Quanta Services, Inc. (PWR) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to the Quanta Services Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. If you have any objection, please disconnect at this time. I will now turn the call over to Kip Rupp, Vice President, Investor Relations, for introductory remarks.

Thank you, and welcome, everyone, to the Quanta Services Second Quarter 2026 Earnings Conference Call. This morning, we issued a press release announcing our second quarter 2026 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our second quarter 2026 operational and financial commentary and our 2026 outlook expectation summary on Quanta's Investor Relations website. While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community. Please remember that information reported on this call speaks only as of today, July 30, 2026, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. This call will include forward-looking statements intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements reflecting expectations, intentions, assumptions or beliefs about future events or financial performance. You should not place undue reliance on these statements as they involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied. We will also present certain historical and forecasted non-GAAP financial measures Reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these statements for additional information regarding our forward-looking statements and non-GAAP financial measures. Lastly, please sign up for e-mail alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information and follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would like to now turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services Second Quarter 2026 Earnings Conference Call. I want to begin by recognizing our people in the field. Everything we are about to discuss starts with our more than 85,000 employees and the execution they deliver for our customers safely, on time and on budget every day. This morning, we reported second quarter results that meaningfully exceeded expectations with strong double-digit growth in revenues, adjusted EBITDA and adjusted earnings per share, robust cash flow and record backlog of $53 billion. Given when these acquisitions closed, their contribution to the quarter was minimal. The strength you're seeing today reflects broad-based organic strength across our segments, service lines and end markets and the successful execution of our strategy and the investments we have made against it. During the second quarter in July, we completed the acquisitions of Phalcon, Enerfab, Percheron and PSD, and we welcome each of these excellent companies and their employees to the Quanta family. These acquisitions enhance our geographic presence and continue our strategy to scale self-perform, craft-skilled capabilities across electrical, mechanical, civil and fabrication and to lean into the front end of our customers' programs where the work takes shape and where getting involved early maximizes the value we can deliver. These are companies that have executed successfully for decades and whose owners and leadership came up through the craft with customer relationships often built over generations. These acquisitions strengthen our position in technology and load centers, while adding meaningful diversification across end markets we've served for decades. Quanta runs it on a culture of absolute performance and is dedicated to the continuous improvement and the success of our customers. Every acquisition has to fit our strategy, and the culture has to fit. That is the first thing we evaluate and something we do not compromise. When a company that has built its name over 50 or 100 years decides to join Quanta, they are choosing a home that protects their legacy, keeps their management team and gives the people more opportunity than they could create alone. Our solutions-based model is performing well, creating markets and unlocking growth opportunities because it is a platform that brings our customers industry-leading capabilities, scope and scale with the largest craft workforce in North America at the center. The rigor we built over decades serving utilities, the planning, the safety and the programmatic execution is exactly what we are bringing to technology and load center and generation markets. Technology is trying to move as fast as possible. Utilities are working to protect the ratepayer, and Quanta sits in the middle of the nexus, providing solutions to both. Our customers realize how important speed and certainty is and the trust and track record we have built over decades is what differentiates Quanta. Quanta's core strategy remains grounded in craft-skilled labor, execution certainty and disciplined capital deployment. Craft is built over time, and we prioritize that investment for well over a decade. We self-perform 80% to 85% of our work, which is what allows us to deliver on time and on budget at scale. That certainty, quarter after quarter and year after year is what our customers count on, is what has produced record adjusted EPS for the last 9 consecutive years and why our customers keep asking us to do more. As a result of our strong first half, improved visibility into the remainder of the year and expected contributions from the acquisitions announced this morning, we are significantly increasing our full year 2026 financial expectations across all metrics. The record backlog we reported reflects the demand in front of us, but we're still in the early stages. The larger programs across the utility generation and technology load center markets are ahead of us, and we expect them to stack in the years to come. In many ways, we are just getting started. We remain focused on executing for our customers' success, deploying capital with discipline and compounding earnings and shareholder value over the long term. I will now turn the call over to Jayshree Desai, Quanta's CFO, to provide a few remarks about our results and 2026 guidance, and then we will take your questions. Jayshree?

