Quanta Services at Bernstein Conference: Strategic Growth Insights

On Wednesday, 28 May 2025, Quanta Services (NYSE:PWR) presented at the Bernstein 41st Annual Strategic Decisions Conference 2025. The company outlined its strategic evolution from an electrical contractor to a comprehensive infrastructure solutions provider. While Quanta has positioned itself strongly in utility, renewable, and technology infrastructure markets, it faces challenges such as labor shortages and regulatory hurdles.

Key Takeaways

• Quanta is transitioning to an electrical infrastructure solutions provider, enhancing its vertical supply chain.
• The company is focusing on data centers, onshoring, and economic growth as key demand drivers.
• Quanta self-performs 85% of its work, offering insight into labor costs and project execution.
• The battery business is rapidly growing, with projections heading toward $2 billion.
• Potential acquisitions aim to expand solution offerings, focusing on mechanical businesses.

Financial Results

• Quanta’s utility infrastructure capital is estimated at $250-300 billion, with technology capital at $200-300 billion.
• The company anticipates high single-digit organic growth.
• Data centers currently account for less than 10% of Quanta’s business, but demand is expected to rise.
• The average contract size remains between $5-6 million, with a significant portion of work negotiated.

Operational Updates

• Quanta is addressing labor shortages, particularly for low-voltage electricians, through educational partnerships.
• The company is enhancing its capabilities with recent acquisitions, including Cupertino for low voltage and Pennsylvania Transformer for US-based production.
• Quanta emphasizes collaboration with clients for long-term planning and multi-year projects.

Future Outlook

• The grid is expected to double in size over the next 20 years, driven by data centers, onshoring, and economic expansion.
• Quanta is focusing on increasing capacity and building more infrastructure to meet growing demand.
• Renewable energy remains a priority, with a competitive levelized cost of energy for solar projects.
• The company is preparing for potential tax bill changes affecting renewable projects.

Challenges and Solutions

• Quanta faces labor shortages, particularly in skilled craft areas, and is working to accelerate permitting processes.
• The company is leveraging its supply chain to drive growth and manage regulatory changes.
• Quanta aims to provide holistic solutions to overcome infrastructure development impediments.

In conclusion, Quanta Services is strategically positioned to capitalize on infrastructure growth opportunities while navigating industry challenges. For more details, refer to the full conference transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Chad Dillard, Lead Analyst, Bernstein: Hi. Good morning, everyone. My name is Chad Dillard. I’m the lead analyst here at Bernstein covering the machinery sector and the electrical infrastructure companies. I’m really pleased to have Quanta Services here who is, a leading electrical infrastructure solutions provider.

And, joining me from the company is, Duke Austin, CEO, and Jay Sridharasad, CFO. So if you have any questions, during this fireside chat, there is a link somewhere around here, where you can actually, plug in your questions via pigeonhole, and I’m more than happy to read them off, and we’ll get your questions answered. So we’ll begin with a a brief prepared remark, from Duke, and then we’ll jump right into questions. Duke, over to you.

Duke Austin, CEO, Quanta Services: Yeah. Thanks, thanks for having us, and, appreciate everyone being here. So Quanta, in general, is a solutions provider to three addressable markets, is utility infrastructure, renewable infrastructure, and then the technology infrastructure. So really providing solutions around craft skilled labor at the core. We’re we’re bolting on engineering and technology and other things to really provide solutions.

We do have some vertical supply chain initiatives that we have that really around the pull through through those solutions that address those markets. Markets are growing. They’re they’re converging, and we we set the nucleus of what I consider one of the biggest builds of infrastructure that we’ve seen. So I’m really, really excited to be here to talk about the company and, kinda tell you guys where we’re going. So thank you for having us.

Okay.

Chad Dillard, Lead Analyst, Bernstein: So, Duke, first question for you. So you’ve talked about Quanta as being, you know, evolving from an electrical contractor to an electrical infrastructure solutions provider. So why is owning more of the electrical supply chain a better way to do business for for Quanta and its customers? And I’d love to get just any anecdotes on how this is being received by your customers. Yeah.

I mean, I

Duke Austin, CEO, Quanta Services: think the companies that, you know, we’ve acquired or or how we think about it is independently, when you acquire a company, typically, they’re a contractor, you know, really, you know, try to stay not commoditized but virtually commoditized as a contractor. When you think about a solution, the way I think about it, you’re putting multiple companies together, providing multiple things when you’re collaborating with a client to to provide that solution that that they’re after. So, really, a good example, you know, when when we look at, SunZilla is a project that we built. It was putting wind, our transmission capabilities, all of our permitting, all of our front end solutions towards one of the larger infrastructure projects in the country, and and providing in a turnkey solution. So I I think as we see it before COVID, things like that, we could see supply chain constraints.

We acquired transformer capabilities there because we felt like the industry was it was necessary. So US based transformers, we’ve continued to to lean into that. And, you know, really for the pull through against substations in our own work, not really to be a manufacturer. We have invested. We’ll continue to invest, but I wouldn’t consider us a manufacturer.

We’re really that solution that the client’s looking for. And and not only our electric utility clients, but it’s also our technology. Technology is buying transformers. So as we sit and we talk to them about data centers, we talk to them about, you know, how the interconnections, It’s just a holistic view of of the markets that we see, what we’re working with the utilities, and, you know, what I would consider technology renewables as we’re backing up the grid for that overall solution when so when you think about a data center, you know, really the constraint is power. We sit in the middle of that.

