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Date
Thursday, Oct. 30, 2025, at 9 a.m. ET
Call participants
- President and Chief Executive Officer — Duke Austin
- Chief Financial Officer — Jayshree S. Desai
- Vice President, Investor Relations — Kip A. Rupp
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Takeaways
- Revenue -- $7.6 billion in revenue for fiscal Q3 2025 (period ended Sept. 30, 2025).
- Net income attributable to common stock -- $339 million attributable to common stock for fiscal Q3 2025, or $2.24 per diluted share.
- Adjusted diluted earnings per share -- $3.33 adjusted diluted earnings per share, with management highlighting double-digit adjusted EPS growth expected for 2026.
- Adjusted EBITDA -- Adjusted EBITDA was $858 million.
- Free cash flow -- Full-year free cash flow guidance raised to $1.5 billion at the midpoint.
- Record backlog -- $39.2 billion backlog, led by "accelerating demand in our electric segment," according to Duke Austin, and expanded platforms.
- Recapitalization transaction -- $1.5 billion of notes issued, at an interest rate approximately 40 basis points below 2024’s issue, following the Dynamic Systems acquisition and recent ratings upgrade.
- Power generation platform launch -- Management announced a new "total solutions" power generation platform, including a major project with NiSource to deliver about three gigawatts of capacity for a large load customer through a joint venture with Zachry.
- Risk management in large projects -- Austin emphasized, "we are not taking risk on these kinds of projects" and characterized the NiSource deal structure as collaborative and de-risked for both parties.
- Renewable and storage backlog momentum -- Broad-based increases in solar and storage backlog, attributed by management to "LNTPs are coming into FNTPs," according to Duke Austin.
- Base business stability -- Approximately 80% of business remains "base level recurring services," even with large project stacking.
- Market outlook -- Management expects to deliver another year of double-digit adjusted EPS growth for 2026 (non-GAAP).
- Workforce expansion -- Workforce count increased by approximately 6,000 year-over-year via acquisitions.
- Integration of Dynamic Systems acquisition -- With increased inbound demand and expansion in the mechanical segment.
Summary
Coinciding with backlog reaching an all-time high and raised full-year guidance for both revenue and free cash flow, Quanta (PWR +1.06%) announced a major platform expansion with a new "total solutions" power generation initiative and a significant three-gigawatt customer engagement, reinforcing its position in large-scale, integrated infrastructure projects. Management is actively managing risk in project contracts, highlighting collaborative structures designed to minimize exposure on large jobs, and noted that core recurring services continue to provide business stability despite increasing large-project activity. The implementation of a recent $1.5 billion recapitalization, completed at improved credit terms following a ratings upgrade, underpins continued strategic growth, agility, and capital deployment following the Dynamic Systems acquisition.
- CEO Austin said, "We are not going to take risk on these larger projects with our labor and our labor force and everything we have for certainty, it is not the right answer for the client," directly addressing concerns on execution and contract structure for the NiSource joint venture.
- CFO Desai raised full-year free cash flow expectations due to operational cash strength.
- Management described the joint venture with Zachry for NiSource as a 50%-50% structure, with revenue recognition anticipated largely after air permits are secured and significant contributions expected in 2027 and 2028.
- Approximately 80% of Quanta's business remains recurring, even as the company anticipates "stacking large projects on top of that base" according to Duke Austin, and expects backlog growth "for decades or more," according to Duke Austin.
Industry glossary
- LNTP / FNTP: Limited Notice to Proceed / Full Notice to Proceed; contractual milestones governing phased work and backlog recognition on large projects.
- CCGT: Combined Cycle Gas Turbine; a type of power generation facility referenced in power infrastructure projects.
- Inside wireman: Skilled tradesperson specializing in electrical wiring within buildings, cited as an area of labor scarcity for Quanta.
- MSA: Master Service Agreement; recurring service contract structure forming the bulk of Quanta's base revenue.
Full Conference Call Transcript
Kip A. Rupp: Great. Thank you, and welcome everyone to the Quanta Services third quarter 2025 earnings conference call. This morning, we issued a press release announcing our third quarter 2025 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our third quarter 2025 operational and financial commentary and our 2025 outlook expectation summary on Quanta's Investor Relations website. While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community.
Please remember that information reported on this call speaks only as of today, 10/30/2025, and therefore, you are 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 and information intended to qualify under the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements reflecting expectations, intentions, assumptions, or beliefs about future events or financial performance or that do not solely relate to historical or current facts.
You should not place undue reliance on these statements as they 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. We will also present certain historical and forecasted non-GAAP financial measures. Reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward-looking statements and non-GAAP financial measures. Lastly, please sign up for email alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information.
And follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would like to now turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?
Duke Austin: Thanks, Kip. Good morning, everyone. Quanta delivered another quarter of strong results, achieving double-digit growth in revenue, adjusted EBITDA, and adjusted EPS compared to the prior year, along with a record backlog of $39.2 billion and a number of other record financial metrics. These results reflect accelerating demand in our electric segment, robust activity across our end markets, and positive momentum headed into 2026. They demonstrate the strength of our portfolio, the capability of our craft-skilled workforce, and our ability to provide certainty through world-class execution as customers modernize and expand critical infrastructure.
