PWR · Q3 2025 Earnings

Bullish

Quanta Services

Reported October 30, 2025

30-second summary

Quanta delivered Q3 revenue of $7.63B (+17.5% YoY) with adjusted EBITDA of $858M and pushed total backlog to a record $39.2B (RPO $21.0B), and raised FY2025 revenue and free cash flow guides. But the print has hidden cuts the headline obscures: FY EBITDA midpoint was trimmed $20M, the adjusted EPS range tightened around an unchanged $10.58 midpoint (low end +$0.05, high end −$0.05), and adjusted EBITDA high end was clipped $10M — all while revenue went up. The structural story (transmission, data-center load, the new Total Solutions power generation platform and JV with Zachry to build CCGTs for NiSource) is intact and management is now committing to "double-digit EPS growth" in 2026; the near-term margin signal is what to watch.

Headline numbers

EPS

Q3 FY2025

$3.33

Revenue

Q3 FY2025

$7.63B

+17.5% YoY

Gross margin

Q3 FY2025

15.9%

Free cash flow

Q3 FY2025

$0.44B

Operating margin

Q3 FY2025

6.8%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$7.63B	+17.5%	$6.77B	+12.7%
EPS	$3.33	—	$2.48	+34.3%
Gross margin	15.9%	—	14.9%	+102bps
Operating margin	6.8%	—	5.5%	+133bps
Free cash flow	$0.44B	—	$0.17B	+157.6%

Guidance

FY2025 revenue guidance raised and FCF raised, but Adjusted EPS range narrowed despite higher revenue; magnitude of raises modest, suggesting mixed outlook.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2025	$27.4 billion to $27.9 billion	$27.8 billion to $28.2 billion	+$0.4B to +$0.3B at high end; +$0.4B at low end	Raised
Adjusted Diluted EPS	FY2025	$10.28 to $10.88	$10.33 to $10.83	+$0.05 at low end; -$0.05 at high end; midpoint flat at $10.58	Lowered
GAAP Diluted EPS	FY2025	$6.47 to $7.07	$6.53 to $7.02	+$0.06 at low end; -$0.05 at high end; midpoint -$0.005	Lowered
EBITDA	FY2025	$2.50 billion to $2.63 billion	$2.49 billion to $2.60 billion	-$0.01B at low end; -$0.03B at high end	Lowered
Adjusted EBITDA	FY2025	$2.76 billion to $2.89 billion	$2.77 billion to $2.88 billion	+$0.01B at low end; -$0.01B at high end; midpoint flat at $2.825B	Lowered
Operating Cash Flow	FY2025	$1.70 billion to $2.25 billion	$1.85 billion to $2.25 billion	+$0.15B at low end; unchanged at high end	Lowered
Free Cash Flow	FY2025	$1.20 billion to $1.70 billion	$1.30 billion to $1.70 billion	+$0.10B at low end; unchanged at high end	Raised

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Electric Infrastructure Solutions	$6.172B	+17.9%
Underground Utility and Infrastructure Solutions	$1.459B	+15.9%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Remaining Performance Obligations (RPO)	$21.0 billion
Total Backlog	$39.2 billion
Adjusted EBITDA	$858.3 million
Electric Segment Operating Margin	11.4%
Underground and Infrastructure Operating Margin	8.4%
Year-to-Date Operating Cash Flow	$1.1 billion

Management tone

Q4 24 → Q1 25 → Q2 25 → Q3 25 narrative arc: Cycle setup → "Fundamental transformation" framing → "Potential historic investment" + solutions-partner positioning → Generational cycle + Total Solutions power generation platform launch.

Three quarters ago power generation was a discrete capability inside renewables and BESS; last quarter management began describing itself as a "solutions partner" rather than a contractor; this quarter Quanta launched a Total Solutions power generation platform and stood up a JV with Zachry to build combined-cycle gas turbines. Management's framing: "positions Quanta as a long-term collaborator, not a traditional contractor." The shift signals that the company sees CCGT and large-load generation as a permanent line of business, not an opportunistic add — and is reorganizing how it talks to customers and investors accordingly.

