Quanta Services Inc

NYSE:PWR

Earnings Call Transcript 2021-Q3

[Operator]

Hello, and welcome to the Quanta Services Third Quarter 2021 Earnings Call and webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Kip Rupp, Investor Relations for Quanta Services. Please go ahead.

[Kip Rupp, Investor Relations]

Thank you, and welcome, everyone, to the Quanta Services Third Quarter of 2021 Earnings Conference Call. This morning, we issued a press release announcing our third quarter results, which can be found in the Investor Relations section of our website at quantaservices.com, along with the summary of our 2021 outlook and commentary that we will discuss this morning. Additionally, we will use a slide presentation this morning to accompany our prepared remarks, which is viewable through the call's webcast and is also available on the Investor Relations section of the Quanta Services website. Please remember that information reported on this call speaks only as of today, November 4th, 2021, 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 intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.

These include all statements reflecting Quanta's expectations, intentions, assumptions, or beliefs about future events or performance that do not solely relate to historical or current facts. Forward-looking statements 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. For additional information concerning some of these risks, uncertainties and assumptions, please refer to the cautionary language included in today's press release, along with the Company's periodic reports and other documents filed with the Securities and Exchange Commission, which are available on Quanta's or the SEC's website.

You should not place undue reliance on forward-looking statements and Quanta does not undertake any obligation to update such statements and disclaims any written or oral statements made by any third-party regarding the subject matter of this call. Please also note that we will present certain historical and forecasted non-GAAP financial measures in today's call, including adjusted diluted EPS, backlog, EBITDA, and free cash flow. Reconciliations of these measures to their most directly comparable GAAP financial measures are included in our earnings release. Lastly, if you would like to be notified when Quanta publishes news releases and other information, please sign up for email alerts through the Investor Relations sections of quantaservices.com. We also encourage investors and others interested in our Company to 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?

[Duke Austin, CEO]

Thanks Kip. Good morning, everyone and welcome to the Quanta Services Third Quarter 2021 Earnings Conference Call. On the call today, I will provide operational and strategic commentary and will then turn it over to Derrick Jensen, Quanta's Chief Financial Officer. We will provide a review of our third quarter results and full year 2021 financial expectations. Following Derrick's comments, we welcome your questions. This morning, we reported solid third quarter results, which included a number of record financial metrics, including revenues, adjusted EBITDA, and earnings per share. Additionally, total backlog of $17 billion at the end of the quarter was also a record, which we believe reflects the benefits of our collaborative approach with the customers, favorable in market dynamics, and continued advancement of our long-term growth strategies.

As many of you are aware, several weeks ago, we completed the previously announced acquisition of Blattner, which is a premier utility-scale renewable energy infrastructure solutions provider in North America with decades of experience and a strong safety culture. We believe the energy to transition in North America is on the cusp of a significant acceleration, and that moving to a carbon neutral economy will require sizeable and decade's long investment in renewable generation and related infrastructure. We believe this transaction fits Quanta in a unique position to enable the energy infrastructure for North America's energy transition. Since announcing our intention to acquirer Blattner in early September, customer reactions and conversations across our customer base have been overwhelmingly positive and supportive. Further, we previously commented about how remarkably similar Quanta and Blattner are, operationally and culturally, which has become increasingly apparent through working with the Blattner management team on integration.

We were all excited about our combined growth opportunities when we first announced the transaction. And I can tell you that today, we're even more excited and increasingly confident in the value proposition, innovative solutions, and growth synergy opportunities that Quanta and Blattner are positioned to provide existing and new customers. Now, turning the call to our operating results. Our Electric Power Solutions operations continue to perform well with record revenues and strong margins driven by robust demand for our services, solid and safe execution, high utilization of our resources and operational excellence. We're proud of our execution and confident that our strong market position will allow us to capitalize on future opportunities created by a favorable long-term trends driving utility investment, and demand for our comprehensive solutions.

Demand for grid modernization, system hardening, and renewable energy interconnection services remain active. And discussions around opportunities for our electric vehicle infrastructure installation, and program management capabilities continue to advance. Our electric power backlog remains strong, driven primarily by significant multiyear master service agreements with utilities, which adds to the substantial MSA backlog growth we generated in the first half of this year. During the quarter, Hurricane Ida made landfall over Louisiana, which ultimately left 1.2 million customers across 8 States without power, including 1 million outages in Louisiana alone. One of deployed significant resource is to support utility customers whose electric power infrastructure was damaged or destroyed by the hurricane, including more than 2,500 line workers and front-end support services and engineering staff.

Our comprehensive response resulted in record emergency restoration revenue and highlights our ability to quickly mobilize substantial resources to support our customers in times of need. Our customers continue to advance their efforts to achieve carbon neutrality over the coming decades, which is planned to be achieved and large part through increasing renewable generation investment. We believe public policy and that the positive general sentiment supporting a greener environment will drive North America's power generation mix increasingly towards renewables over the near and longer-term. Blattner's utility-scale renewable generation solutions, coupled with Quanta's complimentary and holistic grid solutions, creates a unique value proposition and opportunity to collaborate with our customers to shape their energy transition initiatives.

For example, Blattner is currently constructing more than 30 utility-scale renewable energy projects across the country and another Quanta Company is currently working on the largest solar powered battery storage project in North America. Additionally, we're seeing accelerated demand for our services that enable renewable generation, including transmission interconnections and substations. We continue to scale our communication operations and progress our strategy. For example, we have developed a wireless capabilities and are expanding our wireless services into certain markets. Communications revenues grew significantly in the third quarter as compared to last year. And though we incurred higher costs in certain jobs due to descoping of certain contracts and project closeouts which impacted profitability for these operations, these issues were not meaningful to the overall electric power segment or Quanta as a whole.

Nevertheless, demand for our communication services remains high and the majority of our communication operations are performing at or near our double-digit margin targets. Our underground utility and infrastructure solutions segment generally performed well in the quarter, despite being impacted by work disruptions along the Gulf Coast due to Hurricane Ida and work inefficiencies associated with the recent surge of the COVID-19 Delta variant in certain areas. We continue to experience solid demand for our gas utility and pipeline integrity services, which are driven by regulated spend to modernize systems, reduced methane emissions, and certain environmental compliance, and improved safety and reliability. We expect our industrial services to strengthen through next year along with the continued recovery of the global economy and demand for refined products, as well as the return of our customer maintenance and capital spending that was previously deferred due to the effects of COVID-19 on the downstream market.

