Quanta Services Q4 2025 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
February 20, 2025
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Operator

Good morning, and welcome to the Quanta Services 4th-Quarter and Full-Year 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's prepared remarks, and we ask that you please hold all questions until that time. I will then provide instructions for the question-and-answer session. As a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Kip Rupp, Vice-President of Investor Relations for introductory remarks.

Kip Rupp
VP of Investor Relations at Quanta Services

Thank you, and welcome everyone to the Quanta Services 4th-Quarter and Full-Year 2024 earnings conference call. This morning, we issued a press release announcing our 4th-quarter and full-year 2024 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our 4th-quarter and full-year 2024 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 the information reported on this call speaks only as of today, February 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 or 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 control, and actual results may differ materially from those expressed or implied.

We will also present certain historical and forecasted non-GAAP financial measures. Reconciliations of these financial measures to the most directly-comparable GAAP financial measures are 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 to receive notifications of news releases and other information and follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would like to now turn the call over to Mr Duke Austin, Quanta's President and CEO. Duke?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Thanks, Kip. This morning, we reported our 4th-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 $34.5 billion and notably, Renewable Energy Infrastructure Solutions segment 12 month and 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 multi-year 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 and 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. Quanta's portfolio approach uniquely positions us to support our clients as they navigate this evolving landscape. Our diversified service lines, self-performed 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 more than ever. We are positioning Quantum for decades of expected necessary infrastructure investment and believe our service line diversity creates platforms for growth that expand our total addressable market. Our portfolio approach and focus on crowd-skilled labor is a strategic advantage that provides us the ability to manage risk and shift resources across service lines and geographies, which we believe will become increasingly important as load growth, electrification and the energy transition accelerates. 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, Quanta's CFO to provide a few remarks about our results and 2025 guidance, and then we will take your questions.?

Jayshree Desai
CFO at Quanta Services

Thanks, Duke, and good morning, everyone. Quanda completed the year with 4th-quarter revenues of $6.6 billion, net income attributable to common stock of $305.1 million or $2.03 per diluted share and adjusted diluted earnings per share of $2.94. Adjusted EBITDA was $737.8 million or 11.3% of revenues. Of note, our cash-flow in the 4th-quarter and for the full-year exceeded the upper-end of our free-cash flow guidance expectations.

For the 4th-quarter and full-year of 2024, we had free-cash flow of $575.4 million and $1.6 billion, respectively, with our full-year free-cash flow a record. Our earnings and cash-flow performance allowed us to-end the 4th-quarter with ample liquidity 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 of approximately $562 million of cash and stock.

This morning, we provided our full-year 2025 financial expectations, which 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, 31 March 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 our 2025 financial guidance can be found in our operational and financial commentary and outlook's expectation summary, both of which are posted on our IR website. In summary, we are executing well on our strategic plan and are pacing well against our multi-year 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?

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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 requeue 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 on the bottom of your webinar application. If you have joined by phone, please dial star nine 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.

Charles Dillard
Analyst at Sanford C. Bernstein & Co.

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

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

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 at our customer level. You can look at it, you can point to it. 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 -- we just see a great market there and the -- from deep seek to you know, AI chips and what that does, we're not concerned with that at this point. We just see that demand that's firmed.

Charles Dillard
Analyst at Sanford C. Bernstein & Co.

That's helpful. And just second question just on the recent M&A that you guys did. So I guess, first of all, like what sort of revenue contribution should we be baking in for '25? And then on the civil business, how are you thinking about the mix of business going-forward? Is this meant to support Quanta's 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 Quanta positioned there with this acquisition?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. So the -- basically the civil solution business, I think from my standpoint, the DNA, the culture of the company, we've known them a long-time, known them for decades. I passed by their office my whole career. So I know the family, it's a great family business that fits our DNA and it also is something that the company itself has synergies against that 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 approach. Our customers are asking for it. We 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 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 more flexibility as we look at the markets. In Australia, and we continue 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 to -- we like it long-term and feel like we can continue to invest in the country. So great rule of law and obviously gives us a lot of flexibility. So we're excited about on that market as well. I'll let comment on the revenues.

