far as working capital, where we still see plenty of acquisition-type targets out there that come through. We're not hard-pressed to make acquisitions. But if we see the right company management teams, we'll certainly lean into them as we have in the past. And I think that will also be additive to anything we're trying to accomplish from a strategy standpoint. And I do think when we look at the way the company is running and the way that the capital allocation happens going forward, it does allow us to start thinking through the opportunity certainly for double-digit EPS growth year-over-year. And so we've seen much more than that.

And if you go back on a 5-year CAGR basis, it's much more than that. You see our guidance this year more than that. So I do think the company's ability to lean in and to pull all levers of the balance sheet to move us forward is certainly there, and you'll see us do that.

Derrick A. Jensen -- Chief Financial Officer

Another way to think about it, back and look at our averages, I mean you see that we averaged probably around $400 million or more in deployment of capital and acquisitions over the last 4, five years.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you.

Operator

Our next question is coming from Steven Fisher of UBS. Please go ahead.

Steven Fisher -- UBS -- Analyst

Thanks. Good morning. Just on the cash flow, your guidance of about 45% conversion of EBITDA, it seems a little bit higher than you were previously talking about when you get growth going into sort of the upper single digits on a revenue basis. So I guess, is there anything, in particular, that's taking that cash flow above that maybe 35% to 40% conversion on a kind of a low single-digit -- low to mid single digit basis or is this now sort of a new normal kind of cash conversion at a better level?

Derrick A. Jensen -- Chief Financial Officer

Yes. Thanks for the question, Steve. Actually, what I'd say is it is a little bit higher. We ended up the year with probably running about a little over 12% working capital as a percentage of trailing 12-month revenues. Historically, we were really running probably about 13%. So we -- I think we've done a good job of continuing to get some of that pressure down on the working capital side. I think we can maintain that throughout this year, and that will give us a little bit higher conversion rate.

As Alex just asked, there is a little bit of M&A driving the revenue side so that would factor the revenue growth up just a little bit. But we commented multiple times that in a moderated growth rate, call it, in kind of that mid-single-digit that we could be in that 40% to 50% type conversion, which is largely what you're seeing with a little bit of an uptick based on expectations of maybe a little bit better cash conversion than what we've seen in recent periods.

Steven Fisher -- UBS -- Analyst

Great. And then just on the telecom business, just curious what the bookings potential looks like there? Are there any opportunities out there to maybe drive a step function increase in that $900 million backlog you have today or should we now expect that as this business gets a little bit bigger, the growth rate kind of starts to have a moderating trend, both on the revenues and the backlog side?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. Steve, I think when we look at the telecom business, if we see the macro market, it's very good. And I think our ability to book is there, continue to book. What I would say is we've taken a measured approach to make sure that we kept our double-digit margins and hit those targets. And I think we've done that. We've grown it nicely. As long as we can hit, kind of the double-digit target margins that we're after, then we'll continue to see the kind of growth rates, but it will moderate at some point, the law of big numbers will get there. But in general, the market is there for us to continue to grow that business above the growth rate of the Electric segment for sure. So I think we see that going forward and our ability -- what's happening with the work is that's also going on in our municipal electric customers.

So it's allowing us even more opportunity to grow the business with even in our Electric side of the business. As far as our crew sets and with 5G and the way that that's going into the omni electric space. Certainly, it will push our telecom up even further. So I'm optimistic, the market is good and we're doing well there.

Steven Fisher -- UBS -- Analyst

Thank you.

Operator

Thank you. Our next question is coming from Jamie Cook of Credit Suisse. Please go ahead.

