Quanta Services, Inc. Price & Performance (PWR)

This morning, we issued a press release announcing our fourth quarter and full year twenty twenty four results which can be found in the Investor Relations section of our website at quantaservices.com Quanta. This morning, we also posted our fourth quarter and full year twenty twenty four 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, 02/20/2025, 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, financial performance that do not solely relate to historical and 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 Quanta, natural results may differ materially from those expressed or implied.

We'll also present certain historical and forecasted non GAAP financial measures Reconciliations of these financial measures to the most directly comparable GAAP financial measures, included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding 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 Quan IR and Quanah Quanta on the social media channels listed our website. With that, I would like to now turn the call over to Mr. Duke Austin, Quanta's President and CEO Quanta. [indiscernible] Thanks, Kip. This morning, we reported our fourth quarter and full year 2024 results. Which included double digit growth in revenues and earnings and a number of record financial metrics. Total backlog at year end was $34,500,000,000 And notably, Renewable Energy Infrastructure Solutions segment twelve month in total backlog achieved all time highs. Our ability to deliver consistent profitable growth is a testament to the strength of our portfolio approach, a diversified solutions based strategy that enables us to adapt to evolving industry dynamics, while delivering mission critical infrastructure.

Quanta has produced record revenues seven of the last eight years. Seven consecutive years of record adjusted EBITDA, and eight consecutive years of record adjusted diluted earnings per share. These results were made possible by more than 58,000 dedicated employees and our industry leading operational and financial platform. 2024 was another successful year for Quanta strategically operationally and financially. And while there are always areas for improvement, we are proud of our many accomplishments during this year and we continue to look forward with excitement towards the multiyear strategic initiatives we are working on and the goals we expect to achieve in this and the coming years. We continue to see significant opportunity to advance our growth strategy and are pacing well against our multiyear financial targets. Including double digit EPS growth, and double digit returns. Our strategic initiatives are enhancing our service lines, and capabilities while also expanding our customer base and therefore enlarging our total addressable market opportunity for both organic growth and strategic capital deployment. The energy and infrastructure landscape is undergoing a fundamental transformation. And Quanta is positioned at its center. Utilities across The United States are experiencing and forecasting meaningful increases in power demand for the first time in two decades.

Which is being driven by the adoption of new technologies and related infrastructure. Including data centers, Quanta artificial intelligence. The energy transition and policies intended to strategically reinforce domestic manufacturing, and supply chain resources. This increasing demand coupled with tightening power generation capacity underscores the urgent need for large scale grid modernization and energy infrastructure development. Fana's portfolio approach uniquely positions us to support our clients, as they navigate this evolving landscape Our diversified service lines, self perform capabilities and craft skill workforce give us the flexibility to deploy resources where they create the most value across geographies, industries and service lines. We believe our collaborative solution based approach is valued by our clients. Than ever. We are positioning Quanta for decades of expected necessary infrastructure I believe our service line diversity creates platforms for growth that expand our total addressable market. Our portfolio approach and focus on crowd scale labor is a strategic advantage that provides us the ability to manage risk and shift resources across service lines and geographies, we believe will become increasingly important As load growth electrification We believe our portfolio approach positions us well to allocate resources to opportunities we find the most economically attractive.

And to achieve operating efficiencies and consistent financial results. I will now turn the call over to Jayshree Desai. CFO to provide a few remarks about our results and 2025 guidance then we will take your questions. [indiscernible] Thanks, Duke, and good morning, everyone. Quanta completed the year with fourth quarter revenues of $6,600,000,000 net income attributable to common stock of $305,100,000 or $2.03 per diluted share and adjusted diluted earnings per share of $2.94 Adjusted EBITDA was $737,800,000 or 11.3% of revenues. Of note, our cash flow in the fourth quarter and for the full year exceeded the upper end of our free cash flow guidance expectations. For the fourth quarter and full year of 2024, we had free cash flow of $575,400,000 and $1,600,000,000 respectively. With our full year free cash flow a record.