We want obviously, wanna build as much as we can of the data center. So, you know, one day, you’re talking to a a a technology company, a utility, and a renewable customer the same day, but for some reason, they can’t connect. And so we’re really in the middle of that trying to connect those things and provide those solutions that really are impediments to what I consider, you know, that solution about going forward. And you you hear a lot around constraints of power, getting in the queue. We do a lot of planning.

So really on the front side of the business, trying to get to the customer and listen to what they’re saying and really be collaborative at the customer level at the highest level so we can see farther out and really talk about the company in a multiyear, multi decade, type, you know, situation at this point.

Chad Dillard, Lead Analyst, Bernstein: So how does that change your your addressable market? And then how do you think about the shift in the risk profile now that you’re, you know, potentially doing the the full turnkey project?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I I I think a lot of you know, I would say the majority of our is negotiated. When you put yourself in a position where you’re talking about time, Typically, we have three, you know, like I said, three addressable markets, two big markets. Utility bit capital is around 250 to 300,000,000,000. Your your technology capital is around 200,000,000,000, 3 hundred billion, somewhere in there of what they’re spending on the addressable markets that we’re in.

Let’s just call it 200, and growing at the technology and the new renewables and generation backing that up. So those three markets are are large in nature, so we sit right in the middle of of those markets and and really try to address them. As they come together, Chad, I think that’s important. Independently, you you may see us building a, you know, a transmission line to feed a data center, or you may see us building a data center substation and transmission line. So I think our ability to really work with the client on what they’re trying to accomplish, early and and address those markets is really making the company grow.

As we look at service lines, you can see it. We’re really craft centric. And when I say that, four generations in the business, know the craft business, understand, electricians, you know, line workers. It doesn’t matter what craft it is. So we self perform 85%, which I think is is really critical to your question because difference in the past or with others, they don’t know their labor.

And so you can say, yeah. I’m gonna show up with 5,000 people, but who are they? We know exactly who we’re showing up with on any given day. We’re looking at the work. We’re looking at it.

So we’re able to understand cost, on time, on budget. I really feel like we were resilient in markets and have have not taken the risk of EPC lump sum where there’s some kind of commodity risk or output risk. You know, I’ve been there in the past. I’ve seen it. We’ve obviously a decade ago, we’re in the middle of of those kind of builds.

But, as it sits today, look, linear construction, the things that we do best, generation, it’s really a collaborative effort with the client to look at total cost and drive the total cost down versus the risk. And, you know, less risk, sometimes you give up a little margin for less risk. But but, typically, you know, I feel like we’re trying to hit singles and and doubles and, you know, that that’s how the company is built, and it’s built around craft and our craft.

Chad Dillard, Lead Analyst, Bernstein: So we actually yeah. Speaking of crafts, so it’s pretty well understood that Quanta, you know, was ahead of the curve when it comes to, you know, setting up craft labor and the training. But where to from here? Is there anything that any different that you need to do, or more you need to do to further enhance that labor strategy?

Duke Austin, CEO, Quanta Services: I mean, I think we’re always looking at, you know, the company is doing considerable amount of free cash. We we look at three ways to deploy it. And as we see you know, when I when I see great companies, great family businesses that we’ve known a long time, such as a Cupertino or a Bladner or others, we don’t pass those up. You know, we we lean into them. We believe that, the right management teams, the right culture, the way that we look at the markets, if they fit on if they fit with us and and where we’re going and try to provide the solutions, you know, the more the more that we can provide in a craft to those addressable markets, you know, the the larger the company can get, the farther we can go.

And really trying to look leverage supply chains and the things that we can do in a centralized way, you know, to create the create that overall solution is really important. But but really at at the craft and the service lines and and multiple crafts, it like I said before, it doesn’t matter. You could see us in, you know, one day, we’re putting gas distribution in, pipelines, you know, transmission. So so many ways that that we can lean into craft, but philosophically, they we think the same. Everyone thinks the same.

And and the way we treat our people, and I think it’s it’s really, really important, for us. And we’ve had colleges. We really we we start early. We built colleges out a decade ago. We started building training centers, all the things that we need to do to lean in.

I mean, I know we’re hearing a lot about Pell Grants and things like that. We don’t need Pell Grants. We are what I consider. We’re taking them out military. We’re bringing kids in.

We’re training, training, training, training. And, like, I always say, if you wanna be a surgeon of line work, then you wanna come to us. If you don’t care, maybe maybe it’s not us, but we wanna train up. And we want to train where someone from the field can take my job or vice versa, someone from college can go into the field and and come up the same way. So we’re really trying to work at that that craft and lean into it and making sure that we can, address the markets that are in front of us.

Chad Dillard, Lead Analyst, Bernstein: So moving on to the demand part of the the equation. So investors have been very focused on data centers and AI as the main, demand drivers for electricity, but that’s only part of the so can you help us fill in, the rest of what’s driving load growth? What’s needed from a grid infrastructure perspective, and based on your conversations from, you know, some of the largest utilities or renewable developers? And just ultimately, by how much does the grid need to grow to support this growth?

Duke Austin, CEO, Quanta Services: I mean, I I I think when when we look at it, knowing a lot about it generationally, you know, transmission is is the cheapest form of generation. So the more transmission we can build, the more flexible the system becomes, much like a highway system. So and I I know we talk a lot about, well, it’s it’s only about 60% utilized, things like that. Well so I look at it. There’s a 24 lane highway in in Houston.

