QUANTA SERVICES, INC.

Quanta Services, Inc. is a leading provider of comprehensive infrastructure solutions for the electric and gas utility, power generation, large load center, manufacturing, communications, pipeline and energy industries in the United States, Canada, Australia and select other international markets. The company provides design, engineering, procurement, construction, upgrade and repair and maintenance services for infrastructure within each of these industries, including electric power transmission and distribution networks; substation facilities; wind, solar and gas power generation and transmission and battery storage facilities; low voltage electrical, mechanical, plumbing and process infrastructure for large load centers, such as data center, advanced manufacturing, healthcare, pharmaceutical and industrial facilities; communications and cable multi-system operator networks; gas utility systems; pipeline transmission systems and facilities; and downstream industrial facilities. The performance of the business generally depends on the ability to obtain contracts with customers and to effectively deliver the services provided under those contracts, with services typically provided pursuant to master service agreements (MSAs), repair and maintenance contracts and fixed price and non-fixed price construction and engineering contracts.

The company has a large and diverse customer base, including many of the leading companies in the utility, renewable energy, hyperscaler, technology, communications, industrial and energy delivery markets. For the year ended December 31, 2025, the largest customer accounted for 8% of consolidated revenues and the ten largest customers accounted for 30% of consolidated revenues. Representative customers include American Electric Power Company, Inc., National Grid plc, CenterPoint Energy, Inc., NextEra Energy, Inc., Comcast Corporation, NiSource, Inc., Duke Energy Corporation, Pattern Energy, Engie IR Holdings LLC, PG&E Corporation, Entergy Corporation, Puget Sound Energy, Inc., Exelon Corporation, RWE AG, FirstEnergy Corp., Santos Limited, Hydro One Incorporated, Sempra Energy, Iberdrola Group, The Southern Company, Idaho Power Company, The Williams Companies, Inc., Invenergy LLC, Turner Construction Company, Lower Colorado River Authority, and Xcel Energy Inc. The company believes its reputation for safety leadership, responsiveness and performance, geographic reach, comprehensive service offerings and financial strength have resulted in strong relationships with numerous customers, and it endeavors to develop and maintain strategic alliances and preferred service provider status with its customers.

The company generates revenue by providing design, engineering, procurement, construction, upgrade and repair and maintenance services for infrastructure across multiple industries. Revenue is recognized from contracts with customers, which are classified into three categories: unit-price contracts, cost-plus contracts, and fixed price contracts. For the year ended December 31, 2025, approximately 63.8% of revenues were recognized under fixed price contracts and unit-price contracts with more than an insignificant amount of partially completed units, using the percentage-of-completion method measured as the percentage of costs incurred to total estimated costs. The company has a large and diverse customer base, including utility and power companies, energy and other companies, and technology, manufacturing and communications companies. For the year ended December 31, 2025, estimated revenues by customer type as a percentage of total revenues were 70% from Utility and Power, 17% from Energy and Other, and 13% from Technology, Manufacturing and Communications.

The Electric segment provides comprehensive services primarily for the electric power grid, power generation and large load center markets. Services include design, procurement, new construction, upgrade and repair and maintenance services for electric power transmission and distribution infrastructure, both overhead and underground, and substation facilities; engineering, procurement, new construction (EPC), repowering and repair and maintenance services for renewable generation facilities such as utility-scale wind, solar and hydropower generation facilities and battery storage facilities; emergency restoration services; energized installation, maintenance and upgrade of electric power infrastructure; installation of smart grid technologies; design and installation of electrical systems for large load centers such as data center, advanced manufacturing and industrial facilities; design and construction services to wireline and wireless communications companies; and aviation services primarily for the utility industry. This segment also includes the majority of the financial results of the advanced training facility and postsecondary educational institution, the portion of earnings of unconsolidated integral affiliates including a 50% equity interest in LUMA Energy, LLC, and financial results associated with power transformer, circuit breaker and other manufacturing operations. For the year ended December 31, 2025, the Electric segment generated revenues of $23,001,468,000 ¹ and operating income of $2,360,262,000 ² with an operating margin of 10.3% ³.