Our earnings and cash flow performance allowed us to end the fourth and a balance sheet that supports both our organic growth expectations and the opportunistic investment of capital to generate incremental returns for our stockholders. To that end, subsequent to the end of 2024, we acquired two companies for aggregate upfront consideration approximately $562,000,000 of cash and stock. This morning, we provided our full year 2020 financial expectations, calls for another year of profitable growth with record revenues improved margins and opportunity for double digit growth in adjusted EBITDA, and adjusted earnings per share. We believe our expectations demonstrate the strength of our portfolio approach to the business our commitment to our long term strategy, our favorable end market trends and our competitive position in the marketplace. As mentioned in our earnings release, beginning with three months ending 03/31/2025, we will report our results under two reportable segments: Electric Infrastructure Solutions and underground utility and infrastructure solutions. The new Electric Infrastructure Solutions segment combines the previous electric Power Infrastructure Solutions and Renewable Energy Infrastructure Solutions segments. This new segment reporting reflects how the business is managed and resources are allocated and better reflects the positioning of our strategies and comprehensive solutions for our growing and increasingly converging addressable markets.

Additional details and commentary about 2025 financial guidance can be found in our operational and financial commentary and outlooks expectations summary. Both of which are posted on our IR website. In summary, we are executing well on our strategic plan on our and are pacing well against our multiyear financial targets, including double digit EPS growth and double digit returns. We ended 2024 with record backlog. And our end markets have never been better, and we see opportunity for further strength in the coming years. With that, we are happy to answer your questions. Operator?

Thank you. We will now move to our question and answer session. We ask that all participants limit themselves to one question. If you have additional questions, you may re queue and ask and those questions will be addressed time permitting. If you have joined via the webinar, please use the raise hand icon which can be found in the bottom of your webinar application. If you have joined by phone, please dial 9 to raise your hand. When you are called on, please unmute your line and ask your question. We will now pause a moment to assemble the queue. Our first question comes from Chad Dillard with Bernstein. Your line is open. Please go ahead.

Hey, good morning, guys. So just a big picture question here. So what does the shift from investing in training data centers to and the broader grid? Is there any difference in the labor needs, design approach, grid use? Is it a positive, negative, or net neutral?

I mean, when we look at data centers and what it does, like before AI, there was still significant demand. After AI, there's more demand. How much demand? I don't know. What I do see is we see firm commitments of generation [indiscernible] It's well over 50 gigs, in the 100 gigs honestly. So when you see those that type of demand on energy the type of data centers and how you're looking at it, we're not looking at it in that way. We're just seeing the demand on our infrastructure and what we need to build. We're booking backlog against it. So we [indiscernible] AI chips and what that does, we're not concerned with that at this point. We just see that demand that's firm.

That's helpful. And just second question just on recent M and A that you guys did. So I guess first of all, what sort of revenue contribution should we be baking in for 2025? Quanta then on the civil business, how are you thinking about the mix of business going forward? Is this meant to support Qantas core business or are there other like ancillary verticals that you're going to be operating in? And then on the Australia expansion, I guess like what's your long term view on Australia as an attractive market? And I guess what is the market structure and how is a Quanta position there with this acquisition?

Yes. So [indiscernible] The Civil Acquisitions business, I think from my standpoint, the DNA, the culture of the company, we've known them a long time, known them for decades, passed by their office. My whole career. So I know the family, it's a great family business. It fits our DNA and it also is something that the company itself has synergies against the Obviously, we don't put those in the deal I feel like when we look at those solutions that we can provide, it gives us a holistic [indiscernible] can deliver it on a holistic basis and really add value to the overall solutions of what we're trying to accomplish If you look at a 1,000 acre solar site, look at a 1,000 acre 10,000 acre data center, you look at all the things that we do and try to provide solutions to whether it's LNG, sites, it doesn't matter. We will take the assets, the people which are the core to it and go and deliver against our own business as well as others. So it's a solution that people are asking for and we want to be holistic when we look at it and self perform more capabilities and give ourselves the more flexibility as we look at the markets.

In Australia, continuing to invest in Australia, The front side of the business down there is something that we've said all along that we'll continue to invest in. Great companies, great markets. We're market leaders in the renewable business down in Australia. We like it long term and feel like we can continue to invest in the country. So great rule of law obviously gives us a lot of flexibility. So we're excited about that market as well. I'll let Jayshree comment on the revenues.

We don't contribute we're not going to discuss any individual acquisition, but we'll tell you that the two acquisitions, the majority of it is captured in our U, U and I segment, and we did give you guidance in that around what the inorganic contribution in our guide is related to that.