I’ve said this before. And if you took out eight lanes, yeah, it could happen, but you would back all the way up to San Antonio and take about ten hours to get into into Houston. So it’s the same thing. Congestion, you’re building for peaks at times, and and so you need the transmission flexibility to to move load. So that’s a fallacy to think you don’t need.

I think the grid could really double, on generation for sure. And the what we see going out, call it twenty years or so, I think, somewhere in there. But but in general, I see, you know, great demand. Some of it’s data center driven. Some of it’s onshoring.

Some of it’s just growth. I mean, we had the appliances, and we made a lot of headway there. We do have battery vehicles. I you know, probably, I would say that that slowed. It’s slower than kinda how I thought about it, but, I would say data centers and everything else has exceeded that demand.

And I I think we we can see out a decade or more of of really kind of good builds growth. I I know sometimes that these articles and, you know, big jobs, monuments, I’ll call them, you know, they take the headlines. But underneath is just solid growth and just a very, very paced infrastructure build. You can look at our capital on on utility capital, or you can look at technology capital and see that growth coming. And we can’t meet demand today.

I mean, you know, if you look at turbines, they’re out, I don’t know, five years, I guess, is the average. I someone else would know better than me, but, at least call it five years in turbines. And and so when you look at gas being out that long, you have to come in with the renewables and things that you can batteries, things that you can do today. And so that’s really the angst is to go faster in AI, push the data centers, push onshoring. You can’t do that without generation and and transmission.

So I I continue to believe you’ll see significant amounts of transmission build as well as generation behind it. Lots of renewables, probably solar batteries for the time being, some wind, and you’ll get some gas generation built in here for, you know, really what I consider to probably double the load of the system.

Chad Dillard, Lead Analyst, Bernstein: So to go on and go back to that comment about 60% utilization. So what is it? Is you know, are the is are the transmission lines just in the wrong place, or is there something else going on? Like, why can’t we just go from 60 and let’s just call just call it 80%, without building more physical infrastructure?

Duke Austin, CEO, Quanta Services: Yeah. I mean, because it loads up, you know, line of load. Some of them are in the wrong places. So that that’s a that’s a problem. But the other part is is that you can’t load them, you know, all day.

At times, they’re a %. On the average, they’re 60. Not never a hundred, but call it 90. And sometimes they’re at 60. So the average, it makes good headlines to say it’s only utilized 60%.

But I I venture to say if you go out early in the morning, eight 08:30 in New York, it’s pretty crowded on the street. You go out three in the morning, and it’s not very crowded. So why why is the street only 50% loaded? Yeah. So it’s it’s the same scenario on a line, and I I think, you know, you’ll hear a lot of dialogue around it, and I just it it’s just wrong.

I don’t know how to say it any other way. It’s wrong to think 6060% is full, when it needs to be. And so it just you have to build more line and more infrastructure in order to meet the demand. And so it’s point to point demand, like a data center. Yes.

But look. The more load you have, eventually, you’ll create NPV. We have not built a line in this country that is not NPV positive to the rate payer. We haven’t. And and so it’s a fallacy to think like we’re building line out there in the world or in in North America that is not, you know, what I would consider a benefit to the ratepayer.

It’s just wrong. It it’s absolutely beneficial. So let’s let’s shift over

Chad Dillard, Lead Analyst, Bernstein: to Cupertino. That’s the most recent acquisition you made and expanded your your market into more of, like, behind the meter opportunities. So how has that acquisition changed Quanta’s addressable market, and how are Cupertino and Quanta better together? And maybe you can give some specific examples to to illustrate that.

Duke Austin, CEO, Quanta Services: Yeah. I mean, we bought Cupertino for a couple reasons. Great platform company. It was something that was a decade long in the making. Very, very good, management team, young, just fit on top of us.

We’re we’re we were primarily high voltage, and and they were primary low voltage. But two things, it gave us the ability to lean into more of the electric, package of a data center and provide that solution in a broader way. I mean, we were building the substations, the high voltage, some of the medium voltage, but this allowed us to really go inside the center. And they had been in San Jose for decades and grew up with technology. And, really, when I think about it and think about the business at the at at the strategic level, it’s really the client and and access access to the client and understanding the trust that goes into that.

You don’t go up to, you know, Silicon Valley and say, hey. I’m here. I’m gonna go to work. They laugh at you. And so you you really have to have credibility up there.

And so I I think Cupertino gave us a lot of credibility and what we could do with that versus a contractor that they were into a solution provider that we can be, with multiple clients, not not just hyperscalers, but across the board. You know, the labor’s fungible, and so it it can be health care one day. It can be, chip plants the next day. It can be other things. But, you know, look, it’s all around some kind of technology or or or what I consider us leaning into the markets that we see, where where we can, you know, get the most value for the client.

Chad Dillard, Lead Analyst, Bernstein: So is the work that two that Cupertino is doing, is it becoming more programmatic, you know, compared to, you know, what your your traditional, you know, heritage quanta business has been? And if so, why?

Duke Austin, CEO, Quanta Services: I would consider it, know, repetitive in nature. We’re certainly you know, look. We’re not looking at a magazine looking for work. I’ll say that. Like, we can see out, you know, a decade or so with them, and it’s really can’t how fast can we get there?

