Manish Samaya

Manish Samai asked if the working capital pulled forward from Q1 2026 into Q4 2025 would create a headwind for 2026 cash flows. He also sought President and CEO Koti Vadlamudi's thoughts on M&A versus organic growth, how the company intends to pursue opportunities where it is subscale, the potential size of acquisitions, and their relation to the 1.5x debt target.

Answer

CFO Ken Dodgen stated that he expects another solid year for cash flow in 2026, with operating cash flow trending towards the 4%-5% of revenue target and free cash flow at least 50% of adjusted EBITDA, not anticipating a headwind from the Q4 pull-forward. President and CEO Koti Vadlamudi emphasized that M&A must align with strategy, targeting subscale markets or opportunities that accelerate growth, while also being prepared for organic growth. He noted a wide and varied appetite for acquisition size, biased towards high sustainable growth and cultural fit, leveraging the healthy balance sheet.

Manish Samaya inquired about the pricing discipline holding in the marketplace, potential supply chain dynamics as a headwind, and how Quanta's vertical supply chain strategy addresses de-risking and affordability, as well as the impact of the tight craft labor market.

Answer

Duke Austin, President and CEO, explained that the $300-$700 million investment in vertical supply chain (transformers, breakers) is primarily to de-risk the company and ensure certainty for clients, while also addressing affordability. He noted a shift from 1-2 year bidding to 5-10 year programmatic negotiations, which enhances ROIC. He reiterated that the company thrives in tight craft labor markets due to two decades of investment in its workforce.