Greetings and welcome to the Quanta Services Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kip Rupp, Vice President, Investor Relations. Thank you. Please go ahead.

Thank you and welcome, everyone, to the Quanta Services fourth quarter and full year 2021 earnings conference call. This morning, we issued a press release announcing our fourth quarter and full year 2021 results, which can be found in the Investor Relations section of our website at quantaservices.com, along with a summary of our 2022 outlook and commentary that we will discuss this morning. Additionally, we will use a slide presentation this morning to accompany our prepared remarks, which is viewable through the call's webcast and is also available on the Investor Relations section of the Quanta Services website. Please remember that information reported on this call speaks only as of today, February 24, 2022. And therefore, you're advised that any time-sensitive information may no longer be accurate as of any replay of this call. This call will include forward-looking statements intended to qualify under the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. These include all statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance that do not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expressed or implied. For additional information concerning some of these risks, uncertainties and assumptions, please refer to the cautionary language included in today's press release, along with the company's periodic reports and other documents filed with the Securities and Exchange Commission, which are available on Quanta's or the SEC's website. You should not place undue reliance on forward-looking statements, and Quanta does not undertake any obligation to update such statements and disclaims any written or oral statements made about any third party -- by any third party regarding the subject matter of this call. Please also note that we will present certain historical and forecasted non-GAAP financial measures in today's call, including adjusted diluted EPS, backlog, EBITDA and free cash flow. Reconciliations of these measures to their most directly comparable GAAP financial measures are included in our earnings release. Lastly, if you would like to be notified when Quanta publishes news releases and other information, please sign up for e-mail alerts through the Investor Relations section of quantaservices.com. We also encourage investors and others interested in our company to follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I'd 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 fourth quarter and full year 2021 earnings conference call. On the call today, I will provide operational and strategic commentary and will then turn it over to Derrick Jensen, Quanta's Chief Financial Officer, who will provide a review of our fourth quarter results and full year 2022 financial expectations. Following Derrick's comments, we welcome your questions. This morning, we reported strong fourth quarter results, which complete another year of solid, safe execution, profitable growth. These results were built off a strong operational and financial platform and we believe demonstrates the dedication of the best employees in the industry. Our portfolio of companies, diversity of service lines and field leadership has allowed us to endure the uncertainties and challenges presented by the global pandemic over the past couple of years while still delivering four consecutive years of record adjusted EBITDA and five consecutive years of record adjusted earnings per share. We accomplished a great deal in 2021 through the successful implementation of our strategic initiatives, and our past success positions us well for the future. We remain focused on continuing to provide collaborative solutions to our customers and business partners to help them achieve their goals and to capitalize on opportunities to enable the energy transition that is unfolding. Here are some of our accomplishments in 2021. We continue to advance our front-end solution strategy both organically and through acquisitions, which is focused on strengthening our design, engineering, permitting, environmental and program management capabilities. This strategy allows us to expand our solutions to our customers, enhances risk management and increases our total addressable market. We expanded our emergency response capabilities and generated another year of record revenues by supporting our customers' efforts to restore power to millions of people adversely…

Thanks, Duke, and good morning, everyone. Today, we announced record quarterly revenues of $3.9 billion for the fourth quarter of 2021. Net income attributable to common stock was $104.8 million or $0.71 per diluted share and adjusted diluted earnings per share, a non-GAAP measure, was a record $1.54. Overall, the fourth quarter closed out another exceptional year of operational performance for Quanta. Our fourth quarter results include the introduction of our Renewable Energy Infrastructure Solutions segment, largely due to the inclusion of Blattner in our operating results beginning in October. At a high level, this segment primarily represents the solutions we're providing associated with interconnection, substation and generation infrastructure directly supporting the delivery of renewable electricity. Historically, these activities were included within our electric segment. However, as the same market forces driving Blattner's growth will drive growth in these related areas, which included the aggregation of these services provided incremental clarity to the investment community. Our reported results exceeded our expectations for the fourth quarter in numerous areas, including revenues, adjusted EBITDA, EPS and adjusted EPS, with revenues and adjusted EBITDA delivering significant growth as compared to last year. I'll cover a few items impacting the quarter. Revenues continued to show significant growth compared to last year, in part due to record emergency storm response revenues, although only slightly above last year's ERS revenues. Additionally, revenues from acquired businesses were approximately $500 million in 4Q '21, the majority of which was attributable to Blattner. Operating margins in the quarter benefited from continued strong execution across our electric operations with margins exceeding 12%. Also contributing were the operating results of our integral unconsolidated affiliates. This primarily relates to the LUMA joint venture, but also includes contributions from a business that provides specialty site preparation and access solutions in which we acquired…

[Operator instructions] Our first question is coming from Michael Dudas of Vertical Research. Please go ahead.

