Quanta Services, Inc.
Analytical review · Second-quarter 2026 report (as at June 30, 2026)
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review rests on. Quanta Services' quarterly report on Form 10-Q for the quarter ended June 30, 2026 and the accompanying earnings release, both published July 30, 2026; the annual report on Form 10-K for 2025; the nine current reports on Form 8-K filed in 2026, including the terms of the August notes offering and of the April performance-unit awards; the chief executive officer's Form 4 of May 5, 2026; and the annual earnings releases for 2018–2024. Every number on this page is drawn from one of these documents. Where a figure was computed by us, this is stated explicitly.
Company Profile
Quanta Services, Inc. is the largest specialty infrastructure contractor in North America in the electric power field. It is headquartered in Houston, Texas, its shares trade on the New York Stock Exchange under the symbol PWR, and at year-end 2025 it employed about 69,500 people — of whom about 55,700 were hourly employees, with about 36% of all employees covered by collective bargaining agreements. 93% of 2025 revenues came from the United States; the remainder mainly from Canada and Australia.
The company designs, builds, upgrades and maintains infrastructure: electric transmission and distribution lines and substations; power generation facilities — wind, solar, gas and storage; electrical, mechanical and process systems for "large load centers" such as data centers and advanced manufacturing plants; communications networks; gas systems and transmission pipelines. In 2025, per its announcement, it installed more than 6,100 megawatts of solar generating capacity. It also owns transformer and breaker manufacturing operations, a lineman training college, a helicopter fleet for line work, and 50% of LUMA Energy, which operates Puerto Rico's electric grid.
The structure is decentralized: dozens of operating companies acquired over the years that retain their management and their names. What distinguishes the model is self-performance — most of the work is done by the company's own employees rather than by subcontractors, and the company presents its skilled craft workforce as its central competitive advantage. Work is performed under multi-year master service agreements with utilities, maintenance contracts, and fixed-price and non-fixed-price construction contracts.
The largest customer accounted for 8% of 2025 revenues and the ten largest for 30%. The customer mix is shifting: utility and power customers declined from 75% of revenues in 2023 to 70% in 2025, while technology, manufacturing and communications customers rose from 6% to 13%. The company has no controlling shareholder; institutions hold about 92% of the shares.
Financial Performance
In the second quarter of 2026 Quanta reported revenues of $9.56 billion, up 41.1%, and GAAP earnings of $2.96 per share against $1.52. The adjusted earnings the company presents were $4.24 per share, against $3.31 that analysts had anticipated. The company raised its full-year outlook across all metrics.
| $ millions | 2023 | 2024 | 2025 | H1 2025 | H1 2026 | Q2 2025 | Q2 2026 |
|---|---|---|---|---|---|---|---|
| Revenues | 20,882 | 23,673 | 28,480 | 13,006 | 17,432 | 6,773 | 9,557 |
| Gross profit | 2,937 | 3,511 | 4,275 | 1,842 | 2,653 | 1,008 | 1,545 |
| Gross margin | 14.1% | 14.8% | 15.0% | 14.2% | 15.2% | 14.9% | 16.2% |
| Amortization of intangible assets | (289) | (383) | (499) | (223) | (309) | (113) | (157) |
| Operating income | 1,128 | 1,346 | 1,612 | 609 | 1,034 | 370 | 695 |
| Operating margin | 5.4% | 5.7% | 5.7% | 4.7% | 5.9% | 5.5% | 7.3% |
| Net income attributable to common stock | 745 | 905 | 1,028 | 374 | 672 | 229 | 451 |
| EPS — GAAP | 5.00 | 6.03 | 6.80 | 2.47 | 4.41 | 1.52 | 2.96 |
| EPS — company-adjusted | 7.16 | 8.97 | 10.75 | 4.25 | 6.92 | 2.48 | 4.24 |
How much of the growth is organic and how much was acquired
The company does not report organic growth, but the quarterly report discloses how much revenue came from acquired businesses: approximately $575 million in the Electric segment and approximately $355 million in the Underground and Infrastructure segment in the quarter, and approximately $1.04 billion and $690 million in the half. By simple subtraction:
| Revenue growth | Q2 2026 | H1 2026 |
|---|---|---|
| As reported | +41.1% | +34.0% |
| Excluding acquired businesses | approx. +27.4% | approx. +20.7% |
| Electric segment, excluding acquisitions | approx. +33.1% | approx. +27.5% |
| Underground and Infrastructure, excluding acquisitions | approx. +3.7% | approx. −6.5% |
Our computation. The company discloses the acquired contribution in rounded amounts ("approximately"), so precision is on the order of one percentage point.