Jayshree Desai
CFO at Quanta Services

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&I segment and we did give you guidance on that around what the inorganic contribution in our guide is related to that

Operator

Thank you. Our next question will come from Ati Modak with Goldman Sachs. Please unmute and ask your question. Yeah.

Ati Modak
Analyst at The Goldman Sachs Group

Hi, good morning, team. Maybe I was wondering if you can provide some color on the margin performance in the electric power segment, the factors that drove that? And how much of the margin improvement should we considered as structural going-forward?

Jayshree Desai
CFO at Quanta Services

Yeah. 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 I do think when we look at it, the margins that we've stated in the past, 10.5%, 11% type framework, 12% on the outer years where if you got a lot of utilizations and things of that nature in the business. But in general, we said all along, it was back-half loaded. We felt like the electric business be strong in the second-half. It was -- I 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. And so I think no matter what we do in that segment, that's kind of how you should look at the framework going-forward. Yeah, there'll be some years that are above it due to some factors here or there. But given what we see in the market, that's kind of the framework we see going-forward, 10.5% to 11%. Yeah. I think also just to add to that. If you look at our electric segment, you're seeing us at 10 -- 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 are going to continue operating at that level and the performance of the company from last year is going to go into 2025 as well.

Ati Modak
Analyst at The Goldman Sachs Group

Makes sense. Thank you,.

Operator

Our next question will come from the line of Jamie Cook with Truist Securities. Appears you're on a phone, Jamie. Star 6 will allow you to unmute.

Jamie Cook
Analyst at Truist Securities

Hi, can you hear me? Hey, could you hear me now. Hey, thanks guys. I guess my first question, Duke, if you could frame on the expectations for backlog growth in '25 and in particular, can you talk to potential synergies or big awards that could be Cupertino. I know you guys were very successful with revenue synergies associated with. 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,, 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.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah, thanks, Jamie. I think when we look at the business in totality. When we buy these platform companies, we don't build synergies into on the discussions that we have or way we value them. But what we do see is when the total adjustable markets of TAMs on the business are something that goes unnoticed, the customer-base goes unnoticed. Those synergies show-up and you've seen them with Blattner as we've gotten farther along and the balance of plant, the things that we're able to do with these type customers because there's convergence between our 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 you look at utility capex, utility capex is $200 billion-plus and then now technology is $300 billion-plus, but probably, let's just Call-IT $150 in North-America. The addressable markets that Quanta serves and how we converge into 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. So I can't tell you exactly when that will happen. But what I see bigger projects, the -- our ability to perform solutions is something that's unnoticed to the investment community. We are a solutions provider, I'll say it again, solutions provider. And what we do and those solutions that we provide and how we collaborate with that customer will allow us in our addressable markets only getting bigger. So it just allows us more opportunity. And I think we see it, 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, but we'll continue the base business. We are not taking our eye off that either. So thanks for you.

Jamie Cook
Analyst at Truist Securities

Hey, Jamie, on a free-cash flow oh, sorry, go-ahead. No, I was just going to say specific to Cupertino is the question to Duke, like anything specific to Cupertino in terms of a revenue center, a larger award in 2025?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

I think I inferred that, but yes, absolutely.

Jamie Cook
Analyst at Truist Securities

Okay. Okay. All right. Sorry,, go on the cash-flow question. Thanks.

Jayshree Desai
CFO at Quanta Services

Yeah, on free-cash flow, it's our typical profile, Jamie. It will be back-half weighted. 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.

Jamie Cook
Analyst at Truist Securities

Okay. Thank you. Thanks,.

Operator

Our next question will come from Steven Fisher with UBS. Please unmute and ask your question.