Good morning, Kip, Derrick, Duke. I think in your prepared remarks, I was quite intrigued about -- you talked about expanding service offerings at several operating units. I assume you've made quite a few acquisitions to expand that, especially on your front-end work and advisory stuff. Can you share a little bit more what's going on and how that's going to be -- I would expect strategically because of what you can add to your clients, but I would also think maybe a mix or margin or financial aspect? So I thought that would be something that you could be like to get more clarity on?

Yes. Thanks, Mike. We've talked about it quite a bit, about the company being a portfolio and truly believe we operate in that manner. As we think about the regionality and how we sit, we -- what we've done is in our underground segments, our utilized segments, you continue to see us look at underground electric, look at underground telecom. It doesn't matter to us what median or what service we're providing. The equipment is very similar. The people are very similar. So we believe we can expand those offerings as well as on the front-end services across the board really at a regional level. And so the segmentation may look one way, but how we're operating in the field to get the leverage at the unit, which will ultimately produce the margins that they're seeing and enhance the margins that you're seeing will allow that leverage at that level. So it's just from our standpoint, that's the way that we will continue to operate the company and offer various service lines to the customer and really what's driving that as a customer demand on the local level for expanded services that we can offer. So really, it's us trying to make sure that we're leveraging that at the very field level, which will ultimately increase margins.

Thanks Duke.

Our next question is coming from Justin Hauke of Baird. Please go ahead.

I guess I have two questions. I'll start with kind of maybe the bigger one, and then I've got just a quick technical one. But just -- maybe just a little more details on the Las Vegas project. It's EPC. I'm just wondering, are you -- do you have partners on this project or is that all you? And just any comments on kind of the risk terms or how it would be different. And then you talked about it being the largest U.S. contract you've ever had. I think the Canadian ones you had were just over $1 billion of revenue. So would that be a good benchmark to kind of think about maybe the size of this project?

Yes. So the project we discussed to the West, that's not Las Vegas. But in general, what I would say is we're performing that holistically internally, probably still performing 90% of it. We're proud of the project, nice mill project. So in our mind, an example of us stacking on to our existing base business there in the West. And we don't have partners, and it's not necessary for us to have partners given the size of the company. So again, we're trying to really work on the synergy transition, and we're going in a holistic fashion. This is something where had several operating units coming together and able to perform the whole project for the client and give them the best service offering, in our mind. So real proud of the project to the west. And again, it's just an example of where the company is going. And way I do believe it's in the renewable segment, as we discussed. And I do think you'll see more of this moving renewables to the west. And so those type of projects will definitely stack on to our existing base business. We're proud of it. And as far as the size of it, we talked about it being the largest in the business in North -- in the Lower 48. So ultimately, a large project for us. We're not going to get into the size of it.

Yes. We'll only frame it by saying that had it been awarded prior to year-end, our total backlog would have exceeded $20 billion.

Okay. That's helpful. I guess, Derrick, maybe the other question. So on the equity income this quarter, it jumped to $22 million. You guys called out the minority investment that you did. It sounds like maybe that's part of it. I'm just curious, was there anything that was like a -- that was associated with LUMA being at full transition that we should think as kind of a run rate for that? Because it looks like the implied guidance for '22 would have run at a much lower rate than what it was in the quarter.

Yes. I mean, actually, the majority of the difference was the joint venture-type dynamic. It had a very nice fourth quarter. There is a little bit of an uptick in the fourth quarter associated LUMA, which just has to do with the timing of kind of internal administrative costs rather than anything associated with the fixed fee itself. On a go-forward basis, I would tell you that it's -- that range that I provided, $45 million to $50 million, is a little bit of the increment associated with the joint venture contribution and fairly close to our original expectations for the remaining LUMA.

Great. Thank you very much guys. Appreciated.

Our next question is coming from Sean Eastman of KeyBanc Capital Markets. Please go ahead.

Hi, team. Thanks for taking my questions. I just wanted to hone in on the new renewables segment. It sounded like the underlying outlook for Blattner embedded in there is consistent with what you guys communicated before. But it'd be helpful just -- since we only really had historicals on an EBITDA level for Blattner, it would be great to just kind of walk through the sort of normative or targeted margin profile we should be thinking about for this new segment since it includes some other stuff as well.