Looking to the coming years, we believe the opportunity Quanta has with customers in this segment as they increasingly pursue strategies to reduce their carbon footprint and diversify their operations and assets towards greener business opportunities may be underestimated. There are several examples of such initiatives and project opportunities. Gas utilities are implementing system modernization initiatives that position them to blend hydrogen into their natural gas flow. To that end, Quanta is working with several gas utility customers on hydrogen pilot programs. Certain refiners are building renewable and bio-fuel processing facilities, which could create opportunities for our Industrial services.

Natural gas power plants are also exploring blending hydrogen with natural gas as a fuel source to power their turbines, which could create opportunities for our Pipeline Infrastructure services. Lastly, we are actively pursuing carbon sequestration projects in the U.S., which could utilize our Engineering and Pipeline Construction services. In Canada, Pembina Pipeline and TC Energy have proposed a plan to jointly develop a carbon transportation and sequestration system called the Alberta Carbon Grid, which is envisioned to serve as the backbone of Alberta's carbon capture utilization and storage industry and could include participation by other pipeline companies. The initiative with leverage existing pipelines requires a new pipeline and facility investments, which when fully constructed, would be capable of transporting more than 20 million tons of carbon dioxide annually.

The North American energy transition is just that, a transition process. The role our Electric Power Infrastructure Solutions play in the energy transition is clear. However, we believe Quanta's underground utility and infrastructure solutions operations could play in an evolving and increasing role, in this transition in support of our customers carbon reduction initiatives. Progress continues in Washington DC towards enacting the bipartisan infrastructure bill and to build back better plan. As commented on prior calls, our positive multi-year outlook and strategic plan are not reliant on either of these packages. But if either or both enacted, they could provide incremental opportunity for Quanta over both the near and longer term. These packages include funding and policies to encourage new infrastructure development and modernization and several of our core markets.

In particular to build back better plan currently contains policy and [Indiscernible] representing the largest clean energy legislative package in American history. While additional political steps are still required, we're encouraged by what we've seen recently. We have profitably grown the Company and executed well this year and expecting to continue to do so. We are confident in the strategic initiatives we are executing on, like the better position we have in the marketplace and our positive multi-year outlook. We also believe that our business and opportunities for profitable growth in 2022 are gaining momentum, driven by our solution-based approach, the growth of programmatic spending with existing and new customers, opportunities for larger electric transmission projects, the addition of Blattner's renewable generation solutions, and the opportunity for recovery of certain portions of our business that have been affected by the global pandemic.

Looking to the medium and longer-term, as energy transition and carbon reduction initiatives are increasingly implemented, and addition to the primary drivers of our business currently, we believe our visibility could increase and our growth opportunities could expand and accelerate. We believe the infrastructure investment and renewable generation necessary to support these initiatives are still in the early stages of deployment and that this is arguably the most exciting time in Quanta's history. We are focused on operating the business for the long term and expect to continue to distinguish ourselves through safe execution and best-in-class field leadership. We will pursue opportunities to enhance Quanta's base business and leadership position in the industry and provide innovative solutions to our customers. We believe Quanta's diversity, unique operating model, and entrepreneurial mindset for and the foundation, that will allow us to continue to generate long-term value for our stakeholders. I will now turn the call over to Derrick Jensen, our CFO for his review of our third quarter results and 2021 expectations. Derrick

[Derrick Jensen, CFO]

Thanks, Duke. And good morning, everyone. Today we announced record third quarter 2021 revenues the $3.4 billion. Net income attributable to common stock was $174 million or $1.21 per diluted share and adjusted diluted earnings per share, a non-GAAP measure was $1.48. Our Electric Power revenues were $2.3 billion, a quarterly record and a 10% increase when compared to the third quarter of 2020. This increase was driven by continued favorable dynamics across our core utility and communications markets and associated demand for our services. Also contributing to the increase were revenues from acquired businesses of approximately $55 million. Electric segment operating income margins in 3Q21 were 12.4%, slightly lower than 12.7% in 3Q20, but better than our initial expectations. Operating margins benefitted from record emergency restoration revenues of approximately $230 million, which typically present opportunities for higher margins than our normal base business activities due to higher utilization, as well as overall solid execution across our electric operations.

Additionally, segment margins benefited from approximately $10 million of income associated with our LUMA joint venture. Otherwise, a slight reduction in operating margin versus prior year was attributable to normal job variability and mix of work and our communication operations, which delivered mid-single-digit margins during the quarter. As a reminder, last year's third quarter Electric Power results also included, what was at the time, a record level of emergency restoration revenues. Underground Utility and Infrastructure segment revenues were $1.02 billion for the quarter, 12% higher than 3Q '20 due primarily to increased revenues from gas distribution and industrial services. Though our operations experienced increased activity year-over-year, current quarter revenues and margins in our industrial operations were negatively impacted by disruptions along the Gulf Coast attributable to Hurricane Ida, and both our industrial and non-U.S.

markets within this segment remain pressured by COVID-19 dynamics. Third quarter operating income margins for the segment were 6.7%, 107 basis points lower than 3Q 20, but generally in line with our expectations. Margins for the year -- margin for the third quarter of 2020, benefited from favorable adjustments on certain larger pipeline projects with both scope changes and favorable closeouts in the quarter. Our total backlog was $17 billion at the end of the third quarter, the fifth consecutive quarter we posted record total backlog. Additionally, 12 month backlog of $9.8 billion also represents a quarterly record. Our backlog growth continues to be driven primarily by multi-year MSA programs with North American utilities, which we believe reinforces the repeatable and sustainable nature of the largest portion of our revenues and earnings. The Blattner acquisition occurred after September 30th, and accordingly, their backlog is not included in our current reportedly levels.

However, the total backlog from Blattner and the other 4Q acquisitions is approximately $1.8 billion. For the third quarter of 2021, we generated negative free cash flow, a non-GAAP measure, of $40 million, compared to $70 million of positive free cash flow in 3Q '20. Net cash provided by operating activities during the third quarter of 2021, although largely in line with our expectations, was down due to higher revenues and corresponding increases in working capital demands compared to prior year, which benefited from lower revenues and a corresponding lower use of working capital. Also, 3Q '20 benefited from the deferral of $41 million of payroll taxes in accordance with the Cares Act, 50% of which are due by December 31, 2021, with the remainder due by December 31, 2022.

