UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2004 | ||
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to . | ||
Commission file no. 001-13831
Quanta Services, Inc.
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Delaware
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74-2851603 | |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1360 Post Oak Blvd.
Registrant’s telephone number, including area code:
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
116,176,223 shares of Common Stock were outstanding as of November 3, 2004. As of the same date, 1,046,067 shares of Limited Vote Common Stock were outstanding.
QUANTA SERVICES, INC. AND SUBSIDIARIES
INDEX
1
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | September 30, | |||||||||
| 2003 | 2004 | |||||||||
| ASSETS | ||||||||||
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Current Assets:
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Cash and cash equivalents
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$ | 179,626 | $ | 217,738 | ||||||
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Accounts receivable, net of allowances of $27,306
and $9,920, respectively
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365,840 | 394,223 | ||||||||
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Costs and estimated earnings in excess of
billings on uncompleted contracts
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44,477 | 52,241 | ||||||||
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Inventories
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23,809 | 25,425 | ||||||||
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Prepaid expenses and other current assets
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62,341 | 27,714 | ||||||||
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Total current assets
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676,093 | 717,341 | ||||||||
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Property and equipment, net
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341,542 | 324,774 | ||||||||
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Accounts and notes receivable, net of allowances
of $46,374 and $42,953, respectively
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34,327 | 19,419 | ||||||||
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Other assets, net
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25,591 | 23,929 | ||||||||
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Goodwill and other intangibles, net
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388,882 | 388,685 | ||||||||
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Total assets
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$ | 1,466,435 | $ | 1,474,148 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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Current Liabilities:
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Current maturities of long-term debt
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$ | 5,034 | $ | 4,084 | ||||||
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Accounts payable and accrued expenses
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177,241 | 216,594 | ||||||||
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Billings in excess of costs and estimated
earnings on uncompleted contracts
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17,115 | 16,498 | ||||||||
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Total current liabilities
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199,390 | 237,176 | ||||||||
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Long-term debt, net of current maturities
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58,051 | 27,807 | ||||||||
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Convertible subordinated notes
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442,500 | 442,500 | ||||||||
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Deferred income taxes and other non-current
liabilities
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103,362 | 107,272 | ||||||||
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Total liabilities
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803,303 | 814,755 | ||||||||
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Commitments and Contingencies
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Stockholders’ Equity:
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Common stock, $.00001 par value,
300,000,000 shares authorized, 116,426,215 and
118,698,670 shares issued and 115,499,775 and 117,432,771
outstanding, respectively
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— | — | ||||||||
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Limited Vote Common Stock, $.00001 par
value, 3,345,333 shares authorized, 1,067,750 and
1,051,067 shares issued and outstanding, respectively
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— | — | ||||||||
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Additional paid-in capital
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1,071,701 | 1,083,097 | ||||||||
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Deferred compensation
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(7,359 | ) | (8,558 | ) | ||||||
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Retained deficit
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(389,485 | ) | (400,515 | ) | ||||||
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Treasury stock, 926,440 and 1,265,899 common
shares, at cost
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(11,725 | ) | (14,631 | ) | ||||||
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Total stockholders’ equity
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663,132 | 659,393 | ||||||||
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Total liabilities and stockholders’ equity
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$ | 1,466,435 | $ | 1,474,148 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2003 | 2004 | 2003 | 2004 | |||||||||||||||
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Revenues
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$ | 436,133 | $ | 463,077 | $ | 1,211,564 | $ | 1,207,268 | ||||||||||
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Cost of services (including depreciation)
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381,125 | 404,652 | 1,065,281 | 1,075,778 | ||||||||||||||
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Gross profit
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55,008 | 58,425 | 146,283 | 131,490 | ||||||||||||||
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Selling, general and administrative expenses
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39,193 | 44,265 | 136,964 | 128,396 | ||||||||||||||
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Income from operations
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15,815 | 14,160 | 9,319 | 3,094 | ||||||||||||||
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Other income (expense):
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Interest expense
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(8,080 | ) | (6,379 | ) | (24,182 | ) | (18,973 | ) | ||||||||||
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Other, net
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489 | 823 | 1,073 | 1,545 | ||||||||||||||
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Income (loss) before income tax provision
(benefit)
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8,224 | 8,604 | (13,790 | ) | (14,334 | ) | ||||||||||||
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Provision (benefit) for income taxes
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2,825 | 4,448 | (4,511 | ) | (3,304 | ) | ||||||||||||
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Net income (loss)
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5,399 | 4,156 | (9,279 | ) | (11,030 | ) | ||||||||||||
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Dividends on preferred stock, net of forfeitures
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— | — | (2,109 | ) | — | |||||||||||||