And, you know, what what does the labor look like? Where where can we go? As as we sit and look at long term plans of technology, we we’re afforded the opportunity to really lean into long term plans of technology. And so the question is is what’s the pull through? What what can we do to get you there quicker?

You know, lots of the bottleneck is the interconnection queues and generation. And I think that’s the moat that we have is to really help there. So once they see that we can actually help with the high voltage, with the generation, with the real issues that are out there and not just say, hey. We’re Quanta, and we get we’re gonna be a knuckle dragging contractor today. That’s not who we are.

We’re we’re there to say, okay. If you build here, we think there’s an opportunity with this client. Let’s go talk to that client. We can get the renewable client in here. Let’s have that discussion and build, you know, what I consider a good consortium to try to go in.

And what do we wanna do? We wanna build it. And so the first thing they ask is where do you have your transformers? Yeah. We have them.

Do you have your you know, lots of different things. It’s just where’s your labor, how are you getting labor, all those kind of things that we can answer. And when you can answer all the with the hard questions and and show up and do it and do it on time, that that’s that’s where you get the solution that that we talk about daily. So they’ve allowed us really to access into that in that collaborative nature that we had, what I would consider in the renewable business. The same thing with Blattner, very much, you know, sits just like Blattner in in the technology arena.

Chad Dillard, Lead Analyst, Bernstein: Gotcha. So if we truly got serious about reshoring, what will we need to do to get the grid ready? And how does your acquisition of Cupertino help Quanta participate behind the meter?

Duke Austin, CEO, Quanta Services: I think when you think about, Cupertino, know, a lot of it about, call it, a billion and a half of bat is data center driven. That’s not to say that there’s not ancillary or or things like that, but it’s really straight up data center, driven. Some majority of it is Cupertino, but it’s it’s other things that we do as well. So when I think about that, it’s not we can build a chip plant too. I mean, you know, so we can go in and do all the electrification that you would do inside of a data center.

Same thing. Before there was data centers, there was hospitals, there was buildings, there was all kinds of things, had a great business, and continued. So I I don’t think it’s really when I look at it, data center is not even 10% of the business at this point. I think it could be much greater. I think the business is gonna grow anyway, but I think that the the data center piece can is will be our fastest growing piece of the business.

But it’s not to say we won’t build out a chip plan or, you know, other things, clean rooms, all kinds of different things that we can do. We do fabricate our fabrication facilities. I I really like what we’re doing there. We can go faster. Right now, it’s not the the top line of of the company could continue to grow.

It’s just how fast can you get there and make sure that our quality and, you know, our word means something, and and we’re gonna continue to to value that and make sure that we can deliver, Chad. I think that’s that’s the big thing here is us being able to deliver and execute and do the things that we’ve done over the last decade.

Chad Dillard, Lead Analyst, Bernstein: So what’s the the biggest obstacle to scaling that business?

Duke Austin, CEO, Quanta Services: I think we can scale it. It’s just a matter of us. I really wanna be more of, you know, more of a solution to the client versus just to the electrical package. So as we as we move forward, you’ll see us, you know, I believe, provide that holistic solution to other craft, other things that we can do in a data center because they’re asking us to do it. Make sure the high voltage, all the supply chain, all the things that we can do.

I I I’m not seeing a lot of impediments there. Scale it. It’s much like we’ve done with the high voltage side. You know, we need more craftsmen. So it’s probably the most constrained group that we have of craft would be that that group.

So, you know, colleges and a lot of people don’t wanna climb. So as we say, okay. You don’t wanna climb poles, we’ll come into this side. So we’re building out curriculum. We’re building out pre apprentice programs, things like that for, low voltage pipe electricians.

It takes four years. So as we see that, you know, we’ll we’ll look at fabrication. We’ll do all the other kind of things that we can do to speed it up. But, in general, we need more craft.

Chad Dillard, Lead Analyst, Bernstein: So let’s shift gears to to more current events. So with the house version of the tax bill headed to the senate and look recognizing it could potentially change, when it comes out of there, what are your thoughts on the impact on renewable project activity as the bill stands, as it’s currently drafted?

Jay Sridharasad, CFO, Quanta Services: Yeah. I think, yeah, the house bill came out a little bit harder than initially expected, but but I’ll tell you the, the general view of the customers that we work with, right, which are the higher quality developers who’ve been in this industry for many, many years, decades, who’ve lived through the cycles of PTCs on and off. They’ve done a really good job of anticipating the changes, getting ahead of it. A lot of them have strong balance sheets, have been very good about supply chain themselves, have worked through these things in the past, have a really robust pipeline to be able to manage through the the complications that may arise with the bill. Lot of lot of lot of work with safe harbor in ’24, so I think you’re gonna see very good growth in the next few years.

We’ll see where the senate bill comes out. I think there’s still some room for improvement in the bill. A lot of it is gonna be hinged around the foreign entity of concern. Clarity is required more so than necessarily having to get it fully repealed, but there does need to be some clarity in the bill. But the demand side for renewables continues to be as strong as ever as strong as ever.

In fact, PPA prices continue to reflect that. If you have a project ready to go, you’re going to get get that built, and that’s what we’re seeing. We haven’t seen any significant slowdown. The conversations, like Dick was saying, around our solutions based approach is even stronger. I think another thing to point out is with with the way the the the credits now are are potentially going to fall out, you’re going to see a rush to quality again.