Jamie Cook -- Credit Suisse -- Analyst

Hi, good morning and nice quarter. I guess my first question back to Underground Utility and Infrastructure. Are there any sort of inorganic opportunities that you could do in acquisitions that we could think about in 2021 to somewhat accelerate the margin improvement in this business? I know before -- or historically, Duke, you talked about scale and perhaps not enough geographic diversification sort of weighing down on the margins in this business. I'm wondering how opportunistic we can be there versus just waiting for the Industrial

Services business to come back? And then on Industrial Services, I know you talked about if we normalized, you get margin improvement in that business. I guess, what's the revenue growth that you need or can you remind us where Industrial Services revenues were ended in 2020 versus what you would need to get that margin improvement? Thanks.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. Thanks, Jamie. To be clear, I want to make sure our goal is to operate that segment, and we're doing what's necessary to operate that segment in upper single digits, the way it sits. That being said, our crews aren't sitting. I mean, many times, they'll go and perform electric work. They'll do other things on the Electric segment. So you're seeing the overall margins of the company move up. No matter what class of work they do a bore rig, for example, can bore electric one day, gas the next and telecom the next. So what we're doing is making sure that our offices are fully utilized so what's driving the overall margins up of the company. And we do anticipate that as we continue to grow out a utility side of that LDC business with integrity and pipe replacements, that that will continue to be the largest piece of the segment as well as move up our margin profile and resiliency of the business as we go forward.

So those are 30-year builds. We like that business. We have put in the eastern seaboard, albeit it had some issues last year and just now starting to kind of come back to full-scale on the Eastern Seaboard. So I think when we see all that come together, you're going to start to see it move up fairly rapidly. I do think the industrial business, we -- when we acquired Stronghold, it was around $500 million. We had anticipated that growing to $1 billion at some point, but that is back to more normalized what we would. So when we look at that piece going forward, we like the pieces that are there. They're critical path infrastructure. We've not scaled back to operate at the $500 million mark. We still believe, when this moves out, that there's greater opportunity for us. So we are holding on to some people to make sure that we can fulfill the customers' needs as we move forward. So there is a little drag on margin there in the industrial business by design. We've done it before in other areas. I think it's the right thing to do for the long-term vision that we have for that group.

Derrick A. Jensen -- Chief Financial Officer

Jamie, a couple other quick points there. Relative to the differential revenue, Duke commented on it effectively. Think about it like a couple of hundred million dollars. But I think another point that's worth noting is 2021 expectations are exacerbated by kind of a first quarter effect. Industrial is counter-seasonal.

And so it oftentimes contributes a little bit more into the first quarter than the normal aspect of our business. When you look at the modeling, I think what you'll find is for you to get to a 5.5% to 6% margin profile for underground based upon the breakeven to a small loss in the first quarter, you're going to have to see second, third and fourth quarters, operating effectively at around 7%. So it's really right now an exacerbated first quarter dynamic that's really creating the majority of the dilution, but otherwise, you're seeing margin execution of that remaining portion of the business, ex-industrial in the back half of the year, still at kind of that 7% type plus performance.

Jamie Cook -- Credit Suisse -- Analyst

Okay thank you. I appreciate it.

Operator

Thank you. Our next question is coming from Michael Dudas of Vertical Research. Please go ahead.

Michael Dudas -- Vertical Research -- Analyst

Good morning, all. You had some rough weather down your part neck of woods last week to 10 days. Just share with us how you guys worked through that? And do you get the sense certainly and be in touch with your utility customers maybe just for ERCOT area, just in general, and plus the news and the flow that's happened, is this going to accelerate some of the decisions and the problems that ERCOT had to some other parts of the country? And are you -- do you think you're going to get a sense of that here in the next couple of months, even especially from a regulatory standpoint, not only just in Texas, but some of the other regulators around the U.S.?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. Thanks, Mike. Thanks for the question. Yes. We had some weather here, for sure. And I want to say our employees, both at the corporate level and in the field, did a remarkable job of putting earnings out and being safe in the field and getting the lights back on. So that being said, when we look at that, I think you're going to have to have some redundancy, no matter what you do, due to the intermittency. So whether it be if you're still backed by gas, your pipe get frozed out in West Texas. You're going to have to see some redundancy on to back-up the grid. And I -- whether you do it with batteries or new pipe, that's certainly there as well as transmission where you had load, you can't bring it out because you were constrained.