Yes. Sean, it's Duke. In general, I would think, in our mind, it's double-digit EBITDA, even some uplift in margins if we can operate through some contingencies on the way through it. So we're proud of the segment. We think it highlights where the company is at. Certainly, Blattner is the big piece of that segment. We've stated the guidance there before around 2.6. So that's where we stand on that. And I do think you'll see those type of margins that are previously stated with Blattner in that segment. So we had a nice business in Florida. We talked about a lot, how we're enabling the infrastructure with substations and interconnections and long transmission lines. I do think that segment will continue to build. You'll continue to see nice work, nice backlog. It is lumpier than what you would consider our base business. But it's just timing -- days timing, not years timing in my mind. So I do think it is fairly predictable at this point. And we've given good guidance on Blattner out to '25. So I do think we're able to not only show the power of what we can do in that sector but also give you some visibility. And I'll let Derrick comment.

Yes. I think you've said it fine. The only thing I'd add additional color, you could think all way back to when we did the original deal announcement for the largest portion of a decade, Blattner has been able to operate at a double-digit EBITDA. They had some very good performance within the last few years, kind of pressing that number up a little bit. But we look to kind of those historical dynamics to think about our multiyear expectations. So consistent with the '22 and in the outer-years, we think they continue to operate it was double-digit EBITDA. Aggregate for the segment, we think we've tried to be prudent on how to think about that in '22 when you think about it at the operating level of that 9%. I think that between the Blattner execution as well as our own, as we execute through contingencies, that gives us the ability to see a margin expansion. Duke made reference to it within our prepared remarks. We do believe that there's a bit more variability that you'll see within the segment. There's a smaller number of overall projects as compared to, as an example, the larger remaining electric power group as a whole, which can create a bit of variability in the timing to work, but largely very confident in our ability to execute.

Okay. That's helpful. And the underground segment, it looks like no changes to the segment reporting there. The revenue and margins came in a little better than I was expecting in terms of the outlook. So just a bit of a flavor on what type of operating environment and kind of underlying assumptions for the bigger buckets in there, namely industrial and the LDC business, would be helpful as we think about what bridges less to this 2022 outlook for that segment.

Yes, Sean. I think you've seen the rebound in some of the oil pricing and things of that nature. So the industrial business seems really going to uplift. We thought it would be anyway. So I think it will stack on to the current demand that we're seeing on the industrial side. So we're confident in that business in '22 as it stands. That's certainly something that we were watching very closely. So we feel good about it. Our Canadian business is also rebounding. We like where we stand there. So all in all, I would say, incrementally, we're more positive on the underground segment than we have been. But we stated before, we're running it as a portfolio, the LDC business. We may be doing telecom, we may be doing electric, and some of that business will be blended within the electric segment, telecom segment in the field as a portfolio. So I wouldn't get too caught up in the segmentation. The overall business will continue to rise, and we're producing double-digit margins, double-digit growth, those kind of things at the bottom. And so what I'm really looking at is that bottom number, and they continue to grow. So we're proud of it.

Okay, excellent thanks guys. I’ll turn it over there.

[Operator Instructions] Our next question is coming from Jamie Cook of Credit Suisse. Please go ahead.

I guess my question is on Blattner. Understanding the revenue guide and guidance for Blattner is unchanged, is -- can you talk about what they're sort of seeing on the supply chain side? Any difference in what you're expecting, solar versus wind, or perhaps revenue synergies are starting to come through? So just an update on what Blattner is seeing? Thank you.

Good morning Jamie. So in general, I would say we're confident in Blattner, confident in the guidance. Obviously, we've given outward year guidance as well. The demand on renewable business balance of plant is certainly there across the board, both solar and wind. We have really nice high-demand clients that customers that we believe really have the supply chain figured out for the most part, not to say there's not some small areas where you're seeing things happen. But in general, we took all that into account when we gave guidance originally. We've taken into account now. We believe we can execute through it. Certain things may show up a little later, but we've done a really nice job. I think what I would tell you is I think it's an advantage for Quanta when there is the supply chain disruptions. It allows us to show the breadth of the company and be able to move where a panel may be delayed a little bit, but we can build everything up to the panel and move to where the panels are and just move around. So it shows the scale and scope of the company and how we operate, and it doesn't affect us, which allows us to collaborate with the client. So I mean, I think we're using it to our advantage. Honestly, we like where we sit in the market.