Our next question will come from Atimoda with Goldman Sachs. Please unmute and ask your question.

Yes. Hi, good morning team.

Power segment, the factors that drove that and how much of the margin improvement should we consider as structural going forward?

Yes. I mean, we executed well in the quarter. We've done some acquisitions there with Cupertino that are in the segment. Obviously, it had a lower margin profile, but a better return. So Utilizations and things of that nature. In the business. But in general, we sat all along, it was back half loaded. We felt like the electric business is going to be strong in the second half. It was. [indiscernible] can only say that we have the field and the personnel that we have out there and the structures that we put together is what's delivering it. And I think as we see the markets, we will continue to deliver earnings in the 10.5%, 11% range in this segment. That's basically where we're at and where we'll be on a go forward basis. So I think no matter what we do in that segment, that's kind of how you should look at the framework going forward. Yes, it will be some years that are above it due to some factors here or there. [indiscernible] given what we see in the market, that's kind of the framework we see going forward to Nafilimersen. [indiscernible] If you look at our electric segment, you're seeing us at over 10%, and that's after taking into consideration that we have reduced storm from where we were in 2024.

It takes out the Peru impact. And even with that, we're still in double digit segment revenue. And I think that you should take comfort that we're we're going to continue operating at that level and the performance of the company from last year going to go into 2025 as well. Makes sense. Thank you, Jesher.

Our next question will come from the line of Jamie Cook with Truist Securities.

Appears you're on the phone, Jamie. Star six will allow you to unmute.

Hi, can you hear me? Hey, can you hear me now? Hey, Jamie. [indiscernible] first question, Duke, if you could frame the expectations for backlog growth in 2025 Quanta in particular, can you talk to potential synergies or big awards that'd be could be coming out of Cupertino? I know you guys were very successful. With revenue synergies associated with Blattner. I'm just trying to understand what's going on with Cupertino and is that an opportunity for larger awards in 2025? But my second question, Jayshree, just and I'm sorry if you missed this, I know on the cash flow guide you sort of talked to it being more back end loaded. Just how do we think about first half versus back half and what's driving that? Thank you. Yes. Thanks, Jamie.

I think when we look at the business in totality, when we value these platform companies, we don't build synergies into The discussions that we have or the way we value them But what we do see is when the total adjustable markets of TAMs on the business something that goes unnoticed, the customer base goes unnoticed. Those synergies show up And you've seen with Blattner as we've gotten farther along in the balance of plant, the things that we're able to do with these type customers because there's convergence between technology, utilities, and the way we look at the data centers And so the way that we're looking at the business certainly looks different and those markets are different. If you just look at the tech CapEx and look at utility CapEx. Utility CapEx is $200,000,000,000 plus. And then now technologies $300,000,000,000 plus, but probably call it $150,000,000 in North America. The addressable markets that Quanta serves and how we converge in the nexus of the middle of it really puts us in a different position on larger projects So I expect our backlog to be at record levels. It could CAGR at record levels. It wouldn't surprise me.

But I do expect us to be at record levels throughout the year. I can't tell you exactly, you know how the backlog books I can't tell you exactly when that will happen, but What I see bigger projects, the our ability to perform solutions something that's unnoticed to the investment community. We are a solutions provider. I'll say it again, solutions provider. [indiscernible] what we do in those solutions that we provide and how we collaborate with that customer, we allow us in our addressable markets only getting bigger. So it just allows us more [indiscernible] we see it showing up Super excited about where we sit and the strategies that we have going forward against that solution based how we use craft, skill and engineering in that solution. So, yeah, I mean, I fully expect us to book larger projects and but we'll continue the base business. We are not taking our eye off that either. [indiscernible] sorry, go ahead.

No, I was just going to say specific to Cupertino is the question too, do like anything specific to Cupertino in terms of a revenue center. Larger awards in 2025.

I think I inferred that, but yes, absolutely.

Okay. Okay. All right.

Sorry, Jaysh, you're going to go on to the cash flow question. Thanks.

Yes.

On free cash flow, it's our typical pro Wouldn't expect too much in the first half. Just given the nature of how our business operates. So I think you'll see similar cadence to what we've done in the last couple of years.

