Quanta Services Inc

NYSE:PWR

Q1-2025 Earnings Call

[Operator]

Good morning, and welcome to Quanta Services First Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Kip Rupp, Vice President, Investor Relations, for introductory remarks.

[Kip Rupp, executive]

Thank you, and welcome, everyone, to the Quanta Services First Quarter 2025 Earnings Conference Call. This morning, we issued a press release announcing our first quarter 2025 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our first quarter 2025 operational and financial commentary and our 2025 outlook expectation 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 that information reported on this call speaks only as of today, May 1, 2025, 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 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 e-mail alerts through the Investor Relations section of quantaservices.com to receive notifications of news releases and other information, follow Quanta IR and Quanta Services on the social media channels listed on our website.

With that, I would now like to turn the call over to Mr. Duke Austin, Quanta's President and CEO. Duke?

[Earl Austin, executive]

Thanks, Kip. Good morning, everyone, and welcome to the Quanta Services First Quarter 2025 Earnings Conference Call. This morning, we reported our first quarter 2025 results, which included robust double-digit growth in revenue, adjusted EBITDA and adjusted earnings per share, along with record backlog of $35.3 billion and a number of other record financial metrics. As a result, we have increased our full year 2025 expectations for revenue, adjusted EBITDA and adjusted earnings per share.

Quanta's core strategy is built on the foundation of craft skill labor, execution certainty, investment discipline and clear strategic rationale. At the heart of Quanta's success is our unmatched craft workforce, deliver essential infrastructure solutions with a dedication to safety, quality and performance. Our execution certainty, combined with strategic investments in talent, technology and complementary businesses strengthens Quanta's leadership position across our expanding and addressable markets.

Our investment decisions are guided by a disciplined strategic rationale aimed at reinforcing Quanta's differentiated platform, growing customer partnerships and driving long-term sustainable value creation. Quanta differentiates itself through a unique solution-based approach that integrates craft labor with engineering, technology and program management expertise to deliver comprehensive self-perform infrastructure solutions. Rather than providing isolated services, Quanta partners with customers to solve complex challenges across the full project life cycle, which creates deeper strategic relationships.

Our collaborative model drives higher value for our customers and positions Quanta as a trusted partner and solutions provider, not a contractor. As demand for our resilient -- as demand for resilient electric grids, power generation, technology expansion and energy infrastructure accelerates, Quanta's large addressable markets continue to grow. Quanta has a proven track record of consistent, profitable growth across both favorable and challenging conditions, demonstrating the resilience and sustainability of our business model, which is a testament to the strength of our portfolio approach, a diversified solution-based strategy that enables us to adapt to evolving industry dynamics, while delivering mission-critical infrastructure.

The successful execution of our strategic plan, combined with significant financial liquidity positions us well to not only navigate periods of uncertainty, but emerge stronger. The energy and infrastructure landscape is undergoing a fundamental transformation, and Quanta is positioned at its center. Utilities across the United States are experiencing and forecasting meaningful increases in power demand, which is being driven by the adoption of new technologies and related infrastructure, including data centers and artificial intelligence, policies intended to reinforce domestic manufacturing and supply chain resources and the need for all forms of energy generation.

We believe these drivers are leading to what could become the largest investment and an expansion of high-voltage transmission infrastructure in a generation. And that's Quanta's unmatched execution platform and solution-based mindset enable us to capitalize on these expanded opportunities, positioning Quanta for sustained leadership and long-term growth. I will now turn the call over to Jayshree Desai, Quanta's CFO, to provide a few remarks about our results and 2025 guidance, and then we will take your questions. Jayshree?

[Jayshree Desai, executive]

Thanks, Duke, and good morning, everyone. This morning, we reported strong first quarter results, including revenues of $6.2 billion, net income attributable to common stock of $144 million or $0.96 per diluted share and adjusted diluted earnings per share of $1.78. Adjusted EBITDA was $504 million or 8.1% of revenues. Additionally, we generated healthy cash flows in the first quarter with cash flow from operations of $243 million and free cash flow of $118 million, both of which include the impact of $109 million tax payment deferred from 2024.