Thanks, Duke, and good morning, everyone. This morning, we reported historically strong second quarter results with revenues of $9.6 billion, net income attributable to common stock of $451 million or $2.96 per diluted share, adjusted diluted earnings per share of $4.24 and adjusted EBITDA of $1.1 billion. Those results included approximately $11 million of adjusted EBITDA from acquisitions made during the second quarter. The performance in the first half of 2026 exceeded our initial expectations, led by the strength of our end markets and our strategies in action. The versatility of our workforce and our customer-centric delivery model are translating to greater scope, better resource utilization, elevated revenues and improved margins. And our customers are increasingly recognizing how the breadth of our capabilities can contribute to their success as evidenced by another quarter of record backlog. Given the strength of our first half performance, improved visibility into the second half and expected contributions from recent acquisitions, we are raising our full year financial expectations. We now expect revenues to range between $39.3 billion and $39.7 billion, adjusted EBITDA to range between $4.1 billion and $4.2 billion, adjusted EPS to range between $16.45 and $16.95, and free cash flow to range between $2 billion and $2.5 billion. As Duke described, subsequent to our first quarter earnings release, we acquired 4 companies for approximately $1.24 billion of upfront consideration, net of cash acquired, plus approximately $242 million of contingent consideration that can be earned based on financial performance in the years following the closing. Included within our increased full year financial expectations are $1.2 billion to $1.4 billion of revenues and $120 million to $140 million of adjusted EBITDA from these acquisitions. Importantly, as evidenced by the ratings upgrade by Moody's, our balance sheet and credit profile strengthened even as we deploy capital on the aforementioned acquisitions. As calculated under our senior credit agreement, at the end of the second quarter, our debt-to-EBITDA ratio improved to 1.7, down from 1.95 at the end of 2025, and we had total liquidity of approximately $2.8 billion. The larger programs, broader service offerings and multiyear commitments we're negotiating every day are a direct reflection of the trust our customers place in our ability to execute at scale. Combined with the disciplined way we're allocating capital across our strategic initiatives, we believe we're well positioned to keep converting that trust into durable, attractive returns for our shareholders. Additional detail and commentary on our 2026 financial guidance can be found in our operational and financial commentary and outlook expectation summary, both available on our Investor Relations website. With that, we're happy to take your questions.

[Operator Instructions] Your first question comes from Steven Fisher with UBS.

Can you hear me?

Yes, now we can.

Sorry about that. Just was saying congrats on the strong beats across your business in the quarter. But maybe focusing on the strong margin performance. I know you've been, Duke, a little bit reserved and Jayshree on the margin upside messaging. I guess, to what extent are you now thinking maybe a little bit more positively longer term about the margin potential here as you have more self-perform and you've got more large load projects becoming more of the mix? I guess, any reason why that wouldn't add to some margin upside over the longer term?

Yes. Thanks, Steve. Thanks for the comments about the quarter. I think when we're looking at the margin profile, we said the UI segment had some room, and we felt like it would move up. The businesses that we've acquired, how we look at that business today, the risk we're willing to take, certainly is moving that profile up, and you're seeing that in the quarter. And I believe you'll see that on a go-forward basis. So that moved up electric as well. I think we moved that up as well on the backside. That -- look, structurally, fundamentally, the business has changed. We're seeing it change. We have 2 addressable TAMs, both of which are growing. I do -- that mix, we're looking at it constantly to make sure that we're giving you good, prudent guidance. Yes, I do think we posted a real nice quarter. We were prudent in the guidance that we gave you in the back half. You're seeing synergies show up. We're seeing a lot of book-to-burn. So I do believe like there is some room in the margins in the backside. We took a prudent approach to it. There's no -- you got climes and -- northern climes weather. We take everything into risk, project slips, all that's already baked into our numbers. So yes, I think there's upside in the back. And as we see it, as we see the work mix, as we see the mix in the electric segment, it's a big segment. So we have to really take into account everything in there. And I think we've done a nice job of that. But I do think there's room for margin improvement in the backside. We've always said that the electric segment has the ability to operate 10 to 12 on the utility side, 12 would be the utmost margins that you would see. And that's when you stack in large transmission and all aspects at once. So you get full utilization. You're also training a lot of people. I mean we've added 15,500 people over the year, 7 of which -- or 8 of which, 7 or 8, I can't remember, is organic. I believe it's 8. So in saying that, I mean, significant amount of training going in. We're getting better at training. If we can get better at training, we can get scale out of that as well. I do think we have the ability to improve margins. It's still something we're trying to compound it. We have ratepayers on the utility side. It's very much regulated. And so that said, we're doing a nice job on the technology TAM, and we're also getting some synergies out of our training and getting people to the field. So super happy with where we're at.

Your next question will come from Julien Dumoulin-Smith with Jefferies.

Hopefully, you can hear me okay. Just wanted to ask, one, we've seen a large utility in Midwest recently indicate for -- at least for their gas generation RFP that they're electing to self-perform because there's inadequate resources. Again, given this backdrop, how do you think about your willingness to participate in the gas generation side of the business? Obviously, we saw a press release from you guys on NiSource earlier. How do you think about leaning further into that? And what would that look like inasmuch as a JV structure is not obvious? I'm curious for your thoughts about the [indiscernible] EPCM?