Okay. Thank you. [indiscernible] Our next question will come from Steven Fisher with UBS.

Please unmute and ask your question.

Thanks. Good morning. It was helpful and high and low voltage. Just curious directionally, if you can give us a sense of what those growth rates were in 2024, so we can kind of see how it compares year over year? And then kind of looking beyond 2025 conceptually, do you think generation should still grow kind of above the high and low voltage rate for the next couple of years. Or is this sort of like the renewables piece kind of driving generation, which is going to slow down while the grid part should be accelerating and those streams will cross, if you will.

Yes, Steve. I mean, I think you're seeing gross growth across the business. You're seeing growth at the EPS line at the midpoint, what is it, 16%. At the midpoint of EPS. And you're seeing growth on the top line, call it organic growth 6% to 7%. Percent, up 10% if you look at the whole company on the top. So we're seeing growth One of the reasons that we're going to one segment is how we run the business. And we feel like that the convergence of the business, we spoke a lot last year around T and D Actually, I explained it for four months. That our transmission and distribution crews cross segments It was very confusing to the investment community. It's not how we run the business. We put it together. So for us to go in and tell you how much generation growth or what is that? Because there are substations, there's all kinds of different things. Our people [indiscernible] from data centers to chip plants to hospitals, clean rooms, move all across. So we're going to optimize our people against the markets. We're not making any specific manufacturing anything manufacturing where it's only specific to one segment or one TAM, I mean, we're addressing across a large customer base.

So we like the way we're set up. And we're not going to get into guidance on little pieces of the segment because it doesn't matter to us. What matters is the markets are growing, all the businesses growing, We're putting up at the midpoint of the range 10 plus you see growth all across it. So we feel like that All the markets that we're in are growing and we can move and be nimble across them and provide those solutions that we've discussed on the go forward basis, how we're going to run the business, how we're going to talk about the business. And we have growth and we see growth you can see the backlog I welcome you to look at the backlog and see what we put up in the Renewables segment. Alone, which I believe we said that last quarter that we would put it up and we did. And those kind of numbers are staying there and they're not just twelve month backlog, it's long term backlog in the 2627 and '28. So we see growth and I think you can comfort yourself on the demand you see for generation. It's just a supply and demand issue, we've said this, like the demand on generation, it doesn't matter.

It's going to be renewables, it's going to be gas fired generation, it's going continue and you can see it it's right there and then we're talking about it daily. So we're optimistic. Like the growth. We're not going to get into the little pieces of the segment. That's not who we are, we're a solution provider.

Sounds good. Thank you.

Our next question will come from the line of Julien Dumoulin Smith Excellent. Good morning, everyone. Thank you very, very much for the time. I appreciate it. Maybe just to come back to that last point here briefly, just on the renewable front real quickly. As you think about some of the headlines here under the new administration, can you speak a little bit to your confidence in the execution on the Sunseo project specifically, both in terms of operations permit considerations across federal lands. I suspect it's largely intact, but Quanta to make sure we've checked that off. And then separately and related here, as you think about this resegmentation, I think you were alluding to it a moment ago, but if you weren't to resegment, right, again, just to use the hypothetical and brief, can you speak As to how that backlog would translate into compounding revenue as it stands today? I suspect some folks are looking at this and saying, is there something about a deceleration? The renewables business clearly backlog data points today would suggest otherwise. But if you can speak to that even more Julian, thanks. Sunzia, first of all, like I we're doing great.

We're progressing well. I fully expect us to complete not seeing any permitting issues on it. We're well past that. And then I want to talk a little bit about Sunzia because I think people are worried about the replacement. If you break Sunzia down and you go soon to have your project, if you look at the wind piece, it's basically two jobs. A year. And I just we're not worried about replacing some of these. We've already replaced it. It's in the backlog. And then on the transmission line, yes, it's a big line, but we replace that as well.