You’re gonna see customers wanting to come to quality solution providers who can ensure that they meet the deadlines as as as now implemented potentially. So I I think all we’re seeing is opportunity. You again, you may see some slowdown here and there as as as as developers figure out which part of their portfolio best is is suited for the new the new rules. But the demand side continues to be so strong, and the build over the next few years continues to be very, very strong. And even post ’28, we we’re just not seeing any concern around the demand side, which means the the growth should be should be strong going forward.

Well, actually, let let

Chad Dillard, Lead Analyst, Bernstein: me double click on that. So I guess, like, the question is how necessary are the test credits for sustained growth? Like, because I think through you know, Duke talked about, you know, five years to get a turbine. Maybe you can talk about just where the levelized cost of energy of renewables are versus gas. You know, are there any other, you know, state level mandates for for renewables?

Just kind of give give some color on that.

Jay Sridharasad, CFO, Quanta Services: Yeah. The I mean, the levelized cost of energy for solar is is the lowest LCOE. And in many markets, it’s even lower than even without the credits. Alright? It depends.

In some areas, the credits are critical just because the resource isn’t as strong or or the or the the interconnection challenges around it, it depends. But in general, the LCOE of solar continues to be very, very strong. I do think because investments were made around a certain view of where credits are gonna be, you you what you don’t wanna do is create sudden changes around investment thesis. If you give if you give the industry time to to work through any sort of changes around the regulatory framework. You’re gonna see the industry adjusting just like has happened in the past around supply chain.

You’ll see the same thing around credit. This four year runway that even with this house version, there’s there’s effectively a four year runway since a lot of this was safe harbored in late twenty four, and you have until ’28. So I I I I I believe that you’re going to see, again, the quality developers be able to work through this with with with with the right frameworks in place. Because, again, what the the fundamental view is the demand is so strong. While gas is gonna be necessary, you can’t get to where you need to be on the gas side for at least five years with the with the supply chain constraints that we’re seeing.

You’re seeing the gas prices now at $2,500 a kw, and it that’s effectively a hundred dollar megawatt hour price of power. That’s quite competitive. Solar and and batteries are quite competitive against those. So if that market sustains, you’re gonna see this this market still have a very strong mix of all forms of generation, including renewables, still be one of the one of the biggest parts of that energy mix.

Duke Austin, CEO, Quanta Services: Yeah. It’s I think it’s a really important point. It’s it’s not one or the other. It’s all of the above. And and I I do think if the right answer is to build a big the biggest line you can build, probably seven sixty five, if you ask me, because you can drop load and and fill it up with gas and renewables and some batteries, across the board.

And if you do it and you blend it right, it it creates the lowest lowest cost to the to the customer. And I I that’s what you’re trying to accomplish. Gas gas plants have gone up. I mean, they’re probably 60% where they were up. And so that that cost is up there, and you’re not gonna get a turbine cheaper, and you’re not gonna get someone to build it at risk cheap like you can’t.

And so that’s that’s part of the issue. The same labor force that’s building a gas plant is also building a data center. It’s also building other things. And, I mean, it’s a it’s a what I consider, it’s a good environment. And so I when I look at it, the the answers are gonna be you gotta continue to build solar out here in batteries, some wind in in areas that make sense, and just have a sensible plan going forward.

Gas should have never been like we always thought. I always thought it would be 25% or more of the system to balance the load. It’s the right way to balance load. And and and so some nuclear, obviously, the administration’s pushing nuclear. It’ll SMRs are coming along.

They haven’t built anything in The States yet. So I I do think that’s common, but it it’s it’s longer out. And then, you know, there’s a cost there, and, you know, there there’ll be a cost to it. So I I think in general, the way, you know, you can see it today is a lot of solar, gas backed, with batteries on peak and in the line full. So you you answered some of this, this, but I guess longer term, like, where do renewables fit in the generation mix?

And how does your your battery business complement this? And if you can,

Chad Dillard, Lead Analyst, Bernstein: how big is that today?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I I the battery business is what’s fastest growing. I mean, we’re, you know, we’re in excess of a billion. I going on two probably. But but in general, the the battery business is is a nice business.

I I think if if you look at Texas, I was looking at the curves the other day. Obviously, it’s a topical. So the amount of batteries at peak that that it’s really holding the load there is I was astonished at, you know, how much it’s really helping, and I I was probably a naysayer at some point. I’m not anymore. I I do think batteries at peak make tons of sense.

And, you know, obviously, we have to, you know, get them in country, tariffs, and all those a lot of safe harboring going on. But, you know, batteries are making a lot of a lot of sense here in in the markets that we’re in especially. That you can build them quick, five acre sites. You can build a lot of batteries.

Chad Dillard, Lead Analyst, Bernstein: So talk about the seven sixty five kV transmission build out that’s ahead of us. What’s driving it? And maybe you can contextualize the scale of that build versus what we’ve seen over, you know, the last decade. And, you know, just how do

Duke Austin, CEO, Quanta Services: you think about Quanta’s win rate for that sort of, project? I mean, I think the good part about seven sixty five is you can move vast amounts of power, you know, across areas and, you know, bring in load. And so as you do that, you get flexibility. In Europe, you get a lot of DC lines. DC lines in the states, you cross states, you cross RTOs, and very, very difficult to build DC in the states for state rights mainly.

So I I prefer seven sixty five. It’s easier, from permitting and everything else. That said, it’s heavier. It’s a heavier load of corridors. Tough to tough to build.