Partially offsetting these dynamics was a favorable impact of increased earnings as compared to 3Q '20. Days sales outstanding, or DSO, measured 89 days for the third quarter of 2021, an increase of 7 days compared to the third quarter of 2020, and an increase of 6 days compared to December 31, 2020. The increase was primarily due to elevated working capital requirements associated with 2 large Canadian transmission projects driving an increase in contract assets. Specific to the Canadian projects, both continue to encounter work stoppage protocols in Canada associated with COVID mitigation, as well as delays attributable to, among other things, wildfires impacting access to worksite. These dynamics created substantial inefficiencies and production delays resulting in increased project costs. We are in active discussions with both customers regarding change orders associated with these increased costs, some of which have already been approved, with the remaining amounts being pursued in the normal course.

In addition, normal variability in work production and associated payment cycles across our operations contributed to slightly higher DSO in the quarter. As Duke discussed, and as we previously announced, we closed on the acquisition on October 13th. Prior to the closing in September 2021, we issued $1.5 billion aggregate principal amount of senior notes with a weighted average interest rate of 2.12%. Receiving net proceeds of $1.48 billion. Accordingly, as of quarter end, we had approximately $1.7 billion of cash. Subsequent to the quarter, we amended our credit agreement to, among other things, provide a term loan facility of $750 million, which was fully drawn and combined with the net proceeds from the senior notes offering to fund a substantial majority of the cash consideration payable to the Blattner shareholders at closing. Our highlight that our financial strategy and consistent performance have allowed us to maintain investment-grade ratings subsequent to these financing transactions.

From a capital allocation perspective, Blattner represents the largest acquisition in Quanta's history and a strategic opportunity to expand the solutions we deliver to support North America's transition to carbon-neutral energy infrastructure. Capital deployment for strategic acquisitions has always been a key part of our strategy, but as we've discussed in the past, our first priority for capital allocation remains supporting the working capital and equipment needs of our existing operations. While the debt issued to support the Blattner acquisition moved our leverage profile above our target range, it remains well below the financial covenant requirements in our credit facility, and we believe we can efficiently deliver, while continuing to create shareholder value through our dividend and repurchase programs, as well as strategic acquisitions. To the date of this earnings release, we've acquired approximately $64 million worth of stock since the beginning of the year as part of our repurchase program and we'll continue to evaluate potential acquisitions that fit our strategic objectives.

To that end, during the third quarter and through the date of the earnings release, in addition to Blattner, we acquired 3 additional businesses and made a minority investment in another, for total combined consideration of approximately $110 million. These incremental transactions further enhance our ability to deliver comprehensive infrastructure solutions to our North American utility and communications customers. Turning to our guidance. Our outlook for the remainder of the year reflects the strength of our core utility backed operation, which continued to deliver solid results with robust year-over-year growth. However, the results of companies acquired during and subsequent to the third quarter, including Blattner's operations, will be included in our consolidated financial statements, which makes comparability to our previous expectations challenging. It should be noted that we are in the very early stages of establishing Blattner's specific opening balance sheet, which includes assessing the positions of our ongoing projects as of the closing and dialing the tangible and intangible assets acquired.

The results of those ongoing efforts will have a meaningful impact on Blattner 's forth quarter contribution, which we've attempted to address in the range of our fourth-quarter expectations for the acquired businesses. That said, excluding the expected contributions from the recently acquired companies, we now expect full-year revenues from our legacy operations, to range between $12.15 to 12.35 Billion. Due to the strength of our consolidated performance for the first nine months of the year, we are increasing our expectations for the contribution of our legacy operations to adjusted EBITDA, to range between $1.17 billion and $1.2 billion. With the midpoint of the range representing an increase over our previous guidance and 13% growth when compared to 2020's record adjusted EBITDA. As it relates to our current reportable segments. While we continue to evaluate how these change may change with the addition of Blattner, I wanted to provide some color on our current expectations compared to our previous commentary, again, excluding contributions from the recently acquired business. We continue to expect full-year revenues to range between $8.7 and $8.8 billion for our legacy electric segment operation.

However, based on strong performance through the first 9 months of the year, and continued confidence in our ability to execute on the opportunities across the segment, we've increased our full-year margin range for the segment, for 2021 operating margins expected to come in slightly above 11%. Our full-year expectations for the underground utility and infrastructure solution segment, however, have slightly moderated due primarily to lower third quarter revenue levels than previously expected. Accordingly, we are reducing our full-year expectations for the segment, for its revenue is now expected to range between $3.45 and $3.55 billion while segment margins are now expected to range between 4.5% and 5%, which includes the $23.6 million provision for credit loss recognized in the second quarter, a nearly 70 basis point negative impact on a full-year basis. With regard to the recently acquired companies, operations I spoke of earlier, including Blattner, we expect post-closing revenue contributions for the year to range between $400 and $500 million and adjusted EBITDA and non-GAAP measure, ranging between $40 million and $60 million.

Accordingly, including the expected contributions from the recently acquired companies, we now expect our consolidated full-year revenues to range between $12.55 billion and $12.85 billion and adjusted EBITDA, a non-GAAP measure of between $1.21 and $1.26 billion. Corporate and unallocated costs will increase significantly primarily due to the acquired big companies. We currently estimate amortization expense for the full year will be between $149 million and $159 million, with $60 million to $70 million attributable to the recently acquired companies. Stock compensation expense for the full year is now expected to be approximately $89 million, with approximately $2 million attributable to restricted stock units issued to employees in the acquired companies. Acquisition and integration costs are expected to be approximately $26 million for the fourth quarter, resulting in approximately $36 million for the year.

This includes approximately $10.5 million of expenses associated with change of control payments awarded to certain employees of Blattner, by the selling shareholders, which require expense accounting, as they have a one-year service period requirement. We expect a comparable dollar amount will be accrued each quarter post-closing until the one-year anniversary of the transaction, at which time the payments will be made to the employee. We intend to include this amount as an adjustment to arrive at our adjusted EPS and adjusted EBITDA, both non-GAAP measures. Below the line, we expect interest expense for the year to be around $67 million, which includes approximately $16 million of incremental interest expense associated with debt financing used to fund the cash portion of the Blattner acquisition. Additionally, we now expect our full-year tax rate to be around 24%, reflecting a slight reduction from our prior expectations due primarily to a favorable shift in the mix of earnings between various taxing jurisdictions.

