Greetings, and welcome to Quanta Services First Quarter 2017 Earnings Conference Call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kip Rupp, Vice President, Investor Relations. Please go ahead, sir.

Great, thank you and welcome, everyone, to the Quanta Services conference call to review first quarter 2017 results. Before I turn the call over to management, I have the normal housekeeping details to run through. If you would like to be notified when Quanta publishes news releases and other information, please sign up for e-mail alerts by going to the Investors & Media section of quantaservices.com or download the Quanta Services Investor Relations app. We encourage investors and others interested in our company to also follow Quanta on the social media channels listed on our website. Please note that in today's call, we will present certain non-GAAP financial measures. In the Investors & Media section of our website, we have posted reconciliations of the differences between these measures and their most directly comparable GAAP financial measures. Please remember that information reported on this call speaks only as of today, May 4, 2017, and therefore, you're advised that any time-sensitive information may no longer be accurate as of any replay of this call. This call will include forward-looking statements intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance or that do not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or that are beyond Quanta's control, and actual results may differ materially from those expressed or implied. For additional information concerning some of these risks, uncertainties and assumptions, please refer to the company's 2016 annual report on Form 10-K and its other documents filed with the Securities and Exchange Commission, which are available on Quanta's or the SEC's website. Management cautions that you should not place undue reliance on these forward-looking statements, and Quanta does not undertake any obligation to update any forward-looking statements and disclaims any written or oral statements made by any third party regarding the subject matter of this call. With that, I would now like to turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services First Quarter 2017 Earnings Conference Call. On the call, I will provide an operational and strategic commentary before turning it over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a detailed review of our first quarter results. Following Derrick's comments, we welcome your questions. Quanta's first quarter results were consistent with our expectations and put us on track to achieve our full year outlook. Our end markets are strengthening and we continue to believe we are entering a renewed multiyear up-cycle for our business. The successful execution of our strategic imperatives, coupled with favorable end-market trends, positions us well to further separate Quanta in the marketplace and for profitable growth. Fundamental to Quanta's growth is our view that our backlog will remain strong and has a potential for solid growth. Our electric power segment backlog increased without the inclusion of multiple larger project opportunities that are in various stages of regulatory review or that remain subject to competitive submission processes to meet state and provincial energy policies. Oil and gas segment backlog declined in the quarter, primarily due to burn associated with significant pipeline construction activity, seasonality and the cancellation of a pipeline project contract for which we received a cancellation fee. As a reminder, oil and gas segment backlog can be variable due to its faster book-and-burn nature and the timing of larger pipeline project awards. As we mentioned in our Investor Day a month ago, we feel incrementally better about opportunities to book pipeline work for the second half of this year, which should positively impact backlog as contracts are executed. We're in the late-stage negotiations on multiple larger pipeline projects that are expected to start construction in 2017 and are in discussions for billions…

Thanks, Duke, and good morning, everyone. Today, we announced revenues of $2.18 billion for the first quarter of 2017, reflecting a 27.1% increase from the first quarter of 2016. Net income attributable to common stock was $48.3 million or $0.31 per diluted share compared to net income attributable to common stock of $20.5 million or $0.13 per diluted share in the first quarter of 2016. Adjusted diluted earnings per share, a non-GAAP measure, was $0.39 for the first quarter of 2017 compared to $0.23 for the first quarter of 2016. The increase in consolidated revenues in the first quarter of 2017, as compared with first quarter of last year, was primarily associated with increased capital spending by our oil and gas pipeline customers on larger projects, certain of which moved into full construction during the second half of 2016 and continued into 2017. Our consolidated gross margin was 12.2% as compared to 11.9% in the first quarter 2016. This increase was driven by improved margins in both segments, which I'll discuss later in my prepared remarks. Selling, general and administrative expenses were $184.6 million in the first quarter of 2017 or 8.5% of revenues as compared to $158.5 million or 9.3% of revenues in last year's first quarter. The increase in G&A was primarily due to higher compensation costs largely associated with higher incentive compensation based on current level of profitability as well as annual compensation increases and increased personnel to support business growth. Other increases include a $1.9 million loss on a planned sale of a construction barge, approximately $1 million in incremental administrative costs associated with acquired companies and costs associated with ongoing technology and business development initiatives. Higher quarter-over-quarter legal costs, inclusive of the attorney's fees and expenses of $4.2 million attributable to the non-compete matter, largely…

Thank you, sir. At this time we'll be conducting a question-and-answer session. [Operator Instructions] The first question today comes from Noelle Dilts of Stifel. Please go ahead.

