Sangita Jain

Sangita Jain followed up on the recently announced JV for the large load center, asking if the scope is primarily high-voltage transmission and if there's potential to add further low-voltage electrical or mechanical work.

Answer

President and CEO Duke Austin clarified that the JV is for a full CCGT build, a 50/50 partnership with Zachry, encompassing electric scope. He indicated potential for additional stacking with other NiSource opportunities.

Sangita Jain followed up on the announced JV for the large load center, asking if it primarily involves high-voltage transmission and if there's potential to expand scope to include low-voltage, electrical, or mechanical work with the customer.

Answer

President and CEO Duke Austin clarified that the JV is for a full CCGT build, a 50/50 partnership for a turnkey project, including electric scope. He indicated that the NiSource program would likely see additional stacking with other opportunities, such as battery projects, as Quanta builds out its comprehensive generation platform.

Sangita Jain of KeyBanc Capital Markets asked for the backlog size of the Boardman to Hemingway project and how Quanta is safeguarding its backlog against potential negative changes to the Treasury's safe harbor rules for renewables.

Answer

President & CEO Duke Austin described the Boardman to Hemingway project's contribution to backlog as "meaningful" but did not quantify it. Regarding safe harbor rules, he expressed confidence, stating that any changes that accelerate project timelines would actually benefit Quanta, as customers would seek more certainty, playing to Quanta's strengths in execution and delivery.

Sangita Jain asked if Quanta would consider entering the natural gas generation EPC market to address labor shortages, and if the 1.0x book-to-bill ratio signaled a customer shift towards faster-turnaround projects.

Answer

President and CEO Duke Austin confirmed Quanta has the capability for natural gas generation projects but would only pursue them under a low-risk model, avoiding technology risk on new turbines. CFO Jayshree Desai stated the book-to-bill ratio was due to normal timing, not a strategic shift. Duke added that some businesses, like Cupertino, have inherently faster book-to-bill cycles.

Sangita Jain inquired about the recent civil business acquisition, asking about its primary geographic focus and the potential to leverage its capabilities for Cupertino's data center projects.

Answer

President & CEO Earl Austin clarified that the acquired civil business is based in the Southeast but has the engineering and operational capabilities to expand nationally. He confirmed there are significant synergies with Cupertino's work, particularly with data center expansions in Texas and the Southeast. He noted the acquisition's capabilities are so complementary that its entire capacity could be absorbed by internal projects, though it will continue to serve external clients as well.

Sangita Jain of KeyBanc asked about the significance of the Department of Energy becoming an anchor tenant on transmission projects. She also requested more detail on the recent transformer acquisition and how it compares to the PTTI assets.

Answer

President and CEO Earl "Duke" Austin stated that while DOE backing is helpful, projects still face significant permitting and equipment availability hurdles. On the acquisition, he explained it produces a smaller class of transformer than PTTI but is a strategic buy to supplement their offerings, cross-sell to clients, and de-risk projects by securing U.S.-based manufacturing capacity amid supply chain uncertainty.

Sangita Jain asked for insights into the exceptionally strong free cash flow in Q3, seeking clarification on full-year expectations and any material advance payments. She also questioned the nature of backlog growth, specifically if it indicates booking projects further out, particularly in modular, data center, or life sciences/pharma sectors.

Answer

CFO Bill George explained that Q3's strong free cash flow was a significant catch-up from earlier in the year, with no extraordinary events, and that cash flow generally aligns with net income. COO Trent McKenna clarified that while modular bookings can extend further, most other new bookings are slated to begin within the next year, even if they are longer-term projects.

Sangita Jain asked about the exceptionally strong Q3 free cash flow, seeking clarification on its sustainability for the full year and any material advance payments. She also questioned the nature of backlog growth, specifically if bookings are extending beyond a year, and if this trend is driven by modular, traditional construction, or specific sectors like data centers or life sciences/pharma. Additionally, she inquired if the commissioning of large data centers is leading to changes in electrical or mechanical scope, such as a shift to DC power.

Answer

CFO Bill George explained that Q3's strong free cash flow was a catch-up from earlier quarters, emphasizing that cash flow generally equals net income, and noted favorable payment terms. COO Trent McKenna clarified that while modular bookings can extend further, most traditional construction bookings are slated to begin within the next year. Bill George added that while the scale of data center projects is immense, the fundamental electrical work remains generic, with no material changes observed regarding DC vs. AC power.