As a result, our expectation for full-year diluted earnings per share attributable to common stock is now between $3.20 and $3.40 and our increased expectation for adjusted diluted earnings per share attributable to common stock, a non-GAAP measure is now between $4.62 and $4.87. On a consolidated basis, we now expect free cash flow for the year to range between $350 and $500 million. This slight decrease is primarily due to potential timing of payments associated with emergency restoration efforts, as well as the likelihood that the dynamics impacting the larger Canadian projects continued to pressure DSO in the fourth quarter. Additionally, while we expect Blattner will be meaningfully accretive to our cash flow profile on an annual basis, we expect certain favorable billing positions at the time of acquisition could unwind as Blattner incurs costs in the fourth quarter to finish projects for which they've already received payments.

This dynamic could minimize Blattner's cash contribution during the quarter, which we factored into our range of expectation. As we've stated in prior quarters, our quarterly free cash flow is subject to sizable movements due to various customer and project dynamics that can occur in the normal course of operations. For additional information, please refer to our Outlook Summary, which can be found in the financial info section of our IR website at quantaservices.com. Overall, we continue to believe we are in the early stages of a significant infrastructure investment cycle. And the acquisition of Battner further differentiates us in the markets we serve and expands our ability to deliver solutions to support North America's transition to carbon-neutral energy infrastructure. We remain confident in our ability to execute against the opportunities in front of us while maintaining the financial flexibility to opportunistically deploy capital to deliver long-term shareholder value. This concludes our formal presentation and we'll now open the line for Q&A. Operator.

[Operator]

Thank you. We'll now be conducting a question-and-answer session. We ask you to please ask one question and one follow-up then return to the queue. [Operator instructions] One moment, please, while we poll for questions. And as a reminder, that's one question, one follow-up, then please return to the queue. Our first question today is coming from Chad Dillard from Bernstein. Your line is now live.

[Chad Dillard, Bernstein]

Hi. Good morning, guys.

[Derrick Jensen, CFO]

Good morning.

[Chad Dillard, Bernstein]

I just want to zero in on some of the areas of business that underperformed expectations of the quarter. I guess, first of all, on the communication side, you guys talked about some higher costing jobs impacting margins. First of all, can you quantify that? And then do you see that coming back on track as we go into the fourth quarter '22? And then on the Industrial Services side, I think you talked about some storm issues impacting results. Is that business still profitable or was that business profitable in the third quarter? And just lastly, on the Canadian projects that you called out, just want to confirm whether there were -- were charges taken or was this just a working capital swing and were those DSOs normalized?

[Duke Austin, CEO]

Hey, good morning. I think when we look at the Telecom business, we did call it out [Indiscernible] we're operating from mid single-digits instead of upper-single to double-digits when we looked at it. So it's not performing terrible. It's not where we want it to be. The macro market is very good and robust. The closeouts on a few projects are very difficult but the large majority or the vast majority of the business is performing in those double-digit margins and offsetting anything there as minimal, as we said on the call, from a charge standpoint or really just cost standpoint when we close things out. We'll go from there, but I do think we added backlog.

We continue to build backlog in this segment. We see a long runway there and we did start up some wireless capabilities, it has some cost in it. In general, incidental to the Company, incidental to the segment, we like the market long-term, we will get into double-digits there over time. Canada, when we looked at Canada, I think in general, the projects are performing well. We still see some COVID effects there to the Delta variant on some of those projects. There is some delays in getting billing cycles, billing points there as we run through a project, I think. So that it's more of a billing issue of when can we get things build versus any problems with the project or charges.

We did not take charges on Canadian projects. We performed very well. And the storm, yes, it did have a positive effect to the electric segment. It does when we get storms like that, it was up a little bit bigger than last year from the standpoint. Fairly large storm for us, I think it shows our collaborative effect with the client, how we've got in and work our front-end services, we're still working the storm for our clients. It just shows the longevity of the Company and what we've done on the front side of the business to collaborate with the client, to get things up faster, to do a nice job there for them. And I think we performed very well there. Offset, but it did have some impact on some of our underground segments as it always does when it comes in. So you get some offset and you also come off some larger work to go pick up storm. So those things offset some in the quarter.

[Chad Dillard, Bernstein]

That's helpful. And then just my second question is a little bit longer term. It has to do with labor. Clearly there's a lot of work coming down the pipe to de -carbonize the U.S. and you guys have the Northwest Lineman College. But just trying to understand just your strategy for scaling labor. Maybe you could start off with how much throughput do you have into your ranks from Northwest Lineman College. And then how can you scale that program to meet that future labor needs? And then lastly, maybe you can talk about whatever innovations or technology you have to minimize or actually improve labor productivity of your workers and your business.

[Duke Austin, CEO]

[Indiscernible] I think if you're just now trying to scale labor, you're long ways behind. We've spent about $150 million over the last 5 years and we're way ahead of that. So in my mind, we've done that. We've proven that we grow the Company, that's who we are. This is craft skilled labor, and not labor. In my mind, we self-perform about 85-90% of our business for a reason. And it's this reason, when you get tight labor markets, we can perform, we could perform on time, on budget, and give our client what they're asking for which is certainty. And we're doing that on a daily basis. That's why we're collaborating, that's why you're seeing expansion. As far as productivity, I'll put our margins up against it and show the growth of the Company, the growth of our internal labor force. The 3,000 or 5,000 that we add every year to that labor force is proof that we can do it, we can scale it. We are scaling it and the productivity speaks for itself, and the margins.

[Chad Dillard, Bernstein]

Thanks, I'll hop back in.

[Operator]

Thanks. Our next question today is coming from Alex Rygiel from B. Riley. Your line is now live.

[Alex Rygiel, B. Riley]

Thank you, gentlemen. As it relates to higher DSOs due to the cost in delays on the two Canadian electrical transmission projects, can you address your confidence in collecting on these and what the likely timing of that will be?

[Duke Austin, CEO]

Yeah. So on the DSOs there in Canada and our likelihood. Canada has traditionally had larger DSOs and projects are bigger. Some of the time frames in the way that milestone billings go in. It's typically been this way. We have a high degree of confidence and probability in collecting outlet. Derrick, comment on the DSOs.

[Derrick Jensen, CFO]

Yeah. Exactly. What I would comment on is that from a timing perspective right now. I think it would be post year-end, which is reflected in our cash flow commentary. I think it is probably going to be more in the first quarter and second quarter of next year.