Thanks, good morning. I just wanted to start on your pipeline backlog. So it sounds like you guys are pretty confident on the outlook there and the opportunity around some large projects in spite of backlog being down in the quarter. So the first question is, are you in sort of very advanced discussions on some of these jobs and you're just waiting for formal approvals to come through? Or is that just they're going to get awarded down the line? And then the second question there is, how much did the project cancellation impact backlog? And then if you could just discuss sort of what happened there and how often you see these types of cancellations that would be helpful.

Yes, Noelle, this is Duke. As far as the backlog goes, and where we're at in the pipeline cycle there, it's lumpy, we've talked about it. We've announced ACP before. It's not in our backlog today. So you can see some of the stuff that's not in there and others that are imminent here. So it's - we're just in late stages of negotiations. It doesn't meet the criteria to put in our backlog. We feel confident that we'll fill that up with our large pipeline business. The 2018 cycle is robust. The latter half of 2017 is looking favorable. So we're happy with where we're at on that. As far as the cancellation fee, there are some contracts that contemplate this and delays and this is one of them. Roughly, the amount was around $100 million so for 2017.

Okay. Great. And then could you give us an update on your utilization in terms of your mainline spreads in the quarter? And if you had to make an estimate, how utilized is the industry today? And at your Investor Day, you talked about 2018 potentially being capacity constrained. Are you still thinking that's the right way to think about it?

Sure. We're in a robust environment in our large pipeline business. Rover's moving along. I think we're in good shape in 2018 as well as we stated in the past that we do have capacity. We can still book work. But I feel confident that with the ongoing opportunities and what we see, we should be in pretty good shape here for the next few years.

The next question comes from Andrew Kaplowitz of Citi. Please go ahead.

Hey, good morning guys.

Good morning.

Duke, you mentioned at your Analyst Day that you're starting to see some signs of life in your Canadian oil and gas business. When do you think those signs of life can translate into results? I think you mentioned that Canada was overall, right now, a low single-digit margin business. From what you see right now, do you have enough visibility to say your margin in Canada can be higher than that later this year or even just in 2018?

Yes, I think you have to look at it on the electric side and the gas side and split it. If you want to talk about Canada, the overall economics, being energy based, are down but our project-based business and the need to move natural gas to the coastline is there. We like where we're at. We like where we're positioned there. We're starting to see some projects move forward in your shales, in your Montney shales and such moving that gas out. And when you get some takeaway in there, things will look good. We've seen Trans Mountain get mentioned a few times. Those kind of things, those larger projects stroll up resources in the country and so that allows others - other projects that we'll be on to - we can execute well. So I like where we're at there. I think we're cautious about the overall economy on the gas side, but there's signs of life. On the electric side, with us having a backbone project of WFMAC and coming off Nalcor, we are seeing some stuff in the East, Toronto and in the West. Alberta is still, besides WFMAC, it's still very depressed there. So we're optimistic on the coast and we're cautious about the Alberta market. But all in all, we're executing through it pretty well through a tough economy there. And if you go back a few years in Canada, it was our highest margins in our company. So I'm optimistic we'll come back to those margins over time.

Okay. That's helpful, Duke. And Derrick, you raised guidance for the year by a couple of pennies. You talked about having increasing conviction in the fourth quarter. When I look at the revenue guidance raise and the $0.02 increase, it looks like the revenue guidance raise is on sort of low-ish low margin. Maybe you can talk about that. But do you feel more confident here in the fourth quarter, even with the oil and gas backlog down? So fourth quarter is not going to be that big trail off that you talked about last quarter as a concern?