Yes. No, look, Julien, we're seeing the same thing. I mean I do think some of the utilities, a few of the utilities are trying to self-perform. Yes, it sounds easy. It's not. So I think in general, we saw that in the past back in -- I don't know it was probably 20 years ago, my age myself. Look, we know the risk. We know the risk of the people that we need to employ. Our craft-skilled labor is there. We're doing a nice job of building that business. It's something meaningful in the future. We talked about it. As far as like the robust nature of EPC on generation, not only in front of the meter, behind the meter, someone was saying not too long ago that we're just in front of the meter -- I mean, behind the meter. So we're on both sides of that. We're seeing some small engines. We're seeing big engines. We're seeing all types of generation. And we're installing EPC in it. I like the business. We're just not willing to take the risk on the combined cycle side and some of the single-cycle engines. So that's the issue. If we can get the type of contracts that we need to feel comfortable with it, we'll do it. And certainly, the inbounds and ask of our customers, we did mention NiSource. I do believe a significant amount of that will go into backlog in the third quarter. That's moving nicely. There's some other, what I believe, opportunities in that part of the world that will continue to compound. And not only them, but every customer we have, we're working with them on their capital plans to build both generation and T&D.

Guys, appreciate it. Just a quick one on the technology side. Can you speak a little bit to how you're scaling that business? Are you -- is this just land and expand with existing customers? What exactly is going on within the details, if you can? Just -- obviously, it's a nascent business model for folks, you got a lot of new entrants. Just curious, do you have a lot of interest relationships you're hearing about out there. How much of this is new customers and new platforms? And what are you going to do from like a strategic M&A perspective to continue to build this business, too?

A lot to that. So we're not -- when we think -- when we thought about it, when we acquired Cupertino, we acquired a platform. We talked about the technology customers that we thought that we could take our collaborative approach and build another TAM that's every bit as big as our utility TAM. We're doing that. It's showing up direct to the hyperscaler, direct to the larger customers, showing them what we can do, our self-perform capabilities, we show up. We're on time. We're certain. And that's leading to balance of plant type builds in multiple areas. So call it, 80% what a data center build less chips. And I think 90% maybe. So we have the abilities to do that. And as people see that we're certain and our projects are on time, on budget, self-perform, more and more addressable market comes our way. So I think we really like what we see, the collaborative nature. We talk about synergies a lot, and we don't put them in anything. But you can see from the quarter, they show up. We're crossing -- we're fungible with labor. We're crossing both T&D as well as going into the data centers with our people. You can see the queues on the utility side of substations, all the substations that are out there. We're right in the middle of that. And I think as that nexus, I'm not sure people understand that nexus and how difficult it is to interconnect to the grid and how much we're right in the middle of that interconnection. So that interconnection along their vertical supply chains, the various strategies that we've discussed are showing up and the synergies are right there with them. So I do believe, Julien, as we look at technology, we're, in a collaborative way, helping them be certain on not only cost, but getting it done on time. So we really like where we sit.

Your next question will come from Chad Dillard with Bernstein.

So my question is on the modular and prefab side of the business. It's increasingly clear that you guys are investing in that organically and inorganically. So I'd be curious to hear what share of your RFPs have that capability? And how do you think about that on the next 5 years? And maybe you can talk about just like the labor cost savings that you see when you deliver that and to the extent to which you can value-based price with your customers on that?

Yes. I mean, look, we talked about having 7 million square feet, and we just added, call it, 0.5 million square feet with the acquisitions that we've made. So yes, we're adding to that. We've always done some what I would consider fabrication. But I do think this integrated fabrication that we're doing, it's different. It's a solution-based approach. It has a lot of VDO (sic) [VDC] engineering and a lot of technology in front of it. We can really design from a construction nature and work with the client on what they're trying to accomplish, less water, closed-loop systems, no water, all kinds of things that we're able to really, really work with the client upfront. I think we have some of the best engineers in the world because they've been in the field and they know how to construct. So that allows us to really lean into these projects, become much, much more efficient if we work in a collaborative manner with our clients, much like we've done with AEP on 765. I mean, I think when we look at it, we work together. And if we can do that, the fabrication is exponential. I don't -- but whether it's cost less or more. It's going to cost less. It's less people to some degree, depending on where you're at in your logistics. So logistics cost a significant amount. So you really need to be close to where you're building, and I think that Northeast environment and what we've done there with the acquisition of Phalcon really gives us a lot of opportunity in the East and the fabrication in the East. But yes, look, it's -- you're certain as well, you're inside, and it allows us to really have a certain outcome and the engineering in front of it allows the cost to come down. So yes, the more collaborative the client is with us, the -- what I would consider the total cost goes down significantly for them.

Great. That's helpful. And then have you started to see RFPs for 800-volt work yet? When is that starting? And just from like a labor standpoint, is there any difference in complexity, the mix of labor force or even like the use of modular when you're shifting from 54-volt to 800-volt architecture?

I'll just say it this way. We haven't seen it show up. We're in the middle of engineering with it. We're all over it from the high-voltage side as well as equipment. Anything complicated, anything with a higher voltage, the higher the voltage, the better for Quanta. So I'll just say it like that. We love complicated high-voltage infrastructure, the more the better.