[Duke Austin, CEO]

Both projects with longstanding clients, we have great relationships with that I believe ultimately, we're in very good shape. We're quite confident.

[Operator]

Thank you. Our next question is coming from Sean Eastman from KeyBanc, your line is now live.

[Sean Eastman, KeyBanc]

Hi Gentlemen, thanks for taking my questions. I feel like coming through earnings here just a lot of concerns around the renewables supply chain. I know you guys obviously just completed a big acquisition tied to renewable development into next year. I guess just in light of what you're seeing in the supply chain, could you maybe update us on how much cushion you think you have in that 2022 Blattner outlook that you framed back in September. Do you think that outlook is bias to the upside or is that looking increasingly realistic at this point?

[Duke Austin, CEO]

If you said 2,5 to 2,7, we standby it. We standby today. We know more about the Company today than we did when we talked about it before. We feel highly confident in those numbers. And I would just say, in general, yes, there is some supply chain noise, is what I would call it, and I think us having the breadth of Quanta, the breadth of Blattner is only from my standpoint helps us to add to who we are. It adds to how we can go execute. And I want to also say, when we think about Blattner and we think about this long term, we're looking 20 years and we've given guidance out. Not only do we stand by the 2-6 2-7 that we've given, which also gave a 2025 guidance of 3.6. We stand by that even more today.

[Sean Eastman, KeyBanc]

Okay. Fair enough, Duke. Thanks for that. And maybe you could comment on how Luma is trending relative to what they need to be doing to capture those performance incentives. Could that be upside in the fourth quarter? I'm just not exactly sure how that works. And obviously, a lot of noise in the headlines still. So great to get an update there.

[Duke Austin, CEO]

Yes. So Luma, we expected noise in the headlines. I think we've said that from the start, and as you transition to these large transitions on an island, it does have some noise to it. We're performing very well underneath the governor, the government is very much behind it. What we're doing is the right thing. We will transition that all into a modern system. We're doing so every single day, you can't get the payments on the upside of those payments until we get into a full contract which doesn't go into a full contract until bankruptcy's declared out of bankruptcy, and then it goes into a 15-year contract. But as we stand today, we are in a contract that just has not started on the 15 years until they come out of bankruptcy. There was some favorable rulings on the bankruptcy proceedings in the last week or so, I believe. Really good stuff going on underneath, a little noisy on the top, primarily around the generation which we don't control. I feel confident in our ability to perform there and what we're doing for the people that [Indiscernible]

[Sean Eastman, KeyBanc]

Okay. Thanks a lot, Duke. I'll turn it over.

[Operator]

Thanks. The next question today is coming from Neil Mehta from Goldman Sachs. Your line is now live.

[Neil Mehta, Goldman Sachs]

Good morning, team. I want to spend a little time on transmission and there is breaking news of the whole thing of the NECEC transmission project. And do you [Indiscernible] foresee some risks the electric power top-line growth in the future due to regulatory concerns around large project activity in transmission, and any of the current projects that you're working on facing similar risks that we should be aware of?

[Duke Austin, CEO]

I look at it like this. I saw [Indiscernible] most of our clients either add to their $20 billion of backlog over time, of what they're going to build in the CapEx and OpEx over the quarter. Almost every single one of them added to what they're trying to do from an energy transition. The large projects may get headlines and people want to talk about them. We're right around the edges on every one of them. They are additive to anything we said. The 85% of our business that still exist today, is -- the MSA work, those capital spend, there's undergrounding, what Energy said yesterday on [Indiscernible], those kind of things and with the tight labor supply. So any headline you're reading or what you read into something on large projects. It's not affecting the underlying business in our growth trajectories. We've given good guidance on that. The 85% mid-upper single-digits, you can look at our track record over the last 5-6 years and see what it looks like. I expect that going forward.

[Neil Mehta, Goldman Sachs]

That's really clear and thank you for saying that. The follow-up is around the budget reconciliation package. Would spending from both the budget reconciliation package, depending on what form it takes, and the bipartisan infrastructure build directly drive project activity that Quanta could be involved in? And that's over and above the base case growth that you talk about.

[Duke Austin, CEO]

I think you're going through energy transition, as we said. And I think the sentiment around North America and around what we're hearing, even in Canada, you're seeing more and more transition. And as you go into EVs, as you go into your renewables coming on, and you are also doubling load over time. And I think that's the unknown, is people don't understand that you're doubling load, and you're going to a carbon free fuel source. So as you do those things, you're going to need hydrogen, you're going to need tons of renewables. And I think in order to do that, you got to how transmission and we're sitting in very, very good spaces in all these areas. And it allows us through policy or without policy, we'll continue to see that sentiment move forward. That's what we see. I do think when both the five and plan. The plans that we've seen are additive to anything we said.

[Neil Mehta, Goldman Sachs]

Thanks, Duke.

[Duke Austin, CEO]

Absolutely.

[Operator]

Thank you. The next question is coming from Jamie Cook from Credit Suisse. Your line is now live.

[Jamie Cook, Credit Suisse]

Hi. Good morning. I guess, two questions. One sort of short-term once or a longer-term. First, Derrick, can you help us understand the Industrial business or stronghold business. What is implied for the revenue in sort EBITDA, if any contribution in your 2021 guidance and just the opportunity for that business to be more accretive to margins and earnings as we look to 2022. And then my second question Duke, just longer term is, as we think about good long-term secular trends. You have Blattner, infrastructure etc. Could you sort of help us reframe how you're thinking about the electric power margins, over the longer-term, and is there more of an upward bias versus how you've thought about margins historically? Thank you.

[Duke Austin, CEO]

And good morning, Jamie. I will take a little bit of [Indiscernible] and I'll let Derrick comment on the numbers. But in general, what we see is, we see an increase in that business in the fourth quarter a bit. I would say you have a higher oil price, so they'll be reluctant to do much in this environment. But as we go into next year, we see a real strong turnaround year. We believe that the business is coming back meaningfully. I feel confident in the next year on the business, but I'll let Derrick comment on the fourth quarter.

[Derrick Jensen, CFO]

Yeah, as it relates to -- go ahead, Jamie.

[Jamie Cook, Credit Suisse]

Yes. Sorry, go ahead. Go ahead, Derrick.