Our performance continues to be powered by Quanta's core drivers: craft-skilled labor, execution certainty, and disciplined investment, which are critical to how we operate and create long-term value. Our craft workforce remains the foundation of our business, executing with safety, quality, and reliability across diverse infrastructure solutions. Execution certainty reinforces our reputation as a trusted partner capable of consistent high-quality project delivery, and disciplined investment ensures capital is allocated toward opportunities that strengthen our platform, deepen customer relationships, and support sustainable growth. Quanta's integrated solution-based model continues to differentiate our platform. By combining craft labor with engineering, technology, and program management expertise, and critical supply chain capabilities, we deliver comprehensive self-perform solutions across the full infrastructure life cycle.
This approach deepens customer partnerships and positions Quanta as a long-term collaborator, not a traditional contractor. Quanta operates at the center of a fundamental transformation in the energy and infrastructure sectors. The convergence of the utility, power generation, technology, and large load industries is driving increased demand for resilient grids, expanded generation and storage, and new infrastructure to support electrification, data centers, and domestic manufacturing. These structural drivers are fueling a generational investment cycle in critical infrastructure, and Quanta's diversified, scalable platform is well-positioned to capitalize on these opportunities.
To that end, this morning, we announced the expansion of our total solutions that builds upon our world-class craft-skilled labor capabilities and history of constructing more than 80,000 megawatts of power generation through our industry-leading renewable energy and battery energy storage solutions, as well as other forms of generation. Our total solutions power generation platform leverages these capabilities to address growing generation and infrastructure needs due to the rapidly increasing demand for electricity from data centers, manufacturing and reshoring, industrialization, electrification, and power grid expansion. This platform is focused on providing a fully integrated solution to high-quality customers for their generation development strategies.
As a demonstration of this platform's strength and scalability, NiSource has engaged Quanta for a design, procurement, and construction execution of generation and infrastructure resources capable of producing approximately three gigawatts of power for a large load customer. This project highlights the strength of our total solutions platform, spanning power generation, battery energy storage, transmission, substation, and underground infrastructure, and underscores the value of our collaborative approach and builds on our relationship with NiSource and strong presence in Indiana. We believe these announcements reinforce our strategy to lead in large converging markets where utilities, power consumers, and industrial operators require scalable integrated solutions. We expect to achieve record backlog and another year of double-digit earnings per share growth in 2026.
Our strategy remains focused on delivering certainty to customers, investing in talent and technology, and expanding our addressable markets through disciplined strategic growth. Quanta's resilient solution-based model has performed well through varying market conditions. Our strong execution, disciplined investment, and commitment to safety and quality continue to differentiate our platform and support sustainable value creation for our shareholders. I will now turn it over to Jayshree Desai, Quanta's CFO, to provide a few remarks about our results and 2025 guidance, and then we will take your questions. Jayshree?
Jayshree S. Desai: Thanks, Duke, and good morning, everyone. This morning, we reported third quarter results with revenues of $7.6 billion, net income attributable to common stock of $339 million, or $2.24 per diluted share, adjusted diluted earnings per share of $3.33, and adjusted EBITDA of $858 million. Based on our continued backlog momentum and strong revenue growth during the quarter, we are raising our full-year revenue expectations to a range of $27.8 to $28.2 billion. We are also raising our full-year free cash flow expectations to $1.5 billion at the midpoint, driven by another quarter of healthy free cash flow, totaling $438 million.
During the quarter, we issued $1.5 billion of notes to recapitalize the balance sheet and enhance our liquidity position following the acquisition of Dynamic Systems. The interest rate on these notes was approximately 40 basis points lower than our issuance in 2024, reflecting the benefit of our recent ratings upgrade and the stability of our earnings outlook. This transaction reinforces our ability to support operations, maintain financial flexibility, and deploy capital strategically while preserving our investment-grade rating. Our customers continue to value Quanta's differentiated, self-performed craft labor solutions, and we are expanding our platforms for growth, as evidenced by the power generation platform we announced today.
These dynamics, coupled with another quarter of record backlog, give us confidence in our ability to drive sustained revenue and earnings growth over the coming years. As we look toward 2026, the end market momentum and our consistent execution position us to deliver another year of double-digit adjusted EPS growth and attractive returns. We believe the opportunities ahead represent the next phase of a generational investment cycle in critical infrastructure, and Quanta is well-positioned to lead through it, delivering consistent performance, disciplined capital deployment, and long-term value creation for our stakeholders. Our operational and financial commentary and outlook expectation summary can be found on our Investor Relations website. With that, we are happy to take your questions. Operator?
Operator: We will now move to our question and answer session. For today's session, we will be utilizing the raise hand feature via the webinar. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen and press star six to unmute. Once you have been called on, please unmute yourself and begin to ask your question. We ask that all participants limit themselves to one question. If you have additional questions, you may re-queue, and those questions will be addressed, time permitting. Thank you. We will now pause a moment to assemble a queue. Our first question is from Steve Fleishman from Wolfe Research.
Please unmute your line and ask your question.
Steve Fleishman: Hi. Can you hear me?
Jayshree S. Desai: Yes. We can. Good morning.