Sangita Jain of KeyBanc Capital Markets inquired about Comfort Systems' plans for expanding its modular capabilities, including the potential for a third location, and asked about any initial customer conversations related to bonus depreciation or the AI executive order.

Answer

EVP & CFO William George explained that the company favors measured, incremental capacity growth while focusing on improving productivity in existing facilities. He noted a third location is a long-term consideration but not a current priority. Regarding tax incentives, he stated that while helpful, they are not a significant driver in the current high-demand environment.

Sangita Jain of KeyBanc Capital Markets inquired about Comfort Systems' plans for modular capacity expansion, including the possibility of a third location, and asked about any initial customer conversations related to recent tax legislation and AI executive orders.

Answer

EVP & CFO William George explained that the company favors a measured, incremental approach to expanding modular capacity, with a strong focus on improving productivity in existing facilities. He noted a third location is a long-term consideration but not a current priority. Regarding tax changes, George stated that while beneficial, they are not a significant driver for the company given that demand already far outstrips capacity.

Sangita Jain of KeyBanc Capital Markets inquired about Comfort Systems' plans for modular capacity expansion, including the possibility of a third location, and the potential impact of tax legislation on customer demand.

Answer

EVP & CFO William George stated the company prefers measured, incremental capacity additions while focusing on productivity in existing locations. He noted a third location is a long-term consideration but not a current high priority. Regarding legislation, he acknowledged bonus depreciation helps but is not a major driver given the already high demand.

Sangita Jain of KeyBanc Capital Markets inquired about Comfort Systems' strategy for expanding its modular capabilities, including the potential for a third location, and asked about the impact of recent legislative changes like bonus depreciation on customer demand.

Answer

EVP & CFO William George explained that the company favors measured, incremental capacity additions for its modular business, prioritizing productivity and automation improvements in its two existing locations. He noted a third location is a long-term thought but not a current priority. Regarding legislative impacts, George stated that while helpful, they are not a major demand driver in the current environment of already high demand.

Sangita Jain of KeyBanc Capital Markets inquired about Comfort Systems' plans for expanding its modular capabilities, including the potential for a third location, and asked about customer conversations regarding the impact of recent tax legislation like bonus depreciation.

Answer

EVP & CFO William George responded that the company favors a measured, incremental approach to adding modular capacity, focusing heavily on improving productivity and automation in existing facilities. He noted that while a third location is a long-term consideration, it is not a high priority. Regarding tax changes, Mr. George stated that while bonus depreciation is helpful, it is not a significant driver of demand, which already far outstrips the company's capacity.

Sangita Jain from KeyBanc Capital Markets asked for clarification on the booking of 'inside defense' data center opportunities mentioned in previous quarters and sought more detail on the nature of the significant new award announced.

Answer

CEO Daniel Peyovich confirmed that the Q2 backlog includes all 'inside defense' awards to date, which consist of new projects in different locations. He described the significant new award as a multi-state, multi-year agreement with a long-term customer for both fiber-to-the-home construction and ongoing service and maintenance.

Sangita Jain of KeyBanc Capital Markets questioned if the full-year guidance raise implied conservatism. She also asked if the expanded O&M business could reduce capital intensity and improve free cash flow over time.

Answer

CEO Dan Peyovich stated the revised outlook is achievable, reflecting Q1's outperformance and the scale of their project portfolio. CFO H. DeFerrari addressed the second question, reiterating that free cash flow is a priority and noting DSO improvement in the quarter. He confirmed the full-year net CapEx guidance remains unchanged, indicating no immediate shift in capital intensity.

Sangita Jain questioned the reason for the sequential reduction in headcount and asked if the company is seeing radio replacement work beyond the scope of its recent Black & Veatch acquisition.

Answer

President and CEO Daniel Peyovich stated there was nothing significant to read into the headcount change, as the company uses a variable mix of its own labor and subcontractors. He confirmed that while their pre-existing wireless business does some equipment replacement, the primary focus is currently on executing the large replacement program from the recent acquisition.