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Net income (loss) attributable to common stock
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$ | 5,399 | $ | 4,156 | $ | (7,170 | ) | $ | (11,030 | ) | ||||||||
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Earnings (loss) per share:
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Basic earnings (loss) per share
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$ | 0.05 | $ | 0.04 | $ | (0.06 | ) | $ | (0.10 | ) | ||||||||
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Diluted earnings (loss) per share
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$ | 0.05 | $ | 0.04 | $ | (0.06 | ) | $ | (0.10 | ) | ||||||||
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Shares used in computing earnings (loss) per
share:
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Basic
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116,567 | 114,683 | 112,484 | 114,343 | ||||||||||||||
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Diluted
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116,645 | 115,385 | 112,484 | 114,343 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||
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Cash Flows from Operating Activities:
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Net income (loss) attributable to common stock
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$ | 5,399 | $ | 4,156 | $ | (7,170 | ) | $ | (11,030 | ) | |||||||||||
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Adjustments to reconcile net income (loss)
attributable to common stock to net cash provided by operating
activities —
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Depreciation and amortization
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14,920 | 14,564 | 45,128 | 44,331 | |||||||||||||||||
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Loss (gain) on sale of property and equipment
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307 | 782 | 1,001 | (473 | ) | ||||||||||||||||
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Provision for doubtful accounts
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504 | 56 | 19,761 | 239 | |||||||||||||||||
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Deferred income tax provision (benefit)
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3,558 | 4,270 | 35,862 | (7,175 | ) | ||||||||||||||||
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Amortization of deferred compensation
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839 | 1,178 | 1,923 | 3,468 | |||||||||||||||||
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Preferred stock dividend, net of forfeitures
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— | — | (2,109 | ) | — | ||||||||||||||||
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Changes in operating assets and liabilities, net
of non-cash transactions —
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(Increase) decrease in —
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Accounts and notes receivable
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(34,053 | ) | (40,621 | ) | (23,517 | ) | (13,714 | ) | |||||||||||||
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Costs and estimated earnings in excess of
billings on uncompleted contracts
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(1,240 | ) | 552 | (3,096 | ) | (7,764 | ) | ||||||||||||||
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Inventories
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1,173 | 1,100 | (19 | ) | (1,616 | ) | |||||||||||||||
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Prepaid expenses and other current assets
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(3,582 | ) | 23,775 | (3,597 | ) | 28,466 | |||||||||||||||
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Increase (decrease) in —
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Accounts payable and accrued expenses and other
non-current liabilities
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10,901 | 33,950 | 7,227 | 49,325 | |||||||||||||||||
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Billings in excess of costs and estimated
earnings on uncompleted contracts
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3,902 | 475 | 2,317 | (617 | ) | ||||||||||||||||
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Other, net
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959 | 1,589 | 3,038 | 2,018 | |||||||||||||||||
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Net cash provided by operating activities
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3,587 | 45,826 | 76,749 | 85,458 | |||||||||||||||||
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Cash Flows from Investing Activities:
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Proceeds from sale of property and equipment
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1,009 | 169 | 1,913 | 3,439 | |||||||||||||||||
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Additions of property and equipment
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(11,459 | ) | (10,495 | ) | (23,936 | ) | (29,987 | ) | |||||||||||||
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Cash (restricted) released for
self-insurance programs
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(1,248 | ) | 2,382 | (8,448 | ) | 8,409 | |||||||||||||||
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Net cash used in investing activities
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(11,698 | ) | (7,944 | ) | (30,471 | ) | (18,139 | ) | |||||||||||||
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Cash Flows from Financing Activities:
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Net borrowings (payments) under bank lines
of credit
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— | (18,800 | ) | — | (29,500 | ) | |||||||||||||||
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Proceeds from other long-term debt
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353 | 1,770 | 2,491 | 2,014 | |||||||||||||||||
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Payments on other long-term debt
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(1,882 | ) | (652 | ) | (5,631 | ) | (3,709 | ) | |||||||||||||
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Debt issuance and amendment costs
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(315 | ) | (1,224 | ) | (315 | ) | (1,224 | ) | |||||||||||||
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Issuances of stock, net of offering costs
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1,667 | 1,392 | 7,103 | 3,042 | |||||||||||||||||
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Exercise of stock options
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— | 53 | — | 170 | |||||||||||||||||
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Net cash provided by (used in) financing
activities
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(177 | ) | (17,461 | ) | 3,648 | (29,207 | ) | ||||||||||||||
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Net Increase (Decrease) in Cash and Cash
Equivalents
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(8,288 | ) | 20,421 | 49,926 | 38,112 | ||||||||||||||||
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Cash and Cash Equivalents, beginning of period
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86,115 | 197,317 | 27,901 | 179,626 | |||||||||||||||||
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Cash and Cash Equivalents, end of period
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$ | 77,827 | $ | 217,738 | $ | 77,827 | $ | 217,738 | |||||||||||||
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Supplemental Disclosure of Cash Flow Information
Cash paid (received) for —
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Interest
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$ | 9,093 | $ | 4,180 | $ | 20,042 | $ | 11,207 | |||||||||||||
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Income taxes, net of refunds
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$ | (1,144 | ) | $ | (29,494 | ) | $ | (39,566 | ) | $ | (29,950 | ) | |||||||||
The accompanying notes are an inte