One quarter at a time, Quanta Services (NYSE:PWR) just keeps coming into better focus. And with utilities moving along the process of improving their transmission and distribution assets from thinking to planning to actually doing, more growth should be on the way.
Revenue for this first quarter rose 33% to more than $496 million. Significantly (or at least it seems significant to me), there was less contribution from storm work in this period than in either the prior quarter or the year-ago period. In other words, the growth we saw here was from actual planned projects. Better revenue filtered through the rest of the income statement, reversing year-ago losses at the operating and net income lines.
This has pretty much always been a utility story, and that's still the case. Revenue from power and gas companies was up 34% and made up two-thirds of the revenue base. As management tells it, not only are utilities starting to put plans into action on transmission and distribution work, but pricing on contracts is also getting better. That's good news for Quanta, and even for rivals InfraSource (NYSE:IFS) and Pike Electric (NYSE:PEC). There's plenty of utility business to go around, but there are also plenty of contractors to bid on that business.
And though I believe that work relating to power transmission and reliability is still the biggest part of the story, it's not the only thing Quanta has going for it. The telecom and cable business is growing pretty well, and it doesn't seem as though customers like Verizon (NYSE:VZ), AT&T (NYSE:T), and TXU (NYSE:TXU) are pulling back from their respective broadband/fiber projects.
With a growing backlog, big-name clients, and a federal mandate to improve power service, I don't think Quanta is close to a peak in its business yet. In fact, this will most likely be a multiyear upswing for the company as a combination of power upgrades, new power projects, growing broadband competition, and potentially more violent weather all play to this company's strengths.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