Steven Fleishman
Analyst at Wolfe Research

Well, thanks. Good morning. It was helpful to have the guidance for upper single-digit growth in generation versus the mid-singles and in 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 just kind of looking beyond '25 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?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah, Steve. I mean, I think you're seeing growth across the business. You're seeing -- 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%, up 10% if you look at the whole company on the top. So we're seeing growth. We're -- 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&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. So we put it together. So for us to go in and tell you how much generation growth or what is that because there's substations, there's all kinds of different things. Our people cross from data centers to chip plants to hospitals, clean rooms, we move all across. So we're going to optimize our people against the markets. We're not making a specific manufacturing you know anything manufacturing where it's only specific to one segment or one TAM. I mean we are 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 business is 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 a 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 that what we put up in the renewable 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 12-month backlog, it's long-term backlog in the '26, '27 and '28. So we see growth and I think you can comfort yourself on the demand you see for generation. I -- 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 to continue and you can see it, it's right there and then we're talking about it daily. So we're optimistic. We 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.

Steven Fisher
Analyst at UBS Group

Yeah sounds good. Thank you.

Operator

Our next question will come from the line of Julian with Jefferies. Appears you're on a phone, Julian, Star6 will allow you to unmute.

Julien Dumoulin-Smith
Analyst at Jefferies Financial Group

Excellent. Good morning, everyone. Thank you very much for the time 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 Sunzia project specifically, both in terms of operations and permanent considerations across federal lands. I suspect it's largely intact, but just want to make sure we've checked that off. And then separately and related here, as you think about this re-segmentation, I think you were alluding to it a moment ago, but if you were to re-segment, right, again, just to use the hypothetical in brief, can you speak brief -- as to how that backlog would translate into compounding revenue as it stands today? I suspect some folks are looking at this and saying, well, is there something about a deceleration in the renewables business? Clearly, the backlog data points today would suggest otherwise. But if you can speak to that even more clearly than you just alluded to a moment ago, I'd appreciate it.

Ati Modak
Analyst at The Goldman Sachs Group

Yeah, Julian. Thanks. Sunzia, first of all, like we're doing great. We're progressing well. I fully expect us to complete. We're not seeing any permitting issues on it. We're well past that. And 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 after 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 something we've already replaced it 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 Lenzia going-forward. And I think that's a misnomer in the investment community. I want to get that out there and say, we're not worried. Second, when we're talking about generation, 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 in '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% to 30%. But when you start ordering turbines that are 36 to 48 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. So I'm not worried about growth, but we need to get the permitting straight to get the transmission built.

Jayshree Desai
CFO at Quanta Services

And Julian, just to be clear, we are. Starting first-quarter.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. Yeah, we're re-segmenting first-quarter for sure.

Julien Dumoulin-Smith
Analyst at Jefferies Financial Group

Yeah. No, absolutely indeed. And if I can 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 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 few months.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. I'm glad you noticed that what I would say is I do think we're having those discussions today and before they even came out. I think that 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 on mainly all the RTOs 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.

Julien Dumoulin-Smith
Analyst at Jefferies Financial Group

All right. Best of luck. Thank you.

Operator

Our next question will come from the line of Steve Fleishman with Wolfe Research. Please dial star 6, unmute and ask your question. Again, Steve, that's star 6. Unmute. We can hear you, please go-ahead.

Steven Fleishman
Analyst at Wolfe Research

Steve. Okay. Sorry about that. Hi. 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 -- I just -- I would just ask, is there anything that you're watching or wary of there? But certainly didn't look like it was a 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 more growth in your undergrounding business over the next several years as this does seem to be likely to ramp-up meaningfully, you know, looking out.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah, Steve, first of all, like we do look at -- I mean, we're looking at the administration on PTCs 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 10 years' worth of look out in renewables and what we see. I mean, certainly some of that is based on the RA and the way it impacts it. But the guy -- 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, long out and we need all forms of generation. I think it goes back probably 10 years and when we talked about it, we talked about all forms of energy, all forms 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 we 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 all 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 costs to build one of these days is not the same. And so 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 my head. 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, those aren't difficult and we'll be involved in some of that, but we won't take the risk-on combined-cycle.