The gap between GAAP and adjusted earnings — structural, not one-time
In the company's 2026 outlook, adjusted EPS ($16.45–$16.95) exceeds GAAP EPS ($11.41–$11.92) by $5.03 at the midpoint — 43% above it. The company's reconciliation sets out what the gap is made of, pre-tax: $679.5 million of amortization of acquired intangible assets, $267.2 million of stock-based compensation, $44.6 million of acquisition and integration costs, and $16.4 million of increase in the value of contingent consideration. The two large items recur every year, because the company acquires businesses every year and pays in stock every year.
The two items do not carry the same meaning. The amortization is non-cash, but it is the accounting expression of the price of the acquisitions. Stock-based compensation is a wage expense. Adding back to GAAP earnings the amortization only, after tax, and leaving stock compensation as an expense gives, by our computation, earnings of about $15.0 per share at the midpoint of the 2026 outlook — between the company's two numbers.
Balance Sheet & Capital
Quanta's balance sheet is that of a company that has grown by acquisition. Goodwill and other intangibles total $11.1 billion — more than stockholders' equity ($9.6 billion), so tangible equity is negative. In each of the last three years the annual goodwill assessment was qualitative only, and no impairment was recorded.
| $ millions | Dec 31, 2025 | Jun 30, 2026 |
|---|---|---|
| Cash | 440 | 506 |
| Accounts receivable | 6,847 | 8,532 |
| Contract assets | 1,522 | 1,534 |
| Contract liabilities | 3,258 | 4,242 |
| Goodwill | 7,317 | 7,869 |
| Other intangible assets | 2,906 | 3,216 |
| Total assets | 24,927 | 28,292 |
| Debt, including current maturities | 5,995 | 6,105 |
| Contingent consideration for acquisitions | 594 | 814 |
| Stockholders' equity | 8,938 | 9,638 |
Debt. At June 30, 2026: $4.75 billion of senior notes, $666 million under the credit facility and a term loan maturing October 8, 2026, and $448 million of commercial paper. After the balance sheet date the company issued $2.0 billion of notes in three series — 4.85% due 2029, 5.30% due 2033 and 5.55% due 2036 — and increased the revolving facility to $2.98 billion through July 2031. In June Moody's upgraded the debt rating to Baa2.
Contingent consideration is a future payment to the sellers of acquired businesses, subject to their performance. It is carried at $814 million against an aggregate maximum of $921 million, and only $7 million of it was paid in the first half. In addition: self-insurance accruals of $648 million (against $521 million at year-end 2025), and performance bonds of approximately $21.5 billion outstanding.
Cash flow
| $ millions | 2023 | 2024 | 2025 | H1 2025 | H1 2026 |
|---|---|---|---|---|---|
| Cash provided by operating activities | 1,576 | 2,081 | 2,230 | 539 | 1,487 |
| Capital expenditures | (435) | (604) | (609) | (273) | (451) |
| Cash paid for acquisitions | (652) | (1,746) | (3,052) | (586) | (930) |
Operating cash flow in the half, $1,487 million, rests mostly on earnings: before changes in working capital it was, by our computation, $1,382 million. Within working capital there were large movements that offset one another — receivables grew by $1,127 million, while contract liabilities and payables grew by $700 million and $884 million. Days sales outstanding, as the company measures it, was 57 against a five-year average of 71. At the same time, cash paid for acquisitions in 2025 exceeded that year's operating cash flow, and the difference was financed with debt.
