Greetings, and welcome to the Quanta Services Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kip Rupp, Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, and welcome, everyone, to the Quanta Services second quarter 2024 earnings conference call. This morning, we issued a press release announcing our second quarter 2024 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our second quarter 2024 operational and financial commentary and our 2024 outlook expectations summary on Quanta's Investor Relations website. While management will make brief introductory remarks during this morning's call, the operational and financial commentary is intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community. Please remember the information reported on this call speaks only as of today, August 1st, 2024, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. This call will include forward-looking statements and information intended to qualify under the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements reflecting expectations, intentions, assumptions, or beliefs about future events or financial performance that -- or that do not solely relate to historical or current facts. You should not place undue reliance on these statements as they involve certain risks, uncertainties, and assumptions that are difficult to predict or beyond Quanta's control and actual results may differ materially from those expressed or implied. We will also present certain historical and forecasted non-GAAP financial measures. Reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward-looking statements and non-GAAP financial measures. Lastly, please sign up for email alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information, and follow Quanta IR and Quanta Services on the social media channels listed on our website. With that, I would like to now turn the call over to Duke Austin, Quanta's President and CEO. Duke?

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services second quarter 2024 earnings conference call. Quanta's first half of the year is off to a good start. Our second quarter results highlighted by another quarter of double-digit growth in revenue, adjusted EBITDA, and adjusted earnings per share, a record total backlog of $31.3 billion, and strong cash flow. We believe our results reflect the power of our portfolio, sound execution, and continued demand for our services, driven by our customers' multiyear programs to build the renewable generation and power grid infrastructure necessary to support North America's energy transition, load growth security, and reliability. We recently completed the acquisition of Cupertino Electric or CEI, which provides a platform of new service lines and a dynamic customer base, which includes technology companies driving load growth and demand for renewable energy. CEI brings an exceptional management team and a premier craft-skilled workforce that complements Quanta's culture and will create a comprehensive self-performed electric infrastructure solution offering for renewable developers, utilities, and large power consumers from electron generation to transmission to consumption. Utilities across the United States are experiencing and forecasting meaningful increases in power demand for the first time in many years, driven by the adoption of new technologies and related infrastructure, including artificial intelligence and data centers, as well as federal and state policies designed to accelerate the energy transition and policies intended to strategically reinforce the domestic manufacturing and supply-chain resources. There is momentum building across our portfolio of solutions with the complexities of the energy transition, its impact on the power grid, and the significant upgrades and enhancements required to facilitate load growth, our collaborative solution-based approach is valued by our clients more than ever. We continue to look forward to the realization of our multiyear strategic initiatives and the goals we expect to achieve in the coming years. We are positioning Quanta for decades of expected necessary infrastructure investment and believe our service line diversity creates platforms for growth that expand our total addressable market. Our portfolio approach and focus on craft skill labor is strategic. Advance -- is a strategic advantage that we believe provides us the ability to manage risk and shift resources across service lines and geographies, which is increasingly important as the energy transition and new technology add complexity to infrastructure programs. We believe our diversity and portfolio approach has also improved our cash-flow and returns profile and positions us well to allocate resources to the opportunities we find the most economically attractive and to achieve operational efficiencies and consistent financial results. I will now turn the call over to Jayshree Desai, Quanta's CFO, to provide a few remarks about our results and 2024 guidance and then we'll take our questions. Jayshree?

Thanks, Duke, and good morning, everyone. This morning, we reported second quarter revenues of $5.6 billion, net income attributable to common stock of $188.2 million or $1.26 per diluted share, and adjusted diluted earnings per share of $1.90. Adjusted EBITDA was $523.2 million or 9.4% of revenues. We generated healthy cash flows in the second quarter with cash flow from operations of $391.3 million and free cash flow of $258.6 million. This earnings and cash-flow performance allowed us to end the second quarter with ample liquidity and a balance sheet that supports both our organic growth expectations and the opportunistic deployment of capital to generate incremental returns for our stockholders. To that end, and as Duke commented, subsequent to the end of the second quarter, we completed the acquisition of CEI for upfront consideration of approximately $1.5 billion, excluding cash acquired and subject to customary adjustments. We funded $1.3 billion of the transaction with a combination of cash-on-hand, borrowings under our existing commercial paper program, and a new short-term loan facility, and we are currently evaluating debt refinancing options. This morning, we also provided an update to our full-year 2024 financial expectations, which calls for another year of profitable growth with record revenues and opportunity for double-digit growth in adjusted EBITDA, adjusted earnings per share, and free cash flow. Of note, our increased guidance for revenues, adjusted EBITDA and adjusted diluted earnings per share was attributable to the expected contribution from CEI, but otherwise, our prior guidance for these financial metrics remain unchanged. We believe our expectations demonstrate the strength of our portfolio approach to the business, our commitment to our long-term strategy, favorable end-market trends, and our competitive position in the marketplace. Additional details and commentary about our 2024 financial guidance can be found in our operational and financial commentary and outlook expectation summary, both of which are posted on our IR website. With that, we are happy to answer your questions. Operator?