And and we built, I don’t know, probably well over 50%, probably in the 75% of of the nonstates. And so I I consider, you know, for us, that’s a core competency to us. We’ve stayed. We’ve invested in it. We always have.

And so I like our chances on, building seven sixty five all the time. And, you know, we we we do believe as you as you see it, it it will, you know, create the right, what I would consider load growth of where bringing load into load centers that that’s necessary for data centers for onshoring, really, just to you’ve got 5% load growth in places. You need big, you know, corridors. Either you build two three forty five lines or a seven sixty five. You’re building two lines.

The corridors are much bigger, and I I think seven sixty five allows, a lot of flexibility for for us and and, you know, as an industry.

Chad Dillard, Lead Analyst, Bernstein: So is the the mix of, of transmission line moving towards seven six five?

Duke Austin, CEO, Quanta Services: I wouldn’t go I mean, I I think, you know, look. You build a seven sixty five line. There’s 25% more line coming behind it. It’s either three forty five, two 30, or a 38, like, coming right behind it. It it’s it’s a good it’s a good, you know, what I would consider backbone infrastructure that that that that we need in North America.

So as we see that get built out, a lot of 500, still a lot of $3.45 line out there, but if you can build seven sixty five, it makes a lot of sense.

Chad Dillard, Lead Analyst, Bernstein: Gotcha. And how do I think about your win rate? The higher the KV, the higher Qantas’ win rate?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I look. I I don’t I don’t really like to look at it as like that said. Obviously, I I think it’s you know, I like our chances on it all. I I don’t really we don’t really care, whether it’s a a 69 line or a small line.

I we look at it all the same, and I I expect the company to not get enamored with bigger lines. I I want the company to really concentrate on all all the above, but, we’re we’re six we’re successful in in bigger lines for sure. I mean, I we’re around the edges and do quite a bit of bigger work, just from helicopters and all the ways that we can construct. I’ve I I like what we’re doing there. Okay.

Chad Dillard, Lead Analyst, Bernstein: So shifting back to more near term. So how are tariffs impacting final investment decisions for your your utility customers as well as renewables? And is there any change in, like, the the volume or, like, the type of work that you’re seeing coming out of the utility customers?

Jay Sridharasad, CFO, Quanta Services: Not really. I mean, I think the utilities, you’ve seen their CapEx. A lot of it is domestic sourced. We also given our strong supply chain capabilities, our transformers, we’ve been we’ve been able to help our customers be able to source materials. On the renewable side, I with we’ll see.

There’s still some noise around the house bill around really around the FEOC and some tariff language that’s causing a little bit of just, wait. What’s going on here? How do we manage through this? More on the battery side than I would say on the solar and wind side. So you you may see a little bit of hiccup as people are working through that.

But, again, because of how smart a lot of our customers have been on the renewable side as well, and by getting ahead of it and really sourcing around the globe, and because they they just have the experience to understand and figure this stuff out, they’re they’ve they’ve gotten ahead of a lot of this. So we’re not nothing so far is giving us any concern around dramatic shifts in in in our work thus far.

Duke Austin, CEO, Quanta Services: Yeah. I think I think the company is in a position to see it coming. And I we’re not talking about 26, 20 seven today. I mean, we’re talking about 32. So I think it’s really important that when you look at the company and you and you see what we’re doing, I these decisions were made five years ago where we’re at today.

We’re not just going, oh, let’s go buy companies, and that’s that’s who we are. We’re gonna be a, you know, habitual acquirer of companies, and that’s how we’re gonna grow the business. That’s not true. There’s a strategy around it. We see it.

We can see multi years out. We we knew the administration would press, renewables. We knew this. We set it. And we we’ve set the company, I believe, to withstand these things and not give a bunch of excuses on weather and politics and everything else that can come up.

Yes. It’s it’s painful. You read Twitter as well. We just don’t run the company by Twitter. So, like, look.

I I I just we can’t we just gotta put our heads down, execute. Everyone’s got issues. We’ve gotta operate through it and see where it’s going and really set the company up for the long term, and I think we’ve done that.

Chad Dillard, Lead Analyst, Bernstein: So Qantas compounded earnings at a high teens CAGR over the last decade, and that’s when load growth is zero. So why shouldn’t that be faster over the next five to ten years when we do have positive load growth?

Duke Austin, CEO, Quanta Services: I mean, I the company is bigger. And so I so I do I do think as you see load growth and you you see the press, it will grow, and it it will grow at I’ll consider high upper single digit growth, organic growth. And and as you but, you know, look. It’s bigger. So every year it gets bigger.

The CAGR gets bigger, and and so I, you know, I it’s hard for me to get my head around, can we grow faster? We we grow certainly can grow more, And there’s more verticals and more ways to provide solutions. The returns are are better, from my standpoint because we’re our supply chain’s a big piece of this as as we go forward and how we look at the supply chain level. So, look. I I think our returns grow faster, kind of the same pace on organic growth.

We’ll have years at five, six, and we’ll have years at nine to 10. I I just that’s what you’re gonna see, and it it depends on really how we deploy capital and what we deploy capital in against strategies and things like that because it’s not I would’ve I would’ve said five years ago, our distribution business will be growing faster because I thought there would be more EV penetration. We’re getting EV penetration to the West. It’s kinda slowing down in other areas, but I I still grid hardening, all the other things that are out there are certainly in play. But it’s kinda like fiber, for example, until it gets to the home that getting to the home build of of electrification is so enormous that it goes on for decades because that’s where as the load gets down to the very house where you’ll see discontinued build, as you see more electrification in vehicles and things of that nature.