Yes, what I'd said is I still expect the fourth quarter to be a downtick, irrespective of where we see the overall uptick in revenues. Last quarter to - fourth quarter '16 versus fourth quarter '17, I still believe that we're looking at a downtick. The uptick in the revenues overall for our guidance, some of that came from the strong quarter in the first - the strong revenue in the first quarter, but otherwise, it comes from some level of incremental comfort as we spoke about before in the back half of the year. But that's coming from both electric power and oil and gas, probably somewhat equally at this stage. We see some opportunity in backlog for both. But I'd still think you need to be factoring in a downtick in the fourth quarter.

The next question is from Tahira Afzal of KeyBanc. Please go ahead.

Hi Folks.

Good morning.

Duke, first question is really in regards to follow up on what Noelle was asking. You're pointing to a record backlog. And if you really do the math over the next quarter, it basically implies a pretty sizable opportunity on the bookings side. Should we - are any of those dependent on the FERC quorum at this point? Or is the timing of the bookings and the risk really not regulatory related at this point?

Yes, as I've said with Noelle, I think what we see and our opportunity that we see and where we're at in the stages of the contract negotiations, we feel confident in the statement. So I'm fairly optimistic that we'll be in record backlogs.

Got it. Okay, Duke. And the second question is on the telecom side. I know it's just a small part of your business right now but one that could potentially be growing pretty rapidly. Should we be looking for any visible announcement around MSAs from key customers to really help us feel comfortable around how you're doing there?

I would say, Tahira, we'll over-communicate a bit for a few quarters here on telecom because we'll give you some idea of where we're at. I do think we're a little bit behind where I'd like to be. When you have a lawsuit in front of you, it does. It is a distraction on the operation and that past us now. And hopefully, that's the last time we'll talk about that, I think it is. And we're optimistic of the markets and you see it growing. You see what AT&T, Verizon and others are doing in that business. And our Canadian operations, our Latin America operations are growing nicely, similar to what you see others are doing in the U.S. So we had really good feedback from the customer base and I'm confident we'll move forward here in the next few quarters. And we'll definitely communicate it to the investment community.

The next question is from Andrew Wittmann of Robert W. Baird. Please go ahead.

Great, thanks and good morning. I guess I wanted to start my questions on the Labrador Island contract. I heard a couple of things in the script but thought maybe could use a little bit more color. In particular, you mentioned that's - it's on track and it's going well but you are baking in some level of contingency. I want to understand that a little bit better. As you finish up here later this year, do you expect, because your booking it more conservatively here, that if things progress at the existing pace, that you'll be able to book an incentive award or some sort of third quarter benefit when that thing completes? But I also heard that, obviously, the receivables have been slow to come in and that there's potential for claims on that. So I was hoping you could give us some sense about the magnitude of the claims that you're contesting and the impact that might be having on the receivables as well.

Yes, I'll talk a little bit about the job itself and let Derrick talk a little bit about the numbers. From our standpoint, we're working collaboratively with the client and I think both of us have the same goal in mind and that's for a completion and it be a successful project. There's nothing to read into that other than we're working together to - on both commercially and on schedule that they would like to see completed this year. So we're working through all the issues that it takes to do that. It is a 1,200 kilometer or so job across very remote country and you get 50 foot of snow in the winter and so things, you get a thaw. And so it's difficult from a construction standpoint and we've done a great job executing through it. I'm happy with our performance there. And so the client's happy with us and we'll get through the commercial issues here over the next few quarters. And I'll let Derrick comment on where we're at from a cash standpoint.

Yes. Also, this relates to the contingencies. I mean, the contingencies are normal in any job like this. The job is a very large job, as Duke spoke about. And to that level, I mean, we're going to manage those contingencies relative to the risks that we see ahead of us. Is there the opportunity for some of those contingencies to come through with an expanded margin? I would say yes. It's typical to all of our type of work we think that if we can execute through contingencies it offers us a degree of upside. We have not factored that into the equation because it is still a complicated job. As it relates to the receivables, as we've talked about in previous quarters, effectively, the new revenue for a given period is replacing the settlements of older balances. So we're just kind of turning the balances each individual quarter. The overall net position has stayed relatively constant over the last 6 to 9 quarters as the new work is replacing the old. And then as it relates to any aspect from a change order perspective, most of that is really just kind the unit adders in the contract itself and any of that is the smallest portion of the overall receivables, unbilled production and change orders. It's the smallest component of the equation.