[Operator Instructions] Thank you. Our first question comes from the line of Justin Hauke with Baird. Please proceed with your question.

Oh, great. Thank you very much. Good morning, everybody. I guess I wanted to start with just kind of a question of maybe the moving pieces, positives and negatives within kind of the organic outlook. I mean, you said you're back here to unchanged. I guess it seems like some of your peers would may say that some of the base kind of low voltage, I don't know if you want to call it more like retail market demand, maybe in your Underground business too is a little bit weaker, some pressure with the utilities offsetting and storm was pretty good here and I guess you had Hurricane Beryl obviously locally to you first couple of weeks of this month. I guess, can you just give us a little bit of the lay of the land of maybe what's moving a little bit stronger and what's a little bit weaker overall getting you back to the same place for your outlook for the year?

Yes. Thanks, Justin. I think we've said all along that we run a portfolio and we look at it as a portfolio. So the portfolio is performing as expected and I expect it to continue. When we think through just the pushes and pulls that for the most part, the business is performing well better than what we anticipated in many cases. But I do think you see some delineation between segments where you can have a segment that's a little off here or there. I would point out that our UIs, when we forecasted the outlook on it, certainly there's mix and shift of work there. Utilities, when you think about their CapEx budgets as they look at their own budgets, especially ones that have gas and electric, many of them are ahead of their leak replacements or don't have the capital there. So they need the capital over into an underground distribution, transmission, whatever it may be, and it offsets into another segment for us. So that shift of work there, there's larger projects that move back and forth. We like the Underground business. It's healthy. It will continue. We will certainly take a conservative approach to how we look at that segment, starts and stops on our large-diameter pipe, things of that nature. We've always said, we guide to $500 million, and we don't need it to make it. So I stand by that. We don't need it to make the midpoint of the range. The midpoint of the range is $860 million and it's also 15% organic growth at the midpoint of EPS. So I'll say that again, 15% organic growth at the midpoint.

Okay, great. Thanks. And then I guess maybe the second one is for Jayshree. So on the -- the renewables margins were really strong here in the quarter, but you mentioned there was still the drag from the handful of projects that you called out in the first quarter. I think in the Q last quarter that the hit from those was about $22 million. Do you have a similar number for 2Q, just so we can kind of have an understanding of what the margins would have been kind of excluding that drag?

Yes. We had a little bit of a drag continue from one of those projects into the second. You'll see in the Q, it's around $20 million, but the overall segment performed very well better than we expected, overcame those challenges from the projects you mentioned in the first quarter. So we're pleased at where that segment is heading.

Yes. And I'll add, we're performing really well there. There was the 95% or 99.9% of the projects that performed above what we thought as well. We just don't get to point those out.

Yes. No, the margins were strong. So it sounds like $20 million was still kind of the same source of pressure in the segment. So, okay, great.

We've stated three projects. It's the same and there was some drag in the segment, some drag on it. But as you clear out, you can see they performed in kind of double-digit ranges on the way out.

Yes. Going forward, that's baked into our expectations. That's what you're seeing with the back-half strength, and we feel like we've got the execution on those things under control and we're confident in our back-half expectations on renewable.

Great. Okay. Thank you. Thank you for taking my questions.

Our next question comes from the line of Sangita Jain with KeyBanc Capital Markets. Please proceed with your question.