Steve Fleishman: Okay. Great. Thank you. Appreciate it. I will follow the rule and try to stick to one question. Yesterday, we heard from AEP talking about a potential partner for their high voltage transmission opportunities. Maybe I would be curious if you could comment on whether that would likely be you? And then also just how much of the kind of high voltage transmission that is being discussed in Texas PJM is kind of already in any backlog? Or is that all mainly to come, and when might we see it?
Duke Austin: Yeah. Thanks, Steve. With AEP, look, they are a large customer of ours, have been for many, many years. We have great relationships there, and I do think we are collaborating on capabilities and doing a lot of different things together. So I do think there is more to come there with us. But as we sit today, none of the 765 is in our backlog. We have lots of discussions, lots of verbals, you have LNGPs, all kinds of different things, but none of that is in the backlog at this point. It is something that we are taking our time with to make sure we get it right.
We are setting the resources and making sure internally that we have the training done. Working with the clients on this in a collaborative manner. I do think there are opportunities for us. We have made investments in our transform facility and done some things there. Collaboratively with AEP. So, yes, we have a great relationship there, probably more to come, and I like our chances on the 765.
Steve Fleishman: Great. Thank you.
Operator: Thank you. Our next question is from Andy Kaplowitz from Citigroup.
Andy Kaplowitz: Good morning, everyone.
Jayshree S. Desai: Morning, Andy.
Andy Kaplowitz: Duke, just for you, obviously, the total solutions platform announced today, I think, can provide a whole new driver of backlog growth. But how do you think about execution risk for these larger total solution jobs that include power generation? I do not think you ever really left power generation, but, Duke, as you know, when you have focused on bigger power generation, you have had a little more variable performance. So can you get favorable terms and conditions and get comfortable? How do you protect Quanta as you enter these larger jobs?
Duke Austin: Yeah, I mean, great question. When we think about it, we have built eight gigs of generation, and Zachary has built six. So 14 gigs put together. They built 100 CGTs. So when I think about it, we put a great partnership together. We collaborated significantly with the client, not only for us but for the end users, ratepayers, as well as the large load customer. So I think when we look at it in a holistic manner, it is a total solutions, we are able to put together what I consider, you know, de-risk both sides here on cost escalations and things of that nature.
We have said publicly that we are not taking risk on these kinds of projects. And I think we have done a great job of working with the client here in a collaborative manner to, you know, what I consider give the ratepayer the right cost as well as the end user, which is a large load customer, the right cost. So it is really, I think, when we plan, when we get in front of these things, we can give a total cost solution and de-risk everyone in the value chain here. We have done that.
Steve Fleishman: Thanks, Duke.
Operator: Thank you. Our next question is from Stephen Fisher from UBS. Please unmute your line and ask your question.
Stephen Fisher: Thanks. Good morning.
Andy Kaplowitz: Good morning, Stephen.
Stephen Fisher: In 2019, you rolled out this utility services model, which reduced the reliance on larger discrete projects and focused, I guess it was around 80% plus or so more on kind of utility services. And I think that has obviously been a very, very successful strategy. And I am just curious how we should think about your overall strategy. I know obviously it is very heavily focused on being a solutions provider in this new platform. I think you would say is clearly part of providing solutions.
But just curious how we should think about frame the strategy between being sort of this more base level recurring services type strategy versus more of a discrete EPC project delivery that may be a little bit lumpier.
Duke Austin: Yeah. Thanks, Stephen. Look, I think when you look at the company, nothing has changed. We certainly believe that craft skills are at the core. Fungible. We will move across different platforms from MSAs to larger projects and solve the system-based approach to the client. We are not going to turn down work because it is a large project. I mean, I think that is part of this, and projects are getting bigger. We are working for clients that we have worked for decades, and that has not changed. We continue to do that. Also, you know, discussing technology as a and I do believe we are addressing that. And so our clients there, we have worked for decades.
So as we look at both sides of this, and I would tell you that we are still around 80% of base business even with what you see today. Now we have talked about this before. I do believe you are going to get in a period where you start stacking large projects on top of that base. And I have been consistent in that. You are just now starting to see it show up. So I would expect the backlog to continue to increase. I would expect us to stack and continue to. Not nor the power plant nor Grainville is in our backlog. And it will continue to stack.
So I at the larger projects, LNTPs, no 765 in there. You know, I really like our chances of stacking this for decades or more, and we are giving long-term growth profiles. We are doing things that we need to do to be a consistent compounding earnings platform.
Stephen Fisher: Good stuff. Thank you.
Operator: Thank you. Our next question is from Sangeetha Jain from KeyBanc.
Sangeetha Jain: Great. Thank you for taking my question. So can I ask a follow-up on the JV that you announced this morning? For the large load center. I am assuming that this is mostly all your basic high voltage work you do, but I am wondering if there is a potential to add further scope to this with the customer itself for low voltage electrical or mechanical work?
Duke Austin: No. Sangeetha, this is a full build. That is a fifty-fifty partnership. Certainly, we have aspects of this that we will perform internally, and then Zachary has aspects of this that they will perform really well. So it is a full JV, a full turnkey project, and, you know, it is electric scope too. I think you will see the program itself with NiSource, you will continue to see some stacking there with the other things and opportunities. But in general, what you see is us building out that platform of what I consider from the CGT is three gigs and the batteries around it. And that is what we are building. I hope I answered your question.
Sangeetha Jain: No. That is good. Thank you. Thank you, Duke.