And so I'm not concerned at all with our ability to replace Zia going And I think that's a misnomer in the investment community. I want to get that out there and say, not worried. The second we're seeing renewable generation growth. We're seeing it in outer years. We're looking at '26, '27 and '28. We put growth up and '25. We'll put growth up in '26. We're not concerned at this point with that and yes, there's going to be gas generation getting built. We see it. We've said it all along. It's 20%, 30%. [indiscernible] when you start ordering turbines that are thirty six to forty eight months out, what are you going to do between now and then? And I still believe like even when you get turbines in, when you start to see that, you still got to build renewables behind it. And fill up the lines and it when I look at the cost of renewables, at The way I'm looking at it and the way everyone should, we got to fill the lines up with renewables, gas, batteries, everything possible because that's what matters and people are underestimating transmission. The real issue is we need to build transmission in North America to really fully get the capabilities of all forms of energy I'm not worried about growth.

But we need to get the permitting straight to get the transmission built. And Julian, just to be clear, we are resegmenting starting first Quanta. [indiscernible] We're resegmenting first quarter for sure.

Yes, no, absolutely indeed. And if I could pick up on that last point quickly, because these RTOs have really released quite substantive increases in their transmission planning processes in the last quarter or so. What's the timeline and cadence that you're expecting for some of that to flow into your backlog? I get that there's there is some kind of lag here. It could be a couple of quarters or so. How do you think about that across these because the numbers are really quite staggering in the last three months?

Yes, I'm glad you noticed. What I would say is I do think we're having those discussions today and before they even came out. I think Steve was talking about the larger projects Someone should look at those queues and see what those say and that's on top of their already ongoing capital.

Those are big projects that are both in mainly all they are for that matter So you're starting to see bigger work and we're having those discussions on a daily basis and I like our chances.

All right. Best of luck.

Thank you. Our next question will come from the line of Steve Fleishman with Wolfe Research.

Please dial 6, unmute, and ask your question.

We can hear you. Please go ahead.

Okay. [indiscernible] So I think on the I think you answered the question on renewables that you it sounds like the tailwinds are still there that you're seeing despite the change in administration and Some of the tariffs, other things that have come up, just [indiscernible] that you're watching or wary up there But certainly didn't look like it with the backlog increase you got Second question, is you mentioned a lot of focus on gas and that seems to keep increasing. I know you don't want to be in the gas turbine business, but just do you see kind of the pieces of your coming together for a more growth in your undergrounding business over the next several years as this does seem to be likely to ramp up meaningfully Looking out Yes, Steve. First of all, like, we do look I mean, we're looking at administration on PTCs and and how that would impact our customers. I think we watch that closely. There's a lot of safe harboring We feel good about our top 10 clients and they're very sophisticated. And I'm not as concerned, but we do watch it. I think we have a really good ten years' worth of look out in the renewables and what we see, And certainly some of that is based on the RA and the way it impacts it.

But [indiscernible] The administration, yes, it will be noisy, but I think in the end, the generation that's needed and what we need will prevail against those kind of short term dynamics in the market, what you may hear We are booking backlog. We see work out long out and we need all forms of generation. I think it goes back probably ten years. And when we talked about it, we talked about all forms of energy. Of generation. It's never been as pronounced as it is today. We need all forms. And we need it quickly and as fast as we can build it. And I think the demand is there. That's why you're seeing behind the meter things come up, distributed generation, everything that you're seeing because can't meet it fast enough. When I look at see, when we look at combined cycle, it's just not who we are. We can build it We probably will build it, but we're not going to build it at risk. And so yes, we'll help our customers. We can build substation around. We can do kinds of things around it.

But the cost of a combined cycle is not cheap either. And so I think trying to get gas to it and the cost on turbines and how much it [indiscernible] I think in general, we have to make sure that we cover the company off on that risk. It's certainly been something in the past that I can't get out of and we'll be prudent about how we look at that business. I do think it's opportunities and opportunities all the way around it. Single cycles, small stuff, yeah, we can build them. I mean, it's aren't difficult and we'll be involved in some of that we won't take the risk on combined cycle.

Okay. Thank you.

Your next question will come from the line of Justin Hauck with Robert W. Baird, Please go ahead.

Great. Thanks. Good morning, everyone.