Congratulations. Thank you.

Thank you.

Our next question is coming from Neil Mehta of Goldman Sachs. Please go ahead.

Good morning team, and strong quarter as well here from my end. First question is about the supply chain. Can you talk about how supply chain issues could affect Quanta in 2022? Is there a risk around project delays this year? And how has Quanta been able to scale its labor force in conjunction with revenue opportunities amid a relatively tight labor market?

I think the company in the past -- over the past six, seven years has really focused on labor, our craft-skilled labor, and so it's the core of the business and really invested in it. So that investment certainly pays off in tight labor markets. And I think when we look at it, it's to our advantage. We continue to grow the business nicely. We work on how we perform our labor where we are able to train, get people to the field faster, safer. So those things are something that we've worked on quite a bit and believe it's core to us. So yes, we like where we sit and we like how we're performing. The supply chain with the breadth of the company and the scale that we have, we're able to move pretty nimble through this. And I think, yes, there is some supply chain issues in certain areas. But in general, we're able to work with the client well before there's a problem or an issue and move project to project or help them become nimble as well. So I do think it's us working with the client, knowing that we see some supply chain constraints and make sure that we're operating properly. And we've done that in the past. You can see the margins in the fourth quarter. We've operated through, we believe, in '22. We'll do the same thing. We have leaned into some of the issues on fleet being the third, fourth largest fleet in North America, we're able to really stretch ourselves there and make sure that we have the fleet necessary to get in front of some of those issues. So we've done a nice job across the board of mitigating the risk of supply chain, not to say that it's not out there.

The follow-up is just on the high-voltage project award that you announced in January. Can you talk about the opportunity set for additional high-voltage transmission projects at a similar scale through this year and beyond? And could you see additional opportunities this year? And as you talk about that, maybe you talk about the regulatory environment because the not-in-my-backyard syndrome is certainly something that's affected the rollout of these transmission lines.

Yes. I think when you look at the company, we've stated before, the base business to 80% to 85% on the electric side and underground given Blattner guidance. So if you think about it, those projects will stack. There's a multitude of projects out there. The list is long. I do think we've talked about where the company sits in those type of projects, and we've always said we would be around the edges and lack of chances. We continue to refine how we deliver to the client. The programmatic spends of the client are larger. And our ability to execute on time, on budget was 85% to 90% self-performed has given us advantages across the board, and we like where we sit in that spectrum. So as those projects become -- come to market, they get FID, we get approvals. Not to say there's not the normal problems around permitting because there is. It's getting better, but there's still issues. And many of these projects have been on the books for decades. When I look back, we had looked at it 10 years ago, and it's just now coming to market. So we're not going to get chase shiny objects all the time, but we are there in the edges. And we will, I believe, have a great service offering to the client when those become available, and we'll stack on top of what you already see in the growth rates that you see below. So we're excited about where we sit. And obviously, the project to the West is just, in our mind, something that as it comes available, we like our chances to win those type of projects.

Thanks Duke.

Our next question is coming from Adam Thalhimer of Thompson, Davis. Please go ahead.

Hey good morning guys. Duke, I wanted to ask two questions, both on Blattner. Number one, are you seeing any revenue synergies yet? And then number two, can you talk about whether you see and how you're thinking about any kind of long-term service opportunity in the renewables business?

Yes. I think when you look at it, Blattner really, in many ways, transformed where we sat in the energy transition. It certainly puts us in front of the client across the board, both sides from energy all the way to utilities to developers. So it allows us a broad spectrum at a very early stage within a project. Blattner's ability, their self-perform capabilities, how they think was much like us on the transmission/distribution side of the utility business. So when we put our heads together, there's not a day that goes by we don't think of a synergy or something that we believe was transitional to the market. So we're in front of this. We think a lot alike. We've enjoyed the management team, and our ability to collaborate has been exceptional. So the opportunities that not only what we would call renewable but also clean energy, and how we think about how Blattner helps us transition ourselves as Quanta to really lead the way in that transition is much more than 1 plus 1, in my mind. It will really allow us to help our client, which is ultimately, both companies are focused on the client. And I say it over and over again, but very much aligned on that. So we really want to get in there and help the client move forward at a very early stage, and it allows a lot of benefits to both sides on the backside of this. You see tight markets like this when both of us are in there with our existing clients, we're able to really produce a nice project for the client at a low cost that, in my mind, it doesn't escalate or we're not having the issues that others may have because we self-perform. So in my mind, we did risk a lot of things that a normal E&C does not. We said that many, many times. And the resiliency of the company shows with Blattner and where we're at -- where we sit in the energy transition.