Okay, that's helpful. My follow-up question was on the pipeline segment. And there, I just wanted to take your pulse a little bit on - from the various basins. I mean, you guys have been pretty clear over time that, out east in particular, some where you believe you are competitively advantaged. But the Permian has clearly been an active shale basin here with a bunch of work. Now I believe that's been largely a nonunion basin, but I was just wondering about your degree of confidence in participating in some of that work with your largely union precedent?

Yes. Last year, we added some nonunion capabilities in addition to what we've had. All those projects were around the edges on all of them. And so we see them depending on where we're at from capacity and what they're trying to accomplish. We're in there. We're in all the basins for the most part. There's also some EPC opportunities with both pipe and stations in that arena that will be around. So we like it. We like it. It gets capacity out of the market as well. So again, as you start to see that takeaway come in, you'll start to see midstream business come back and all those markets are good markets for us.

The next question is from Jamie Cook of Credit Suisse. Please go ahead.

Hi, good morning. A couple of questions, one, Derrick, I don't think, in the prepared remarks, I heard you comment on the margin targets by segment for the year. So I just want to make sure that hasn't changed. And then I also want to understand sort of your revenue guidance at the low to the midrange. I think you said revenues will be comparable or down a little in - or comparable in Q2 and Q3 versus before, you were saying revenues should improve sequentially, just generally. So what changed that? And at the mid- to low end of the range, how do you hit your margin targets for the year if revenues aren't up? Because I always thought you said utilization in revenue ramp were one of the bigger drivers behind hitting your margin targets.

Yes, our margin targets for the year still remain unchanged. You're looking at electric power probably in the low 9% to mid-9% and for oil and gas to be somewhere between the 5% and 6% range, which is comparable to what we said at year-end. Relative to revenues, before, we thought we would have a lower revenue number for the first quarter. Revenues for the first quarter came in pretty strong. So to that end, that's what's giving us the commentary around the potential for flat to lower at kind of the midpoint range or to low end of the range as it relates to the second and third quarter. There's still the ability to have the sequential increase in the second and third at the high end of the range. And so I think that commentary is consistent. But we're trying to be prudent about the way the timing of work can go, whether it be between delays or cancellations. So that's why you're seeing our commentary at the midpoint to low end of the revenue saying that it could be flattish. And then overall, as far as whether that puts pressure on it, that's what we've tried to consider in the margin ranges, that the low end to the high end of revenue is driving kind of the low end to the high end of the overall margin ranges. So I think that's fairly consistent as far as what we think about absorption of costs. That's what we said at year-end.

Okay. And then just, I guess, two other follow-up questions. You said the cancellation in oil and gas, that was $100 million, right? But how big was the termination fee that hit the oil and gas segment? And then when I look at your electric power margins, while they improved on a GAAP basis, if you adjust the Alaska problem project in '17, your margins are actually down from 9.2% last year to 8.2% this year. So I'm just trying to understand that. Is that all just Canada? And then I'll get back in queue.

Yes, Duke did comment that the cancellation for the project was around $100 million. As far as the fee, we're not in position to really quantify. We try not talk about the individual profitability of any individual contract. As it relates to the down margins, yes, you're correct, adding back the power plant last year would get you to something over 9% to something closer into the 8% range this quarter. But that was what was expected. We had commented about the seasonal effects that we could see and a lot of that coming out of Canada. Canada had a - has normal kind of a volatile - it froze and it warmed up and all that stuff hasn't impacted the margins. We had incremental adverse weather across both Canada, U.S. and Latin America this quarter, so - but all of that was effectively baked into our previous expectations. Lastly, I mean, it's the ramp-up as we look at the later part. We've mobilized a lot of crews in order to set up for how we're going to be executing on some of the MSA work here in the second and third quarter. So a combination of factors but the margins overall this year were still coming into around our expectations.