[Derrick Jensen, CFO]

I was just going to say, relative to the fourth quarter, I think it would be slightly profitable, which is what we have said, that they could be back and returning into a degree of profitability overall. That group is at slightly north of $500 million for '21 going into '22. I think we see it having the ability to start to return to the degree of normalcy that we talked about in the past. Those numbers have been north of a $700 million number. I don't know quite yet. It's too early to comment as to whether we'll get into those type levels, but I think we'll definitely see an increase. And we would see that it would be largely returning to some of that historical profitability again. I want to see how this fourth quarter plays out though.

[Jamie Cook, Credit Suisse]

And sir, can you remind me how you're thinking about historic profitability for strongholds?

[Derrick Jensen, CFO]

Historically, they were a double-digit EBITDA.

[Jamie Cook, Credit Suisse]

Okay, So there's potential for that in 2022?

[Derrick Jensen, CFO]

I do believe there is potential for that. Yeah. We are already [Indiscernible]. It will be [Indiscernible] guidance, so we'll see how it starts perform. But yeah, I think in the range of the guidance you'll could see that. As far as the electric power segment, I think when we put stronghold in -- when we put stronghold in, I mean, we see a double-digit margin Company. And as we look at it going forward, we believe that the segment will perform in those areas. Obviously, as we go into '22 we will be prudent about how we guide as we always are. We've got to get through whether we have a lot of [Indiscernible] performing in the field. And I think in general when we think about it, the business is healthy. It's in a good secular macro-environment. We really like where we sit. We think we're doing great things collaboratively. And anything that Blattner has is added to us. And again, their culture and what we're doing internally as far as melting together and looking for opportunity, I can only say that I feel stronger about it today than I did October 3rd.

[Jamie Cook, Credit Suisse]

But, I guess my question is, do you see longer-term in upward bias? Is it more profit dollar growth versus margin? Is that the way to think about it?

[Duke Austin, CEO]

I think it's more -- from my standpoint, we're trying to deliver cash to the bottom line. And the returns, as far as capital, those kind of things, we'll operate in the same kind of profile we have in the past on the Electric segment. Blattner is additive from a standpoint -- from a CapEx standpoint on a return basis. So I -- they're accretive.

[Operator]

Thank you. Our next question is coming from Marc Bianchi from Cowen. Your line is now live.

[Marc Bianchi, Cowen]

Hey, thanks. I wanted to talk about the acquired businesses and what's implied for fourth quarter and try to understand that in the context of the Blattner guidance for '21, or '22 excuse me. I think if I take this fourth quarter revenue from the acquired businesses, it's like a run rate of $1.8 billion annually. And the Blattner guide, I think you said earlier, 2,5 to 2,7 for '22, so is there just a lot of seasonality in that business? Is there -- are there some projects moving around or perhaps it's just conservatism? I'm curious if you could help us understand that progression a little better.

[Derrick Jensen, CFO]

Yeah, sure. Partly, it's only a partial quarter contribution that we did not acquire the Company exactly at the quarter, so there's only a part of October, so that's a component of it. Two, exactly. It's unfair to annualize a given quarter much like it is on Quanta. We have a degree of seasonality. You can't take any given quarter and annualize that. There are movements of projects and seasonality. That is still yet the case as well for Blattner and any of the companies that we acquire. We still yet feel very comfortable with the 2.5-2.7 original guidance for Blattner irrespective of this quarter contribution. And then lastly, there is a bit of just [Indiscernible] at starts and stops of projects, affecting the number. And then probably the last point that you raised is that we have been trying to be a bit prudent with the contribution because of the fact that we have, just outflows the transaction, we got opening balance sheet work to do. Looking at how some of that opening balance sheet will play out to the rest of those contracts. So 4 or 5 different factors there, but net-net, we feel very comfortable still with 2,5-2,7 annual '22 contribution.

[Marc Bianchi, Cowen]

Okay. Super, thanks for that. Maybe looking longer-term, Duke, you mentioned CO_2 and hydrogen pipeline opportunity work down the road. How big could that business be for you, maybe on a on a percentage of what you do today or maybe what the dollar addressable market might look like, and how does that differ from the work you do today on a maybe per mile basis or however you want to talk about it, is it much larger in terms of total dollars per mile a pipeline or what ever the scope of the work is?

[Duke Austin, CEO]

No, I don't think so. When we look at it, we're really just thinking about it. It's part of the segment and much like you would think about LNG when you're moving LNG or you're doing things. Really what you're seeing is the transition of infrastructure, where our role is in this infrastructure transition as we move into the future. I mean, I think we just sit right in the middle of it on anything you can think about is that transition. Whether they need -- they're going to need pipe to move it and they're also going to need pipe to move hydrogen and into blend into natural gas, and I think when you start blending that, you have different infrastructure. So all these different things that we're bringing into the markets: batteries, EV, renewables, technology with 5G, all those things are certainly where we sit.

And as we sit in the nucleus of that and we think about it, as we think about Blattner and where they sit in all this, that transition is something that Quanta is really focused on from a labor standpoint, a technology standpoint, and how we help and collaborate with the client, not only from where they're at today, but how they transition. So at the very front end of that is where we're playing and it's early in hydrogen, I do think there's going to be a significant amount of opportunity going forward. But we're already seeing where turbines in power plants on gas are starting to blend and even spec, hydrogen to some degree. So it's going to be a piece of the nucleus of how you regulate and keep the grid balanced. The bigger issue with the grid is to balance it. Signed, when, and then the balance thereof so hydrogen will play a part in it.

[Marc Bianchi, Cowen]

Okay, thanks very much.

[Duke Austin, CEO]

Sure.

[Operator]

Thank you. Your next question today is coming from Noelle Dilts from Stifle. Your line is now live.

[Noelle Dilts, Stifle]

Hi guys, good morning.

[Duke Austin, CEO]

Good morning.

[Noelle Dilts, Stifle]

I wanted to just -- good morning. I just wanted to touch on, from a very high level maybe, how we should think about the timing or cadence of work in 2022. I have 2 questions related to that. The first is, if higher steel or raw material costs are impacting timing at all, are you seeing any projects really pushed to the right? And then second, if you could touch on how we should think about Blattner typical seasonality, would be helpful. Thanks.

