QUANTA SERVICES INC

Previous wording

The following discussion and analysis of the financial condition and results of operations of Quanta Services, Inc. (together with its subsidiaries, Quanta, we, us or our) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our 2023 Annual Report, which was filed with the SEC on February 22, 2024 and is available on the SEC’s website atwww.sec.gov and on our website atwww.quantaservices.com. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in Cautionary Statement About Forward-Looking Statements and Information above, in Item 1A. Risk Factorsof Part II of this Quarterly Report and in Item 1A. Risk Factors of Part I of our 2023 Annual Report.

Current wording

The following discussion and analysis of the financial condition and results of operations of Quanta Services, Inc. (together with its subsidiaries, Quanta, we, us or our) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our 2024 Annual Report, which was filed with the SEC on February 20, 2025 and is available on the SEC’s website atwww.sec.gov and on our website atwww.quantaservices.com. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in Cautionary Statement About Forward-Looking Statements and Information above, in Item 1A. Risk Factorsof Part II of this Quarterly Report and in Item 1A. Risk Factors in Part I of our 2024 Annual Report.

Previous wording

Electric Power Infrastructure Solutions Segment Results

Current wording

During the three months ending March 31, 2025, our Chief Executive Officer reevaluated how performance of the business is assessed and how resources are allocated, which resulted in a change in the reporting of management’s internal financial information. As a result, beginning with the three months ended March 21, 2025, we began reporting the results of our two operating segments, which are also our two reportable segments: (1) Electric Infrastructure Solutions (Electric) and (2) Underground Utility and Infrastructure Solutions (Underground and Infrastructure). The Electric segment consists of the historical Electric Power Infrastructure Solutions and the Renewable Energy Infrastructure Solutions segments. In conjunction with this change, certain prior period amounts have been recast to conform to this new segment reporting structure.

Previous wording

Our third quarter 2024 results reflect increased demand for our services, as consolidated revenue and operating income increased as compared to the third quarter of 2023, primarily due to increased revenues and operating income for our Renewable Energy Infrastructure Solutions (Renewable Energy) segment.

Current wording

Our first quarter 2025 results reflect increased demand for our services, as consolidated revenues and operating income increased as compared to the first quarter of 2024, due to increased revenues and operating income for both our Electric and Underground and Infrastructure segments.

Previous wording

With respect to our Electric Power Infrastructure Solutions (Electric Power) segment, 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. We have also experienced high demand for new and expanded transmission, substation and distribution infrastructure needed to reliably transport power. In particular, we continue to experience strong demand from our utility customers, which we believe is driven by increasing demand for electricity associated with, among other things, data centers and other technology-related dynamics, domestic manufacturing reshoring initiatives and overall electrification trends. Our acquisition of Cupertino Electric Inc. (CEI) has also created additional demand for our critical path electrical design and installation solutions from the technology and data center industry.

Current wording

With respect to our Electric segment, 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. We have also experienced high demand for new and expanded transmission, substation and distribution infrastructure needed to reliably transport power. In particular, we continue to experience strong demand from our utility customers, which we believe is driven by increasing demand for electricity associated with, among other things, data centers and other technology-related dynamics, domestic manufacturing reshoring initiatives and overall electrification trends. Our acquisition of Cupertino Electric Inc. (CEI) during 2024 also resulted in increased services for our critical path electrical design and installation solutions from the technology and data center industry, as well as our utility scale solar and battery storage solutions. The cost-effectiveness of solar, wind energy and battery storage, combined with a meaningful increase in current and forecasted electricity demand is continuing to drive demand for renewable generation and related infrastructure (e.g., high-voltage electric transmission and substation infrastructure and battery storage), as well as interconnection services necessary to connect and transmit renewable-generated electricity to existing electric power delivery systems. Despite these positive longer-term trends, in the past, supply chain challenges, policy and regulatory uncertainty and other factors have resulted in project delays and increased project costs and could negatively impact future periods.

Previous wording

With respect to our Underground Utility and Infrastructure Solutions (Underground and Infrastructure) segment, during the third quarter of 2024, operating income margin was negatively impacted by cost absorption pressures across our gas operations in the United States and project delays for our industrial operations along the U.S. Gulf Coast due to Hurricanes Beryl and Francine. We continue to believe the market for our industrial solutions and gas utility and pipeline integrity services remains solid given the recurring critical-path maintenance requirements and regulated spend dedicated to modernizing systems, reducing methane emissions, ensuring environmental compliance and improving safety and reliability. Additionally, revenues associated with large pipeline projects have decreased in 2024 as compared to 2022 and 2023, and we anticipate that revenues associated with these projects will continue to fluctuate.