Thanks Duke. Congrats on the quarter.

Thank you.

[Operator Instructions] Our next question is coming from Ian MacPherson of Piper Sandler. Please go ahead.

Good morning gentlemen. Congratulations. This has sort of already been passed a little bit by Jamie and others, but I wanted to revisit. If we look at the tape with renewables, and we see the negative sentiment in the market regarding the impact of rising interest rates and political gridlock in Washington and supply chain cost risk that's impacting utility-scale development, there is implied fear, I think, with respect to the Blattner order momentum throughout this year. And I know you're not guiding on orders and backlog. But Duke, would you refute that negative cinema regarding an air pocket in renewables order activity for this year despite those factors?

We've had a robust market over the last few years, and you continue to have one. You're talking days, months if you're moving things. So I'll just give you an example. If solar panels are delayed, the last thing we're really accomplishing in a solar field will be putting the panels on. So if we build everything else and then put the panels on at the end, it's not a big deal. Does it disrupt a little bit? Yes. Can we get through it? Yes. So it's not -- the things that you're seeing, the disruptions you may see is not something that's insurmountable nor do we believe has affected our ability to capture work or the way that Blattner looks long term, short term. We gave guidance with that in mind, that there would be some balance and some, I would say, lumpiness in the market. We felt like it was there. That's why we gave the guidance we gave. We also gave guidance in 2025 of $3.6 billion. So the market, the overall, where we're going with the energy transition, I don't believe that's changed. I believe all the clients that we have, have said the same. So we really -- we're going to a greener environment where load growth is going up. There's no doubt about it. And the carbon-free, the way that we're going to deliver energy, will be much different. And we're sitting at the very front of that transition over the next decade. We're just getting started. So we really like where we sit.

Good result, good answer. Thanks Duke.

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

Thanks, good morning. And you may have really just answered this, but wanted to ask you again about the renewable segment margin because you do have a decline there assumed. And I'm just wondering, is that for what you just talked about you're baking in -- is it declining because you're now baking in some more of these kind of timing issues where you have to put the panels on later? And I guess the follow-on to that would be, what's the potential for that business segment margin to start growing again as we look beyond 2022?

Yes. If you look at the renewable segment -- I think if you look back, we recast this last year, 13%, I believe, is what it looked like, a little bit over that. Obviously, we've guided differently with the Blattner acquisition, 2 -- a couple of things. Last year, you had some contingency releases, things like that. And the recast as well as when you go forward, we talked about double-digit EBITDA at Blattner, as we said. Can we operate through -- do we think we have given prudent guidance in our renewable segment? Yes. So we'll be prudent about it. We've thought about it. We've thought about the guidance that we've given and our ability to grow. We've talked about Blattner going to 3.6. It's a segment that we believe will grow. Certainly, with both companies doing the things that we're doing, the backlog and things of that nature in this segment, similar to the project that we announced today, I believe, that will go into backlog in the first quarter. So you'll continue to see the growth there, in my mind, on these projects as utility-scale renewables come in as well as the -- our ability to enable that through substations and transmission. So I really like where that segment is, and I do believe it's a growth segment for us. And we talked about if we got over $1 billion in the segment, we would segment them, and that's what we did. So we want to give the investor base a good look at it and allow you to see it. So I'll let Derrick comment more.

Yes. I don't know that I have anything too incremental other than kind of we comment on the things we said earlier. The Blattner dynamic, again, in the last 10 years has operated at a double-digit margin profile. That gives us the multiyear confidence. More specifically, again, the more recent period, they've executed quite strongly above that. So yes, do we believe that we can see an upward potential against our guidance on a multiyear basis? I think the answer is yes. Whether that be because of our legacy electric operations that are now within this group, we think that we continue to see double-digit operating income-type performance of some of those legacy operations and then now thinking about Blattner. So we remain quite confident in our ability to execute on those margins with the level of upside opportunity. But we want to see the mix of work, right? There's a procurement component of it that can put pressure on margins. So very much, I think that it's the right thing to be looking at this year and being kind of prudent guidance. We want to get more visibility. And on a go-forward basis, very confident in our ability to execute at this level and then giving us the upside opportunities as we execute through contingencies.