[Duke Austin, CEO]

Yeah, I'll comment on the -- as far as the commodities, we are seeing some escalation in commodity pricing. It has not affected the business, it's not material. I think our scale, our ability to move from project to project, while one, they delay, others are coming in, I just -- the amount, the macro environment there, that's part of the reason you want to scale. And then our renewable business or any business that we're in, we want to scale. Scale allows us flexibility, allows us flexibility with the client. And also our buying power. I mean, when you look at Fleet and how will we manage through Fleet, there's constraints to others with Fleet and our ability to really work with the client, work with our customers, and our suppliers on that has given us really, what I think, a competitive advantage going forward. I'll let Derrick comment on the rest.

[Derrick Jensen, CFO]

And one other point I guess is that to the extent that there's anything for fluctuations in the timing of Blattner and any of that would be, from a supply perspective, could lead to projects pushing to the right at any given point in time. Not necessarily in our minds impacting a profitability type dynamic but could push things around. But having said that from overall seasonality, I think I'd probably say it's reasonably similar to our overall Electric power operations. Probably really a little bit lower in the first, rising in the second, stronger in the third and in the fourth being either comparable to or having a slight decline, depending upon the timing of any of these supply type dynamics. But largely, I think I'd say it's similar to our historical electric power patterns.

[Duke Austin, CEO]

I would say our commentary on Blattner on the numbers that we've given you based upon us and whether we are going into next year or not. [Indiscernible] any supply chain issue, we are highly confident in those numbers.

[Noelle Dilts, Stifle]

Okay, great. That's really helpful. And then second, I just wanted to clarify one point, within underground utility and infrastructure. On the LDC business, I know you said you're still seeing strong demand there. When you mentioned the COVID impact to margins, was that mostly a strong hold or did you also see that at any LDC business? And if you could comment on where margins are running today or this year versus where you expect them to be over the next couple of years. Thanks.

[Derrick Jensen, CFO]

Actually, some of the other COVID dynamics were a little bit in Canada, London, Australia, and then yes, in some of the industrial side pressuring it, not really so much on the LDC side. I think we're seeing normal operations for the most part on the LDC side. And then from a margins perspective, we're continuing to see that comparable to what we've been speaking to, trending towards getting into that upper single-digit overall as we go forward. We feel confident in our ability to [Indiscernible] that with LDC operation.

[Duke Austin, CEO]

Yeah. No, I would say to our Canadian operations, I think were probably the most affected with COVID, certainly. And when we look at it, we look at it going forward and we've started some nice projects up there and I think we're in from a good shape on the GAAP side. And as far as on the electric side, we had commentary around that and obviously we've got -- the health and safety of these employees are what we're really focused on, to make sure they're safe every day and we've given them great mitigation and great plans to be safe. We've done that through the Company and have not missed work yet for two years. And I fully expect us to operate right through it and we're going to work with our client on any mandate there may be in geographically or holistically.

[Noelle Dilts, Stifle]

Thank you.

[Operator]

Thank you, ladies and gentlemen, in the interest of time and to accommodate additional questions, we ask you please limit yourself to one question. Our next question is coming from Brent Thielman from D.A. Davidson. Your line is now live.

[Brent Thielman, D.A. Davidson]

Hey, thank you. Thanks for taking the questions. I just want to follow up on the gas utility portion of underground, maybe just give the latest and greatest in terms of what you're seeing among customers for modernization programs going forward. Do you still think that portion of the business can achieve the growth rates you've seen a bit of last several years going forward?

[Duke Austin, CEO]

We like the business long term. There's mandates around methane gas release, cast-iron replacements. We've seen some great stuff with hydrogen coming along and we really like the business on the underground. But I want to go back again and say it's a portfolio. If we can build underground electric with gas carriers, that's what we're going to do. We're going to go and really consolidate offices, leverage our capabilities in the field as some gas operations will be performed in underground electric. I'm not really worried about it from the segmentation standpoint. In my mind, we're going to fully utilize our people with the highest impact on the profitability of the Company. And I -- that's what we're focused on, whether it be Telecom, Gas, Electric, some of the equipment is like type of people for the most part, are very much like type. So we can operate throughout our portfolio of our service lines. If we do it properly and leverage our capabilities at the field level, which is that's what this Company is focused on, it's driving the margin of the whole.

[Operator]

Thank you. Your next question is coming from Adam Thalhimer from Thompson David, your line is now live.

[Adam Thalhimer, Thompson David,]

Hey, good morning, guys. Do still think that with the hydrogen and CO_2 lines there's actually less industry pushback?

[Duke Austin, CEO]

It's a complicated dynamic, whether you go green hydrogen. It's just hard. I would say it's corrosive, it burns hot. There's just that it's different. And I think when we think about it, we're working with the client. And in your early stages, it is a part of the solution. And everybody -- we're going to have to regulate the grid, the load is that we get curves in the load and that load regulation is a big deal and especially without interconnections and the difficulty building transmission. While we talk about it a lot, it's still difficult to build large projects and the underlying underneath has to be very, very robust. And so you get a lot of smaller projects and you get a lot of other things that you can do. So I do think hydrogen is just a piece of what we're trying to accomplish as utilities go into their transitions in this renewable state and are you going to build the transmission as well? It's going to stock on top, it's just a timing thing.

[Operator]

Thank you. Our next question is coming from Ian Macpherson from Piper Sandler. Your line is now live.

[Ian Macpherson, Piper Sandler]

Good morning. Thanks for squeezing me in. Duke, I heard, I think $110 million of quarter-to-date [Indiscernible] following Blattner. I had imagined that inorganic strategy might tap the brakes a little bit. As we integrate Blattner, not the case, short-term, and I know that's a big part of your DNA and what Quanta does really, really well. But just curious on your thoughts on the merits versus risks of investing more pro-cyclically, now that things are hotter, evaluations are probably hotter, maybe there's more embedded backlog risk and targets you might acquire. So just your thoughts on what the go-forward cadence might look like for additional acquisitions. Thanks.

[Duke Austin, CEO]

I think when we looked at it, we had some ongoing M&A. And I think that remains to some degree. We've never been out looking for acquisitions. When companies come, they have a strong need forum in a region and I think we've made very good ones and very good acquisition. Again, we're not looking forward. We just made $2.7 billion acquisition and we're going to be prudent about how we manage this Balance Sheet. And I've said all along, we will generate cash and pay down debt. And that's part of who we are, but we're not going to walk away from great companies. We don't feel at all like we've stretched this Balance Sheet given the fact of the macro market and what we see. While we are -- well, I would say yes, will probably tap the breaks a bit. Certainly, we are not going to pass on companies that we believe add value to the shareholders.