Operator: Thank you. Our next question is from Julien Dumoulin-Smith. If you would please unmute your line and ask your question.
Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys very much for the time. I appreciate it. Look, if I could follow-up a little bit on this question of scope of business. Obviously, you guys are expanding into the, you know, more of the generation side. How do you think about, you know, expanding more into the data center side specifically? Right? You are talking about pursuing generation here specifically for large loads. How about getting sort of inside the house? Obviously, you guys have done a couple of acquisitions here. It would seem germane to your strategy to continue to ramp and expand the scope. More directly here. How do you think about that and the rate of growth therein specifically?
Duke Austin: Yeah. Julien, I mean, I think we are down to a shell at this point, and that is from what I can you can, you know, pour a slide and basically build a building. I know the customers and how we look at it in a solution-based, if they ask us to build, you know, balance a plan or what I would say are the total data center, we can build it. We are the MEP piece of it, we can go we can grade. We can do whatever is necessary. I think we will have those opportunities. We will probably work with a general here or there on that.
But look, we are in a position to where we can build the whole data center. We can build the generation behind it. All the way to the rack. So I feel real comfortable with how we positioned ourselves to take advantage of these opportunities. They want to go fast. One person, and we can do that. So it is also working with the client, the utility as well, and how that converges I think, is where the real opportunities for us is that convergence of generation labor certainty, and, you know, where are we sitting at sphere there. So I like it that we are in front of it.
I do think we have a lot of opportunity to continue to build out scope with technology.
Julien Dumoulin-Smith: Excellent. But we will hear about it growing next year, maybe.
Duke Austin: Yep.
Operator: Thank you. Our next question is from Jamie Cook from Truist Securities. Please unmute your line and ask your question.
Jamie Cook: Can you hear me?
Duke Austin: Unclear.
Jayshree S. Desai: Oh, great. I finally figured it out this time. Anyway, so do relations just want to build on your announcement this morning with the total solutions power generation platform. And the joint venture with Zachary to build power plants. I guess, taking this a step further, this is sort of unlike you to sort of joint venture with someone. So I am just thinking longer term, is this sort of you dipping your toe in power generation and getting more comfortable what degree do you think you need to do an acquisition? You know, and acquire someone, you know, to do full EPC power plants?
Like, is this a step in a tip dipping your toe and then over time you would do an acquisition so you could do everything, I guess, by yourself?
Duke Austin: Yeah. Jamie, I look at it like we are listening to our customer, and they are asking us to expand our services. And I believe we have the capabilities to do so. So we are working with select customers on this and, you know, long-standing customers on power generation. I do think it is a great business for the foreseeable future. Zachary was a great company, very much valued the same as us, know him well, know the family well. A great opportunity for us to work together on some things that they do better than us. And we have the capabilities internally to do everything, so do they.
We felt like this was a great venue for us in Indiana to work together. To build this plan. Risk is always concerning me in these combined cycles, and I believe we have done a nice job here of working collaboratively with the client. So I feel real comfortable with that. Yes. We can expand here. It can be a large opportunity for the company. We will take advantage of it. But in select cases, I am not going to get pressured to go sign up 10 combined cycles. It is just not who we are. And we will make sure that we limit ourselves to strategic partners and know, people that will collaborate with us on a total solution.
This is a large program. It is very much a solution for us, and I think we have done it the right way with the JV to mitigate some for the client and ourselves. So I think it is the smart way to kind of for us to go into Indiana and the other places, other kind of machines, we would look at it differently. But for this one, this was a great opportunity for us, and you know, I think we have leveraged our capabilities along with Zachary's to have a complete solution for the client.
Jamie Cook: Thank you.
Operator: Thank you. Our next question is from Ati Modak from Goldman Sachs. Please unmute your line and ask your question.
Ati Modak: Hey, guys. Good morning. I was just wondering as you think as we think about the JV opportunities in general, is there a way to think about, say, the dollar value of the project, maybe on a gigawatt basis or for whatever way you would like to guide us. And what is the view on the total market opportunity that you have for CCGTs as it stands today, and what is a reasonable market share for you? Long term? I think how to look at the JV is just kind of when we think about our portion of it, that it is the whole thing is similar to a SunZia.
I mean, I think that is how you have to look at this, and how we are looking at it, we have half the CGT, but on the other side of that, Quanta is doing direct with other opportunities there with batteries and other things. So I think I would look at it like a SunZilla from that standpoint from our revenue base. Although the JV will be half, we are fifty-fifty on that and Jayshree can walk through the accounting, but it is fifty-fifty. As far as the market, look, I would not get it all lathered up. That we are going to go after all the CDGTs that are out there. That is not who we are.
We are really going to we are focused on our customers and certain programs and where it can be more a total solution. Much like what you have seen with NiSource in Indiana. We want that total solution. We are not going to, you know, if it is a one-off I do not believe you will see us in that arena unless we can know, unless it makes total sense, but I doubt it. So I think we are going to be extremely selective here on how we a good market with combined cycles.
Operator: Our next question is from Nick Amicucci from Evercore. Please unmute your line and ask your question.
Nick Amicucci: Hey, guys. Can you hear me?
Jamie Cook: Yep. Hey.