Yes, thanks. Good morning for taking my questions. So, Duke, if I can go back to the earlier question, early this year, you had talked about a shift between transmission and distribution spending. And so far, we are seeing that utility CapEx budgets are under 50% for the first half. So can you help us understand what you're seeing now for the second half if we should see a ramp back in that distribution spend or are you still seeing kind of like air pockets there?

Yes. I mean, I think when you look at our transmission distribution as a service line and not as a segment, we're up 9% for the year. So we haven't seen too much of a drag, whether it be T or D, we're able to shift from one to the other. So you get some segmentation delineation as we said last time, they were up 9% if you just look at the work itself. So that said, yes, there's movements around utilities and whether they're at T or D, we have great deal of EV penetration out West. And so you're seeing some distribution spend there come into the budgets because of the penetration. And like we've said before, 70% of EV sales are in California in the States. And so that's pushing. I will say that you can see the push on the distribution system, and it validates what we've been saying as that push, I can't tell you the pace of it. If it slows down, certainly it will slow down. But nevertheless, as it pushes through, it certainly impacts our distribution systems as you're seeing in California, where the load is substantial, there's a rebuild ongoing out there and I think that will continue as you push into EV. So it doesn't -- you have storm hardening in areas, which are coming into play. We're strengthening. Certainly, in the back half, you can see it in the numbers, and we like where we sit and we're able to -- the portfolio has allowed us to go through the transition. There is ups and downs with different utilities, regulatory impacts, things of that nature. We're ahead of those things. We know what's coming. So the company has done a really nice job of putting ourselves in great positions to take advantage of our portfolio as we move through the year.

Great. That's very helpful. Thanks. And if maybe this one is for Jayshree. On the renewables book-to-bill in the quarter, how much do you think was a result of SunZia burning at high rates? And how much was it an actual lag in booking renewables maybe?

Yes, for sure, the SunZia burn has an impact on that burn, but we are booking work. In fact, as we pointed out, we're booking additional work past the quarter. But we are held to a higher comp because of that SunZia impact from last year, no doubt about it. But work is coming. We still feel very good about the year, and we continue to book work in that segment.

Yes.

Great. Thank you so much.

I would add that the top line is one thing, but I also think that there's margin accretion in this segment as well that will certainly look differently in next year as we operate better through and execute better through this work. And I'm not concerned at this point around the top as well, right? We see growth. We see growth in '25, right? SunZia will be there in '25, and we've always said you'll have some stacking effect along the way as you CAGR the growth and multi-year outlook, we've talked about it over and over and over again that you will stack on top of your base. Your base grows nicely. We stack some larger projects on top. That stacking effect is certainly there and will continue.

Helpful. Thank you.

Our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.

Yes, thanks. Good morning, everybody. Just wanted to stick with renewable energy here. Obviously, there's some trade uncertainty out there, election uncertainty out there. Are you guys seeing any impact from this from customers? Are customers pulling back away at all as we await some clarity? Just curious what you're hearing and seeing there? Thanks.

A couple of things on that on the renewable side. I think you have a technology sector that is certainly backstopping most everything when you consider elections and the way the budgets are and from our standpoint, technology continues to want renewable generation and they're driving whether it be chips or data centers or hyperscalers or whatever, they're driving the renewable business behind the what you would consider policy from road switching. So that drive will continue to as far as I'm concerned, the Republican or Democratic has done well in both. We've been pretty agnostic to what parties in power. And that drive in the backstop of technology is what's driving the load growth, which continues. And whether it's renewables or gas-fired generation to back it, all those things play in certainly into where we're at and the cheapest of generation is transmission, the country still needs a significant amount of transmission to facilitate any kind of fuel switching or load growth.

That's helpful. Thanks. And then I just want to ask about TS Conductor. Can you talk about details on that investment? What was the rationale there? And just broadly, how are you thinking about opportunities in the manufacturing space? This is now the second deal you guys have done with the manufacturer here in the last year. Thanks.

Yes, what you have is small investment there, alignment really to understand kind of where we're at. And we like the technology. We think it's helpful when you're talking about, we do a lot of energized reconductoring or reconductoring in these corridors and being a part of that solution, great customer-base in there that's invested as well. So we invested alongside our customers as well and we like the technology, we know a lot about it, we have worked many years to one conductor. So we think it's a good technology. It has some solutions across the board and is certainly something we want to be a part of.