Your next question will come from Justin Hauke with Baird.

Great. I just got kind of one -- obviously, there's a lot of positives on this quarter, but one to stand out as well was the free cash flow. I just wanted to, I guess, maybe ask, are you seeing changes in kind of maybe like prepayments or other things that are kind of favorable to working capital from some of these large load customers that maybe it's a sustainable dynamic that maybe improves the free cash flow conversion over time? Or is it kind of just a one-off here this quarter?

Justin, no, we're very pleased with what's happening with free cash flow in our business. The first half of the year was very strong. I think it's a real testament to the operators, how well they're performing. We are getting favorable contracting terms across the business. But the growth of the MEP business, our EPC business and our renewables business is contributing to that free cash flow growth. So we believe that we're going to continue to see those types of factors coming into our free cash flow profile. It's improving our working capital as you said. Having said that, we do think the right way to think about our business continues to be that conversion rate of around 55%. I talked about it in the Investor Day that we have the opportunities to be higher than that, 55% to 60%. Do I believe that we can be at the high end of that even this year and going forward? I do. And I think there's opportunities even to beat it. But growth -- where the growth comes from matters. The strong utility business is continuing to grow in the back end as well. And as you know, that has a slightly different working capital profile, and it can pressure free cash flow. We've taken all that into account in our guide. And -- but I think you can expect, Justin, that we have real abilities to be at the high end of those free cash flow ranges and even better.

Your next question will come from Sangita Jain with KeyBanc.

Can I ask one on Percheron, if I'm pronouncing that right, the acquisition that you made? How much of the revenue that they do is already revenue from Quanta and how much is third party? And as you bring it in, are you going to focus it more on just working for Quanta? And then does this allow you to do more front-end work with data centers? Or is it purely just a T&D type operation?

Thank you, Sangita. So Percheron, when we looked at that, really, it's right-of-way acquisition. It's things of that nature. None of which is for Quanta. Very little, if any, was Quanta revenue. So it's all outside. The customer base would be utilities, hyperscalers. So both sides of that. The way we think about it, anything that -- from our standpoint, it doesn't allow our field forces to move forward or we can collaborate with the client in a constructability way, we want that to be a part of the solution. So they were very much a solution for us on the front end. We believe added to Quanta and our constructability, we can work with the client on routes. You hear about permitting quite a bit, land acquisition quite a bit. I'm getting tired of it. So as we see it, we felt like you can either gripe about it or you can fix it. So Percheron will allow us to provide a unique solution to the client on the front end where we believe we can move right away faster in a more economical way to get our people in the field, both on the technology market and -- actually technology pipeline and utility T&D. So super proud, great company. I believe we can exponentially grow that and the synergies are endless.

[Operator Instructions] Our next question will come from Nick Amicucci with Evercore ISI.

I just had a quick one, too. Just given -- I mean, obviously, it seems like pretty strong organic performance within the quarter. I just wanted to see, I mean, if we could kind of break that out, how much was that -- was there any kind of pull forward of timing or weather implications within there just given kind of more of a mild spring season?

No, I do think you bring up a good point on seasonality. We used to have a much more pronounced seasonality in the business. With being inside and having kind of the electricians in the places that we're at, I do fabrication facilities, you're going to see that level out in the fourth and the second. It will start to level. So it won't be as pronounced as it was in the past. So I do think that's part of it. But as far as pull in, I mean, it is different from a standpoint, nothing pulled in at all that I'm aware of, just nothing. But what is happening, we're getting on sites and people are starting to see us perform and they're asking for more services immediately. So we may book and bill $300 million on a site in a quarter, you never see it show up in backlog. That's part of MEP. And that happens quite a bit. So we're working through that about how to look at those MSAs on the technology side, especially when we're building balance of plant in multiple areas. We need to look at that internally to decide is a PO against an MSA or is it an MSA. So we're following GAAP. But I would tell you the book and burn on that type of work is certainly prevalent in the quarter, and it will be prevalent as far as we can see because we continue to capture more balance of plant opportunities and kind of full-scale data center opportunities, and you'll see us on quite a few sites in the future.

Our next question will come from Adam Thalhimer with Thompson, Davis.

Congrats on another great quarter and a great year-to-date. Duke, I guess I wanted to dial in on your traditional T&D business. How would you say that's -- other than the obvious that it's good, how would you parse that how it's trending versus your initial expectations at the beginning of the year? And then I wanted to get an update on your long-term expectations from electric utility customers?