Nick Amicucci: Alright. Perfect. Just wanted to kind of touch upon so just given, you know, kind of the massively increased demand for natural gas as the feed fuel. I mean, have you guys been having some conversations? Obviously, you know, the pipeline business is kind of it was targeted to be down this year. Just kind of thinking about available infrastructure currently within The United States and then the need, the inevitable need for some more. Just wanted to get a sense of are people starting to talk about that or is it still very early innings?
Duke Austin: No. I mean, I think we have, you know, probably a conversation every day about a piece of pipe. When I think about it, though, I would not when I go into next year, it is $500 million. That is what we are going to guide. And we are not going to unless we have booked work against it, we are not going to get ourselves in a position where that is something that the company is focused on, and we will build it. We certainly see it. We have great customers there. We will be selective. The risk profiles and everything else on a large diameter pipe, and it is lumpy.
We are trying to be a compounder of earnings and give good guidance for multi-years and decades. In fact, it is hard to do when you are with the lumpiness of a big pipe. It is just not us. And so I think, yeah, we can build billions in pipe. It is just a matter if the client needs us to do it, and we will have to do it in a way that we can de-risk ourselves. I do not like the weather risk, the mat risk. Of different things there. If we can de-risk ourselves, we will build it all day.
Nick Amicucci: Do you think the opportunity is there. It is a good market and, you know, certainly, you can see it. It is still tough at the state level in permitting. We are not past that yet.
Nick Amicucci: Got it. Perfect. Thank you.
Operator: Thank you. Our next question is from Ameet Thakkar from BMO. Please unmute your line and ask your question.
Ameet Thakkar: Hey, guys. Can you hear me?
Jayshree S. Desai: Hey. Hello. Morning.
Ameet Thakkar: Hey. Good morning. Thanks for the time. One of your earnings supplements, I think, kind of said that your solar and storage backlog increased pretty significantly versus last quarter. I was just wondering if you guys could provide a little bit more color on how much did it increase? And then what do you guys see as the kind of drivers of that? Is that more from the legislative and safe harbor certainty? Or is this kind of just more follow-through from kind of the power demand environment that is out there? Thanks, guys.
Duke Austin: No. Thank you. Our renewal business has not let up. You know, we said it last quarter. I will say it again. It is just LNTPs are coming into FNTPs. Nothing new. I think we are growing the business. You know, obviously, power is innate, and if you can build it faster with renewables and batteries, that is what is happening. The fastest thing to market right now is we will be all-encompassing in power. And generation. The fact that we put in this, you know, what I consider a total solution now, it will continue. And I think backlog in the renewable side has been great. The inbounds are great. And I do not think it is pulling.
I think it is just the normal course, and we are seeing a nice market there. We continue to see it. Battery storage business is fantastic. We are happy with where we sit in the market. And now that we can provide a, you know, a larger I think it is great. And you will continue to see us follow our customers. I mean, if you look at our bigger customers and look at what they are saying, I think we are right there in front of them or right there with them.
And it is important to us to be able to say yes to a customer app they ask us to do something and they ask us to go with them. That we can say yes and have the capability to do so. The 67, 68,000 employees we have out there, they are fungible in many ways that we can move them around. We have to do a great job up here of making sure that we have the, you know, what I consider the end markets to move to, and then we can be more selective. We have been. So renewable piece is a part of it. We are building a lot of renewables in Indiana.
And so that same workforce will move over and do some CGT work. So I just think we are extremely fungible. We are happy with where we sit. And with backlog was broad-based. And we had not put the bigger projects in it.
Ameet Thakkar: Thank you.
Operator: Thank you. Our next question is from Justin Hauke from Robert W. Baird. Please unmute your line.
Justin Hauke: Great. Thanks for taking my question here. I guess I just wanted to build on Jamie's question that, you know, I guess, you guys have always, you know, self-performed so much of your work, and that is a way that you have mitigated risk. And so just with the joint venture, maybe you can clarify kind of what is in your wheelhouse that you will be doing and what is in Zachary's in terms of the combined cycle gas plants?
And then also just on the margin profile, I know you are not looking to do kind of discrete one-off plants, but guess how we would think about it is historically the margins on those have been a little bit lower than the grid work just because the utilities, the ROEs, you know, are lower on that CapEx versus the spend on grid with some of the adders. So anything different from the margin profile on the work that would be coming in on that? So those are the questions. Thank you.
Duke Austin: Yeah. As far as who is performing what, I mean, both of us can perform, you know, total solution. So I think, you know, they are better at certain things than we are, and we will make sure from an engineering standpoint they are certainly at the engineering staff and the capabilities there. So the front-end side of it, for Zachary. And then, of course, we will balance each other across the plant, whether it is internal, subcontract. Would decide to do it, but we are capable of doing the whole thing. I think what the right answer is, you know, how do we continue to use local content in Indiana. We have a great presence there.
We will work with the client on that to make sure that we are pulling in local content into the state as well as we have, you know, office there. We can self-perform all the mechanical. We can self-perform all the electric. You know, basically, can do it all. It is kind of a 27, 28 build, you know, with the ramp in 28, 27, 28, and we will just have to see where we are at there. But and we had all those capabilities internally. We will just balance each other there. As far as margin profile, I would tell you it is at parity. Or better in the segment.
Justin Hauke: Appreciate it. Alright. Thank you. Congratulations.