The market-environment language escalated again. Q1 was "fundamental transformation," Q2 was "potential historic investment," and Q3 added "The convergence of the utility power generation, technology, and large load industries is driving increased demand for resilient grids, expanded generation and storage, and new infrastructure...These structural drivers are fueling a generational investment cycle." This is now four consecutive quarters of escalating superlatives, and the company is underwriting capital allocation (the $1.5B note issuance, the Zachry JV, ongoing M&A) against that view.

On 2026, management moved from vague long-term CAGR talk in Q2 ("15-year midpoint target") to explicit current-year framing this quarter: "another year of double digit adjusted EPS growth and attractive returns" in 2026, repeated four times in different formulations. That is a firmer commitment than last quarter and answers the Q2 watch item on 2026 seeding directly.

The one area where confidence is conspicuously withheld is contract structure and margin profile on CCGT work. In Q&A, management explicitly declined to disclose whether the NiSource project is fixed-price or cost-plus and offered only "parity or better" when pressed on CCGT margins versus grid work. That is the same playbook as Q2's "we don't talk about synergies" — value being created off-disclosure, but unmeasurable from outside.

Recurring themes management leaned on this quarter:

Generational infrastructure investment cycle driven by data centers, electrification, and reshoringTotal Solutions platform expansion for integrated power generation and grid solutionsExecution certainty and craft-skilled labor as core differentiationRecord backlog ($39.2B) and double-digit growth momentum into 2026Strategic capital deployment with maintained investment grade ratingConvergence of utility, power generation, technology, and large load industries

Risks management surfaced:

Ability to scale craft-skilled workforce to meet demandExecution delivery across expanded geographic and technology footprintSupply chain dependencies for critical infrastructure componentsCapital deployment execution on large integrated projectsMarket cyclicality in infrastructure spending despite structural tailwinds

Q&A highlights

Andy Kaplowitz · Citigroup

How will Duke execute on larger total solutions jobs including power generation, given historical variability in power generation performance? How will the company protect margins and manage contract terms?

Management emphasized that the Duke-Zachary JV de-risks both sides on cost escalations. The company has built 14 GW combined (8 GW Duke, 6 GW Zachary), built 100 CGTs combined. They are not taking risk on these projects and are collaborating with clients to provide total cost solutions that benefit rate payers and large load customers.

Duke has built 8 GW of generation; Zachary has built 6 GWCombined entity has built 100 CGTsCompany explicitly stated it is not taking risk on these combined cycle projectsDe-risking achieved through collaboration with client on cost escalations

Stephen Fisher · UBS

How should investors think about the company's strategy given the 2019 shift to utility services model (80%+ recurring), and how does the new total solutions/EPC platform fit with that strategy?

Management clarified that the core strategy has not changed. Craft skills remain fungible across MSAs and larger projects. The company still maintains approximately 80% base business and is now stacking large projects on top. Management expects continued backlog growth and earnings compounding over decades.

Company still operates at approximately 80% base businessLarge projects are being stacked on top of base businessCraft skills are fungible across different work typesManagement expects backlog to continue increasing and earnings to compound long-term

Jamie Cook · Truist Securities

Is the Zachary JV a stepping stone toward acquiring a power generation company for full EPC capability, or will the JV model be the primary approach going forward?

Management stated they are listening to customer requests and leveraging existing internal capabilities. Zachary was selected because they excel at certain aspects and share similar values. Management emphasized they will be highly selective and strategic about combined cycle projects, not pursuing all available opportunities. Risk mitigation was prioritized over rapid scaling.

No commitment to aggressive acquisition strategy for power generationCompany will remain selective on combined cycle projectsWill only pursue projects with strategic customers and total solutions approachRisk mitigation and collaboration with clients prioritized over project volume

Ati Modak · Goldman Sachs

What is the dollar value or market opportunity for CCGTs on a gigawatt basis? What is reasonable long-term market share for the company?

Management compared the JV portion to a Sunsia-type project in terms of revenue size. Company is extremely selective and will not pursue one-off CCGT projects. Focus remains on total solutions with existing customers where the company can offer comprehensive capabilities.

JV revenue portion comparable to Sunsia project sizeCompany will not pursue standalone CCGT opportunitiesFocus on total solutions with strategic customers onlyCompany will remain selective rather than aggressive in market share pursuit

Justin Hawk · Robert W. Baird

Which company (Duke vs. Zachary) will perform which work in the JV? What is the margin profile compared to grid work, given lower utility ROE margins?