I think we're right on target. We kind of -- you haven't seen the compounding effect. I mean, we're not in backlog on any of the bigger work yet. Even the generation work, most of it is, I would say, 95% of it is not in backlog either. So those big projects, the 765 corridors, 345, 500, all those bigger -- all that bigger work is just starting. A lot of it's in engineering. You'll start to see it hit backlog in the later half of the year and throughout what I would consider the decade. So it's a long-term build well past 2030 on both sides of the business. So we're seeing those projects today. They'll show up in backlog. We'll go to the field, call it, second half of '27. We'll start to see incremental gain there. And the compounding stacking effect will start to hit the backlog. And I continue to expect us to have record backlog into the third and probably even into the fourth. But definitely, we see the work there, and it has not started. So kind of what I would say upper single-digit growth in the business as it sits, doing nicely, working with clients. So I think double-digit type growth is there today, and it's going to get much greater than that as we start compounding big work there. But it will look much like it did, call it, before [ '15, was it '12 to '15, ] somewhere in there when we were on a bunch of big projects and started compounding. We see that type of effect. Yes, it's big numbers, but the big numbers are going to compound as well. So we're super excited about where that's going. Early stages, and it will start to show up, call it, in backlog this year and in the field next year.

Your next question will come from Liam Burke with B. Riley Securities.

Duke, just a quick follow-on on what we just discussed on your longer-term planning on the electric side. Going back to the backlog. So your backlog, similar to what you discussed last quarter, is more broader based across the businesses rather than you bringing in these larger projects?

That's right. I mean I do think those larger projects -- you're going to get some lumpy quarters where you're 1:1, 1:2. You're going to start to see 1:5, 1:6 as you bring in a big chunks of projects, and it's going to happen. We saw some of it when we brought in 765 last quarter. You saw a big boost up. It was broad-based, but it also had a big project in it. That's going to happen. It's not going to be straight line. You're going to see some lumpy kind of quarters, but all kind of lower lows, higher highs all the way through the way we see it because I just think we can't predict timing and bookings on that big work. It just takes time, and we're in LNTPs all over the place and verbals all over the place with lots of clients in a collaborative way. I just really like the collaboration the company is doing, really trying to help our clients. And I think giving them certainty, working with them, driving the cost down to the ratepayer, the company is highly focused on driving the cost down to the ratepayer. I think that's the deal where we're really working hard with -- throughout on the T&D side. And I like where that's going. It's certainly given us a multiyear, even decade look outward. You can see their capital budgets and some we can point our finger to. We're working hard together. I like where the industry is going.

Your next question will come from Philip Shen with ROTH Capital Partners.

Congrats, again, on the strong results. I wanted to check in with you on the recent New York state ban or pause on data centers. We published recently that we could see as many as 10 more states pursue data center bans or pauses by the end of this year. What are your thoughts on this potential risk? How could it impact your business? And then when you add data center work to your backlog, have these projects been cleared of all permitting, environmental approvals, community support? I'm guessing the answer is yes, but just was wondering if you can talk through, is there any risk that some of these state bans or pauses could take some of the projects out of backlog.

Sure. So just a couple of things. It's a good question because it gives me an opportunity to freelance a little bit here. What I would say is 15% of the business is technology, call it, 15% to 20% right in there. And that's a spectrum of chips to everything, not just data centers. So it's not a huge piece of the business, number one. We've grown that to that range over the last 2 years, which I think is phenomenal. We've built a hell of a business already and got a long way to go. So very early stages. And the quality of the companies that we've acquired is just phenomenal, super proud of the platforms. So in saying that, look, we're involved in lots of data centers. I haven't seen much in New York. Nothing really gets built there. So it's very difficult to build in New York. And having a moratorium in New York doesn't bother me at all. I just hope we can get enough power to continue to keep the lights on in PJM. So that's our highly focus there on that. What I would say is, in general, when we think about data centers, I just -- it's such a fallacy of the amount of water and what it does for an economy. I mean, in rural areas, the school districts and the kids and the teachers, we employ people there. I mean, it's such a benefit to everyone that is building in those areas. And it's not a 1-year build. These are 8-, 10-year areas that build and they're providing jobs. And if you look at Northern Louisiana, where they're building there, yes, they're using a little bit more water than in some other areas. I would say there's better designs today and you can use less water. But what that's done for teachers, teachers were the lowest paid in all of Louisiana. They will be the highest paid in Louisiana in that area, all the teachers. All the -- what it does for the rate base, the economies, I just don't think it gets suppressed. We're not doing a good enough job talking about the good things about data centers, national security, everything else that I see. It reminds me a lot of the fracking rhetoric that was out there. So it's just something that I think we have to do a great job to tell the benefits to the industry and how we see it and what it's done to create jobs and good jobs. I think you can look at our median wage and see, like it's very, very good for us and the economy. So look, we're not seeing any shortage of places to go to work. And we're moving forward, really working in local areas to provide jobs. And as long as we do that, and I believe we're on the right side of the rhetoric with data centers and I like where it's going.