Chad Dillard, Lead Analyst, Bernstein: I’m gonna shift my questions over to the audience. So thinking about your exposure to utilities CapEx, what’s the rough breakdown between maintenance CapEx, I e, to modernize the grid versus, growth CapEx to capture incremental load growth?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I we’re doing both both O and M and Capital. I mean, Capital just stacks on top of O and M, so you have a a very good day to day business. I don’t know what the breakdown is these days.

Jay Sridharasad, CFO, Quanta Services: I mean, our base business is still over 80% of our revenues. And in terms of the utility T and D, I’d say it’s it’s probably 35 O and M and and 65% new build.

Duke Austin, CEO, Quanta Services: Yeah. Kinda new construction.

Jay Sridharasad, CFO, Quanta Services: Around that forty, sixty. It it can vary depending on the time.

Duke Austin, CEO, Quanta Services: But your cap, I mean, the way capital works, about, call it, 80 plus percent of the utility’s budget’s capital, something like that. That’s not, you know, it’s not generational on T and D. So so big numbers of capitalization in in their budgets. So that’s kinda how we would look. We look just like they look.

Chad Dillard, Lead Analyst, Bernstein: So looking at Quanta’s contracts, about 60% of the contracts are fixed price. Given how dynamic things are today, how do you, if any at all, you how do you manage, cost risk of these contracts?

Duke Austin, CEO, Quanta Services: Majority of the work is negotiated. When when when it says fixed, look, we know our cost. We’re fixing our price, but it it’s it could be unit based fixed. There can be lots of ways to derisk a fixed price contract. I would just say, like, we have a long track record of executing against these type of contracts.

Know the areas. Know the geographic areas. It’s not like a fixed firm nuclear plant by any means. It’s I think the average contract’s probably less than 5,000,000 these days.

Jay Sridharasad, CFO, Quanta Services: 5 6 million dollars.

Duke Austin, CEO, Quanta Services: 6 million? Okay. 6,000,000. It it you’re you’re you’re in and out. We have our labor, like we said, self performing, and and the fixed price nature is really negotiated.

And, you know, look. We wanna be productive. We wanna give the client, you know, efficiencies and things like that. But, really, you’re looking at it on a megawatt basis on, you know, big fixed fixed numbers, not not little, little big numbers.

Chad Dillard, Lead Analyst, Bernstein: So how are you thinking about congress’s new tax bill, particularly as it relates to the elements of the IRA that have been saved, and some of the new factory and bonus depreciation division, provisions?

Jay Sridharasad, CFO, Quanta Services: Yeah. I think it it what we talked about earlier. I think what what again, the senate we’ll see what the senate version is. But based on the house bill, our customers are still bought ahead. I think you’re saying you’re gonna see some acceleration because of how the bill has been set up with the 60 as well as the twenty eighth in service date.

I think you’re you’re gonna see the benefits of bonus depreciation go for our for the lot of these projects. The the safe harbor provisions of ’24 were still kept in place. So I think you’re gonna see, again, the the better quality developers continue to push forward. And because demand side is so strong, it’s it’s there’s there’s there’s a rush in speed to market that’s far more important than maybe an extra ten, fifteen, 20 percent increase in in cost. So I think in general, it’s been it’s we’re not seeing any slowdown in our activity from our from our core customer base.

Chad Dillard, Lead Analyst, Bernstein: So what can we expect from Quanta in terms of acquisitions? Are there any end markets, products, services that you would like to adjust through further consolidation through Quanta?

Duke Austin, CEO, Quanta Services: I mean, our customers push us, you know, to do more. And I I think as as we’re answering customer demands on craft, on different crafts, you know, we’ve talked about all the things that that we get asked to do. I mean, mechanical somewhere, you could see us from a standpoint that, you know, that that competency is being asked upon us to we don’t have a really a platform there that I would say we can go lean on. As we look at that, that’s certainly something that I would think we would look at, and nothing’s imminent. We’ve gotta find the right companies that fit our culture.

But, you know, I I really, a client dictates dictates a lot of where we go both regionally and how we look at it. So I there’s not one single thing we’re looking at. We’re looking at as the clients move into different areas, they’re asking us our front end capabilities more and more and more. So as as we think about it, if we can’t provide the solution internally and we can’t grow it fast enough, is it you know, is there good companies to acquire? I do believe the, you know, family business today, generationally, you know, lots in the third generations, they’re all getting bigger.

And, you know, I see more inbounds on they wanna put their businesses somewhere that perpetuate the name, perpetuate the culture, take care of their people. You know, we really don’t get an auction processes for for the most part in the companies that we acquire. So they come to us or we see them and know who they are and and look at that profile, and then it has to fit the culture, has to fit the strategy. Obviously, we’ll look at our look at our stock price and our dividends and things that we can do. But, typically, you know, the best way that we can, you know, benefit the shareholder is is to make great acquisitions that, you know, what I would consider returns are above where we’re at today, and the growth rates are higher on them.

So I I as long as we continue down the path we we’ve done in the past and and around craft, The front end services, we continue to grow our engineering. I don’t think you know, we’re invested in Australia and Canada, but primarily, the growth will be in the lower 48.