Sangita Jain asked about the growth prospects for GigaPower, which appeared as a top 10 customer, and questioned if there is a different margin profile for data center work compared to traditional fiber-to-the-home projects.

Answer

President & incoming CEO Daniel Peyovich noted the strong, multi-year relationship with GigaPower and explained its appearance in the top 10 was due to the natural movement of customers in the rankings. Peyovich declined to discuss specific pricing theory but emphasized the significance of the broader data center opportunity, alongside fiber-to-the-home and BEAD-funded projects, as key growth drivers.

Sangita Jain of KeyBanc Capital Markets requested a breakdown of the $14 billion project pipeline, asking about the split between Master Service Agreements (MSAs) and bid work, and the portion related to data centers. She also asked about the thinking behind the increased CapEx guidance and the balance between buying versus leasing equipment.

Answer

President & CEO Christian Brown detailed that the pipeline is roughly two-thirds new project work and one-third MSA renewals, with about 20% of the project work related to distributed power and data centers. He also stated the strategic fleet goals are a 50/50 buy/lease mix and 15-25% efficiency savings. EVP & CFO Gregory Izenstark added that the higher CapEx supports strong growth in the electric business without deviating from their planned financing mix.

Sangita Jain asked if any specific actions from the strategic review are needed to achieve the full-year EBITDA margin target, particularly in a normal storm year. She also inquired if the new MSAs were won by displacing incumbents or by capturing new utility spending.

Answer

President and CEO Christian Brown stated that no radical actions are necessary and that the company is on track to meet its goals through execution, noting the gas business has already bounced back to expected levels. Regarding new MSAs, he confirmed that the wins were a result of both displacing underperforming competitors and securing work from increased customer capital spending.

Sangita Jain inquired about the timeline and expected outcomes of Centuri's strategic review and asked for clarification on the drivers for the low and high ends of the 2025 guidance.

Answer

President and CEO Christian Brown explained that the immediate 3-6 month focus is on organic growth within the core business, with a broader, long-term strategy to be unveiled toward the end of the year. CFO Greg Izenstark added that the high end of the guidance range is achievable through faster crew onboarding and new bid wins, while the low end accounts for potential project delays or cancellations. Storm activity remains a wildcard.

Sangita Jain from KeyBanc Capital Markets asked for the current offshore wind backlog amount and the company's outlook on the segment, particularly in light of recent election results. She also questioned if any significant rate case outcomes are anticipated to bolster gas MSA spending in 2025.

Answer

CFO Greg Izenstark stated the offshore wind backlog is approximately $100 million, extending into early 2026, and that it was too early to comment on election impacts. Interim CEO Paul Caudill addressed the gas MSA environment, emphasizing that the company's priority is to grow and diversify its customer base to mitigate concentration risk, rather than depending on specific regulatory outcomes.

Sangita Jain of KeyBanc Capital Markets inquired about the growth drivers in the data center submarket, the scope of Jacobs' work in the sector, and the nature of the NVIDIA partnership. She also asked about the composition and expected burn rate of the record backlog.

Answer

Chair & CEO Bob Pragada explained that data center work has expanded from design to include power, water, and full program delivery, highlighting the transformational NVIDIA partnership for a reference design. CFO Venk Nathamuni added that the backlog is well-balanced, with faster-burn projects in Life Sciences and Advanced Manufacturing providing momentum for FY26.

Sangita Jain asked which segment would drive margin inflection in Q3, suspecting it would be Infrastructure and Advanced Facilities (I&AF). She also questioned if the trend of booking longer-duration projects continued in Q2 and if this was a deliberate strategy.

Answer

CFO Venk Nathamuni confirmed that I&AF is expected to see the largest margin improvement, driven by mix and lapping the impact of the JV matter. Chair and CEO Bob Pragada clarified that pursuing large, complex projects is part of the company's long-standing pedigree, not a new strategy, and that they maintain a balanced portfolio of project durations.

Sangita Jain asked about the outlook for PA Consulting, specifically how revenue growth is expected to build through the year, and inquired about capital allocation priorities, including the potential for M&A given market conditions.