Segments
| $ millions | Revenues Q2 2025 | Revenues Q2 2026 | Operating margin Q2 2025 | Operating margin Q2 2026 |
|---|---|---|---|---|
| Electric | 5,458 | 7,838 | 10.1% | 11.5% |
| Underground and Infrastructure | 1,315 | 1,719 | 6.9% | 9.1% |
| Corporate and non-allocated costs | — | — | (4.0%) | (3.8%) |
| Consolidated | 6,773 | 9,557 | 5.5% | 7.3% |
The Electric segment — 82% of revenues — is the growth engine. The report attributes the increase to "increased demand" and "improved execution", and notes that demand from utility customers is, in the company's belief, "driven by increasing demand for electricity associated with, among other things, data centers". The Underground and Infrastructure segment grew, per the report, "primarily" through acquisitions, partially offset by lower revenues from large pipeline projects; in the second quarter alone the segment returned to growth excluding acquisitions as well.
Segment margins are shown before two costs recorded in the corporate line: amortization of intangible assets ($309 million in the half) and stock-based compensation ($126 million). That is the reason for the distance between segment margins of 9%–11% and a consolidated operating margin of 5.9%.
The backlog, and what it says about the type of work
The company reports two measures. Remaining performance obligations is an accounting measure: firm orders under fixed-price contracts and, to a lesser extent, unit-price contracts. It rose from $19.2 billion to $33.6 billion within a year. Total backlog ($53.4 billion) adds an estimate of future orders under master service agreements and is not an accounting measure; that component actually declined over the last six months, from $20.2 billion to $19.9 billion.
Together the two describe a change in mix: the share of revenue under fixed-price contracts rose to 63.7% in the quarter from 58.3%, and the share of unit-price contracts fell from 25.6% to 18.5%. Under a fixed-price contract the contractor bears the cost risk. In the same note the company discloses that changes in estimates on fixed-price contracts begun before 2026 reduced first-half revenues by 0.5%, against a nominal amount in the comparable half; in the second quarter alone, measured on contracts open at the end of March, the effect was positive, 0.9%. Per the company, the changes were made in the ordinary course of business.
Competitive Position
The central asset is skilled labor. A high-voltage lineman or an industrial electrician takes years to train, and the industry has a persistent shortage of them. Quanta operates its own college and training facility, participates in the electrical workers' union apprenticeship programs, and performs most of its work with its own employees. A utility that needs to build a transmission line hundreds of miles long needs a contractor with the crews, the equipment and the capacity to carry the performance bonds.
Scale. With a 2026 revenue outlook of about $39.5 billion, Quanta is several times larger than its direct electric-power competitors. Scale lets it take on projects that smaller competitors cannot finance or bond, and offer the customer a single solution from design through maintenance.
Acquisitions as a method. In 2025 the company acquired eight businesses for $3.05 billion in cash, and four more so far in 2026 — Phalcon (about 4,100 employees), Enerfab (about 2,100), Percheron (about 1,050) and Australia's PSD — for about $1.24 billion plus up to $242 million contingent. Per the company, these are anticipated to contribute 2026 revenues of $1.2–$1.4 billion and adjusted EBITDA of $120–$140 million. In an industry where the bottleneck is workers, buying a company is also buying execution capacity.
What limits the advantage. The annual report notes that many customers may cancel or suspend contracts on short notice even when the company is not in default. Operating margins are thin — 5.9% in the half — and the company is expanding the share of fixed-price contracts and of large engineering-procurement-construction projects, where the cost risk is its own. And there have been events in the past: in 2019 a $79.2 million charge was recorded on the termination of a telecommunications project in Peru, after which the company exited Latin America, and in 2021 there were $31.7 million of credit losses from a customer that declared bankruptcy.
How to Think About This Company
The first question is how much of the growth is organic. The company does not report it, but the segment discussion in the quarterly report discloses the contribution of acquired businesses. In the first half of 2026, out of reported growth of 34.0%, about 20.7% was organic and about 39% of the increase was bought. The organic number alone is high for a business of this size — and still these are two different numbers with different meanings.