Yes. And Phil, just on the backlog, I think it's important to add that we take all those into account. The way we treat our backlog, just like we do on the T&D side, just like we do on the generation side, we want to make sure that we have a constructive and prudent way of what goes into backlog. So on the data center side, we tend to put in things that have only LNTPs, and we don't put the rest of it until the project is a go. So I think you can be confident in what we have in our backlog as a result.

Yes. And we're seeing multiyear projects, too. So I mean, we're out well beyond 2030.

Your next question will come from Alex Rygiel with Texas Capital Securities.

Great quarter. Could you speak a bit more about underground and infrastructure, and in particular, pipelines? And are you seeing any green shoots develop?

Yes. I mean, look, I think we certainly have opportunities. I think we're probably -- we booked a little bit of Canada work in the quarter. So a real nice job there with ATCO. So proud about that one. I think we'll book more in Canada. The opportunities, I would say, later half of '26 and '27 for us are there. That business is getting better. So yes, I mean, it's something we're looking at. And as kind of how we look at it, we kind of put $500 million in our head, and that's where it's at. We're well past that for the year, probably and beyond. So we'll relook at that as how we guide. But no, Alex, I think it's all risk. We'll be cognizant of how we look at the risk. And our generation business is growing nicely, some things there. So we're able to use some of those assets and people and project management teams on the generation side. There's a lot of pipe feed and generation that we can bundle that in as well. So that solution-based approach on the technology side applies to the pipeline as well and gives us a lot of opportunity there to do some unique things with the pipe.

And Jayshree, earlier, you mentioned contract terms have improved. Can you expand upon that a little bit? And maybe in particular, how they've changed across various end markets?

Yes. We're just -- as we sit here, we're looking at our renewables business, our MEP business, our EPC business on the T&D side. It allows us to have really favorable cash flow terms and the working capital profile on those things are very positive. We're seeing that across our business, not just in certain markets. The MEP and renewables business and EPC work on our traditional business tends to have the more pronounced favorable working capital profile, and that is getting baked in. But we've talked about this a lot, right? As we sit here today in these markets and the strength of our portfolio and our ability to help our customers, we're very much focused on compounding and growing with them. And so our contracting terms are a reflection of that. And while we're not necessarily trying to take advantage of our customers in any way, it is allowing us to make sure that we're doing things in the way that allows us to be confident about our execution capabilities and delivering for them in the right manner. So that's what's getting reflected across our business. It's not just on working capital, but it's in terms across the company.

Your next question will come from Brian Brophy with Stifel.

Congrats on a really great quarter. Obviously, there was a meaningful uplift in the technology and large load outlook. Curious if there was any notable large bookings on the integrated fabrication part of the business in the quarter? And if that was a core driver of the upside? Or is it more broad-based in MEP?

I think it's broad based the way we see it. Certainly, the MEP business is growing faster than the rest of the business, just percentage-wise. But what I would say is if you look at the whole outlook, I would tell you, it's, all of it's pushing upward. Both segments are pushing upward. The electric segment is moving up. I mean, our renewal business is really good. It's moved up nicely. So I would tell you all things that we discussing are at least double digits, some are double-digit plus, but everything is moving upward at least double digits. And I'm sure it's CEO math, I probably -- it's probably 9.9% in some area, but like very close to double digits and some of it much greater sum of the parts, obviously.

Appreciate it. And then just one quick one, if you wouldn't mind. Did you see any notable SunZia closeout benefits in the quarter or anything that was more onetime?

No. I think you can just -- look, closeouts happen all the time. We're so large, you're going to have projects close out, you're going to have projects start. There was nothing onetime in our quarterly results.

I do like it when they go up, though. I'd rather like them go up than down. But in general, they typically go up, and it's nothing out of the ordinary. It's normal course.

Your next question will come from Joseph Osha with Guggenheim Partners.

So Duke, you've been adding manufacturing capabilities in a couple of areas, transformers. You bought a utility pole company. I'm wondering if there are other areas that you're thinking about in terms of where you might want to add capabilities.

Yes. I mean, look, we did the breaker deal with HICO. I thought that was a critical path for us and the high-voltage breakers are very difficult to get. So you've seen us build them. You've seen us partner. We certainly have great relationships with the suppliers. Anywhere there's a critical path that we think we can invest capital to move it forward, that's what you've seen us do. So as we're looking outward, we're taking advantage of areas where there's underinvestment or we believe it's something that is a critical path for us. And we're working with our clients to really innovate as well with R&D and some things we can do there. So that innovation, technology, how we look at it, but we've made those investments in that vertical supply chain. I think it's showing up in some of the synergies. I think you'll continue to see it. We'll be selective in how we invest there. That's something that -- we look at it all the time, but we do believe we can do some unique things with our vertical supply chain and have done. So it will be a broad-based investment in things that are what you would consider a critical path.

We see a lot of people buying EBOS companies. Is that something that you think might be a good fit for Quanta?