Answer

Chair and CEO Bob Pragada noted that PA Consulting's revenue ramp is visible in its pipeline, with growth expected as major U.K. public sector projects commence. CFO Venk Nathamuni stated that the top capital allocation priority is organic growth, followed by returning cash to shareholders via buybacks and dividends, with M&A being an option but not an immediate focus.

Sangita Jain asked for clarification on whether Jacobs expects higher growth internationally versus domestically in the upcoming year. She also questioned how 'fungible' the company's talent pool is and if resources could be reallocated should U.S. public spending slow down.

Answer

CEO Bob Pragada clarified that while international infrastructure markets are inflecting positively from a flatter period, the company still expects the U.S. to grow faster in the upcoming year, based on strong pipeline and backlog data. Regarding talent, Pragada described the workforce as highly 'deployable' rather than 'fungible,' emphasizing that the global talent pool works on projects around the world in a balanced model that does not map directly to regional revenue streams.

Sangita Jain of KeyBanc Capital Markets asked for a breakdown of the Communications segment's performance between wireline and wireless, particularly in light of the Ericsson contract. She also questioned if significant new investments would be required on the wireline side to meet demand.

Answer

CEO José R. Mas clarified that wireline now constitutes about 60% of the Communications business and is growing strongly, while the wireless business (about 40%) also has significant growth opportunities, including the multi-year Ericsson project. He stated that the necessary investments to ramp up for demand have already been made in recent quarters and he does not expect a different level of investment going forward.

Sangita Jain inquired about the specifics of recent oil and gas bookings, including their geography and timing, and asked about MasTec's capital allocation priorities for potential tuck-in acquisitions.

Answer

CEO Jose Mas explained that the strong pipeline bookings were broad-based across nearly a dozen projects, not reliant on a single large contract, and he expects backlog to continue growing. Regarding capital allocation, he reiterated that the primary focus remains on organic growth, but MasTec is opportunistically evaluating tuck-in acquisitions in key geographies and with certain customers, noting a more reasonable M&A market.

Sangita Jain from KeyBanc Capital Markets inquired about the drivers for the strong Q4 Clean Energy margins, asking if they were due to one-time events or structural improvements. She also requested an update on data center related work and any associated backlog booked during the quarter.

Answer

CEO Jose Mas explained that the strong Clean Energy margins were driven by solid execution, not one-offs, and noted the team delivered on internal projections that were more optimistic than public guidance. He added that this segment has significant potential to outperform in 2025. On data centers, he stated that while activity is growing, it was not a major driver of the Q4 backlog increase.

Sangita Jain of KeyBanc Capital Markets questioned whether a rebound in distribution spending could occur in 2025 and asked to identify the primary potential constraint, such as labor or equipment, for meeting growth targets.

Answer

CEO Jose Mas expressed optimism for a normalization of distribution spending in the Power Delivery segment, which, combined with a major transmission project, could be a significant catalyst in 2025. He identified skilled labor as the most significant long-term industry constraint and asserted that MasTec's investment in training and workforce development provides a key competitive advantage.

Sangita Jain from KeyBanc Capital Markets inquired about the implications of the 'book and burn' cadence in federal work for fiscal year 2026. She also asked for the expected disaster recovery revenue in the fiscal fourth quarter.

Answer

CEO Dan Batrak stated that he expects the 'book and burn' environment for federal work to continue into fiscal year 2026, potentially leading to a flat or even declining backlog in Q4 without impacting the revenue outlook. He also noted that disaster recovery revenue from recent fire and hurricane events would be 'quite minimal' in the fourth quarter, as the primary response work has been largely completed ahead of schedule.

Sangita Jain inquired about the company's margin progression following the USAID contract cancellations and asked for an update on the burn rate of the remaining USAID backlog.

Answer

CEO Dan Batrack stated that without the lower-margin USAID work, the company's overall margin profile now has a higher baseline and is expected to grow slightly faster than the previously guided 50 basis points annually. He clarified that the remaining $220 million in USAID backlog, primarily for work in Ukraine, is expected to be recognized relatively evenly in Q3 and Q4 of the fiscal year, though he cautioned the situation remains highly variable.

Sangita Jain inquired about the disaster response revenue factored into the guidance, asking about its potential flexibility, and also asked about the M&A pipeline and strategy given the company's low leverage.