So I think you're going to see transmission across North America. If we're going to go to more of a renewable sentiment state that's been stated, I've said it before and I'll say it again, the amount of transmission that's necessary to have a robust redundant system to back up intermittency is large in nature, much more than you can anticipate if you go to a European-type environment where you see large corridors of transmission. So I think those spends stay there. Batteries will come into play at some point and be more of -- take some of that intermittency out, but we're early in batteries as we move forward. So those kind of things to build that modern grid as you see electric vehicles come on, on the distribution system. Our infrastructure that we have today, we continue to need to invest to modernize. And you're going to -- our utility customers' capex and OpEx and as well as our regulators, we'll continue to put focus on those areas as we move forward. Alright. I appreciate that color. Thanks, Duke.

Operator

Our next question is coming from Adam Thalhimer of Thompson, Davis. Please go ahead.

Adam Thalhimer -- Thompson, Davis -- Analyst

Good morning, guys. Congrats on the strong Q4. Duke, on the transmission side in the U.S. and Canada, just at a high level, what are you seeing in the bidding environment out there?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

We're really busy. Most of the work we have are multi year agreements across the board. So really, we're in multi-type year agreements on the base business. And then your larger work, we continue to see a robust bidding environment on the transmission side. And I -- from our standpoint, we're certainly positioned well for those larger projects, both in Canada and Lower 48. So it's a robust environment.

Adam Thalhimer -- Thompson, Davis -- Analyst

And then, I guess, sort of the same question on the gas side, where are you in your plans to kind of grow the base business on the gas side with gas utilities adding MSAs?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. I mean, we're adding MSAs pretty much every year, probably every quarter for that matter. It's really about us having the qualified personnel and continuing our training programs to get the folks in the field. And so we remain productive and make sure that we keep our margin profile up and don't go past the margins. So it's more about a margin issue than the amount of macro work from a macro standpoint, the amount of work that's out there. So we'll be prudent about how we step into the gas piece of the LDC market, utility market, but it's certainly there and growing. And I think we've grown it, kind of upper single digits to double digits year-over-year, and you'll continue to see that.

Derrick A. Jensen -- Chief Financial Officer

And maybe, well, when to think about it, the aggregate MSAs are now -- as it relates to the end of 2020, we're just about 50% or just over 50% of revenues, which is definite growth from what you've seen three or four years ago.

Adam Thalhimer -- Thompson, Davis -- Analyst

That helps. Thanks, Duke.

Operator

Our next question is coming from Chad Dillard of Bernstein. Please go ahead.

Chad Dillard -- Bernstein -- Analyst

Good morning, guys. So my questions on the telecom margins. And you guys are guiding to, I guess, kind of in line with the segment levels through this year. And on the revenue side, you're guiding to about $700 million. And I'm just trying to understand what sort of incremental leverage do you have going from the $700 million this year to your eventual $1 billion run rate? And is there potential upside beyond the segment average for telecoms?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

I think, again, we see portfolio approach there when you start to use electric crews to -- not only for electric work but also telecom work, you get some synergy there that would increase the margins on the telecom side. So as that comes into play and years beyond, when we start looking more 5G in the rural areas, I think you'll start to see margins increase as we go forward. And it's about utilization, people utilizations and scale with offices and from a managerial standpoint as well as a fleet standpoint. So the returns get better as well.

Chad Dillard -- Bernstein -- Analyst

That's helpful. And just a bigger picture question. So how much will gas transportation and distribution infrastructure need to change as hydrogen gets introduced as the bigger part of the energy mix? Just what infrastructure is needed on the pipe side? And are there any parallels you can draw versus what we saw on shale gas revolution about a decade ago? And in terms of the capabilities that Quanta has, is there anything you need to beep up on in terms of natural skill set, geographic focus or customer coverage to realize opportunities ahead there?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. I think when you look at the segment, you look at -- as far as the gas distribution and hydrogen, how it mixes in, it's certainly more corrosive. So when you're starting to blend it, we're working on those blends and things of that nature today. So that corrosiveness will cause work as well. So we see that going forward. It's early in my mind and hydrogen, we're still working on how that interacts in my mind with what's going on today. But we continue to see gas being utilized in new areas as well as replacements in our older areas to reduce methane emissions.