Steven Fleishman
Analyst at Wolfe Research

Okay. Thank you. Y

Operator

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

Justin Hauke
Analyst at Robert W. Baird

Great. Thanks. Good morning, everyone. I guess I wanted to ask -- a lot of the big-picture questions have been 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 the -- 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.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

You were involved in some of the underground in California now and it continues to progress nicely out on -- it's expensive, it is. So there's no question about it. But if you -- 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. I do -- we do see violent weather across the -- whether it's winter weather today or 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 has 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 de-risk their business. I don't think anyone ever intended to take fire risk-on a line 35 years ago, 40, 50 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 are coming along as well. So everyone's -- everyone's kind of in this new Paradigm of these violent events and we've got to harden the grid and we're seeing that ongoing and we'll continue to see it for decades or more. We built this grid over the last 60, 70 years, 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. There is risk out from fire as well. I mean, we have to watch ourselves and 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.

Justin Hauke
Analyst at Robert W. Baird

Okay. Thank you very much.

Operator

Your next question will come from the line of Brian Brophy with Stifel Nikolas. Your line is open. Please go-ahead. Star 6 will allow you to unmute Brian.

Brian Brophy
Analyst at Stifel Nicolaus

Thanks. Good morning, everybody. I was hoping you could talk about the communications outlook here a bit and 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 sure you guys knew we're still in the telecom business.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

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. I mean 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 and communications. We love the business. We're growing it, like I said, nicely. I mean, sometimes it goes unnosed, but I thought the award was meaningful and something that the investment community should see that we're still -- we're 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 addressable 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 this company have grown and getting larger.

Brian Brophy
Analyst at Stifel Nicolaus

Appreciate it. I'll pass it on.

Operator

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

Adam Thalhimer
Analyst at Thompson, Davis & Company, Inc.

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, curious if you can comment on the tax-rate. It was a decent step-up year-over-year. Just wanted to see what was going on there. Thank you.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Now we kind of talked about telecom being $1 billion, we're growing off $1 billion and we base there. And I do think we'll see growth in long-haul. We bought some smaller businesses three or four years ago that are really growing nicely. Our markets are growing. There's no shortage of demand on infrastructure around the telecom data space. So I do see us getting more awards and where we can deliver on national 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 and leveraging people 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 on what I would consider all businesses and there's growth to every one of them, infrastructure for the next two decades that I see out is significant. We're right in the middle of it with our crop labor and engineering capabilities.

Jayshree Desai
CFO at Quanta Services

Yeah. And as for the tax-rate, I think a couple of things. One, we had a nice -- we 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. And we're assuming a lower vest rate and grant vesting in the stock price in '25. And so you see that as well. The combination of both those things are why you're seeing a step-up in the tax-rate?

Adam Thalhimer
Analyst at Thompson, Davis & Company, Inc.

Thanks guys.

Operator

Our next question will come from the line of Drew Chamberlain with JPMorgan. Please unmute and ask your question.

Drew Chamberlain
Analyst at JPMorgan Chase & Co.

Yeah, good morning and thanks for taking the question. Just a 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 customers? And then also what you're hearing on the safe-harbor impact that you touched upon briefly earlier and how much that could either have already gone into the backlog or that's already being at play and what the outlook could be for further Safe-Harbor type wins in 2025?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. I think when 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 the projects 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 that the way you go-to-market right now, no one wants to hear 48 months. They want to hear 48 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 quick can you get it.

Drew Chamberlain
Analyst at JPMorgan Chase & Co.

Great. Thanks, Duke. Great.

Operator

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

Sangita Jain
Analyst at KeyBanc

Hey, thanks for taking my question. So if I can ask on the Civil acquisition that you made. 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 maybe?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. I mean I think, yes, it's Southeast based, not just Texas, but Southeast. We can -- we can move it out. They have a lot of capabilities, engineering capabilities and really to expand the business. So yes, I mean importantly, 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 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 -- we know the business well and it's really the culture of the DNA, what we look for in management teams and how we go about our ability to put strategies forth in solutions to our clients and also the quality of the management teams are so paramount when we look at acquisitions that this is a long-standing business 50 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, but we certainly see it and we lack opportunities there.

Sangita Jain
Analyst at KeyBanc

Great. Appreciate it. Thank you.