Answer

CEO Dan Batrack stated that $40-$50 million in incremental revenue from recent California fires has been added to the 2025 guidance, offsetting the USAID hold. He noted this work is higher margin, which supported the increase in the EPS guidance range. CFO Steven Burdick addressed M&A, confirming a strong pipeline focused on acquiring technical leaders in water and environmental sectors to make Tetra Tech 'better, not just bigger,' across its key geographies.

Sangita Jain asked for clarification on the drivers behind the high and low ends of the company's client sector growth ranges and questioned the feasibility of pulling forward federal backlog before the new administration takes office.

Answer

CEO Dan Batrack stated the guidance range is primarily influenced by the outlook for U.S. federal international development (USAID) funding, with the low end assuming a reduction and the high end assuming continued strength. He also confirmed it is viable to pull forward work, noting they have already received requests for sole-source task orders and that an unusual increase in Q1 backlog would reflect this activity.

Sangita Jain from KeyBanc Capital Markets inquired about the new Xcel Energy Master Service Agreement (MSA), asking if it represented new scope or displaced an incumbent. She also questioned the sequential decline in the Commercial and Industrial (C&I) backlog, given the recent booking of a large data center project.

Answer

President, CEO & Director Richard Swartz clarified that the Xcel MSA is for new, additional work and did not involve any displacement. Regarding the C&I backlog, Mr. Swartz explained that backlog is inherently "lumpy" due to the long negotiation timelines for large-scale projects, and the sequential change reflects the normal progression of ongoing work.

Sangita Jain asked for clarification on the exceptionally strong Q1 free cash flow, its sustainability, and the rationale for not extending the share buyback authorization. She also sought assurance on T&D segment margins, questioning if new projects would maintain the profitability of higher-margin projects that are nearing completion.

Answer

SVP and CFO Kelly Huntington explained that strong Q1 cash flow resulted from collecting on reduced pending change orders and retainage from late 2024. She cautioned that future cash flow could face headwinds from lower DSOs and fewer opportunities for overbilling. President and CEO Richard Swartz added that capital allocation is a balance between growth and shareholder returns. Regarding margins, Swartz affirmed the company is on track to be in the mid-range of its 7% to 10.5% T&D margin target by year-end.

Sangita Jain asked about the current bidding environment in the Commercial & Industrial (C&I) segment, including project types, geographies, and whether potential tariffs are a topic of discussion. She also inquired about the decline in fixed-price contract revenue and if it signals a strategic shift towards Time & Expense (T&E) contracts.

Answer

President and CEO Richard Swartz stated that bidding activity is strong across all core markets, particularly in data centers, hospitals, and transit. He confirmed that potential tariffs are a frequent discussion point and that new contracts are including provisions to mitigate this risk. Swartz clarified that the recent increase in T&E work over fixed-price was a result of the specific project mix in the quarter, not a long-term strategic change. CFO Kelly Huntington added that the revenue decrease in fixed-price contracts was also influenced by the wind-down of large, fixed-price clean energy projects in the Transmission & Distribution (T&D) segment.

Sangita Jain asked about the composition of the T&D backlog, specifically the amount of solar work and whether contract terms are improving. She also inquired about the margin progression from Q3 to Q4 and the drivers behind the strong free cash flow.

Answer

Executive Richard Swartz stated that the solar portion of the backlog is declining as the company remains selective, and he confirmed no new problem projects have been identified. CFO Kelly Huntington projected Q4 T&D revenue to be flat to Q3, with lower clean energy revenue offset by core growth. She reiterated that margins should be in the mid-range, excluding problem projects, but risks remain until completion. Regarding cash flow, she attributed the Q3 strength to the timing of project starts and completions and noted an outlook for stronger cash flows due to anticipated profitability increases.

Sangita Jain asked if the HomeSafe program's ramp-up is tied to specific performance metrics required by TRANSCOM. She also inquired about any impact from government efficiency initiatives on Q1 results and if they remain an overhang.

Answer

President and CEO Stuart Bradie clarified there is no single metric for the HomeSafe ramp, but customer satisfaction is a key area of focus for TRANSCOM. He emphasized that the program has proven its operational capability and that move volume will grow as the supply chain expands. He also stated clearly that KBR has seen no impact to date from government efficiency initiatives, noting the company is well-aligned with current budget priorities.