Yes. Jamie, I'd like to add a little bit of commentary on that. We got $6 billion or so to execute through the next three quarters, and obviously, the first quarter has got the most seasonality in it. We're through it, so we can see the visibility in the next three. As we execute through, we will update. Also, as Derrick said, we added roughly around 1,000 employees in the quarter. And as you do that it in your baseload business for the future, it's difficult to put the thing into three month windows. So as we have to talk about today, that's a good thing going forward. We're, by our highest headcount, 29,400. So we're optimistic about what's going on with the base business and also where we're going in the future. So it did put a little pressure on this three months here.

The next question is from Matt Duncan of Stephens Inc. Please go ahead.

Hey, good morning guys. So in oil and gas, you talked about some of the things that impacted margins and I'm curious if you can maybe quantify how much the impact was in those items underutilization of some of your people that would be doing MSA work, the weather impact. What was sort of the total impact on margin? What could it have been without those problems?

Yes, I don't - I'll let Derrick give you a quantification. I just - it's a general quantification to us. It's just we know it's pressure when we see 1,000 employees get at it. We know the Northeast. But we contemplate a lot of that in our guidance and so for us to say we didn't contemplate any of that would be a fallacy because we knew seasonality was there. We've stated it when we talked in our Investor Day that we thought that there would be some seasonality, we contemplated it. Yes, there were some impacts, both sides of this. But again, we contemplate the seasonality in the first quarter. But adding 1,000 employees and the seasonality is kind of what we're talking about.

Yes, I don't know that I'm in a spot to specifically quantify the ups and downs. I would agree with Duke's commentary that, effectively, the margins came in very near what our original expectations were and so any of the ins and outs were effectively offsetting during the quarter.

Okay and then a couple of others. So on the revenue guide, Derrick, did I hear you correctly that there's the potential for both businesses to have 10% growth? I guess, is that kind of the high end of the guidance range if they could both be over 10%-plus? And along that vein, what level of second half revenue does the guidance contemplated in oil and gas? And how conservative are you still being with that outlook? I know you said you feel a little bit better about the prospects for the back half, so curious on that. And then last thing on the number side, just can you give us some thoughts around what the U.S. telecom reentry could add to revenue this year.

Yes. From a revenue perspective, yes, at the high end, I would tell you at this stage, I mean, it's possible that - for both segments to slightly exceed 10% to get to the high end of the range. And then from a timing perspective and how that plays out, I think that we've still yet to see the risk profile as the back half of the year may still yet not materialize for oil and gas, which is what's giving the variability in the overall revenue profile with the back half still having the risk of having declines. Although we feel incrementally confident in the nature of the rewards, as it stands here, I mean, until we actually receive and place them in backlog. We're not in position to guide to anything stronger and to continue to caution that the back half of the year could have weakness such as the fourth quarter. Much like we said at year-end, it could be down. And then the last part of your question, telecom, yes, as it stands here right now, we've not baked in any incremental aspects of telecom. We're still looking at something in the $150 million to $200 million range from both Canada, the U.S. and Latin America contributions. We have not increased anything relative to telecom.

I think just as a general statement, to caution a bit, you still have a new administration. We needed FERC to get in place. We do think that that's going to happen but it does put pressure in some of the near-term things. So we need to be cautious of that in the back half of the year and how we look at it. And so that's - we're waiting on some of that to come through. You also still have some state permitting issues, especially the water permits in the Northeast. You see issues there at times. So we'll be cautious about how we look at that and when we give guidance. And so we think about that when we're putting the midpoint of the range here.

The next question is from Steven Fisher of UBS. Please go ahead.

Thanks, good morning. Since you put out there the thought about the opportunity to hit record backlog in the coming quarters, just, I don't know, timing is just still uncertain. But just trying to gauge your sense of what the chances of getting to that as soon as Q2, or is that sort of not even a possibility or it's more like a Q3, Q4, Q1 kind of thing for next year?

No, I mean, I don't want to put a time frame on it. We're going to collaborate with our customers to get the right contracts in place for both risks and M&As. It takes time. They're big projects, obviously. So as you walk through those, it just takes time. So I don't want to put a time frame on it but I would say the next few quarters here.