The Underground and Infrastructure segment provides comprehensive infrastructure solutions to customers involved in the transportation, distribution, storage, development and processing of natural gas, oil and other products, as well as customers that own and operate large load centers. Services include design, engineering, procurement, new construction, upgrade and repair and maintenance services for natural gas systems for gas utility customers; pipeline protection, integrity testing, rehabilitation and replacement services; catalyst replacement services, high-pressure and critical-path turnaround services, instrumentation and electrical services, piping, fabrication and storage tank services for the midstream and downstream industrial energy markets; engineering and construction services for pipeline systems, storage systems and compressor and pump stations; trenching, directional boring and mechanized welding services; civil solutions including site clearing, earthwork, soil stabilization and infrastructure development; turnkey mechanical, plumbing and process infrastructure solutions for large load centers in the technology, semiconductor, healthcare and other industries; and engineering, construction and maintenance services for energy transition and carbon-reduction related projects. For the year ended December 31, 2025, the Underground and Infrastructure segment generated revenues of $5,478,229,000 ⁴ and operating income of $398,276,000 ⁵ with an operating margin of 7.3% ⁶.

On July 25, 2025, the company completed the acquisition of Dynamic Systems (DSI), LLC, which provides turnkey mechanical, plumbing and process infrastructure solutions. The consideration included approximately $1.26 billion ⁷ in cash and 518,772 ⁸ shares of common stock with a fair value of $218.8 million ⁹ as of the acquisition date, and the former owner is eligible for a potential contingent consideration payment of up to $216.0 million ¹⁰. During the year ended December 31, 2025, the company also acquired seven additional businesses, including two specializing in civil solutions, a business in Australia specializing in electrical engineering, a business specializing in utility construction, a business specializing in overhead and underground transmission and distribution infrastructure, a business specializing in electrical solutions, and a business providing helicopter services accounted for as an asset acquisition. The consideration for these seven additional businesses consisted of approximately $2.00 billion ¹¹ in cash and 789,824 ¹² shares of common stock with a fair value of $284.5 million ¹³ as of the respective acquisition dates, with former owners eligible for contingent consideration of up to approximately $228.0 million ¹⁴. In August 2025, the company issued $1.50 billion ¹⁵ aggregate principal amount of senior notes and received net proceeds of $1.48 billion ¹⁶, net of the original issue discount, underwriting discounts and deferred financing costs. During the year ended December 31, 2025, the company repurchased $134.6 million ¹⁷ of common stock and paid $60.4 million ¹⁸ in dividends.

For the year ended December 31, 2025, consolidated revenues were $28,479,697,000 ¹⁹, an increase of 20.3% ²⁰ compared to $23,672,795,000 ²¹ in 2024. Net income attributable to common stock was $1,028,378,000 ²², compared to $904,824,000 ²³ in 2024. Diluted earnings per share were $6.80 ²⁴ versus $6.03 ²⁵ in the prior year. Operating income was $1,611,509,000 ²⁶ compared to $1,346,468,000 ²⁷ in 2024. Net cash provided by operating activities was $2,229,970,000 ²⁸, a 7.1% ²⁹ increase compared to 2024.

The company expects continued demand for new or expanded transmission, substation and distribution infrastructure to reliably transport power to meet demand driven by electrification, data centers and manufacturing reshoring, as well as the modification and reengineering of existing infrastructure with increasing penetration of renewable generation and battery storage and the increased investment in new gas-powered generation. Utility and other customers are increasing their investment in various forms of power generation in response to load growth expectations, which have accelerated based on demand for electricity driven by data centers, manufacturing and reshoring, industrialization, electrification and power grid expansion. The company believes it is well positioned to provide turnkey infrastructure solutions for data center facilities, such as critical-path low-voltage electrical infrastructure solutions inside data centers; high-voltage substation, transformer and transmission interconnection infrastructure to connect the facilities to the power grid; and generation infrastructure necessary to power the facilities. The company also sees opportunities to provide fiber and other services in and around data centers, and to interconnect data centers.

Through recent acquisitions, the company has expanded its capabilities and solutions related to turnkey mechanical, plumbing and process infrastructure solutions, which it believes position it to meet strong demand for these services by data center, manufacturing, semiconductor and other large load facilities and provide opportunities in other core end markets. The company has also expanded its capabilities and solutions related to civil solutions through recent acquisitions, which allows it to meet strong demand for these services. The company believes that customers in the Underground and Infrastructure segment are implementing strategies to reduce carbon emissions produced from their operations, which are providing incremental opportunities for its services and could include building or repurposing pipeline infrastructure, including the development of infrastructure for blending hydrogen into natural gas flow and carbon capture projects. The favorable characteristics of natural gas could also position North America as a leading competitor in the global LNG export market, which could provide additional opportunities for the company's pipeline service offerings.The company expects substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for its services. The company expects capital expenditures for property and equipment purchases for the year ended December 31, 2026 to be approximately $750 million to $800 million ³⁰. The company also expects to continue to allocate significant capital to strategic acquisitions and investments, as well as to pay dividends and to repurchase its outstanding common stock and/or debt securities.