I guess I wanted to ask a lot of the big picture questions have been asked asked. I wanted to ask about the impact of the California wildfires. Yeah, I don't really think of that as storm work the same way that hurricanes knock down lines but just curious if that's had any impact to you here in the first quarter? And maybe more importantly, just the long term thinking about undergrounding lines and your ability to do that and kind of the cost differential versus overhead lines, just kind of the long term rebuild impact, if you could comment on that We were involved in some of the underground in California now and it continues to progress nicely out on out. It's expensive. It is. So there's no question about it. But if between that and taking fire risk, I think it's probably not expensive. When you really look at the long term nature of the business. We do see violent weather across the whether it's winter weather, today or [indiscernible] storms that hurricanes, fires, we're seeing it and the impacts of it. So I think as an industry, you're seeing the hardening programs in the West. Certainly, Energy's got a resilient program ongoing that we're involved in So we're involved in every one of them.

With our clients and trying to harden the grid and derisk their business. I don't think anyone ever intended to take fire risk on the line thirty five years ago, forty, fifty years ago. So we have to put for ourselves and try to help and collaborate on what we see across the board to make the grid more resilient, more modern. And we're doing that. There's technologies out and things like that that are coming along as well. So everyone's kind of in this new paradigm of these violent events and we're Got to harden the grid and we're seeing that ongoing and continue to see it for decades or more. We built this grid over the last sixty, seventy years. We've got a long way to go. And so I do see that happening, and we've got to get in front of that as an industry. And there is risk out from fire as well. I mean, we have to watch ourselves in the risk that we have. On fire in the West. So I do think how we interact and how we make sure that the company derisk ourselves in the middle of the fire is something that we watch as well.

So look, we're all in it together with the clients and working hard to try to make a difference and make sure that we spare human life when these events happen.

Okay.

Thank you very much.

Your next question will come from the line of Brian Brophy with Stifel Nicolaus. Your line is open. Please go ahead. Star six will allow you to unmute, Brian.

Thanks.

Good morning, everybody. Hoping you could talk about the communications outlook here a bit.

In any more detail on this Lumen announcement. That you made here how meaningful could that be? And when should we start thinking about contributions on that front? Thanks.

Yeah. I was just trying to make you guys knew we were still in the telecom business. But in general, look, we had a nice award there. We continue to grow the business. We continue to incrementally move it forward. The data center demand on fiber is big. It probably goes unnoticed a bit on everything else. But I do think we continue to see long haul fiber opportunities as well as just our core business in communications. We love the business. We're growing it. Like I said, nicely. And sometimes it goes unnoticed, but I thought the word was meaningful and something that the investment community should say that we're still much larger and I said it before, our addressable markets continue to grow. And where the company was five years ago versus where it's at today is much different from an adjustable market standpoint. So when you look at the growth going forward, you can see it across multiple segments, whether it's communication technology or utilities, we can go on and on. But I just think that is something that goes unnoticed. And I want to make sure that everyone realizes that our addressable markets across the company have grown and getting larger.

Appreciate it. I'll pass it on.

As a reminder, we are asking that all participants limit to one question. If you have additional questions, you may re queue and those questions will be addressed time permitting. Our next question will come from Adam Thalimer With sorry, Adam Thalimer with Thompson Davis.

Hey, good morning guys.

I had the same question actually. I was curious about Lumen, what else you're seeing in terms of long haul fiber? Could you book another award of a similar magnitude And then, Jayshree, curious if you can comment on the tax rate. It was a a decent step up year over year. Just wanted to see what was going on there.

Now we kind of talked about telecom being $1,000,000,000 We're growing off a $1,000,000,000 and we base based there And I do think we'll see growth in long haul We bought some smaller businesses three or four years ago. They're really growing nicely. Our markets are growing. There's no shortage of demand on on infrastructure around the telecom, DAU space. So I do see us getting more awards and we can deliver on the national for footprint. We talk about the utilizations of some of our underground business moving over into telecom that can still happen. So we're leveraging all assets across these TAMs. And so I do think our ability to move resources across these customer bases is something that you'll continue to see the company move forward and we're in multiple conversations across what I would consider all businesses of there's growth to every one of them. Infrastructure for the next two decades that I see out is significant Quanta we're right in the middle of it with our ProSculpt labor and engineering capabilities.

And as for the tax rate, I think a couple of things. One, we had a nice did some nice tax planning here that came through at the end of the year that allowed us to clean up some legal entities and take the tax benefit this year, as well as going into 2025, we had this year, we had the big benefit as well earlier in the year of the RSU vesting we're assuming a lower vest rate and vesting of the stock price in 2025. And so you see that as well. Combination of both those things are why you're seeing a step up in the tax rate. Thanks, guys. Our next question will come from the line of Drew Chamberlain with JPMorgan. Please unmute and ask your question.

