The operator welcomes listeners to Quanta Services' Fourth Quarter 2023 Earnings Conference Call and introduces Kip Rupp, Vice President of Investor Relations. The company has updated their earnings call format and supplemental materials, including posting operational and financial commentary and their 2024 outlook on their website. Management will make brief remarks, but the commentary will serve as a replacement for their prepared remarks. There will be no slide presentation. The information discussed on the call is only accurate as of February 22nd, 2024.

The upcoming call for Quanta Services will include forward-looking statements and historical and forecasted non-GAAP financial measures. The company advises against placing undue reliance on these statements and encourages listeners to refer to their earnings release and operational and financial commentary for more information. The call will be led by President and CEO Duke Austin, who will discuss the company's fourth quarter and full year 2023 results, which showed double-digit growth in revenues and earnings. Quanta believes these results demonstrate strong demand for their services and successful execution.

Quanta had a total backlog of $30.1 billion at the end of the year, reflecting the value of their client relationships and their momentum for 2024. They have had six consecutive years of record revenue, adjusted EBITDA, and adjusted diluted earnings per share, thanks to their operational and financial platform and their dedicated employees. 2023 was a significant year for Quanta, and they are looking forward to multiyear strategic initiatives and achieving their goals. Their service line diversity and focus on craft skill labor gives them a strategic advantage and allows them to manage risk and allocate resources effectively. They believe their portfolio approach positions them well for the expected infrastructure investment and energy transition. They will now discuss their results and 2024 guidance.

Quanta had a successful year with strong fourth quarter revenues and net income. They also had record cash flow and made two acquisitions in January. They provided financial expectations for 2024, which show continued growth and profitability. The company believes their portfolio approach, long-term strategy, and favorable market trends contribute to their competitive position. They are now taking questions from analysts.

During a discussion on margins, Duke Austin, the CEO of a company, states that they have historically operated in double-digit margins in both the Electric and Renewable segments. He believes there is opportunity for upside in the Electric segment, especially with new projects like SunZia. They plan to operate in contingency and release funds as needed for execution. There have been some challenges in the Renewable segment, but they are starting to see improvements. Overall, they are confident in their ability to maintain double-digit margins in both segments.

The speaker discusses the Renewable and Electric segments and their potential for double-digit growth when combined. They also mention improved visibility for high-voltage transmission projects, which they believe is crucial for the nation's grid and transition to a carbon-free environment. The speaker expresses confidence in their ability to execute and win these projects. They also touch on their thought process for acquisitions, which is focused on internally sourcing capabilities.

Duke Austin, CEO of the company, discusses the recent acquisitions made in the industrial solutions side of their business. He believes that this segment is resilient and will continue to be valuable in the long term. The company also sees opportunities for synergies and plans to identify and utilize them. The management team and the addition of an environmental solutions business are seen as positive developments for the company's growth. Overall, the industrial base is a strong part of the company's portfolio and has had a successful year.

The speaker discusses the company's confidence in its long-term prospects and the importance of its internal supply chain. They also mention that their customers are not showing any signs of backing off projects, despite concerns about potential regulatory changes. The speaker notes that while there may be some shifts in distribution and transmission, overall the company's customers are continuing to invest in projects such as data centers, load growth, and EV penetration. The speaker also acknowledges the need to plan for potential changes in the industry, particularly in regards to distribution, but also mentions the importance of considering state regulators and customer affordability.

The speaker discusses the demand for electrification and securitization of the system and how it will not affect their portfolio. They stand by their given guidance and have taken everything into account for the 12-month guidance. The speaker also mentions that utility customers have raised their CapEx plans, but they are in a good spot for the start of the year and have the potential for double-digit growth. They will take a prudent approach due to potential factors like storms and the election year.

Duke Austin, the CEO of the company, believes that there is potential for the company to grow by 15% due to the increasing demand for clean power in the tech industry. This demand is driving investments in the transmission and generation systems, which will also benefit the company's distribution sector. He is confident in the company's numbers and is not concerned about the SunZia project, which is expected to ramp up in the second half of the year. He also expects the company to receive more awards in the second half.

Duke Austin, CEO of Quanta Services, discusses the company's growth in the renewables segment in 2024 and beyond. He mentions that they have had significant growth in this area in 2022 and 2023, and expect double-digit growth in 2024. He also notes that there is pressure in 2025 and 2026 due to new wind projects, but overall, the company is optimistic about the future of their renewables business.

Duke Austin, CEO of the company, discusses the impact of wind and solar energy on the company's margins. He believes that as the mix of renewable energy sources changes, margins will continue to increase. He also mentions that the company's Canadian operations are improving in the renewable energy sector. He expects the distribution business to ramp up in the second half of 2024, and sees potential for growth in Canada due to government initiatives for fuel switching. The company's portfolio approach will also help mitigate the impact of the downturn in the Canadian market and utilize assets in the Lower 48 states. However, Austin acknowledges that the company is not performing at its full potential.

The speaker discusses the company's portfolio and how it is shifting towards more electric services. They are focused on optimizing resources and increasing margins. The speaker also mentions that the demand for their services is increasing due to factors such as AI and data center demand, and they are seeing a ramp in certain areas of the business.

The speaker believes that there is still plenty of room for growth in their business and they are not concerned about labor. They have a good understanding of the industry and are seeing impacts on energy and infrastructure. They stress the importance of investing in infrastructure to bring down the cost of energy and ensure security for the country. Unexpected increases in load from data cities also contribute to the need for multiple power lines.

The speaker discusses the growth of technology and the need for utilities and communication services to support it. They mention the need for federal push and state regulation to facilitate this growth and the potential for a noisy transition. The speaker also notes the potential for synergies between power and communication services in supporting the demand for AI and data centers.

The speaker discusses the growth of data centers in the South due to the availability of affordable power. They also mention the challenges of building large diameter pipes for LNG export projects and how it does not significantly impact their financial guidance.

The speaker asks about the higher than expected free cash flow guidance and whether it is due to one-time collections or a more permanent improvement. The speaker explains that the renewable business has a favorable cash flow profile and as it grows, it will lead to better conversion. However, the mix of work between renewables and other segments can affect the range of 45% to 55% conversion. The speaker also mentions the one-time cash flow impact of a large Canadian Renewable project and expresses optimism about collecting it in 2024. They advise looking at a range of 45% to 55% conversion on an ongoing basis.

The speaker discusses how the company will approach capital allocation this year, noting that they will be opportunistic and may increase their pace as they continue to delever. They also mention the impact of tax credits on the industry, stating that they do not expect them to be repealed.

The company's customer base is figuring out the IRA and there are more opportunities in the future. The company is well positioned to take advantage of these opportunities. There is no slowdown from the customer's standpoint. The company's storage and battery business is growing nicely. They are seeing more opportunities for solar and wind projects, including re-powering and the SunZia project.

The speaker discusses the potential for repower work in the future and mentions that wind energy will become more prevalent in the outer years. They also mention the need for transmission infrastructure to support wind energy. The speaker also mentions the expansion of capacity at PTT and the positive outlook for the business. The earnings cadence for the year is expected to be back-end loaded, which is typical for the company.

The speaker thanks the employees and participants for their involvement in the conference call and expresses appreciation for their interest in the company. The call is now concluded.

This summary was generated with AI and may contain some inaccuracies.