Okay. And then in terms of the execution on some of the bigger projects, and I couldn't tell before is if when you're talking about 1,000 people added, if that was in - if that was the integrity work or if that was in the electric side but trying to get at the margins in the oil and gas side of the business. Is the execution on your larger projects, are they at a minimum hitting the as-bid margins? Because I know you had - you mentioned some weather-related delays. So just kind of curious, as we do expect to continue booking more of a larger project, how was the execution going on those projects?

We're not complete with all of them. Many of them are in the late stages and we're happy with what we've done as far as executing on the broad spectrum of all of our pipe and our spreads. We're extremely satisfied with where we're at. We can always do better but we're happy. I think what puts pressure on our segment is that you have a lot of ancillary businesses with your MSA work, your integrity work, which is good and its good long-term work, but you do get seasonality. And when you are ramping for these long-term integrity programs, along with that seasonality puts pressure in any given quarter when you add those folks. So lots of your adds are developed in this quarter or to support that piece of business and those guys once you get them trained. And also, we had some customers that delayed or were working through some state regulatory issues that cause some delays in MSAs that were anticipated to go in the first quarter. So that also caused a little pressure in the segment. We'll work through that as we go and start executing on their budgets for the year. Again, it's the right answer for the long term of the business, it just puts a little pressure here in the quarter. But we're happy with the way we executed on our mainline work.

And are they hitting the as-bid margins? Or was that the weather delay kind of keeping you below those or the weather issues?

Well, we're not done with them yet, but we're happy with where we're at.

The next question is from Chad Dillard of Deutsche Bank. Please go ahead.

Hi, good morning. Just a question on the FERC commission vacancies, this is probably more an industry question. So how are the approval delays for 2017 affecting the competitive dynamics on the pipeline contractor side? Is there a sense that 2017 work is getting pushed out to 2018? And if 2018 was already going to be a tight year, how - like would that suggest better pricing or terms for the contractors? How are you seeing this dynamic at play?

From our standpoint, the way we looked at 2017 is playing out largely like we thought it would. As far as the way our customers look at it, they may look at it a little bit different than we did. But from our standpoint, the way that we see things happening is basically like we thought it would. What's going in '17 is going and with a few exceptions. Some of them did push a bit, but for the most part, it's playing out like we thought it would. We do need to get some commissioners in place. I don't think it's an issue. The administration has committed to putting people to work. I think you'll see that. The biggest issue that we see is probably in the Northeast with some of the water permits and some of the things that are going on there that you've seen make the press. All in all, it's lining up like we thought it would.

And can you speak to what you're seeing on the pipeline base business side? I mean, specifically, I mean, how much do you see this market growing in '17? And how should we think about the mix if we're looking at first half of this year versus second half?

I mean, I'll make a general comment on it. We've talked about the integrity business in our LDC, our local distribution markets, and the sustainability of that over the - there's 20 to 30 year bills as you get low natural gas prices, low interest and they're able to lock in long-term bills. I think it's good for the ratepayer. It's good for our customers. So as you see that, you'll start to see them announce it in their capital budgets and we're executing on those CapEx projects across multi-years, 20 or so years. We like the market. We think we can grow it double digits. And then that piece of business, it's a long-term stable type work. It does have lower margins than your larger diameter pipeline work. And it does have more cyclicality as you go into the winter months, just the way it is. So it's just, in general, lower margins, more seasonality, but its good business and a good long-term business and we understand the risk on it.

The next question is from Alex Rygiel of FBR. Please go ahead.

Thank you and thank you for taking my questions. First question, you increased your revenue guidance a little bit despite the loss of the pipeline project. So did you raise because of upside in electrical awards or did you raise because of upside in pipeline awards or did you raise because of increased confidence in kind of the core business?

Yes. It's a little bit of all. I mean, we have since the cancellation actually already been awarded a few, subsequent with the quarter, additional contracts, smaller contracts that offset that individual cancellation, but then also, the strength of the first quarter. And then, lastly, as you said, I mean, it's a little bit more visibility in both the electric power MSA work that's coming forward as well as Duke talked about the potential for some of these additional oil and gas awards. So it's a little bit of a combination of all.