Operator

Sure. Your next question will come from the line of Mark Bianchi with Cowen. Please unmute and ask your question.

Marc Bianchi
Analyst at TD Cowen

Hi, thanks. I wanted to ask On the outlook for underground here in '25. So '24 was a bit of a lower -- lower-margin year for that business and you're showing sort of an expectation for improvement in '25. And particularly the year-over-year improvement as we get past the first-quarter, it looks like it's a pretty good step-up. So I was hoping you could kind of unpack kind of what happened in '24 and what's driving the confidence in the bounce-back in '25?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. A couple of things. Your industrial business was down a bit and the margins were down. We had some storms come to the Gulf Coast and impact us in the back-half. So part of it is our industrial business gets better. And 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. And then when you look at the acquisitions, it's accretive. So the acquisitions 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 into the core. So all those things kind of come together and that's why you're seeing the impacts margins going-forward. But I would still say that we're leveraging the underground capabilities of gas across into telecom and into on electric space on any given day. So you can see some pullback and then electric may go up $200 million of gas assets and people that move over there, $300 million or $400 million. So 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 an upper-single digits there or maybe even double-digits.

Marc Bianchi
Analyst at TD Cowen

Great. Thanks so much, Duke. I'll turn it back.

Operator

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

Auguste Richard
Analyst at Northland Capital Markets

Yes, thanks for taking the question. On the federal level, there's a lot of changes. You've got indiscriminate layoffs by the, you know, government efficiency Bureau and that could slow approval processes. You've got the potential of deregulation speed things up, you've got the potential of bands of solar panels being imported, another impact. And I'm just wondering if you're seeing anything at this point due to these potential changes and sort of what's your expectation on you know, how easy it will get projects to get done, will it get pulled in or pushed out?

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah, good question. Really try to put my head-down and work 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've guided 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. And 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 in 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 under any scenario, demand is going to outpace 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.

Auguste Richard
Analyst at Northland Capital Markets

Great. Thanks for the answer.

Operator

Sure your next question comes from the line of Joseph Osha with Guggenheim Partners. Please go-ahead.

Joseph Osha
Analyst at Guggenheim Securities

Thanks. Good morning. Can you hear me okay? Yeah. We got you. Okay, great. Duke, you alluded to this a little earlier on, obviously, lead times are way out there for combined-cycle machines, but I was at PowerGen last week and we're starting to hear sort of 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 mix evolve and are you starting to see that same kind of frenzy and longer lead times on the single cycle side as well? Thank you.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

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 back up today. I think the 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 -- the project started quicker. Yeah. So we see the opportunity as well and the company is well-positioned to take advantage of those type of arrangements.

Joseph Osha
Analyst at Guggenheim Securities

Thank you. Absolutely.

Operator

Our next question will come from the line of Brent Thielman with D.A. Davidson. We'll go to Phil Shen with ROTH Capital and we can return to you, Brent.,

Philip Shen
Analyst at ROTH Capital Partners

Can you hear me okay? We can. Please go-ahead. Great. Thanks. Thanks for taking my question. I wanted to go back to the AI data center theme. And what opportunities are you conceptualizing now that could deepen your exposure to the AI data center trend beyond Cupertino? You emphasized 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.

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Yeah. I mean I look, we're taking the same approach with the data center owners that we are with the utilities and that intersection as well. So our ability to talk to our clients on the utility side help them and help the data centers and stay-in the middle. We want to build infrastructure, all types of infrastructure. It involves craft skill, if it involves engineering, if it involves 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 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 a solution. So there's not much we're not talking about with these clients.

Philip Shen
Analyst at ROTH Capital Partners

Great. Thanks, Steve. Sure.

Operator

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

Earl Austin
President, CEO & Director and Principal Operating Officer at Quanta Services

Thank you. I 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 Quantan Services.

Operator

Thank you. This concludes our call.

Corporate Executives
  • Kip Rupp
    VP of Investor Relations
  • Earl Austin
    President, CEO & Director and Principal Operating Officer
  • Jayshree Desai
    CFO
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