Appreciate it. I'll pass it on. Thank you.

Our next question comes from the line of Jamie Cook with Truist. Please proceed with your question.

Hi, good morning. My first question just on underground and utility. I think in the quarter, you mentioned a mix issue. If you could elaborate on that. And I think you lowered your margin target. Just why? And I'm wondering how stronghold this performing given some -- you're hearing industrial weakness in other parts of the industrial landscape? And then my second question, Duke, it is for you just strategically. You've had some pretty good success recently with M&A and some of the questions I get from investors are, is it going to be harder for Quanta to continue to grow organically just because of the law large number starts to work against them. And with your success in acquisitions, I'm just wondering going forward should we expect greater balance or even potentially more growth or the portfolio driven by M&A versus organic growth if the mix shifts more to M&A versus organic growth for those reasons? Thank you.

Thanks, Jamie. I'll go to the UI segment. The industrial business performed great. I think we set records there. I continue to believe that it will going forward. So we like the business. We invested in Evergreen. We like that business as well. So early in the year, we continue to see good margins. It stabilizes a lot of the fluctuations in it. We did have some shift in business, some larger work that you can't predict when those things start, we never like to. So I would just say some of it just pushed our -- from my standpoint, I'm unwilling to put it in the forecast. It may come back in, but we're going to be prudent about how we look at it and we are facing an election year and things of that nature. So we're going to be prudent about how we guide. I didn't like the way it looked and so we made some decisions on the UI segment. And then we had some MSA movement within the distribution business, LDC business where you had some consolidated utilities move the capital from LDC into underground electric or storm hardening or whatever it may be. So we picked it up on the other side. We also moved those crews to the other side. It shows up in the renewables and electric segment. So most of the resources and things like that will move over. We're not really -- our headcount is 58,000 plus today. So we're -- our headcount is up, and it was just a segment movement as well. So some shift there, some shift and outward work on bigger projects, but the industrial business we like and it's growing nicely. And we're conservative on guidance there. So M&A, I think you can't predict M&A…

Thank you.

Thanks, ma'am.

Our next question comes from the line of Michael Dudas with Vertical Research Partners. Please proceed with your question.

Good morning, Kip, Duke, Jayshree.

Good morning.

Good morning.

So maybe update us on the communications business. You highlighted $900 million or so revenue this year. What's the tone of that business? It seems like you're probably targeting more value on the margin side relative to growth. And do you see some visibility as we move out the next couple of years, any trends or client discussions that could give it some improved traction going forward?

Yes, we like the business. I mean, I think it's not something that the company certainly has some nice clients, and we continue to invest with them and our resources. The business has always been fairly dynamic and moves quickly and budgets move in and out. And so we're pretty, what I would call, prudent about how we invest in the business. We can grow it or not grow it and it doesn't really impact us too much. So the growth hasn't come from the segment at this point, not to say it won't, we just haven't really pushed on it. I really look at customer bases, whether they're regulated, non-regulated, how much exposure we want to in communications, and how we invest and allocate capital. So as we see that we make adjustments here or there to support our clients. But the business is fine. The RDOF money or whatever, whatever the end clotures these days. They say it's coming, it's coming, it's coming, big spins, big spins. I haven't seen it yet. When it gets there, I'm sure we'll grow.

Got it. That's great. Thanks, Duke.

Our next question comes from the line of Alex Rygiel with B. Riley Securities. Please proceed with your question.

Thank you. Good morning, Duke. A lot of tailwinds here driving your business. Any chance you could rank which ones might have the greatest impact on your business over the next three years?

Yes. Alex, I think the customer base -- the technology customer base is what's driving load growth and what really gives me what I believe is something that we can point to that backstops most everything, the amount -- the demand side of that. And no matter how you think about it, if it's even half what we're talking about from a gigawatt standpoint, it's substantial. Substantially more than anyone thought. The capital budgets of our customers continue to rise, whether it be technology, whether it be utility. So that rise is certainly something that we can point to. But I would just say the backstop of technology against all things power or data center, whatever it may be, is there and then you roll it back and go over. Do they have a product to sell? And they absolutely do. I mean I think people are willing to spend money on AI, people willing to spend. So there is a product against the infrastructure that's necessary to be put in place. So I do believe the builds would have necessary to backstop generation and are really being driven by technology. So I'll just point to that at this point for the driver of growth.