Yes, good morning and thanks for taking the question. Just to bit of a follow-up on the renewables bookings. Obviously, good to see the strong momentum there. But can you just kind of break that out a little bit on what you're seeing from a technology standpoint and where demand is kind of project profiles that are coming from your [indiscernible] that you touched upon briefly earlier and how much that could either have already gone into the backlog or that's already at play and what the outlook could be for further safe harbor type wins in 2025?

Yes. I think we're we're looking at the renewable business, I mean, certainly, Like there's noise that continues, but our ability to book work there and what we see and how we can deliver across that market like we're not seeing any pullback. And so we're actually seeing more demand. And there's safe harbor. The safe harbor is really meant to Our customers are buying equipment. They're doing the things that are necessary to make sure that [indiscernible] are protected for the long term and the smart, the bigger ones Our customer base that we work for typically do that. And we're comfortable I don't you're not seeing the meaningful impact of call it, beyond 12 backlog because of safe harboring at this point. We just see the market and the strength to it long term. And as far as the data center demand and if you were going to build generation tomorrow, I would just ask what would you build and how quickly could you build it? And you're going you would find yourself building a solar plant probably It's the fastest thing you can build.

And I just think the way you go to market right now no one wants to hear forty eight months. They want to hear forty eight minutes.

And so I think that will be key on how we look at the business. It won't be as much about what form of generation will be, how quickly can you get Great.

Our next question Our next question will come from the line of Sangeetha Jain with Keystone. Please unmute and ask your question.

Hey, thanks for taking my question.

If I can ask on the Civil acquisition that you made, I is that mostly Texas oriented now? I'm trying to see if you can leverage that to your Cupertino low voltage work for data centers [indiscernible] Yes. I mean, I think Sangeetha, yes, it's Southeast based, not just Texas, but Southeast We can move it out. They have a lot of capabilities, engineering capabilities and only to expand the business. So yes, I mean, we can expand. When we look at it, Cupertino works all across the Lower 48. So they're in Texas as well in the Southeast and there's a lot of Southeast expansions and Texas expansions. I just think our synergies would allow us to really grow the business We could probably absorb the whole business internally with synergies internally. So, that's not going to be the case. They get involved in industrial industrial base, LNG, all kinds of different things. And so we're super excited about having the capabilities and I think when we look at acquisitions, we weren't looking for a civil business, but when we know the business well and it's it's really the culture, the DNA, what we look for in management teams and how we go about our ability to put strategies forth and solutions to our clients and also the quality of the management teams are so paramount when we look at our acquisitions that this is a long standing business fifty plus years old generationally that we're super excited that those solutions will be something that both internally and externally, you can see.

And sometimes you can't see it, We certainly see it. And we like opportunities there.

Great. Appreciate it. Thank you. Good.

Your next question will come from the line of Mark Bianchi with Cowen.

Hi, thanks. I wanted to ask on the the outlook for underground here in 2025. So 2024 was a bit of a lower margin year for that business. And you're showing sort of an expectation for improvement in '25. Quanta particularly the year over year improvement as we get past the first quarter looks like it's a pretty good step up. So I was hoping you could kind of unpack kind of what happened in 2024 Quanta what's driving the confidence [indiscernible] Yes, a couple of things. Your industrial business was down a bit and the margins were down. We had some storms come through the Gulf Coast and impact us in the back half. So part of it is in our industrial business gets better. Canada, we're coming off big pipe in Canada. And so that's some of the impacts that are going back into your LDC business that we have growth in. In. And then when you look at the acquisitions, it's accretive. So the acquisition is accretive. We have a better industrial margin profile going forward as well as our LDC business and our core business in the utility space. People are starting to put more capital back into the gas business.

So we're seeing that come back in the core. So all those things kind of come together and that's why you're seeing the impacts of margins going forward. But I would still say that we're leveraging the underground capabilities of gas across into telecom and and to electric space on any given day. So you can see some pullback and then electric may go up $200,000,000 of gas assets and people that move over there, $300,000,000 or 400 you can see that on any given day in the business. If it was up to me, I'd have one segment, but it's not. So like we have two and it does cross. But I do like our business in totality and I think it's something that we'll continue to see margin improvement. We're still not happy with where it's at. And I do believe you can get in the upper single digits there or maybe even double digits. Great.