Current wording

With respect to our Underground and Infrastructure segment, we continue to believe the market for our industrial solutions and gas utility and pipeline integrity services remains solid given the recurring critical-path maintenance requirements and regulated spend dedicated to modernizing systems, reducing methane emissions, ensuring environmental compliance and improving safety and reliability. However, revenues associated with large pipeline projects have fluctuated in recent years, and we anticipate that revenues associated with these projects will continue to fluctuate.

Previous wording

During the nine months ended September 30, 2024, increased revenues and operating income contributed to $1.37 billion of net cash provided by operating activities, a 139% increase compared to the nine months ended September 30, 2023, which allowed us to execute our business plan, including the strategic acquisition of certain businesses, for which we utilized $1.72 billion of cash, net of cash acquired, and the payment of $40.8 million in dividends associated with our common stock. Additionally, as of September 30, 2024, available commitments under our senior credit facility, combined with our cash and cash equivalents, totaled $3.28 billion.

Current wording

During the three months ended March 31, 2025, increased revenues and operating income contributed to $243.2 million of net cash provided by operating activities, a 2% increase compared to the three months ended March 31, 2024, which, along with borrowings under our commercial paper program, allowed us to execute our business plan, including the strategic acquisitions of certain businesses, for which we utilized $394.3 million of cash, net of cash acquired, repurchases of $118.6 million of common stock, and payments of $15.5 million in dividends associated with our common stock. Additionally, as of March 31, 2025, available commitments under our senior credit facility, combined with our cash and cash equivalents, totaled $2.91 billion.

Previous wording

We expect the strong demand for our services will continue. Our remaining performance obligations and backlog were $15.61 billion and $33.96 billion as of September 30, 2024, representing increases of 12.3% and 12.8% relative to December 31, 2023. For a reconciliation of backlog to remaining performance obligations, the most comparable financial measure prepared in conformity with generally accepted accounting principles in the United States (GAAP), see Non-GAAP Financial Measures below.

Current wording

We expect the strong demand for our services will continue. Our remaining performance obligations and backlog were $17.65 billion and $35.25 billion as of March 31, 2025, representing increases of 5.3% and 2.1% relative to December 31, 2024. For a reconciliation of backlog to remaining performance obligations, the most comparable financial measure prepared in conformity with generally accepted accounting principles in the United States (GAAP), see Non-GAAP Financial Measures below.

Previous wording

Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs. These seasonal impacts are typical for our U.S. operations, but seasonality for our international operations may differ. For example, revenues for certain projects in Canada are typically higher in the first quarter because projects are often accelerated in order to complete work while the ground is frozen and prior to the break up, or seasonal thaw, as productivity is adversely affected by wet ground conditions during warmer months.

Current wording

Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third and fourth quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. During the fourth quarter projects are often completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs. These seasonal impacts are typical for our U.S. operations, but seasonality for our international operations may differ. For example, revenues for certain projects in Canada are typically higher in the first quarter because projects are often accelerated in order to complete work while the ground is frozen and prior to the break up, or seasonal thaw, as productivity is adversely affected by wet ground conditions during warmer months.

Previous wording

Demand for services. We perform the majority of our services under existing contracts, including MSAs and similar agreements pursuant to which our customers are not committed to specific volumes of our services. Therefore our volume of business can be positively or negatively affected by fluctuations in the amount of work our customers assign us in a given period, which may vary by geographic region. Examples of items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital spending and their access to and cost of capital; acceleration of any projects or programs by customers (e.g., modernization or hardening programs); economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships; and project deferrals and cancellations.

Current wording

Demand for services. We perform the majority of our services under existing contracts, including MSAs and similar agreements pursuant to which our customers are not committed to specific volumes of our services. Therefore our volume of business can be positively or negatively affected by fluctuations in the amount of work our customers assign us in a given period, which may vary by geographic region. Examples of items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital spending and their access to and cost of capital; acceleration of any projects or programs by customers (e.g., modernization or hardening programs); economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships (e.g., tariffs, taxes); and project deferrals and cancellations.