So that's been something that has gone somewhat unnoticed is the methane emissions that it's caused today from leak prone pipe that's no longer there. So I think we're doing a good job of -- from the environmental aspect as well by replacing. And so I think about it, like the systems that are in place are very valuable because it's very difficult to build a new system today. And so the ones that are in place, what will happen is, the integrity piece of our business will continue to flourish as we move forward due to you're using an older pipe because it's too difficult to build new pipe. So we'll continue to see the -- our integrity piece move up, and we're looking at that as a strategy as we go forward.

Chad Dillard -- Bernstein -- Analyst

Thank you.

Operator

Thank you. Our next question is coming from Brent Thielman of D.A. Davidson. Please go ahead.

Brent Thielman -- D.A. Davidson -- Analyst

Okay great. Thanks. Congrats on a great quarter, great year. Maybe similar to the last question, Duke, it seems that clean energy, electrical vehicles and the infrastructure needed for that, very meaningful for your business over the long term. Are there other capabilities or services that you don't have today that could be of interest to leverage those themes more, whether that's direct engagement in renewables development or things around the EV infrastructure arena? Just wondering if you're looking at any of those sorts of things and sort of supplemental growth opportunities to the core business?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. When you think about everything that you've said, whether it be electric vehicles, automated vehicles, technology, renewables, hydrogen, we're in conversations, collaborations with helping build the modern infrastructure necessary to enable every one of the things that you hear every day. So the company is in a unique position to enable all those things to happen, whether it be electric vehicles on the distribution system to make sure that not only can we put charging stations in, but we can also make sure the grid behind it can handle the amount of electric vehicles that are going to be charging on a daily basis and the intermittency that it causes is a tremendous step forward within the distribution systems that we see today on the electric side, technology, on the telecom side, as we move into 5G, the company is in very -- in a unique position there to deploy resources there.

So I think any way you look at it from a sentiment standpoint and how we're becoming more sustainable going forward as well as environmental-friendly, from a company, we're enabling all those things to happen.

Brent Thielman -- D.A. Davidson -- Analyst

Okay. I appreciate that. And then on communications, I'm sorry if you touched on this earlier, but I guess I'm wondering with the completion of the C-band auction, whether that's being a much more meaningful dialogue with customers just around the build-out of infrastructure? Maybe what are you hearing from them now that that's completed?

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

I think we still see the same. I mean it's a robust conversation on a daily basis about what's going to happen. Obviously, there's been -- with the pandemic, some of the plans have moved. And you see some more fiber pushing into suburbs. So that's certainly something that we see. But on a go-forward basis, the capital spends are there, and I think we're in a -- we're well positioned to take advantage of that as we move forward.

Brent Thielman -- D.A. Davidson -- Analyst

Okay. Thank you.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Thank you.

Operator

Ladies and gentlemen, at this time, I'd like to turn the floor back over to management for any additional or closing comments.

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Yes. I want to just congratulate the company and mention the management teams that we have, they're exceptional. We've performed very, very well in tough conditions as well as the corporate office to push out earnings in tough times. And so I commend everyone in the organization. And I want to thank you for participating in the call. We appreciate your questions and ongoing interest in Quanta Services, and thank you. This concludes the call.

Operator

[Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Kip A. Rupp -- Vice President and Investor Relations

Earl C. "Duke" Austin -- President, Chief Executive Officer and Chief Operating Officer

Derrick A. Jensen -- Chief Financial Officer

Noelle Dilts -- Stifel -- Analyst

Sean Eastman -- KeyBanc Capital Markets -- Analyst

Andy Kaplowitz -- Citigroup -- Analyst

Alex Rygiel -- B. Riley FBR -- Analyst

Steven Fisher -- UBS -- Analyst

Jamie Cook -- Credit Suisse -- Analyst

Michael Dudas -- Vertical Research -- Analyst

Adam Thalhimer -- Thompson, Davis -- Analyst

Chad Dillard -- Bernstein -- Analyst

Brent Thielman -- D.A. Davidson -- Analyst

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