Quanta Services 2018 Annual Report

Selected Financial Data

(In millions, except per share information) As of and for the years ended December 31,

SUMMARY BALANCE SHEET	2018	2017
Total current assets	$3,326	$2,870
Property and equipment, net	1,276	1,288
Other assets, net	294	190
Other intangible assets, net	280	263
Goodwill	1,900	1,869
Total assets	$7,076	$6,480

Total current liabilities	$1,806	$1,492
Long-term debt and notes payable, net	$1,041	$671
Deferred income taxes	219	179
Insurance and other non-current liabilities	405	342
Total equity	3,605	3,796
Total liabilities and stockholders' equity	$7,076	$6,480

SUMMARY INCOME STATEMENT	2018	2017
Revenues	$11,171	$9,466
Operating income	$540	$379
Net income attributable to common stock	$293	$315
Diluted earnings per share attributable to common stock	$1.90	$2.00
Adjusted diluted earnings per share attributableto common stock	$2.81	$1.97
Adjusted EBITDA	$902	$709

SUMMARY CASH FLOW DATA
Net cash provided by operating activities	$359	$372
Capital expenditures, net of proceeds from sales	262	221
Free cash flow ⁽¹⁾	$97	$151

⁽¹⁾ Free cash flow (a non-GAAP measure) is reconciled to net cash provided by operating activities (the most directly comparable GAAP measure).

Reconciliation of Non-GAAP Financial Measures

Adjusted diluted earnings per share from continuing operations attributable to common stock:
(In millions, except per share information) For the Years Ended December 31,

	2018	2017	2016	2015
Net income from continuing operations attributable to common stock (GAAP as reported)	$293	$315	$199	$120
Adjustments:
Impact of Tax Cut and Jobs Act	33	(70)
Income tax impact primarily related to entity restructuring and recapitalization efforts	2	(18)
Change in fair value of contingent consideration liabilities	(11)	(5)
Impact of income tax contingency releases	(8)	(7)	(20)
Severance and restructuring charges	1		6
Asset impairment charges	53	60	8	58
Impact of Alberta tax law change				5
Impact of tax benefit from realization of previously unrecognized deferred tax asset				(4)
Acquisition and integration costs	17	11	3	8
Income tax impact of adjustments	(19)	(24)	(4)	(16)
Adjusted net income from continuing operations attributable to common stock before certain non-cash adjustments	362	261	192	171
Non-cash stock based compensation	52	47	40	37
Amortization of intangibles	44	32	32	35
Income tax impact of non-cash adjustments	(25)	(29)	(26)	(26)
Adjusted net income from continuing operations attributable to common stock for adjusted diluted earnings per share from continuing operations	433	310	238	217
Calculation of weighted average shares for adjusted diluted earnings per share from continuing operations attributable to common stock:
Weighted average shares outstanding for basic earnings per share	153	156	157	195
Effect of dilutive stock options	1	1	0	0
Weighted average shares outstanding for adjusted diluted earnings per share	154	157	157	195
Earnings Attributable to Common Stock:
Diluted earnings per share from continuing operations	$1.90	$2.00	$1.26	$0.62
Adjusted diluted earnings per share from continuing operations	$2.81	$1.97	$1.51	$1.11

The non-GAAP measure of adjusted diluted earnings per share from continuing operations is provided to enable investors to evaluate performance excluding the effects of items that management believes impact the comparability of operating results between periods.

Reconciliation of EBITDA and Adjusted EBITDA

(In thousands) For the Years Ended December 31,

	2018	2017	2016	2015
Net income attributable to common stock (as defined by GAAP)	$293,346	$314,978	$198,725	$120,286
Interest expense	36,945	20,946	14,887	8,024
Interest income	(1,555)	(832)	(2,423)	(1,493)
Provision for income taxes	161,659	35,532	107,246	97,472
Amortization of intangible assets	43,994	32,205	31,685	34,848
Equity in losses of unconsolidated affiliates	52,867	10,945	979	466
Depreciation expense	202,519	183,808	170,240	162,845
EBITDA	$789,775	$597,582	$521,339	$422,448
Non-cash stock-based compensation	52,484	46,448	41,134	36,939
Acquisition and integration costs	17,233	10,579	3,053	7,966
Asset impairment charges	52,658	59,950	7,964	58,451
Change in fair value of contingent consideration liabilities	(11,248)	(5,171)
Severance and restructuring charges	1,326		6,352
Adjusted EBITDA	$902,228	$709,388	$579,842	$525,804
Consolidated Revenues	$11,171,423	$9,466,478	$7,651,319	$7,572,436
Adjusted EBITDA Margin	8.1%	7.5%	7.6%	6.9%

The non-GAAP measures of EBITDA and Adjusted EBITDA are provided to enable investors to evaluate performance excluding the effects of items that management believes impact the comparability of operating results between periods.

Remaining Performance Obligations and Backlog

As of December 31, 2018 (in millions)

This table presents Quanta’s backlog by reportable segment and includes an estimate of the backlog amounts expected to be realized within 12 months of each balance sheet date.

	12 Month	Total
Electric Power Infrastructure Services
Remaining performance obligations	$2,094	$3,046
Estimated orders under MSAs and short-term, non-fixed price contracts	2,468	5,500
Backlog	4,561	8,545
Pipeline and Industrial Infrastructure Services
Remaining performance obligations	1,004	1,636
Estimated orders under MSAs and short-term, non-fixed price contracts	1,411	2,161
Backlog	2,415	3,797
Total
Remaining performance obligations	3,097	4,682
Estimated orders under MSAs and short-term, non-fixed price contracts	3,879	7,661
Backlog	$6,976	$12,343