And then with sort of this new big backdrop of technology driving your business, are you going to market and selling a broader portfolio of services in a different way today than maybe you did in the past?

Yes. I mean, I think we're more solution-based and trying to understand where the client and trying to have end-to-end solutions and whether it be front side of the business and provide the solution to the client. As clients start moving faster, if you want to go faster, you really need to be inclusive and we have to understand what the bottlenecks are from transformers all the way through it. And so our ability to really take out the bottlenecks to go faster to market is something that the company prides itself on. And I think everyone that we deal with wants to go faster today. Can we do it faster, can we do it faster? So our ability to get it to market quicker and on time and relatively in line with budget is something that people want and we're able to provide that.

Thank you.

Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.

Thanks. Good morning. Just a question on cash-flow related to the Canadian receivables. It sounds like you're still pretty confident in the position that you have there. Maybe if you could just give us a little more color on the timing of collection and thoughts around the guidance raise or the guidance maintaining there against the general guidance raise. And how tied is your deleveraging post CEI to the collection of that Canadian receivables?

Yes. So there is -- I'll let Jayshree to give the numbers, but still we're confident in our position. We're starting -- we said it would start to happen in the second half of the year. So part of this is just the way the settlement works and the way we're working through it with the client. I expect it to be in chunks like you've seen today, but look, we're getting closer and closer every day. If it's not by the end of the year, it's very shortly thereafter. So we're making great progress working with the client in a collaborative manner and I see no issue with that receivable. As you can see, some of it's starting to move forward now. So I like where we sit there. I'll let Jayshree comment on the rest.

Yes. I mean, we'll be under 2 times. Our expectation is under 2 times the leverage by the end of the year. And even without for whatever reason, we weren't able to collect, which again, we don't expect that. But to answer your question, we'd still be below 2 times.

Okay, excellent. And then, Duke, just a bigger-picture question to follow up on the M&A. I mean, you've really broadened the capabilities of the company over the last several years. What does service line diversity mean for you going forward? Is it just sort of tweaks from here? Do you think there's still a lot more you can do to kind of diversify the service lines?

I think we really understand craft skill and how they think and how we think about it and how we respect that trade. So we have a workforce development, we have training that we've invested a significant amount in across craft. And I truly believe it doesn't matter what craft it is. So if it's inside electric, it gives us a whole new craft skill workforce because the high voltage and low voltage, the transferability between the two is not bail, I mean, you have to be trained on both sides of that. And so you can't move them across a little bit you can, some can but it's not as easy as it sounds. So there is extra training required on both sides of that movement. So I do believe that the voltage workforce gives us the whole new venue there. And then the things that we can do to meet customer demand across that from a craft standpoint are there. We like the front side of our business as we've discussed before, we need to get basically more scale-out of the front side of the business. And so we'll continue to try to either organically grow that or make acquisitions in that side of the business. So we're not afraid to make acquisitions that makes sense. I think we try to be prudent about that and we're patient. We're not. There's nothing imminent ever. We talked to Cupertino probably over seven or eight years and it happens when it happens. And I think we're patient. And I want to make world-class companies and I think we have the very best in the business and graph. So we want to lead the way there and we'll be patient until we see the right kind of opportunities to add to the comprehensive solutions that we already have.

Sounds good. Thank you.

Sure.

Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Yes, good morning, Duke and Jayshree. First question is more of a big-picture --

Good morning.

Good morning, Jayshree. Big picture question around the regulatory environment. There is no doubt there is an enormous demand for your services and the need for utility CapEx to upgrade the grid. But as we've seen in some tough regulatory outcomes, including in places like Illinois, sometimes questions about the commitment of the regulator to push those capital increases through. And so I just love your perspective on the regulatory environment and the juxtaposition of the enormous need for the services relative to the constraints from a regulatory perspective.