Both companies have full capabilities to perform all work. Zachary is better at certain engineering and frontend/backend functions. Work will be balanced between companies including internal and subcontracted portions. Margin profile described as parity or better in the segment. Project timeline: 27-28 build with ramp in 28.

Both JV partners can self-perform all mechanical and electrical workProject timeline: 27-28 build with ramp in 28Margin profile stated as parity or better compared to segment benchmarksLocal content and Indiana presence to be leveraged in execution

Answers to last quarter's watch list

Q3 backlog after Dynamic Systems is added (>$37.5B confirmed M&A+organic stacking; ≤$35.8B implied softening) — Total backlog $39.2B, decisively above the $37.5B threshold. RPO grew $1.8B QoQ to $21.0B. The M&A-plus-organic-stacking narrative is confirmed. Status: Resolved positively

Organic execution holding the high end of the raised FY guide — Revenue guide raised $350M at midpoint, FCF raised $50M at midpoint, both signaling Q3 organic momentum exceeded the prior bar. However, EBITDA midpoint was trimmed $20M and the adjusted EPS range tightened around an unchanged midpoint — organic top-line is at/above the high end, but profitability is not stepping up. Mixed. Status: Continue monitoring

Electric segment operating margin holding double-digit — Q3 print 11.4%, well above YTD 10.0%. Margin is not just holding the double-digit print, it is expanding. Status: Resolved positively

H2 FCF conversion (~$910M–$1.4B needed in H2) — Q3 FCF was $438M; YTD FCF $726.3M. Q4 needs ~$774M of FCF to hit the new FY midpoint of $1.50B — meaningfully higher than the Q3 print, so this is now a tighter bar than the raised guide implies. FY FCF guide raised $50M at midpoint, but Q4 conversion is the variable. Status: Continue monitoring

Refinancing alternatives — Quanta issued $1.5B of notes in the quarter, preserved investment grade rating, and recapitalized the balance sheet. Capital structure question is resolved with flexibility intact for further M&A. Status: Resolved positively

2026 setup commentary — quantitative framing or long-term-only? — Management committed to "double-digit EPS growth in 2026" four separate times in prepared remarks and outlook language. Firmer than Q2's long-term-only stance. Status: Resolved positively

What to watch into next quarter

Q4 EBITDA print and the FY EBITDA midpoint cut: the FY EBITDA midpoint dropped $20M and adjusted EBITDA high end dropped $10M while revenue went up. Watch whether Q4 EBITDA delivers at or above the new FY midpoint of $2.545B (EBITDA) / $2.825B (adj. EBITDA) — or whether there is a further trim on the year-end print.

Electric segment op margin holding 11%+: 11.4% in Q3 vs. YTD 10.0% is the new bar. A retracement back toward the YTD run-rate in Q4 would signal mix is reverting; sustaining 11%+ underwrites the 2026 double-digit EPS commitment.

Underground op margin durability: Q3's 8.4% printed well above YTD 7.1% with no specific driver disclosed. Watch whether the Q4 print holds the higher level or reverts toward the YTD run-rate.

First quantitative 2026 frame: management gave qualitative "double-digit EPS growth" four times. Watch Q4 FY2025 prepared remarks (typically the initial 2026 guide drop) for a specific revenue and adjusted EPS range, and whether the EPS midpoint implies the >$11.65 (10% off $10.58 midpoint) the qualitative language promises.

CCGT contract structure disclosure: management refused to disclose fixed-price vs. cost-plus structure on NiSource. Watch whether a future quarter — likely as the JV revenue ramps in 2027–2028 — forces structural disclosure, and what margin profile that implies.

Backlog conversion velocity: total backlog ($39.2B) is now growing faster than RPO ($21.0B); the $18.2B gap is up from $16.6B last quarter. Watch whether RPO catches up in Q4 (firm conversion) or the gap widens further (LNTPs piling up faster than contracts firm).

Sources

Quanta Services Q3 2025 press release (Exhibit 99.1), SEC filing dated October 30, 2025 — https://www.sec.gov/Archives/edgar/data/1050915/000119312525257378/d851878dex991.htm

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