The second question is which earnings to measure. The company presents adjusted earnings that are 43% above GAAP earnings, and the difference consists mainly of acquisition amortization and stock compensation. The amortization is non-cash, but it recurs as long as the acquisitions recur. Stock compensation is pay. Adding back the amortization but not the compensation gives an intermediate number. It is also worth knowing that management's long-term incentive plan, from April 2026, is measured by the growth rate of adjusted EPS as published in the earnings releases, with a payout ranging from zero to 600% of the base number of units.
The third question is what a dollar invested earns. By our computation from the annual report, the after-tax return on invested capital including goodwill was about 9.5% in 2025 on a GAAP basis and about 12.5% with amortization added back. The operating business itself, on tangible capital alone, earns a far higher rate. The difference is collected by the price of the acquisitions. This is not a criticism but a description of the model: when the scarce asset is skilled workers, those who sell them know it too.
The backlog is both the demand and the risk. Remaining performance obligations rose 75% in a year, and these are signed contracts. But the accounting definition of the measure is orders under fixed-price contracts, and the share of fixed-price revenue rose to 63.7%. Under such a contract, a rise in wages or a permitting delay is the contractor's expense. In the same note there appears, for the first time in recent years, a negative effect of changes in estimates on older contracts — 0.5% of first-half revenues — alongside a positive effect in the second quarter. The company describes this as ordinary course; one reading is not a trend, and the coming reports will show whether it repeats.
The three demand engines are more connected than they appear. The company lists the power grid, power generation and data centers as separate engines. But the report itself attributes utility customers' demand, among other things, to data-center loads. Technology and manufacturing customers rose from 6% to 13% of revenues in two years. "The largest customer is 8%" is true, and still a large part of demand rests on the same investment programs.
The cash flow is real, and it is not sufficient for the pace of acquisitions. Operating cash flow in the half rests almost entirely on earnings rather than on working-capital timing. At the same time, in 2025 the company paid $3.05 billion for acquisitions against operating cash flow of $2.23 billion, and in August 2026 it issued $2 billion of debt. The $814 million of contingent consideration is part of the purchase price not yet paid.
The track record is a fact. Adjusted EPS rose from $2.81 in 2018 to $10.75 in 2025 without a single down year, and backlog from $12.3 billion to $44.0 billion. Since 2023 the diluted share count has risen by less than one percent a year. Looking at the last seven years, management has met its outlooks and raised them. What the track record does not include is a decline in customer capital spending, because there was none in the period.
A detail on insiders. On May 5, 2026 the chief executive officer sold 155,992 shares at prices of $765–$778, close to the high. Per the Form 4, the sale was not made under a pre-arranged trading plan; it represented about 21% of his holdings, and afterward he retained about 569 thousand shares. Under the repurchase program that ended in June, $135 million was repurchased; a new $1 billion program was authorized in May.
Risks & Monitoring
Principal risks
- Execution on fixed-price contracts. 63.7% of revenues and most of the firm backlog. A cost overrun on a large project is recognized in full when it becomes probable.
- Labor and wages. About 36% of employees under collective bargaining agreements, an industry-wide shortage of skilled workers, and exposure to multiemployer pension plans.
- Dependence on customers' capital programs. Utilities and technology companies; customers may cancel or suspend on short notice.
- Integration of acquisitions. Twelve acquisitions in about a year and a half, goodwill and intangibles of $11.1 billion, and contingent consideration of $814 million.
- Liability and casualty. High-voltage work and work in wildfire-prone areas. The company self-insures up to $100 million per occurrence in some programs. Claims related to the 2020 Silverado wildfire in California: per the company, a material loss is not probable.
- Permitting and regulation. Permitting and interconnection delays affect the timing of revenue recognition.