The company expects capital expenditures for property and equipment purchases for the year ended December 31, 2026 to be approximately $750 million to $800 million ³¹. During the year ended December 31, 2025, the company repurchased $134.6 million ³² of common stock and paid $60.4 million ³³ in dividends. As of December 31, 2025, the company had $365,095,093 ³⁴ remaining under its stock repurchase program authorized through June 30, 2026.

The company's revenues and results of operations can be subject to seasonal and other variations influenced by weather, customer spending patterns, bidding seasons, receipt of required regulatory approvals, permits and rights of way, project timing and schedules, and holidays. Revenues are generally lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments or cause delays on projects. Second quarter revenues are typically higher than those in the first quarter, and third quarter and fourth quarter revenues are typically the highest of the year. The company also faces risks related to the availability of skilled labor, as the pool of skilled workers in certain industries has been reduced due to an aging utility workforce and longer-term labor availability issues, and the cyclical nature of certain industries can create shortages of qualified labor during periods of high demand.

The company faces structural headwinds including the impact of changes in climate, which have caused changes to meteorological and hydrological patterns that have impacted the frequency and intensity of wildfires, hurricanes, floods, droughts, winter storms and other severe weather-related events and natural disasters. These changes have and could continue to significantly impact the company's future operating results. Additionally, the company is exposed to risks associated with operating in international markets and U.S. territories, including changes in applicable regulatory requirements, political instability, unfamiliar legal systems, and complex tax regulations. The company also faces risks related to the availability and price of fuel, materials or equipment necessary for its business or its customers' projects, which could be materially impacted by supply chain and other logistical challenges, global trade relationships, and other general market and geopolitical conditions.

The company's business is subject to operational hazards, including wildfires and explosions, that can result in significant liabilities, and the company may not be insured against all potential liabilities. The company's captive insurance company reimburses claims up to the amount of the applicable deductible of any third-party insurance programs, which in certain circumstances can be up to $70.0 million ³⁵ per occurrence. The company's business is labor-intensive, and it may be unable to attract and retain qualified employees, with approximately 69,500 ³⁶ employees as of December 31, 2025, of which approximately 36% ³⁷ were covered by collective bargaining agreements. The company has a significant amount of debt, with approximately $5.23 billion ³⁸ of outstanding long-term debt, net of current maturities, as of December 31, 2025, and $2.42 billion ³⁹ of aggregate undrawn borrowing capacity under its senior credit facility and commercial paper program. The company's variable rate indebtedness subjects it to interest rate risk, as 16% ⁴⁰ of its debt portfolio incurred interest at a variable-rate as of December 31, 2025. The company faces risks related to the collectability of accounts receivable and contract assets, with $983.6 million ⁴¹ recognized related to unapproved change orders and claims as of December 31, 2025.

Management's message emphasizes that the company's 2025 results reflect increased demand for its services, as consolidated revenues and operating income increased compared to 2024, with increased revenues and operating income in both the Electric and Underground and Infrastructure segments. Management states that utilities are continuing to invest significant capital in their electric power delivery systems through multi-year grid modernization and reliability programs, as well as system upgrades and hardening programs in response to recurring severe weather events. Management also notes strong demand from utility customers driven by increasing demand for electricity associated with data centers and other technology-related dynamics, domestic manufacturing reshoring initiatives and overall electrification trends. Management expects the strong demand for its services will continue, noting that remaining performance obligations and backlog were $23.76 billion ⁴² and $43.98 billion ⁴³ as of December 31, 2025, representing increases of 41.8% ⁴⁴ and 27.3% ⁴⁵ relative to December 31, 2024. The strategic priorities emphasized include delivering and continuing to expand the portfolio of infrastructure solutions to existing and potential customers, developing technological and training capabilities, remaining committed to the safety of employees, and maintaining an entrepreneurial culture throughout the organization.