Yes. I think it's a couple of things. I do believe that energy is top of everyone's mind. Affordability is on top of everyone's mind and you're in a political environment. Sitting here in Houston and watching the hurricane and with our own customer, knowing that they did a really nice job getting people in here. And the political outcry on day two of 2.7 million people out with pine trees 100 foot tall, falling across wire all throughout to expect them to have service back in two days and the outcry and what it's done politically is not even close to fair for the money that's spent. If you want that, you want certainty and you want it up in two days, spend $1 trillion, and underground it, you'll fix it. And until you do, no matter what pull you put in and when you put a 100-foot tree across the water, it's coming down. And so I just -- that outcry that we see from a regulatory standpoint, it doesn't match where the country wants to move and it's expensive, it cost money. So that affordability is something that every single customer we have, whether it doesn't matter where you're at. We all face it, we have to help them and we have to be out there and try to be prudent about how we look at cost that's why we're looking at solutions that are different. And we're certainly there to help and try to make this smoother and they depend on us to do so. So I do believe whether it's political, whether you're in a political season. So I mean, it's fun times around. Once we get through that, I think some of this will die down and we can get the country moving in the right direction towards a transition. And if it's not if we don't believe it's EV, if we don't believe it's renewables and the heat will continue and you'll have 114, 115 and we'll need another air-conditioner in every house. So either way, you're going to push load.

Yes. Thanks, Duke. And then the follow-up is Cupertino really built on your data center platform. But as you think about what data center focused opportunities could look like five years from now, how could you envision Quanta really scaling that business and what could success look like to capture the 15% type of growth in CAGR that you alluded to in your slides?

Yes, they're a real nice renewable business as well. So I wouldn't discount what they're doing there with batteries and solar. So I do think they're doing a nice job there as well and you can see it show-up in the solar and the guidance. And we like that as well. But the data center piece and onshoring of chips and all those kind of things, factories are right down the wheelhouse where we think Cupertino can grow. They were limited by resources, bonding capacity, things of that nature. I do think our solution base a more comprehensive solution to their client base and balance sheet speed-to-market and our ability to manufacture transformers, just everything that we're trying to accomplish to speed-to-market is something that their client base values. So I like where we sit and we're early. I know there's synergies in the market and we were talking around kind of an 8%. I know it's better. I know we can do better than that. I know they know we can do better than that. So we'll continue to find synergies and I think you'll see the growth not only in the top line but also in the bottom line of the company. Our cash-flow profile looks different. If you look at our returns, they look different. So we continue to push the company in the right spot in the macro markets that we're in, they want solutions. We continue to say we're a solution provider. So here it is.

Thank you, Duke.

Our next question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.

Hi, good morning, everyone.

Good morning.

So a couple of questions for you on the implied second-half guidance. So first on your Electric business. It seems like the second half, there's going to be a pretty significant ramp in revenues half-over-half or year-on-year, even if you factor out the recent acquisition. So I was hoping you could help us bridge that and get comfortable with that. And then secondly, in the renewable business, at least like based on the guide again, like excluding CEI, it looks like growth starts to flatten out as we exit the year. So I just want to get some color on how confident you feel about the reacceleration of that growth in that business.

Yes. Hi, Chad. On the -- let me start with renewables. We -- again we are sitting in a good spot. We feel good about where our customers are headed. As Duke pointed out, we're not seeing any concerns yet from our major customers around election noise, et cetera. I do think, again, the quality of the customer base matters a lot in the renewable market. So we still feel very confident about our end-of-year expectations there. We are, of course, as you know, we tend to be conservative. We want to see the market develop over the next six months. So any sort of perceived pullback is only that. We continue to enter contracts or continue to build projects. We don't see any concern sitting here today. And on the electric side, it is a strong back half, but that is -- Duke touched on it. We're seeing our utility customers continue to want to spend capital. We believe that, that capital has come in. We've got big programs that we've entered into and that will start ramping towards the back half of the year. So all of those things give us confidence in our revenue expectations that we've laid out in our guide for both the electric and renewables segments.

Yes, try to stick a little color to you on that. I would say that as we see it, it's difficult to build big solar. But one of the reasons that we felt like we needed to lean into Blattner and give us the very best-in the business was we're concerned with building big solar projects. It's not easy. It looks easy, it's just not. And so I think that is something we have a lot of -- a great deal of confidence in. So does the client base. So the need for renewables to support the tech growth gives you what we believe is visibility for the long haul here and continue. I'm not saying they won't build gas, I'm not saying it will be a new plant there, but you're backstopping renewables and you want redundancy in their system. So if they don't build at day one, they'll build at day two. They're pushing renewables into the system eventually. So I do believe that will continue. We like what we see going forward under any administration. Yes, I think we've taken a prudent approach to guidance and Jayshree is right. I mean, we are starting programs that give us a lot of visibility into the back half on the electric segment as well as the renewable segment. So we feel confident. We just need to execute through here.