Yes. Look, I'm not looking at EBOS companies. That's fine. I mean, look, I'm sure they're great companies and everyone is doing well with them, but it's not something that we're looking at today. We're looking at all kinds of things that it could be a component thereof or whatever it may be. But it's -- traditionally, the core of the business is craft-skilled labor. We're focused -- highly focused on craft-skilled labor and bringing that to the field in a way that's solution-based. If the EBOS or anything else can help us with the solution, we're certainly leaning into those opportunities.

[Operator Instructions] Our next question will come from Jamie Cook, Truist.

Congrats on another fantastic quarter. Can you hear me?

Yes. Thank you.

Good, you can hear me. So Duke, just one question. I mean, I've been beating you up on your underground margins for years. And finally, it sounds these margins are really starting to improve. I guess with some of these acquisitions that you're doing and some of the structural improvements you're making, I'm wondering, over time, although it's not in your sort of longer-term margin targets, is there a path, in particular with some of these higher-margin acquisitions for your underground margins to approach the electric business? Is that totally off base?

Yes. I mean there's always opportunity. It just depends on the work mix. I mean some of those margins you can pull up. And it depends on the risk. It depends on some of the fabrication. Yes, look, I do think you can pull them up. We got -- let me get to double digits first, and then I'll go from there. But I do think we have opportunities to get at parity to electric. You can do it. It just depends on what the mix looks like. We're certainly -- I think that's one thing the company is highly focused on is increasing our efficiencies. Some of the labors are fungible, so it's moving across segments. It's moving over into the electric segment. They move back and forth. I mean we can have someone on what I would consider a data center go to an industrial base, come back into compression on gas side so that we can move electricians and underground folks across multiple segments, which I really like a lot. So it's hard to say because they are making the margins in the electric side on one side of the business as that labor is fungible. But kind of the outlook on the customer base in the UI segment, yes, we can move it up, and you'll see that move up and we could get it to parity electric. It's possible.

Your next question comes from Michael Dudas with Vertical Research Partners.

Duke, just your sense of what your customers maybe on the MSA side or even just across the board, how far out in the future are they asking to secure your specialized craft labor generally? And I don't know -- I'm sure there's ranges of months to years. How has that changed, say, in the last 12 to 18 months? And do you anticipate to get even further tighter out into the future where you have to allocate these resources a little bit more judiciously?

Yes. I mean, we're nowhere near capacity. I know that's been something that people are worried about. So look, you've seen us add 15,000 employees in the quarter. And well, let me back up. 15,000 in the year, a significant amount of which is in the second quarter. Through -- some through acquisitions, some through organic growth, but well over 7,000 in organic growth. We're very much in line with the customer building out programs. We'll go -- we're as far out as their capital plans at least and beyond. So when you're looking at their capital plans, they're out 5, 7 years. We're helping them with capital. We're helping them all the way through in a collaborative manner across the board, having great collaborative conversations on it. So -- and I would say the inbounds are significant. The company is in a different place than it's ever been, how we sit, how we're viewed. I think the #1 thing is what -- how do people feel about us. And I feel real good about how we sit in the industries we serve. And we've done a real nice job. And the men and women in the field are executing at a phenomenal level. And we see decade-plus type arrangements out there.

Your next question comes from Maheep Mandloi with Mizuho.

Congrats on the quarter as well. Maybe just like a high-level question, Duke. Where are you seeing the bottlenecks as you go into data centers or for generation and transmission distribution? Is it still the craft labor? And is there a scenario where you foresee potential competition and oversupply on that aspect few years down the line and maybe labor or craftsman from other industries with this so you have more training or more automation?

Look, I -- we're not seeing any shortage of -- I mean, we're not seeing any oversupply of craft-skilled labor for the near future. It takes about 4 years to make a craftsman and a journeyman. We happen to have more journeyman in all crafts than most. Well, probably in the Electric side, the MEP side, I would say, we're gaining. We're very close. And our training facilities, the things that we've invested in over a decade, we spend about $250 million a year in training. So that's something we're highly focused on and have been for a decade. I know we're making it look a little easy. It is not easy whatsoever. And that -- it's just -- the fact is we've done this for a long time. And I don't think you're going to see an oversupply in any means in the near future, and we see a lot of money getting thrown on it, takes a journeyman to make a journeyman. I'll say it again, it takes multi years, and the more years under their belt, the better they are and more productive. So I think when we look at it, no oversupply, where the bottlenecks would be generation, to some degree, and I know the generation is going to say it's EPC. So yes, look, some of it's technical. It is difficult to have the capacity to build combined cycles at the levels that everyone wants to build them at and as quick as they want to build them at. We're working hard to build those capabilities internally. We've done a real nice job. We have, what I consider, a significant business in front of us in the generation side. So that's organic growth for us. We really like where it's going. And we're putting the resources in it and the training and getting great people here that want to work for Quanta. So real happy with both sides of that. There is bottlenecks here or there. I do think, for the most part, most data centers want to go back to the grid at some point. And not to say that last time I got in trouble for saying something about behind the meter generation or whatever it was, I can't remember what it was, but someone was mad. Look, the faster you can go right now in generation, people are going to buy it. But over time, you're going to try to connect to the grid. It balances things out. And so utilities do it much better than anyone. They've been doing it for decades. So that bottleneck or that queue is extremely important. What does it take to get to the queue? It takes generation and substation. But we're very much involved in both sides of that. And I do think that would be the bottleneck is getting to the -- what I would consider utility scale generation, and they're moving very fast. So we're working with them all over the place. And I do believe utilities are in a growth mode. They've been underinvested in for a while on generation, and you're starting to see that significant investment and it's -- if you start an engine today, if you order an engine today, you're 5 years out, probably 6 before you get them built. So it just shows you the longevity, and I'm sure I didn't listen to GE's call, but I'm confident Vernova had a really nice book, and it's going to continue for a bit here. So we're super happy with where we sit.