Sangita Jain from KeyBanc Capital Markets asked if the international phase of the HomeSafe ramp could proceed concurrently if the domestic ramp is delayed. She also inquired about the expected P&L impact from Mura's new plastics recycling plants becoming operational.

Answer

EVP & CFO Mark Sopp clarified that the HomeSafe ramp is sequential; a delay in the domestic phase would have a carryover effect, pushing out the international phase. President & CEO Stuart Bradie described the Mura partnership as an exciting pathway to growth, noting KBR has exclusive licensing rights, proprietary equipment offerings, and an ownership stake, creating multiple potential economic benefits as the plants achieve commercial operations.

Sangita Jain asked if KBR could follow Aramco to other parts of Asia for similar projects if Aramco's priorities shifted away from the suspended LTC cracker project. She also sought to clarify how KBR is thinking about its long-term guidance, which had included the now-suspended project.

Answer

President and CEO Stuart Bradie clarified that while KBR could theoretically support Aramco in Asia, he believes the investment is strategically tied to decarbonization and value-add initiatives within Saudi Arabia itself. He then corrected the premise of the second question, explaining that KBR secured the overarching coordinating PMC role on the broader LTC program, which is a very prominent, multiyear contract that fully supports the company's long-term targets, despite the suspension of one specific cracker project.

Sangita Jain questioned if safe-harboring activities led to the Q4 renewables revenue increase and asked about customer discussions regarding potential IRA modifications and tariffs. She also requested details on new natural gas power generation projects.

Answer

CEO Tom McCormick stated that while there may have been a slight benefit from safe-harboring, clients remain well-funded and are proceeding with projects, adopting a 'wait and see' approach to policy changes which would likely impact 2026. He confirmed the gas power projects are located in Texas, Oklahoma, and California, with sizes ranging from $70 million to $300 million, and are all currently underway.

Sangita Jain asked for an update on the NuScale monetization, questioning if the timeline had changed, and also inquired about the potential impact of U.S. administration spending freezes on Fluor's federal government contracts.

Answer

Chairman and CEO David Constable explained that Fluor is in 'detailed negotiations' with its strategic investor for a long-term monetization and revenue stream for NuScale, emphasizing the need for patience to get the deal right for the long term. Regarding government contracts, Constable and COO James Breuer stated they do not anticipate significant impacts, as Fluor's work for the Department of Energy and Department of Defense is tied to mission-critical national security and energy programs that are expected to continue.

Sangita Jain asked whether Fluor's data center opportunities are programmatic or one-off projects and inquired about the conviction behind pursuing new semiconductor work with Intel after a recent project cancellation.

Answer

Chairman and CEO David Constable clarified that Fluor is pursuing near-term programmatic data center opportunities, supported by a master agreement with a major tech client. He noted that modularization capabilities developed for this client provide a significant competitive advantage. Regarding Intel, Constable explained that while one mega-project was paused, the relationship remains strong, and Fluor is actively engaged on other work at the same site and pursuing new tool install projects.

Sangita Jain asked about AECOM's potential role in the Los Angeles rebuild efforts and sought an update on segment margin expectations, specifically if International margins were still projected to grow faster than Americas margins.

Answer

CEO Troy Rudd described AECOM's role in disaster recovery as a two-phase process of immediate support followed by long-term resiliency work, drawing on experience from over 700 climate-related events. CFO Gaurav Kapoor confirmed the expectation that International margins will continue to outpace Americas' margin growth, as the segment is starting from a lower base and has significant room for improvement, though the primary focus remains on enterprise-level margin expansion.

Sangita Jain inquired about the drivers behind the international segment's backlog strength in Q4 and whether the rapid pace of margin expansion in that segment could be sustained into fiscal 2025.

Answer

President Lara Poloni attributed the backlog strength to broad-based demand in the U.K., Australia, and the Middle East, highlighting renewed U.K. budget certainty and high win rates on AMP8 water frameworks. CFO Gaurav Kapoor noted that while the International segment will lead margin improvement, the overall enterprise margin expansion is guided at 30 bps for FY25 due to ongoing, high-return organic investments that are expensed through the P&L. He expressed confidence in exceeding the 17% long-term margin target.