Previous wording

Revenue mix and impact on margins. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and services provide higher-margin opportunities. Our larger or more complex projects typically include, among others, transmission projects with higher voltage capacities; pipeline projects with larger-diameter throughput capacities; large-scale renewable generation projects; and projects with increased engineering, design or construction complexities, more difficult terrain or geographical requirements, or longer distance requirements. These projects typically yield opportunities for higher margins than our recurring services under MSAs described above, as we assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes. However, larger projects are subject to additional risk of regulatory delay and cyclicality. Project schedules also fluctuate, particularly in connection with larger, more complex or longer-term projects, which can affect the amount of work performed in a given period. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and competitors at times may more aggressively pursue available work. A greater percentage of smaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a greater number of smaller projects versus continuous production on fewer larger projects. As a result, at times we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward.

Current wording

Revenue mix and impact on margins. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and services provide higher-margin opportunities. Our larger or more complex projects typically include, among others, transmission projects with higher voltage capacities; pipeline projects with larger-diameter throughput capacities; large-scale renewable generation projects; complex data center projects; and projects with increased engineering, design or construction complexities, more difficult terrain or geographical requirements, or longer distance requirements. These projects typically yield opportunities for higher margins than our recurring services under MSAs described above, as we assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes. However, larger projects are subject to additional risk of regulatory delay and cyclicality. Project schedules also fluctuate, particularly in connection with larger, more complex or longer-term projects, which can affect the amount of work performed in a given period. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and competitors at times may more aggressively pursue available work. A greater percentage of smaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a greater number of smaller projects versus continuous production on fewer larger projects. As a result, at times we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward.

Previous wording

Revenues. Revenues increased due to a $1.73 billion increase in revenues from our Renewable Energy segment and a $520.6 million increase in revenues from our Electric Power segment, partially offset by a $225.6 million decrease in revenues from our Underground and Infrastructure segment. See Segment Results below for additional information and discussion related to segment revenues.

Current wording

Revenues. Revenues increased due to a $1.03 billion increase in revenues from our Electric segment and a $168.2 million increase in revenues from our Underground and Infrastructure segment. See Segment Results below for additional information and discussion related to segment revenues.

Previous wording

Selling, general and administrative expenses. The increase was primarily attributable to a $55.7 million increase related to recently acquired businesses and a $29.6 million increase in compensation expense, largely associated with increased salaries due primarily to an increase in number of employees to support business growth and increased incentive compensation due primarily to increased levels of profitability. Also contributing to the increase was a $7.8 million increase in expense related to deferred compensation liabilities. The fair market value changes in deferred compensation liabilities were largely offset by changes in the fair value of corporate-owned life insurance (COLI) assets associated with the deferred compensation plan, which are included in “Other income (expense), net” as discussed below.

Current wording

Selling, general and administrative expenses. The increase was primarily attributable to a $53.4 million increase related to recently acquired businesses and a $35.1 million increase in compensation expense, largely associated with increased salaries and incentive compensation expense due primarily to an increase in the number of employees to support business growth and increased levels of profitability.

Previous wording

Amortization of intangible assets. The increase was related to incremental amortization expense associated with recent acquisitions, including CEI.

Current wording

Amortization of intangible assets. The increase was related to incremental amortization expense associated with recent acquisitions, primarily the acquisition of CEI.

Previous wording

Operating income. Operating income was positively impacted by a $161.5 million increase in operating income for our Renewable Energy segment and a $91.0 million increase in operating income for our Electric Power segment, partially offset by a $70.1 million decrease in operating income for our Underground and Infrastructure segment and a $94.2 million increase in corporate and non-allocated costs, which includes amortization expense. Results for each of our business segments and corporate and non-allocated costs are discussed in Segment Results below.

Current wording

Operating income. Operating income was positively impacted by a $105.3 million increase in operating income for our Electric segment and a $30.0 million increase in operating income for our Underground and Infrastructure segment, partially offset by a $51.5 million increase in corporate and non-allocated costs, which includes amortization expense. Results for each of our business segments and our corporate and non-allocated costs are discussed in Segment Results below.

Previous wording

Interest and other financing expenses. Approximately half of the increase resulted from higher levels of debt as compared to the three months ended September 30, 2023.

Current wording

Interest and other financing expenses. The majority of the increase resulted from higher levels of principal on fixed rate debt balances as compared to the three months ended March 31, 2024.