Operator: Thank you. Our next question is from Phil Shen from Roth Capital.
Phil Shen: Hi, guys. Can you hear me okay?
Jayshree S. Desai: Yes. Hello. Please go ahead.
Phil Shen: Hey, guys. Can you hear me okay?
Duke Austin: Unclear.
Phil Shen: Okay. Great. Thanks. Hey. I know you have not given guidance for '26 but as we wind down '25, can you share what the growth trajectory for organic growth might look like for '26? Perhaps comment on the different outlook for electric infrastructure and UUI. If you cannot take that, perhaps you can comment on the margin profile, the expanded total solutions platform compared to the current electric power margins. Is the deal with NiSource margin accretive or in line with current run rate? Thanks, guys.
Duke Austin: It is in line or accretive on the first on the last question. As far as guidance and where we are at, I mean, look. On 25, we are right in line. You know, see some say, $10 million or one way or the other around $2.8 billion. I get worked up about it. We hit it down the middle, and I think we have taken into account a lot of things and getting concerned guidance. More importantly, when we look at guidance, I mean, I am looking at 2029. We are saying we floored it. At 10 and kind of 15% EPS.
Adjusted EPS at the midpoint given all levers of the balance sheet, and 20 is what we have done. So do not know. I think I have given you five-year guidance as far as I am concerned. Outward. And so I do not, you know, that is the guidance. And it will be somewhere in there when we go to the street.
Phil Shen: Great. Thanks, guys. Bye.
Operator: Thank you. Our next question is from Chad Dillard from Bernstein.
Chad Dillard: Hi, guys. So a big picture question for you guys. So over the medium and long term, how do you think the power industry evolves to serve large load customers like data centers? Is it the gen co model like we are seeing with NiSource? I would love to get a sense for, like, how you think that mix evolves. Then I guess, like, secondly, when it comes to the JV you just announced, you know, how do we think about the contract structure, and just, how you guys are thinking about, you know, bidding. Is this competitive? Is it open book? Any color on that would be helpful.
Duke Austin: I mean, I think it is all of the above when you look at these things. You know, some of it we are certain on. We do not have any issues with it. We as long as we can scope it and feel good about it, you know, we are happy to have lump sum on things. It does not we can do that. But if it is stuff that we do not understand, we will de-risk. You can expect that. I mean, I have said it publicly.
We are not going to take risk on these larger projects with our labor and our labor force and everything we have for certainty, it is not the right answer for the client. And so I think us working together, preplanning, early and upfront is extremely important for us when we look at the future, you know, of how we build things, especially today.
Chad Dillard: Thank you.
Operator: Our next question is from Sherif El-Sabbahy from BIC Bank of America. Please unmute your line and ask your question.
Sherif El-Sabbahy: Hi. Good morning. I just wanted to touch on M and A bit. Just as your backlog builds on multiyear demand, do you ever consider shifting your M and A focus to complement your craft labor pool by acquiring smaller service providers? Do you feel that the steps you have taken internally to grow the labor pool are able to match the workload that you want to take on in the coming years?
Duke Austin: Yeah. I mean, we do not buffer capacity. We never have. It is strategy. Totally. And so when we think about it, we are filling a strategic gap. You could expect us to do so. I think we have done a nice job with that. We have stayed in front of vertical supply chain. Do not talk about that much, but I think we have done a really nice job of our vertical supply chain and what we can do with that. We continue to add there. I think we have probably 10 projects ongoing that are enhancing our vertical supply chain that does not get talked about.
And so we were going to, you know, from our standpoint, we are filling the needs of the solution-based approach for our clients, and we will continue to do so. We are adding fabrication. We are adding just about everywhere, but it is all strategic around the client. And I look. I would say we are ahead in that, and we will continue to buy great family companies. It may make a huge difference in how we think about it. The culture and the company mean so much more than anything else. And then we start there, and then does it fit the strategies next? And then the financials will be after.
But I mean, it kept you know, as far as I am concerned, we pay a nice what I consider, multiple for a great company. And then, you know, we have you could you have seen us go from civil to transformers to other things. They all have a purpose, and they all have a strategy. We will continue to leverage that strategy as we move forward in great markets that we have with technology and utility.
Operator: Thank you. Our next question is from Brent Thielman from D. A. Davidson. Please unmute your line and ask your question.
Brent Thielman: Okay. Great. Thanks so much. Duke, a bit of a follow-on to that last question. But when you look across this sort of massive craft workforce you have accumulated here, are there trades in particular where you see real scarcity such that it is actually somewhat of a limiting factor to your growth? The growth has been good, and maybe where you are especially focused on sort of recruiting talented folks out there.
Duke Austin: Yeah. I think, you know, we have added about 6,000 with acquisitions. So year over year. So when you think about it, I mean, we have invested in that craft-skilled workforce and in our colleges or campuses and everything we have done. Their curriculum we can move that curriculum into all phases of craft. Now, I mean, we are early in our technology piece. Cupertino acquisition was a great platform. That inside wireman, as far as I am concerned, is scarce is probably where you see scarcity. Been able to add fabrication. We continue to add premanufacturing, let us call it, you know, premanufactured products there that are allowing us to scale it.
