Quanta Services

Quanta Services
Public
Traded as NYSE: PWR
S&P 500 Component
Founded 1997
Headquarters Williams Tower
Houston, Texas
Revenue Increase$7.57 billion USD (2015)[1]
Number of employees
 26,000
Website www.quantaservices.com

Quanta Services is a U.S. corporation that provides engineering, procurement and construction services for electric power infrastructure and oil and gas infrastructure industries, and formerly for telecommunications and broadband cable. Capabilities include the planning, design, installation, maintenance and repair of most types of network infrastructure. In June 2009, Quanta Services was added to the S&P 500 index, replacing Ingersoll-Rand.[2]

Quanta Services employs about 26,000 people, approximately 2,300 of which are salaried. Its operating companies achieved combined revenues of about $7.57 billion in 2015.[1] It is headquartered in Houston, Texas. In 1998 Quanta went public on the New York Stock Exchange under the ticker symbol, PWR.[3]

Overview

Quanta Services was founded in 1997 to create an integrated, comprehensive and nationwide network of infrastructure contractors to meet the evolving needs of electric utility and telecommunications companies. With deregulation driving fundamental changes in the electric power industry, the founders anticipated a dramatic expansion in outsourcing of the design, installation, repair and maintenance of power transmission and power distribution networks.

The company quickly grew from $152 million in revenue in its first year to more than $2 billion in 2000. In addition to the telecommunications and power industries, Quanta soon started to develop capabilities in natural gas infrastructure, and has also expanded into a variety of specialty services. A list of their main services are listed below.

Electric Power

Oil and Gas Contractor

Current leadership

On March 14, 2016, Earl C. “Duke” Austin succeed former chief executive officer, Jim O’Neil. Austin is currently president, chief executive officer and chief operating officer. He is a graduate of Sam Houston State University in Huntsville, Texas and is the former president of Quanta’s Operating Unit, North Houston Pole Line.[4]

On April 2, 2012, Derrick A. Jensen succeed former chief financial officer, James H. Haddox. Jensen is a graduate of Oklahoma State University. [5]

Colson and PAR

The man behind the creation of Quanta Services is former executive chairman, John R. Colson.[6] After earning a degree in geology from the University of Missouri at Kansas City, Colson entered the military and served one year in Vietnam. He was discharged from the Army in 1971 and returned to Kansas City, taking temporary employment at PAR Electrical Contractors, Inc., which built high-voltage transmission lines, distribution lines, and substations, and provided other electric utility infrastructure services.

Colson's initial job was to carry stakes for a survey team. Within three years he was named manager of engineering services, and after six he had worked his way up to vice-president of operations. After becoming executive vice-president and general manager in the early 1980s, he began buying the company, became president in 1991, and ultimately emerged as its owner.

Initial formation

In the 1990s, the electrical contracting business was highly fragmented, populated by more than 50,000 companies, the vast majority of which were small, owner-operated enterprises. Deregulation in the electric utility industries in a number of states prompted utilities to become more cost-competitive, leading to the outsourcing of infrastructure work to contractors who could do the job more efficiently. Moreover, much of the transmission and distribution infrastructure in the United States was aging and in need of repair or replacement. In 1997, Colson spearheaded the combination of four contractors to form Quanta Services, Inc., which then established its headquarters in Houston with Colson as its head.[7] In addition to PAR, Quanta consisted of Union Power Construction Co., Trans Tech Electric Inc., and Potelco, Inc.

Initial public offering

With BT Alex Brown Incorporated, BancAmerica Robertson Stephens, and Sanders Morris Mundy Inc. serving as underwriters, Quanta completed its IPO in February 1998, raising $45 million. Of that amount, $21 million was used to pay the cash portion of the buyouts of the four founding companies. Much of the balance, along with a $175 million line of credit arranged with a consortium of nine banks, was used on over a dozen acquisitions completed in 1998. Acquired telecom companies included Manuel Brothers; Smith Contracting; Telecom Network Specialists; North Pacific Construction Company; NorAm Telecommunications; Spalj Construction Company; and Golden State Utility Company. Acquired electric contractors included Harker & Harker; Sumter Builders; and Environmental Professional Associates. Hybrid acquisitions included Wilson Roadbores and Underground Construction Company.

A secondary offering was completed in late January 1999. The company had planned to sell 3.5 million shares at $21 per share, but interest was so strong that in the end 4.6 million shares were sold at $23.25 per share. All told, Quanta realized $101.1 million, money used to fund the acquisition of 40 additional companies, which in total cost $323.6 million in cash and notes and 15 million shares of stock. Many of these additions were made to expand Quanta's business in gas transmission and cable television.

Attempted takeover

In 2001 UtiliCorp United Inc. (now Aquila, Inc.), an energy company with whom PAR had been doing business since the 1950s, began taking steps to gain control of Quanta.[8] UtiliCorp owned about 36 percent of Quanta, an investment that was originally part of a strategic alliance when UtiliCorp outsourced all of its maintenance needs to Quanta. Quanta resisted, and in October 2001 the two parties signed a standstill agreement. A month later Quanta adopted a "poison pill" plan to prevent a takeover, prompting UtiliCorp to sue. A proxy fight ensued in the spring of 2002. Quanta maintained that UtiliCorp, which was enduring difficult times, wanted to gain controlling interest in order to consolidate Quanta's earnings with its own balance sheet. The fight came to an end in May 2002, as Quanta fended off the takeover bid.[9]

Sale of telecommunication and fiber-optic licensing divisions

On November 20, 2012, Quanta Services sold its telecommunications subsidiaries for $275 million in cash to Dycom. On August 4, 2015, Quanta Services sold its fiber optic licensing operations (Sunesys) to Crown Castle International Corp. (NYSE: CCI) for approximately $1 billion in cash.

Large acquisitions

On August 30, 2007, Quanta Services acquired InfraSource Services (NYSE: IFS) through an all-stock deal. Before the merger, Engineering News-Record ranked Quanta Services as the second-largest specialty contractor in the United States and InfraSource Services as No. 8.[10] This acquisition received popular attention after being given positive coverage on Jim Cramer's Mad Money show,[11] in Smart Money,[12] and in TheStreet.[13]

In September 2009, Quanta Services announced that a deal had been struck to acquire Price Gregory, the largest U.S. gas pipeline construction company, for $350 million.[14] With this acquisition, Quanta Services is expected to have consolidated 2009 revenue of $4.4 billion.

On October 22, 2010, Quanta Services announced agreement to acquire Canada's largest electric power line contractors 'Valard Construction' for approximately US$219 million.[15]

Awards

Lower Rio Grande Valley Energized Reconductor Project

On June 13, 2016 American Electric Power (AEP) received the 89th annual Edison Electric Institute's (EEI's) 2016 Edison Award, the electric power industry's most prestigious honor, for its Energized Reconductor Project in the Lower Rio Grande Valley (LRGV) of Texas. The 240 mile project was possible because of Quanta Energized Services (QES) live-line planning capabilities and North Houston Pole Line’s construction expertise.[16]

Operating Units

Quanta Services has a large number of Operating Units that can broadly be classified into Electric & Gas Services. Each typically operates independently. A list of current Quanta Services operating companies is provided below.

Quanta's North America Electric Power Operating Units

Quanta's North America Natural Gas Operating Units

Quanta's International Operating Units

References

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