Our next question will come from the line of Gus Rich Richard with Northland Capital Markets. Please unmute and ask your question.

Yes. Thanks for taking the question.

On the federal level, is a lot of changes. You've got indiscriminate layoffs by the Government Efficiency Bureau and approval processes. You've got the potential of deregulation to speed things up, you've got the potential of bans of solar panels being imported, another impact. And I'm just wondering if you're seeing anything at this point potential changes and sort of what's your expectation on how easy it'll get projects to get done? Will it get pulled in or pushed out? A good question. Really tried to put my head down on where and not listen too much to it because it changes by the minute.

I don't fundamentally from the customers and how we see it and what we've guided to, we've taken into account, we've been very prudent about how we Got it. To the midpoint. And anything that we've seen or think that could be a possibility, we've baked into our guidance at this point. So I feel comfortable that across our addressable markets, we have room to expand on any given day. But you're right, I mean, one day some things are really, really good for certain parts of the business and some things could impact a bit. But in totality, we see growth, we see opportunity. And everything I hear is just opportunity. I don't think when you look at it, there's still a lot of if you go back to first term a lot of this happened then and we did nicely and we continue to grow the business. I think the same thing will happen. It will never be as good as you think and it will never be as bad as you think. So we'll be right down the middle with it and The great thing is, is under any scenario, demand is going to outseed pace supply at this point.

And we just we have to really try to figure out how to get in front of that would be more important.

Great. Thanks for the answer. Your next question comes from the line of Joseph Osha with Guggenheim Partners.

Okay.

Got you. Duke, you alluded to this a little earlier.

Obviously, lead times are way out there for combined cycle machines, but I was at PowerGen last week and we're starting to hear some the same thing happening on the single cycle side as people look to put peaking power alongside Renewables. So I'm just wondering how are you seeing your mixer bulb and are you starting to see that same kind of frenzy in longer lead times on the single cycle side as well? Thank you.

Yes. I mean, the single cycle business for us, we're certainly capable and I'm not concerned near as much.

Building a single cycle. So yes, we'll be around the edges on that. We do see a lot of opportunity there. Whether it be you have a lot of diesel generation backup today. I think single cycles will be forms of energy you can back up and use them in merchant type situations and things of that nature. So and it is way quicker to market with single cycle. So I do think that will be a part of the solution to get the project started quicker. So see the opportunity as well. And the company is well positioned to take advantage of those type of arrangements. Thank you.

Absolutely. Our next question will come from the line of Brent Thielman with D. A. Davidson.

All right. We'll go to Phil Shen with Rothcap Can you hear me okay?

We can. Please go ahead.

Yes.

Thanks for taking my question. To go back to the AI data center theme.

What opportunities are you conceptualizing now that could deepen your exposure to the AI Quanta center trend beyond Cupertino?

You emphasize that you're a solutions provider kinds of problems are your data center related customers experiencing that you could support in a deeper way than you do now?

Yes. I mean, we're taking the same approach with the data center owners that we are with the utilities. And that intersection as well So know, our ability to talk to our clients on the utility side help them and help the data center and stay in the middle. We want to build infrastructure all types of infrastructure. It involves craft skill, it involves engineering, it involves you know, anything really, to be honest, like, we're certainly in the middle of those discussions and how do we help collaborate to move things faster more efficiently across both customers, as well as our renewables as well. So look, it's a convergence. We see it and we're in the middle of it and we will be [indiscernible] Trying to take advantage of those markets on a go forward basis that we see. And we've said all along that we feel comfortable with craft skill. We feel comfortable building up our capacity on the front end side of the business and using those service lines to provide us solution. So there's not much we're not talking about with these clients. Great. Thanks, Steve.

Sure.

And there are no more questions at this time. I'd now like to turn the call back over to management for closing remarks.

Thank you.

Want to thank the 60,000 plus employees They are the best in the business. They allow us to have this call today and they're building what I consider the infrastructure of the future. I want to thank them and I want to thank you for participating in our conference call. We appreciate your questions, your ongoing interest in Quantenna Services. Thank you. This concludes our call.