But I think that is probably when I think through it, we will continue to beef that program up and add faster to our inside wire. And then now we are in plumbing, mechanical, all kinds of trades there. From our mechanical business. So, you know, that is next, and we will continue to add curriculum. Some kids do not want to get in the air, and some of these businesses are more local than others. So on our high voltage, we travel. We cannot they are starting to do more of that on the inside, but it was predominantly local. So we have to build these levels much, much stronger, and you will see us do that.
You will see us add there, but in general, I would tell you the inside.
Brent Thielman: Okay. Thank you.
Operator: Thank you. Our next question is from Mike Dudas from Vertical Research Partners. Please unmute your line and ask your question.
Mike Dudas: Good morning, Kip, Jayshree, Duke. Duke, given the extraordinary demand you are seeing and the tightness in capacity, are your customers starting to recognize they need to secure your time, your MSA, your resources at a more quicker rate? And does that lead to maybe better scale and execution on margins as we move forward? And maybe an answer to that, any concern on how the industry is going to pay for all this capacity that is coming through? Certainly, living in New Jersey, we have been seeing a lot of issues on rate going up, etcetera. Just wanted to get your thoughts on how that is a place you are talking to utilities and your developers.
Duke Austin: Yeah. I mean, I think affordability is always an issue. You know, fuel is a big piece of the bill. I mean, 60% interest. Interest going down, you know, you have got to look at your fuel as well. And so those two are big pieces of a bill. Now, you know, I do think you are going to see large transmission get built and things of that nature. You know, PJM is sharing infrastructure. So, you know, there are different models out there, I go back to I think if you look at technology and look at where the loads come in, you have not built a transmission line in The United States.
It is not NPV positive, number one. Number two, generation. The more generation you can see it with the NiSource example. Where the ratepayer is actually benefiting from the load. Those models are out there. And I do think technology is willing to pay their way. So you are seeing utilities and technology come together for what I think is a benefit of the ratepayer here. And it is taken a little bit of time, but as that goes forward, I, you know, look. We all have to be prudent and watch the affordability piece of this, but the NPV on the other side of it is a downward trajectory. So I like what I see.
I think we will get there, and you will see, you know, a positive effect to the ratepayer, all have to be cognizant of.
Operator: Our next question is from Alex Rygiel from Texas Securities. Please unmute your line and ask your question. Morning, Alex.
Alex Rygiel: Good morning. Yeah. Thank you. Nuclear power is gaining momentum here. Can you talk about how Quanta might get involved in that?
Duke Austin: Yeah. I mean, I look. As long as we do not have to go behind that what I would consider, nerd fence and the nuke fence, we are good. I mean, I think once you get behind there, we have to de-risk ourselves and think hard about it. It is not something that the company is jumping up and down to take a risk on. So we are always around the edges on things, and I think we long as we can do the things that we know how to do and stay out of the nuclear fence, we feel real comfortable. But we are not the reactor person, and we are not the person inside the fence.
You know, there are a lot of ancillary things we can do. And will do, but once we cross the line of that fence, it is not us.
Alex Rygiel: Thank you.
Operator: Thank you. Our next question is from Brian Brophy from Stifel Nicolaus.
Brian Brophy: Thanks. Good morning, everybody. Just following up on the NiSource project. Curious if you can comment on whether that is structured as a cost plus or a fixed price project. I would assume it is fixed price, but I think you have alluded to in the past potentially structuring those on a cost plus basis to de-risk it. Just curious if you can provide any color. Thanks.
Duke Austin: Yeah. I mean, we are not getting involved in what kind of contract structure we have, but I would just say, look, I will stand by my comments previously that the company on these types of projects are not we are not going to take certain kinds of risk on them. And so I feel comfortable with where we sit there, but comfortable with the contract, and I can look everyone, all the investors in the eyes and say everything I have said about risk on a combined cycle we have not taken that. So I am happy with where we sit, happy with the contract structure that is a collaborative structure with the client.
That allows both to come out, you know, in a way that we can de-risk both of ourselves and get the right answer to the ratepayer as well as the large load customers. So I like where it sits. I am not going to get into exactly what the structure looks like. Abby did a great job there, and I am extremely pleased with where we sit. And we have a great offering with Zachary. He built 100 plants and ourselves built eight gigs of generation. I am super happy with how we sit and, you know, the Indiana and what we are doing there for the local economy. I am, you know, it is a great partnership with NiSource.
I hope it continues, and it should.
Brian Brophy: Appreciate it. I will pass it on.
Operator: Thank you. Our next question is for Maheep Mandl from Mizuho Securities. If you would like to unmute your line and ask your question, please.
Maheep Mandl: Hey, good morning and thanks for taking the question here. Maybe just one question on JV and maybe this for Jayshree. So let us talk about the accounting here. It seems like fifty-fifty JV and nice to talking about, like, a $67 billion CapEx. So we assume that $3 billion coming to backlog here and in terms of the rev rec, could you share that or how to think about that here? Thanks.
Duke Austin: Yeah. I think the total backlog will be incremental on that, so you can I would tell you the larger piece of that is air permits? It will hit, you know, second half of next year. That will come into backlog, and you should look at our piece of it similar to SunZilla, you know, how it kind of stacked up, and that is how we would look at the thing. And then as far as the combined cycle, it is fifty-fifty.