And then you added 1,000 employees in the quarter, but revenue guidance is sort of flat going into the second quarter. So what am I missing?

Well, I mean, what we're saying is that it's possible for it to be flat. At the high end, it talks about that there's a sequential growth coming into the second quarter and in the third quarter. But a lot of those employees also have to do with electric power.

Yes, Alex, some your spreads will come down as well in the quarter. So the net effect of that, as the spreads start to come off a bit in the quarter, it's just a dynamic.

The next question is from Adam Thalhimer of Thompson Davis. Please go ahead.

Hey, good morning guys. The oil and gas projects that you talked about you're in late-stage negotiations on, how many of those have you been selected versus if there's still a competitive process going on?

Yes. I just - I really don't want to get into it. I just - from my standpoint, we're in late stages negotiations on multiple large projects and I think it's - we'll talk about it more as we get them signed up. We talked about ACP so others have announced that, announced what's in their backlog, so you can see the type of contracts we're talking about with Atlantic Coast there.

Okay. That's helpful, Duke. And then the follow-up I just wanted to ask you. In terms of this positive multiyear outlook for oil and gas, is the - was oil price volatility kind of returning over the past couple of months? Does that concern you as it relates to the multiyear term outlook?

Again, we watch that. Everything concerns me and so we stay on it, we stay and watch it and think about it and think about how it impacts our business and our customers. And so yes, we're watching it closely. Most of our projects are natural gas based at this point. And we're moving gas and that's baseload fuel at this - what we see going forward, it will continue to be baseload. If you look at it, it surpassed coal and your electric grid. You need redundancy. We like that business, LNG export. I think that piece of business is really good. Oil, we're watching it closely. It affects Canada more so than the Lower 48 as far as what we're doing on a daily basis. And it also affects the overall economy in certain areas. So we keep our eye on it. So far, we've kind of weathered through some of the lower pricing and the volatility in it. Our customers continue to spend CapEx on different things and with the low interest environment and low natural gas, so it allows us to get a multiyear view on many things in our business.

The next question is from Brent Thielman of D.A. Davidson. Please go ahead.

Hi, thanks. Good morning. Duke, your comments on - I was interested in your comments on some of these customers in the power area close to deployment as new kind of multiyear capital program. Just, one, I want to confirm that incremental spend to the big opportunities you already see out there. And then, two, what sort of opportunities do you see from these? Are they small, large transmission projects? Are the programs as big as what you're seeing out there today? I guess, any color behind the scenes there would be interesting.

Yes. I think it's just - if you go to the major IOUs and specialty or integrated IOUs, nat gas and electric, if you just look at their CapEx and their OpEx budgets, they're giving five year guidance for the most part. As you look at that and you look at the incremental impact and how much more that is due to all the things that we talked about with grid modernization, it allows us to get more visible and work with them on multiyear builds as they get regulatory - they're getting their regulatory relief there and I'm able to talk to them about a long-term agreement in the rate base. So I think it's good for the customer. Fuel's going down. They can invest in infrastructure and talk about a multiyear view. And this is unique over the last year, so you're starting to see this. And it's additive to what was already going on in the industry. So we like what we'd see. It gives us an ability to provide the solution that we think we're unique on and talk about multiyear programs and how we help with those. So we like that piece of business and think it's something that's additive to what's been going on in the past.

Okay. And then just one more on the communications business and maybe I'll ask a different way. The agreements you talked about potentially being close to executing with the big service providers, any flavor whether that's coming in the next quarter or are we still a few quarters out on that?

The overall environment in the communications business is robust. They need people to build infrastructure. So as you see that, you can see I'm talking about it as well in our CapEx. You can see others talking about how they're putting on people. It's a big market. I'm optimistic we'll be able to sign stuff fairly quickly here.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the call back over to management for closing remarks.

I'd like to thank you all for participating in our first quarter 2017 conference call. We appreciate your questions and your ongoing interest on Quanta Services. Thank you, and this concludes our call.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.