Great. That's super helpful. And I just wanted to return to a conversation earlier in the call about the shift from our distribution, both electric and gas towards transmission at your utility customers. So I understand that that's what's happening today or like at least for 2024. But like any color you can give from your conversations with your customers about whether you'll see like incremental dollars of capital flowing back to the distribution side of the CapEx equation?

I mean it's regional. You have some movements in there. I didn't say our electric business was moving one-way or the other, by the way. Just said, we have the ability to move them around as necessary. I feel like our distribution on the electric side is fine. There is some push in certain regions, but it's growing in others. So I'm not too concerned there. The gas side of the business moving some capital off-gas into electric, where you're caught up in some gas things and nothing releases, things like that. So they're moving over into electric for the year. Just it happens able to move budgets around, we're able to accommodate. So there is some movement, there are always movement though. I'll say always. We're always moving into substations or transmission distribution, it doesn't matter. We're fungible, our skill-sets are fungible, they can move them around. That's part of that solution that we provide to the client and gives it the ultimate what I consider flexibility. And our job is to provide that flexibility to the client and that solution, we can give it to them.

Great. Thank you.

Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed with your question.

Good morning, everyone.

Hi, Andy.

Duke, you talked about a bit of a low in contracting last quarter as your customers were trying to figure out how to deal with the higher load growth, but you obviously had a nice uptick in electric power backlog this quarter. So did that lull effectively come to an end? And then can you talk about your confidence level about growing backlog from here? Are you starting to see these larger MSA renewables accelerating again?

Yes, I think what we saw when I said low, I just think it's you reset a bit in this transition, we'll continue to see that. Now I'm looking at their capital budgets and you're talking about 15 gigs of solar, wind or of the load for that matter. You're going to see some movements across the segments consistently. I do think everyone's maintaining their capital budgets. We continue to point to it. And they're going up because the load is going up. You can't deny the fact that if you're going to add 15 gigs, 10 gigs, seven gigs of generation, load is going up, capital is going up. How you do it, whether it's gas fire, whether it's renewables, it's still moving up. If we build gas fire across the systems, it stabilizes renewables and it actually makes renewables faster and better. So I wouldn't get to -- I mean, you'll see some of those movements across these capital spends move. We just got to be flexible with how we look at it. So I think transmission is something that's extremely important. We saw PGM yesterday on Go Out and you can see the pricing at the capacity market. I just and you can say, okay, it's one-time, but the fact is demand is far outseeing supply. It's 101 economics. And it just is there, it's been there, it's been coming. We need transmission in this country and we got to build it.

Very helpful. And then could you give us a little more color into how your Canadian business deal is doing? I think it's been a drag on you guys for quite a while. I know you expected some improvement in the second-half of this year. I think you had some positive commentary regarding still expecting improvement in Canada in your release, but could you update us on where you are in that geography?

I mean, it's certainly getting better. The macro market is getting better. We expect the second half to be increasingly better quarter-over-quarter and into '25 because the market is getting better. Canada is always a particular market it has higher highs and low lows. And so you move along with it, but we were able to move a lot of the resources into the States, still are in the States, helping in supporting some of the growth in the States. And as we see Canada come back, we'll push into Canada more and Australia is a nice business as well. It's been very, very nicely. So we like the business long-term. It's -- we just got to -- we right sized kind of the backside of it and we'll grow off that again and just be cautious about how we look at that on a go-forward basis. But I do think in the next year, we see, we book the work and see where that will allow us and bring the margins up very close to parity with the rest of the segment throughout the year. It's incremental though. It's not all at once.

Appreciate all the color.

Sure.

Thank you. We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

Yes. So we appreciate the 58,000 plus employees and their dedication to the clients and what they go through every day with the heat and rain and they work 16 hour days, 20 days in a row. And it doesn't go unnoticed, it doesn't go unnoticed from management team and clients will appreciate you. And we'd like to thank all you for participating in the conference call. We appreciate your questions, your ongoing interest in Quanta Services. Thank you. This concludes our call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.