Previous wording

Comprehensive income. See Statements of Comprehensive Income in Item 1. Financial Statementsof Part I of this Quarterly Report. Comprehensive income increased by $75.2 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to a $49.7 million increase related to foreign currency translation adjustments and a $25.5 million increase in net income. The predominant functional currencies for our operations outside the U.S. are Canadian and Australian dollars. Foreign currency translation gains for the three months ended September 30, 2024 primarily resulted from the weakening of the U.S. dollar against the Canadian and Australian dollars.

Current wording

Comprehensive income attributable to common stock. See Statements of Comprehensive Income in Item 1. Financial Statementsof Part I of this Quarterly Report. Comprehensive income attributable to common stock increased by $56.9 million in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a $30.3 million increase related to foreign currency translation adjustments and a $22.9 million increase in net income. The predominant functional currencies for our operations outside the U.S. are Canadian and Australian dollars. Foreign currency translation adjustment loss for the three months ended March 31, 2024 primarily resulted from the strengthening of the U.S. dollar against both the Canadian and Australian dollars as of March 31, 2024 when compared to December 31, 2023.

Previous wording

We report our results under three reportable segments: Electric Power, Renewable Energy and Underground and Infrastructure. Reportable segment information, including revenues and operating income by type of work, is gathered from each of our operating companies. Classification of our operating company revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Integrated operations and common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs, as well as general and administrative costs. Certain corporate costs are not allocated, including corporate facility costs; non-allocated corporate salaries, benefits and incentive compensation; acquisition and integration costs; non-cash stock-based compensation; amortization related to intangible assets; asset impairments related to goodwill and intangible assets; and change in fair value of contingent consideration liabilities.

Current wording

Reportable segment information, including revenues and operating income by type of work, is gathered from each of our operating companies. Classification of our operating company revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Integrated operations and common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs, as well as general and administrative costs. Certain corporate costs are not allocated, including corporate facility costs; non-allocated corporate salaries, benefits and incentive compensation; acquisition and integration costs; non-cash stock-based compensation; amortization related to intangible assets; asset impairments related to goodwill and intangible assets; and change in fair value of contingent consideration liabilities.

Previous wording

The following table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated, as well as the dollar and percentage change from the prior period (dollars in thousands):

Current wording

The following table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated, as well as the dollar and percentage change from the prior period (dollars in thousands), with certain of our segment results of operations recast to conform to our current segment reporting structure as described above:

Previous wording

Operating Income. The increase in operating income for the three months ended September 30, 2024 was primarily due to the increase in revenues. Operating margin for the three months ended September 30, 2024 was favorably impacted by higher margin emergency restoration services revenues offset by lower operating margins associated with telecommunication projects.

Current wording

Operating Income. The increase in operating income for the three months ended March 31, 2025 was primarily due to the increase in revenues. The increase in operating margin for the three months ended March 31, 2025 was primarily due to the increase in revenues and improved execution in power generation, partially offset by lower operating margins associated with telecommunication projects. Operating margin for the three months ended March 31, 2024 was negatively impacted by decreased operating income margins on various solar projects in the United States that were the result of decreased productivity.

Previous wording

Revenues. The decrease in revenues for the three months ended September 30, 2024 was primarily due to lower revenues from large pipeline projects, partially offset by approximately$55 million in revenues attributable to an acquired business.

Current wording

Revenues. The increase in revenues for the three months ended March 31, 2025 was primarily due to approximately$95 million in revenues attributable to an acquired business and increased demand for our industrial solutions.

Previous wording

Operating Income. The decrease in operating income and operating margin for the three months ended September 30, 2024 was primarily due to decreased revenues, which contributed to lower levels of fixed cost absorption, as well as the overall mix of work performed in the period.

Current wording

Operating Income. The increase in operating income and operating margin for the three months ended March 31, 2025 was primarily due to increased revenues, which contributed to higher levels of fixed cost absorption, as well as the overall mix of work performed in the period. Operating income for the three months ended March 31, 2025 was negatively impacted by $4.2 million that, pursuant to an acquisition purchase agreement, was withheld from the sellers’ proceeds, to be paid to certain employees upon satisfaction of post-closing service obligations. Operating margin for the three months ended March 31, 2024 was negatively impacted by a loss of $10.7 million related to the disposition of a non-core business.