Thank you.

Our next question is coming from Alex Rigel of B. Riley. Please go ahead.

Very nice quarter, gentlemen. Just one quick question here. How do you view the federal regulatory environment currently? At times in the past, it hampered growth; at other times, it enhanced growth. How do you see it developing here one year into a Biden administration?

Thanks, Alex. When we look at it, the overall transition, the energy transition, I believe, is intact. Under any administration, we believe that the sentiment towards carbon-free is certainly there, whether it be hydrogen renewables, balance of plant solar, it doesn't matter. We believe that ship has settled. As far as trying to help with different -- as far as siting, permitting, certainly Build Back Better, those things are all helpful. But either way, I mean, the programmatic spend underneath, if you go into electric vehicles, if you're going to put that many electric vehicles in the systems, your distribution system has to move in a much, much different manner with decades worth of work to be done to modernize as well as the same with renewables coming on to the systems. The modernization, the way it has to work and the interconnections are something that I think goes unnoticed in the amount of work that needs to be done on the grid. So with those type of things are there. Obviously, if we push an interest way high, it would concern everyone. And we were certainly cognizant of hiatus, what it does to an economy and can push it down. So we're certainly watching that as well.

Thank you very much.

Our next question is coming from Noelle Dilts of Stifel. Please go ahead.

Just quickly on underground. Could you walk through the key factors that are allowing you to guide for record margins in 2022, though revenues are about 20% less than the 2019 peak? And is this a full recovery or is there still more recovery in '23 that you're expecting?

Thanks, Noelle. I think when we looked at our underground segment, we thought the industrial business would come back strong. And certainly, as it sits today, it's coming back strongly. And so that's a turnaround. We also -- the Line 3 adjustment that was in their last year, it was not there on a go-forward basis. So you get some movement there as well. Those 2 things are really driving it up. Canada, Australia, both are energy economies that have been depressed over the last 24 months and are certainly moving in the right direction. And so we really like what we said in both Australia and Canada. You add all it up and what we've done on the LDC business and how we're leveraging at the operating level in the field allows all segments to move up. So I do believe as we operate as a portfolio, it will ultimately pull up all segments as we go forward. Was that’s helpful.

Yes. The only thing I'd comment to is that thinking all the way back to a pre-COVID environment, we actually were guiding to a similar type of margin expectations. And so it's just taking us down in a couple of years to get through both on the industrial, Canada and Australia. So I'd argue that we're very similar to where we were in a pre-COVID environment. And I think this is a good step towards us getting to that upper single digits we've been talking about being able to return to as we look forward on a multiyear basis.

Yes. And I think where we're at now is we're early in a way that we're operating the portfolio of the companies. For us to guide there, that's good. We're getting there. But certainly, we're not satisfied with that. We believe we can operate the segment in upper single digits.

Great. Thank you.

Our final question today is coming from Gus Richard of Northland. Please go ahead.

Yes, thanks for filling me in and congratulations on a good quarter. I was curious about the underground business. And how much are you seeing in the energy transition to hydrogen? And how much are you seeing Integrity as people try to mitigate the methane leaks?

Yes. I mean we saw that early, and I think we invested in the LDC business quite a bit. We've grown it, and there's certainly a multitude of capital deployment there over 30-year periods across the board. So the methane release that we've seen, certainly, that's part of that LDC business that's growing nicely. Hydrogen and carbon sequestration is certainly a few other we were sorting going to lead the way there on many teams that are doing that. We're early, but I do think hydrogen blend, hydrogen, green hydrogen will be something we talk about quite a bit. As you saw batteries 3 or 4 years ago, 5 years ago, we were talking about batteries. And I think they're certainly prevalent today and moving forward. So the same thing with hydrogen, we're just -- we're a little early. But I do think the company sees that and is in front of that in many ways to make sure that we capture that market share in that segment. So certainly, when we think through it, we'll definitely see hydrogen as being a part of the solution of energy transition.

Got it. Thanks.

At this time, I'd like to turn the floor back over to management for any additional or closing comments.

Yes. I want to thank the men and women on the field that are out in the inclement weather doing the things that they do rate the storm here, tough environments. They continue to execute at very, very high levels safely. So we're proud of that and proud of them. With that, I'd like to thank you all for participating in our conference call. We appreciate your questions and your ongoing interest in Quanta Services. Thank you. This concludes our call.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time, and enjoy the rest of your day