Jayshree S. Desai: And the accounting on that, as we said, would be proportional. So we will just income statement will reflect our share of that work on from the revenue all the way down to the profit and balance sheet as well.
Duke Austin: There are parts of it with the battery and things like that are straight to Quanta and parts of it that are part of the JV.
Jayshree S. Desai: And just to make sure that, as Duke said earlier, the backlog will reflect as the work progresses. So we are in LNTP phase now. We will move forward in those things. As Duke mentioned, there is an air permit that has to get has to be obtained middle of next year. When it really hits FNTP. So you can expect most of the revenue pickup, and as Duke was saying, is it starts in the '20 and really more into '27 and '28.
Duke Austin: Yeah. There will not be anything meaningful in back, I mean, as far as going to construction or revenues in '26?
Jayshree S. Desai: Correct.
Maheep Mandl: Thank you.
Operator: Thank you. Our next question is from Adam Thalhimer from Thompson Davis.
Adam Thalhimer: Hey, good morning guys. Nice quarter.
Jayshree S. Desai: Thank you.
Adam Thalhimer: If you can comment on the dynamic acquisition, how the integration is going, what kind of demand you are seeing generally in Texas, and what would be your appetite for more mechanical construction acquisitions?
Duke Austin: I mean, I think we are extremely pleased with the acquisition. We bought a great family business, long-standing. We got everything that we thought we would do it 10 times over. I feel like as far as how it is integrated with our offering now, I mean, the inbounds and what we can do certainly picked up the mechanical side. We are addressing them. We can do a lot from fabrication. They already had large facilities. And, you know, broad-based service offering. So we will expand it very quickly, much like we have done in Cupertino and Plattner. I think you can see that type of expansion with DSI. As far as mechanical, I, you know, look. It is trades.
As long as it fits the profiles and the trades, we would look at it. You know, it is something we are starting. We will work with DSI to look at opportunities as they come in. Nothing imminent, but we will continue to look at that offering. I like the business. It is obviously, you know, we have peers there, and they have done a really nice job. They are ahead of us, you know, we are catching up pretty quick. And I like where we are going.
Adam Thalhimer: Thanks, Duke.
Operator: Thank you. Our next question is from Joe Osha from Guggenheim Partners. Please unmute your line and ask your question please.
Joe Osha: Hi. Can you hear me?
Jayshree S. Desai: Yep. We can hear you. Please go ahead.
Joe Osha: Okay. Great. Hey. Good morning, everybody. Lots of talk about combined cycle gas, and I am a little curious. We hear a lot about single cycle going inside defense alongside some of these big data to complement scale renewables. I am wondering if that is perhaps part of the work that you are seeing or perhaps contemplating. Thank you.
Duke Austin: Yeah. I mean, we said that before. I mean, when we started putting group together, it was really around the single cycles. So we felt like that was something right down the middle for us. But it has led to, you know, where we are at today and having more of a total solution to it. But we have a nice group that is looking at it all. I mean, I think it is important for us not for the technology or the large load customer, on the other side, but utility as well and how we interface that and speed this process up.
You know, everyone right now is around speed, and I think that we can provide a unique solution with the mode around the utility and helping both sides of this. So like I said, it comes together a generation and craft skill, which we check both boxes and the certainty thereof. And can we move faster? With single cycles? It is speed to market, whether it is solar, batteries, single cycle, you know, the combined cycle lead times if you have the engines. You know, just all those things matter here. It is a race. And I think in general, for our generation, and we are right in the middle of it. So I am pleased with where we sit.
Joe Osha: Okay. Thank you.
Operator: Thank you. Our last question is from Laura Maher from B. Riley. Please unmute your line and ask your question.
Laura Maher: Hi, good morning. Thanks for taking the question. My question is, are there the utility seeing any regulatory pushback to fund T and D growth?
Duke Austin: I mean, I think you would see affordability issues that are in certain places. But most of the commissions are, you know, really as long as it is a positive to the ratepayer. And like I said, I mean, most transmissions, MPB positive, you know, every commission is different. And every state is different. So they approach it in different ways. But for the most part, I mean, you know, everyone the need for infrastructure is there, and we want a modern robust grid. I mean, in order to have an economy that we see today, the grid has to be modern.
And, you know, not only are we seeing these new projects, but just you still have an ongoing mean, we performed very nicely for three decades in negative load growth. And that business is still there. I mean, we still have to operate these systems. And so you have that ongoing with the load in front of it, and it is broad-based. So I think the commission is there to serve, and we are going to make sure that the affordability of the ratepayer is there as an industry, and everyone is cognizant of that. And fuel, how you purchase fuel, your fuel source, taking risk on larger projects, I mean, I think everyone is looking at risk.
On the outer years and stranded assets, all kinds of different things that you can get into. And that is why you have seen the pace be a little slower with technology because they want to make sure that the stranded assets are not at the ratepayer. But as you see, I believe the models are there will move much faster now that the models are in place to solidify the fact that they have ratepayer benefits in most cases.
Operator: Thank you. We have no further questions at this time. I will turn the call back over to Duke Austin for closing remarks.
Duke Austin: I want to thank the 68,170 men and women in the field who make these calls possible. Our field leadership who continue to make us look good, and thank you for participating in our conference call. We appreciate questions and your ongoing interest in Quanta Services. Thank you. This concludes our call.