Previous wording

The increase in corporate and non-allocated costs during the nine months ended September 30, 2024 was primarily due to a $53.4 million increase in intangible asset amortization and a $23.5 million increase in compensation expense, which was attributable to increased salaries, incentive compensation and non-cash stock compensation expense in support of business growth.

Current wording

The increase in corporate and non-allocated costs during the three months ended March 31, 2025 was primarily due to a $32.1 million increase in intangible asset amortization expense associated with recent acquisitions, including CEI, and a $9.3 million increase in compensation expense, which was primarily attributable to increased incentive compensation expense, salaries and non-cash stock compensation expense in support of business growth and associated with acquisitions.

Previous wording

(1) The amount for the nine months ended September 30, 2024 is a loss of $11.9 million on the disposition of a non-core business, partially offset by a gain of $7.5 million as a result of the sale of a non-integral equity method investment.

Current wording

(2) The amount for the three months ended March 31, 2024 is a loss of $10.7 million on the disposition of a non-core business, partially offset by a gain of $7.3 million as a result of the sale of a non-integral equity method investment.

Previous wording

As of September 30, 2024 and December 31, 2023, MSAs accounted for 38% and 45% of our estimated 12-month backlog and 49% and 55% of our total backlog. Generally, our customers are not contractually committed to specific volumes of services under our MSAs, and most of our contracts can be terminated on short notice even if we are not in default. We determine the estimated backlog for these MSAs using recurring historical trends, factoring in seasonal demand and projected customer needs based upon ongoing communications. In addition, many of our MSAs are subject to renewal, and these potential renewals are considered in determining estimated backlog. As a result, estimates for remaining performance obligations and backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies and adverse weather conditions; and final acceptance of change orders by customers. These factors can cause revenues to be realized in periods and at levels that are different than originally projected.

Current wording

As of March 31, 2025 and December 31, 2024, MSAs accounted for 38% and 38% of our estimated 12-month backlog and 50% and 48% of our total backlog. Generally, our customers are not contractually committed to specific volumes of services under our MSAs, and most of our contracts can be terminated on short notice even if we are not in default. We determine the estimated backlog for these MSAs using recurring historical trends, factoring in seasonal demand and projected customer needs based upon ongoing communications. In addition, many of our MSAs are subject to renewal, and these potential renewals are considered in determining estimated backlog. As a result, estimates for remaining performance obligations and backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies and adverse weather conditions; and final acceptance of change orders by customers. These factors can cause revenues to be realized in periods and at levels that are different than originally projected.

Previous wording

The increases in both remaining performance obligations and backlog from December 31, 2023 to September 30, 2024 were partially due to the impact of acquisitions that occurred in the nine months ended September 30, 2024 as well as increased new project awards with existing customers, and the increase in backlog was also attributable to new project awards included in the Electric Power segment.

Current wording

The increases in both remaining performance obligations and backlog from December 31, 2024 to March 31, 2025 were partially due to the impact of acquisitions that occurred in the three months ended March 31, 2025 as well as new project awards with existing customers.

Previous wording

Our capital deployment priorities that require the use of cash include: (i) working capital to fund ongoing operating needs, (ii) capital expenditures to meet anticipated demand for our services, (iii) acquisitions and investments to facilitate the long-term growth and sustainability of our business, and (iv) return of capital to stockholders, including through the payment of dividends and repurchases of our outstanding common stock. We intend to fund these requirements primarily with cash flow from operating activities, as well as debt financing as needed.

Current wording

Our capital deployment priorities that require the use of cash include: (i) working capital to fund ongoing operating needs, (ii) capital expenditures to meet anticipated demand for our services, (iii) acquisitions and investments to facilitate the long-term growth and sustainability of our business, and (iv) return of capital to stockholders, including through the payment of dividends and repurchases of our outstanding common stock.