[Operator]

Thank you. The next question today is coming from Andy Kaplowitz from Citigroup, your line is now live.

[Andy Kaplowitz, Citigroup]

Hey, good morning guys.

[Duke Austin, CEO]

Good morning.

[Andy Kaplowitz, Citigroup]

Duke, I know of even a few years ago you deemphasized large oil and gas pipelines but in the last quarter I think you talked about winning some larger projects in that space and obviously oil prices are higher now. It seems like there are a couple of projects out there that you could bid on. How do you view the more traditional projects these days? Is there an active pipeline? Could there be significant growth in that world?

[Duke Austin, CEO]

I think when we talked about that last quarter, when we were in construction on some in Canada today. We're opportunistic there. We can operate that business quite profitably. We're just not, in my mind, we decided not to invest in it and not to continue to invest. So that's a little bit different. We can still do a billion dollars in the business, we can do $2 billion in the business from what we have today. So we don't have to invest more in capital. We have the people, we have the things that we can do. As you look at carbon sequestration and all the lines there and all the things that are coming up on hydrogen, it certainly plays into the business and we'll look at it. We have the capabilities entirely. We'll continue to take the opportunities that'll stack onto anything we're doing. Whether it be Canada, the U.S. but there is some nice projects out there and then certainly around the edges on every one of them. But we're not going to take the risk that it's not something that we have to have. And when we guide, it will be $3 to $500 million. I can almost tell you right now. And that's what it'll look like if we do $2 billion great. We'll let you know.

[Operator]

Thank you. Next question today comes from Michael Dudas from Vertical Research. Your line is now live.

[Michael Dudas, Vertical Research]

Yes. Thanks. Regarding Duke the capital budgets that your utility clients are putting forth for 2022 I'm certain and beyond. Has there been a significant mix? I'm talking more from the T&D side on hardening resilience relative to new investment replacement. Is that shifting? Are they focusing more on the former? And I'm assuming there is not a major difference in margin or utilization depending on what you guys do for them, but just wanted to -- if you could share your thoughts on that.

[Duke Austin, CEO]

It's all of the above. So I think when we look at it depends on where you are at geographically, but certainly all of the above [Indiscernible], escalate. We've seen undergrounding certainly come about in a significant way. Those two things are there. I think what's underappreciated is the amount of infrastructure and the modernization necessary on the distribution system to handle the load of [Indiscernible]. When you start putting these cars' batteries on at night and on the distribution load of what it does to the system, I think it's underestimated on the cost and the amount of work that's out there, capital that's necessary to get these systems ready for electric vehicles. I just -- in my mind, it's just underappreciated.

[Operator]

Thanks. Our next question is coming from Justin Hauke from Baird. Your line is now live.

[Justin Hauke, Baird]

Hi, good morning, everyone. I guess my question and thanks for all the questions you've answered. But, on Blattner, just the award activity in 3Q and since. Given that you talked about a lot of solar mix shift for next year relative to the wind projects, I guess, maybe just an update on how things are trending there. And if that mix shift is coming through, and then also it seems like there's been a lot of approvals for offshore wind projects, and I think that's outside of the house that you're looking at. But are there opportunities for you to participate on any of those?

[Duke Austin, CEO]

When we look at Blattner, I reiterated guidance pretty firmly in the '22 and talked about $3.5 billion to $3.6 billion in '25. The commitment there, we're really looking at megawatts, not projects. And the projects are certainly there if we decided to start, say, the reward we got. I just think it's not valuable to the shareholder nor is it productive. What we're saying is Q6, Q7 next year and $3.6 billion in '25 of top-line [Indiscernible]. That's how we see it. That's how robust it is. So it should give you a good idea of what we're seeing as a Company and how we said and depending on the future in the renewable business. In my mind, that shows where we're at and I think, again, the awards are there. We're certainly with the client, talking to them on a multiyear basis, not just one job. So that's their offshore. It's expensive. I think we have clients that are certainly, have their plans around offshore and we're certainly in there as far as interconnections, things that we we're good at we'll do. But primarily, as it comes on [Indiscernible], I just -- but I've said this a floor, but we have had bad luck with boats and I'm just not a boat fan.

[Operator]

The next question is coming from Steven Fisher from UBS. Your line is now live.

[Steven Fisher, UBS]

Thanks a lot. It sounds like there's a learning curve on Telecom that you're experiencing now and I want to make sure we understand how to set our expectations on that from here as it relates to the margins. What are the different elements of the learning curves you have to get up? And when can we expect that to normalize such that we can have a more consistent margin expectation here on the Telecom side within that -- the electric segment. And just maybe a quick follow-up on -- just to clarify, on the Blattner deal, you've been extremely clear about the confidence that you have in the guidance numbers, but you've talked about the revenue numbers, not the EBITDA contribution. I just want to make sure there's no difference in your confidence in -- between the revenue and EBITDA. Thank you.

[Duke Austin, CEO]

Double-digit EBITDA on Blattner. As far as the Telecom, we've talked about it in length. I think, in general, what I would say is, the closeouts in the end, as far as engineering closeouts and things like that, and then some descoping us serve clients on their builds, created some effects in projects, We're still working with the client. We will do our best to claw stuff back. But if you think about it, if we get $200 million and we did 6% instead of 10%, it's $6 million, something like that. It's just -- it's not big numbers for us long-term and I think we're not seeing big effects to that as far as margins and we will get them in the double-digit ranges. We're operating for primarily in those ranges. We had some projects early on that are complicated and it's an Industry issue. It's not just us, so it's something that we're all faced with and some closeouts. And I think we're in the late stages of those closeouts and you'll start to see it get back into double-digits.

[Operator]

Thank you. We've reached end of our question-and-answer session. I would like to turn the floor back over to management for any further closing comments.

[Duke Austin, CEO]

First, I really want to welcome the people of Blattner and certainly the culture there and then the people in the field, the people that pay our pay checks. Thank them for what they do every day. And storms were tough. Our people perform extremely well through the tough environment down in the Gulf Coast and certainly the families lost lives and [Indiscernible] to there, it's tough. Our guys did really well and I'd like to thank all of you for participating in the conference call. We appreciate your questions and your ongoing interest in Quanta Services. Thank you. Close our call.

[Operator]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.