Chad Dillard, Lead Analyst, Bernstein: So do you expect renewable backlog to grow sequentially through the rest of this year? And will 2026 and ’27 be bigger than ’25?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I think the the beauty of the larger segment is the larger segment backlog will grow, whether it’s renewable backed, line backed, line backed, and renewables. I I don’t have to think about it anymore, but, I do think our backlog overall will grow sequentially.

Chad Dillard, Lead Analyst, Bernstein: So the industry has several bottlenecks such as labor and permitting. Have you noticed any easing in those categories? What are your expectations for the future, and how is Quanta positioned?

Duke Austin, CEO, Quanta Services: Yeah. I mean, I I think permitting, all the things that, you know, on a linear infrastructure project, especially out west, that were giving us issues, the administration’s really leaned into that, and they’ve leaned into asking the question of what’s wrong, why can’t you move. And, you know, look at a lot of it is paper. You know? And so just paperwork balled up in someone’s desk or things like that.

And I I do think that, they’ve tried to alleviate a lot of those things. So so I think permitting itself is gonna move faster. I we watch interest. We’re we’re watching things that from a utility standpoint, they’ll look at, which would be affordability, things of that interest is a big piece of affordability as well as fuel pricing. And so as fuel prices come down, interest comes down, it’s a great time to build.

So I I I I think, you know, it’s setting up nicely. We are getting some relief and and permitting. I think it’ll get better and better on a permitting from a perm permitting stance. So over the last decade, if you look at your return on invested capital, it’s grown by about 800 basis points. What levers do you have to pull to continue that improvement?

I mean, I I still think we can expand margin. I do. I I’m not saying I wouldn’t, you know, lean into the company and say this is gonna be a technology play, and we’re gonna expand margins that much. But the returns from a from my standpoint as our vertical supply chain gets better, really, the investment’s minimal. And, you know, you take on more scope, and that scope creates more value.

We need to get paid a little quicker in areas. You know, I I think utilities or vice versa, they’ll hold cash till the end, put it in rate base at the end of the year. So that profile’s always been that way. Difficult for us to kinda get that piece of the DSOs up. But as we take more if if we’re taking more lump sum, if we’re doing more EPC, our vertical supply chains, all of our, front end services require much less capital.

So the company has become much less capital concentric to some degree. And so so I do think the returns will continue to climb faster probably than margins.

Chad Dillard, Lead Analyst, Bernstein: Gotcha. And maybe just on on the margin front, like, how would you kind of scaffold out the the opportunities to drive margin higher?

Duke Austin, CEO, Quanta Services: I just think the the supply chain and the things that we’re doing there and then it will allow some margin expansion. It’s not really it’s more of a utilization than it is, like, oh, we’re gonna go out and get more out of the client because I look. They got returns. They’re pressed too. And, in order to really continue to grow the company the way we’ve grown in the past, we we we need to be cognizant of of what we can do from a margin standpoint, but create the returns for us that, you know, I I think we can get in a better spot.

And there’s pieces of the business that just haven’t performed like it can with leverage and things of that nature or how they like, Canada’s been down. And, you know, it’s been a drag for five years, and I I’d see that picking back up. They’re mad at us, and maybe that’s rightfully so. But but I I they’re going to build infrastructure in Canada. So it’ll it’ll help us, I I believe, in Canada.

And and we’re we’re already seeing some of the, you know, better margins and better utilizations out of Canada today. So that’s coming into play. We’re much better, and, our big solar works gone much better this year. You’re seeing expansions. Our industrial business has come along nicely.

So, you know, there is some pipe around, and I think even the pipe business is, you know, optimistic. We’ll build some pipe these days. So, you know, we’re around all the all the what I would consider the edges and and the places that we’ve been depressed or have the ability to go up. So I I do think we’ll expand some.

Chad Dillard, Lead Analyst, Bernstein: Got it. So, actually, maybe sticking with with Canada. So what what green shoots are you seeing, and, you know,

Duke Austin, CEO, Quanta Services: how far out would you say, you know, recovery in that in that business segment is? Canada is really cyclical, and I’ve I mean, we’ve probably had a decade of down market there. I think you’ll you’ll start to see it come back, and it was already coming back some, certainly, with with the way the tariffs have worked, you know, really a lot of infrastructure that that’s on the board there to get built. So I I think it it starts to speed up in Canada. Hydro One being public health in Toronto.

Certainly a great customer. So we’re looking at their capital spends. I I I I do see it moving back up, and I I think it’s you know, you got a decade there of kinda upward upward trends.

Chad Dillard, Lead Analyst, Bernstein: So it looks like we’ve got one last question. So it’s it’s been more than a year since you acquired Pennsylvania Transformer. You recently acquired Niagara. I’d love to get a sense for how you’re seeing those acquisitions play out in your negotiations with, with customers and how is that, you know, better within the fold of Quanta?

Duke Austin, CEO, Quanta Services: Yeah. I mean, looked at great acquisitions stand alone. They’re they’re even more impressive of what we can do with with them with the client. And I think a lot of that’ll come to to fruition this year, and people will see really why we acquired the companies and and what can be done. And so I I like what we said.

We’ll continue to invest some and, you know, try to make sure that we, being US based transformer right now is a good thing. A lot of Chinese content that that probably goes away here. So, I I really like what we’re doing there.

Chad Dillard, Lead Analyst, Bernstein: Okay. We’re out of time. Thanks, dude. Thanks.

Jay Sridharasad, CFO, Quanta Services: Appreciate it.

Duke Austin, CEO, Quanta Services: Thank you. Thanks thanks to everyone for that. Thank

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