Previous wording

Cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by the timing of working capital needs associated with the various types of services that we provide. Our working capital needs may increase when we commence large volumes of work under circumstances where project costs are required to be paid before the associated receivables are billed and collected. Additionally, operating cash flows can be negatively impacted as a result of unpaid and delayed change orders and claims. Changes in project timing due to delays or accelerations and other economic, regulatory, market and political factors that may affect customer spending could also impact cash flow from operating activities. Further information with respect to our cash flow from operating activities is set forth below and in Note 16 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Current wording

Cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by the timing of working capital needs associated with the various types of services that we provide. Our working capital needs may increase when we commence large volumes of work under circumstances where project costs are required to be paid before the associated receivables are billed and collected. Working capital needs are generally higher during the summer and fall due to increased demand for our services when favorable weather conditions exist in many of our operating regions. Conversely, working capital assets are typically converted to cash during the winter. These seasonal trends can be offset by changes in project timing due to delays or accelerations and other economic factors that may affect customer spending, including market conditions or the impact of certain unforeseen events (e.g., regulatory and other actions that impact the supply chain for certain materials). Additionally, operating cash flows may be negatively impacted as a result of unpaid and delayed change orders and claims. Changes in project timing due to delays or accelerations and other economic, regulatory, market and political factors that may affect customer spending could also impact cash flow from operating activities. Further information with respect to our cash flow from operating activities is set forth below and in Note 15 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Previous wording

(1) Further information with respect to our cash and cash equivalents is set forth below and in Note 15 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report. This amount includes $303.0 million in jurisdictions outside of the U.S., principally in Australia. There are currently no legal or economic restrictions that would materially impede our ability to repatriate such cash.

Current wording

(2) Further information with respect to our cash and cash equivalents is set forth below and in Note 14 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report. This amount includes $283.1 million in jurisdictions outside of the U.S., principally in Australia. There are currently no legal or economic restrictions that would materially impede our ability to repatriate such cash.

Previous wording

Sources and Uses of Cash, Cash Equivalents and Restricted Cash During the Nine Months Ended September 30, 2024 and 2023

Current wording

Sources and Uses of Cash, Cash Equivalents and Restricted Cash During the Three Months Ended March 31, 2025 and 2024

Previous wording

Net cash provided by operating activities of $1.37 billion and $572.4 million in the nine months ended September 30, 2024 and 2023 primarily reflected earnings adjusted for non-cash items and cash provided and used by the main components of working capital: “Accounts and notes receivable,” “Contract assets,” “Accounts payable and accrued expenses,” and “Contract liabilities.” Net cash provided by operating activities during the nine months ended September 30, 2023 was negatively impacted by incremental working capital requirements and the timing of billings related to the large renewable transmission project in Canada as discussed further in Note 3 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Current wording

Net cash provided by operating activities of $243.2 million and $238.0 million in the three months ended March 31, 2025 and 2024 primarily reflected earnings adjusted for non-cash items and cash provided and used by the main components of working capital: “Accounts and notes receivable,” “Contract assets,” “Accounts payable and accrued expenses,” and “Contract liabilities.”

Previous wording

Days sales outstanding (DSO) represents the average number of days it takes revenues to be converted into cash, which management believes is an important metric for assessing liquidity. A decrease in DSO has a favorable impact on cash flow from operating activities, while an increase in DSO has a negative impact on cash flow from operating activities. DSO is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets, less contract liabilities, and divided by average revenues per day during the quarter. DSO as of September 30, 2024 was 65 days, which was lower than DSO of 79 days as of September 30, 2023 and lower than our five-year historical average DSO of 80 days. This decrease in DSO as compared to September 30, 2023 was partially due to an increase in contract liabilities related to favorable billing terms on certain large projects and increased revenues in the nine months ended September 30, 2024 as well as improved collection of customer receivables. Although the decrease in DSO had a positive impact on cash flow from operating activities, unapproved change orders and claims included in contract assets from the aforementioned large renewable transmission project in Canada continued to negatively impact DSO and cash flow from operating activities as of and during the nine months ended September 30, 2024.

Current wording

Days sales outstanding (DSO) represents the average number of days it takes revenues to be converted into cash, which management believes is an important metric for assessing liquidity. A decrease in DSO has a favorable impact on cash flow from operating activities, while an increase in DSO has a negative impact on cash flow from operating activities. DSO is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets, less contract liabilities, and divided by average revenues per day during the quarter. DSO as of March 31, 2025 was 63 days, which was lower than DSO of 71 days as of March 31, 2024 and lower than our five-year historical average DSO of 77 days. This decrease in DSO as compared to March 31, 2024 was partially due to favorable billing terms on certain large projects. Negatively impacting DSO and cash flow from operating activities for both the three months ended March 31, 2025 and 2024 were unapproved change orders and claims included in contract assets from the large renewable transmission project in Canada further described in Note 3 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report. Net cash provided by operating activities for the three months ended March 31, 2025 was also impacted by payment of approximately $109.1 million related to the deferral of 2024 quarterly federal income tax pursuant to federal disaster relief. Net cash provided by operating activities for the three months ended March 31, 2024 was impacted by our prepayment of amounts to suppliers for certain project materials that require a long lead time and payments of a significant amount of accounts payable balances on certain large renewable projects that were outstanding as of December 31, 2023.