Your next question will come from Andy Kaplowitz with Citigroup.

Duke, you just added like 10% more employees to the Quanta family again in one quarter through acquisitions. I know how you're going to answer this question, but I'll ask it anyway. At some point, do you worry about the acquisition flywheel moving too fast and maybe it could hurt underlying performance? Or alternatively, can you keep the pace of the recent acquisition trajectory that you've had over the last few years up, as it obviously has been a significant acceleration?

Yes, that's a good question. We're buying great companies. I mean, one of them was over 100 years old, maybe 2. We're not passing on great family businesses with great management teams. It'll depend on the management teams, do they fit here. We're super excited with the ones that we bought. A lot of that, too, is -- I mean I would tell you a couple of them we had talked to for 36 months, maybe, maybe longer, maybe 5 years, about acquisitions. We just can't tell you when -- exactly how that's going to work out. Last quarter, we did zero. This quarter, we did 4. We're not seeing shortages of people wanting to sell their businesses here. I mean, I do believe culturally, it matters. We view that more so than anything else because if we continue down the path, the cultural path, we get the synergies. They want to work together. People want to work here. We're creating great jobs. I mean, we have a lot of journeyman here that are Executive Vice Presidents, Presidents, CEOs. They're all over. And we have a path for craft here that's remarkable. So I do believe if you want to exit your business, Quanta makes tons of sense for you. And we're excited about that. I do think creating those opportunities, watching craft do very well. We pushed equity down to 10,000-plus people. I pinch myself on how lucky we are to be in the space we're in and be able to do the things we can do for craft. So I'm super happy, and that's why people want to sell their business here.

Your next question comes from Chris Tsung with Wolfe Research.

Nice quarter. Just on the acquisitions, can you give us like the annualized EBITDA run rate? Are both purchase multiples you underwrote just the $120 million to $140 million contribution seems like it's just partial year, and I just want to make sure we're comparing it correctly with the purchase price.

Yes, I think you can just do the math. It's about 6, 7 months worth of what we gave you. So you could annualize it based on just that, and that can give you a good sense of the run rate.

Our last question comes from Alexa Petrick Breno from Goldman Sachs.

The guidance revision this quarter was notable. Can you just talk more about the drivers of that revision? What are you seeing in the market and in your backlog that gives you confidence in this new guide?

Yes. I mean, look, you can see the head count is moving up. You can see both electric and gas moving up. Obviously, the contribution from electric, it's a bigger segment. It's going to be up. So it was broad-based. I think the synergies that we have and the things that we saw coming together, we're doing a lot of balance of plant work on the data side and the technology side, but it's not just data centers. I mean, we're involved in all kinds of manufacturing, [indiscernible] plants, starting all kinds of different things. Tesla has got plenty going on. Onboarding, manufacturing -- I mean kind of onshoring, manufacturing, medical. Across the board, we're picking up on both sides of that. So I would say our T&D business is growing nicely. Our renewable business, I know everyone was worried about that for a while. We're setting records there. So super happy with what they're doing. So broad-based growth. We will stack both generation and large transmission on the business. And that will be the outward growth in foreseeable future. So you'll start to see that stacking effect as well. We're not on in a lot of big -- large transmission. We're cleaning a few of them up, and then we're starting a few of them ourselves. But in general, I do think that stacking hasn't started yet and it's going to. I think it's probably second half of '27, you'll start to see us go to the field in a meaningful way, and that will stack on out through the decade. So we're happy with that.

We have no more questions at this time. I will pass it back to the Quanta team for closing remarks.

Thank you. I want to again thank the 85,000-plus men and women in the field. Their sacrifices to build the infrastructure of tomorrow is noted, and we thank them. So -- and I also want to thank you for participating in our conference call. We appreciate your questions and ongoing interest in Quanta Services. Thank you. This concludes our call.