Matters under monitoring — measured directly from upcoming reports
| Matter | Latest reading | Where it is published |
|---|---|---|
| Changes in estimates on prior-period fixed-price contracts | (0.5)% in the half · +0.9% in the quarter | Revenue note in the 10-Q |
| Share of revenue under fixed-price contracts | 63.7% | Revenue note |
| Revenue from acquired businesses, by segment | approx. $930M in the quarter | MD&A in the 10-Q |
| Remaining performance obligations, and the MSA component | $33.6B · $19.9B | Earnings release |
| Gap between adjusted and GAAP earnings | $1.28 in the quarter | Reconciliation in the earnings release |
| Operating margin by segment | 11.5% · 9.1% | Earnings release |
| Operating cash flow before working-capital changes | $1,382M in the half | Cash flow statement |
| Acquisitions: cash, stock and contingent consideration | $930M · $128M · $814M | Acquisitions note |
| Unapproved change orders and claims | $411M · $984M at year-end 2025 | Revenue note |
| Third-quarter report | October 29, 2026 | — |
Scenario Framework
Scenarios are descriptive, not predictive. They contain no prices, no probabilities, and no ranking of outcomes. Their sole purpose is to set out the conditions that must hold for each state to materialize, so they can be checked against upcoming reports.
- If changes in estimates on fixed-price contracts return to positive or nominal
- If growth excluding acquisitions remains in the high double digits, and 12-month performance obligations keep growing
- If Electric segment margins remain above 10% even as the fixed-price share grows
- If cash paid for acquisitions does not exceed free cash flow
- If the capital programs of utilities and of data-center operators remain in place
- If about a third to two-fifths of growth continues to come from acquisitions
- If the gap between adjusted and GAAP earnings stays around 40%–45%
- If changes in estimates move around zero, sometimes positive and sometimes negative
- If acquisitions are financed by a mix of cash flow, debt and stock, and leverage stays within the investment-grade range
- If the consolidated operating margin moves between 5.5% and 6.5%
- If changes in estimates on older contracts are negative for a second consecutive quarter
- If a material cost overrun is recorded on a large fixed-price project
- If large data-center operators reduce or defer capital programs
- If labor cost rises faster than the prices fixed in signed contracts
- If 12-month performance obligations decline two quarters in a row
- If a goodwill impairment is recorded on one of the large acquisitions
Analytical Lens
The following six questions are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company along the same six dimensions applied to every other company.
Key Observations
1. Revenues in the second quarter of 2026 rose 41.1% to $9.56 billion. Per the quarterly report, approximately $930 million of that came from acquired businesses; excluding them, by our computation, growth was about 27.4%. Remaining performance obligations rose 75% in a year to $33.6 billion.
2. The company's 2026 outlook is GAAP EPS of $11.41–$11.92 and adjusted EPS of $16.45–$16.95. The difference consists mainly of $679.5 million of amortization of acquired intangibles and $267.2 million of stock-based compensation. Management's long-term incentive plan is measured on adjusted EPS.
3. The share of revenue under fixed-price contracts rose to 63.7% from 58.3%. Changes in estimates on fixed-price contracts begun before 2026 reduced first-half revenues by 0.5%, against a nominal amount in the comparable half; per the company, in the ordinary course of business.
4. The company paid $3.05 billion in cash for acquisitions in 2025 and $0.93 billion in the first half of 2026, against operating cash flow of $2.23 billion and $1.49 billion. Goodwill and intangibles, $11.1 billion, exceed stockholders' equity. In August 2026 it issued $2.0 billion of notes.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held a licensed investment adviser qualification in Israel during 2008–2023. As of the publication date of this document, the firm does not hold an investment advice, investment marketing or portfolio management licence.
This document is intended for research and professional study purposes only. Nothing herein constitutes a recommendation to buy, sell, hold or carry out any transaction in securities. Nothing herein substitutes for advice that takes into account the data and needs of each person. Every decision is the sole responsibility of the investor.
Data were drawn from official sources: Quanta Services' quarterly report on Form 10-Q for the quarter ended June 30, 2026 and the earnings release (July 30, 2026), the annual report on Form 10-K for 2025, the 2026 Form 8-K filings, the Form 4 of May 5, 2026, and the annual earnings releases for 2018–2024. Subsequent filings may change the picture. Past performance is not indicative of future results. The site does not participate in the investment decision. The decision is the client's.
Qualified Investor Review โ Family Office
The full analytical review of Quanta Services, Inc. (PWR) for Q2 2026 is available to Bakshi Finance premium clients.
The review comprises 10 sections, the "How to Think About This Company" narrative, a structured scenario framework, and a 6-dimension Analytical Lens.
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