Previous wording

Net cash used in investing activities in the nine months ended September 30, 2023 included $472.6 million related to acquisitions and $325.4 million of capital expenditures. Partially offsetting these items were $48.0 million of proceeds from the sale of, and insurance settlements related to, property and equipment and $42.3 million of proceeds from the sale of non-integral equity investments.

Current wording

Net cash used in investing activities in the three months ended March 31, 2025 included $394.3 million related to acquisitions and $132.8 million of capital expenditures.

Previous wording

Net cash used in investing activities in the nine months ended September 30, 2024 included $1.72 billion related to acquisitions, $457.1 million of capital expenditures and $72.6 million cash paid primarily for non-integral equity method investments. Partially offsetting these items were $67.2 million of proceeds from the sale of, and insurance settlements related to, property and equipment; $31.2 million of proceeds from the disposition of a non-core business and $29.2 million of proceeds from the sale of a non-integral equity investment.

Current wording

Net cash used in investing activities in the three months ended March 31, 2024 included $384.1 million related to acquisitions and $83.1 million of capital expenditures. Partially offsetting these items were $28.7 million of proceeds from the disposition of a non-core business, $26.6 million of proceeds from the sale of a non-integral equity investment and $26.4 million of proceeds from the sale of, and insurance settlements related to, property and equipment.

Previous wording

Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed for the foreseeable future in order to meet anticipated demand for our services. In addition, we expect to continue to pursue strategic acquisitions and investments, although we cannot predict the timing or amount of the cash needed for these initiatives. We also have various other capital commitments that are detailed primarily in Note 14 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Current wording

Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed for the foreseeable future in order to meet anticipated demand for our services. In addition, we expect to continue to pursue strategic acquisitions and investments, although we cannot predict the timing or amount of the cash needed for these initiatives. We also have various other capital commitments that are detailed in Cash Requirements and Capital Allocation above and in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of Part I of our 2024 Annual Report.

Previous wording

In July 2024, we entered into, and borrowed the full amount available under, a $400.0 million 90-day term loan facility outside of our senior credit facility and utilized these borrowings, together with $1.2 billion of borrowings under our commercial paper program and cash on hand, to finance the acquisition of CEI, as well as pay certain related costs and expenses and fund certain working capital requirements. On August 9, 2024, we received net proceeds from the issuance of senior notes of $1.24 billion, including $2.8 million of deferred financing costs paid of accrued by us, but net of the original issue discount and underwriting discounts and used the proceeds to repay certain borrowings utilized to acquire CEI, including the full amount of the short-term term loan. Net cash provided by financing activities in the nine months ended September 30, 2024 included $791.0 million of net repayments under our senior credit facility and commercial paper program. Financing costs paid directly by us during the nine months ended September 30, 2024 were $7.6 million, which related to the August 2024 issuance of senior notes, the short-term term loan and the amendment of our senior credit facility. Net cash provided by financing activities in the nine months ended September 30, 2024 was also partially offset by $140.6 million of payments to satisfy tax withholding obligations associated with stock-based compensation and the payment of $40.8 million of dividends.

Current wording

Net cash provided by financing activities in the three months ended March 31, 2025 was primarily due to borrowings under our commercial paper program. Net cash provided by financing activities in the three months ended March 31, 2025 was partially offset by $118.6 million of repurchases of common stock, $71.6 million of payments to satisfy tax withholding obligations associated with stock-based compensation and the payment of $15.5 million of dividends.

Previous wording

Net cash provided by financing activities in the nine months ended September 30, 2023 included $203.6 million of net borrowings under our senior credit facility and commercial paper program, partially offset by $113.4 million of payments to satisfy tax withholding obligations associated with stock-based compensation and the payment of $36.1 million of dividends.

Current wording

Net cash used in financing activities in the three months ended March 31, 2024 included $504.5 million of net repayments under our senior credit facility and commercial paper program, $75.7 million of payments to satisfy tax withholding obligations associated with stock-based compensation and the payment of $13.7 million of dividends.