Our first quarter performance reflects a continuation of the significant revenue, EBITDA and EPS growth and the free cash flow generation that we have achieved since 2020. Over that period, we have demonstrated our ability to grow organically and maintain a disciplined approach to acquisitions and share repurchases, while improving our cash flow profile and return on invested capital. This track record has facilitated our ability to raise debt capital as an investment-grade borrower and efficiently delever following opportunistic capital deployment. Accordingly, during the quarter, S&P Global Ratings upgraded our long-term issuer rating to BBB flat from BBB- and our short-term issuer rating to A2 from A3.

We believe these credit upgrades lower our borrowing costs, expand our liquidity and financing options and strengthen our financial position, while supporting our long-term growth strategy. As Duke mentioned, our performance in the first quarter, coupled with the momentum we're seeing across our core markets, have led us to increase our 2025 expectations for revenues by $100 million, adjusted EBITDA by $10 million and adjusted earnings per share by $0.15. In light of the recent trade policy actions and based on what we understand today, we believe the terms and conditions in our contracts limit our exposure to direct cost increases associated with the currently implemented tariffs.

As a result, we believe we have addressed those potential impacts within our range of expectations in our full year 2025 guidance. We are also proactively collaborating with our customers to provide supply chain, process and value-driven solutions focused on cost optimization and growth. Further, we are adjusting our own supply chain by making strategic advanced purchases as well as working with existing suppliers and evaluating additional suppliers in an effort to manage material and equipment costs and product availability.

In addition, we believe our full year range of 2025 guidance takes into consideration delays that could result from possible changes to the Inflation Reduction Act or IRA. To date, we have seen immaterial shifts in capital plans from our sophisticated and high-quality renewable energy customers, who we believe have the supply chain expertise and robust development pipeline to weather near-term impacts from policy disruptions. Demand for power is increasing rapidly. As such, the need for renewable energy generation and storage is strong, and we remain confident in our multiyear CAGR expectations.

We are actively engaged with our customers to provide solutions designed to help them navigate the evolving policy and regulatory environment, combining our craft labor capabilities with our engineering, procurement and domestic manufacturing solutions. We believe our increased 2025 financial expectations demonstrate the strength of our portfolio approach to the business, our commitment to our long-term strategy, favorable end markets and our partnership approach with our customers. From January 1 to the date of this earnings release, we have repurchased approximately $135 million of our common stock, leaving us with approximately $365 million remaining under our existing repurchase authorization.

Given our cash flow expectations and the strength of our balance sheet, we expect to remain opportunistic with stock repurchases, while continuing to support strategic investments to generate incremental returns for our stockholders. Additional details and commentary about our 2025 financial guidance can be found in our operational and financial commentary and outlook expectation summary, both of which are posted on our IR website. Also, our first quarter 2025 operational and financial commentary includes a new supplemental information table that provides estimated revenue growth opportunities across each of our key markets in 2025, along with the factors influencing those opportunities.

Note, this information is a directional estimate that is not intended to replace or exactly align with our guidance for the year. Quanta's strategies are focused on delivering solutions to customers across all of our end markets, and we continue to emphasize the power of our aggregate portfolio of solutions and the cash flow earnings and returns they generate. With that, we are happy to answer your questions. Operator?

[Operator]

[Operator Instructions] Your first question comes from Ameet Thakkar from BMO Capital Markets.

[Ameet Thakkar, analyst]

Just I got, I guess, a question maybe that's a little bit off the beaten path, but it looked like the Long Island Power Authority, I guess, voted down your application to kind of be the grid operator there. I just was wondering, was any of that kind of baked into your guidance for this year? And then the second question is that sort of kind of grid operator role, is that something you envision doing more of in other jurisdictions?

[Earl Austin, executive]

Yes. Thank you. So first off, the LIPA, when we looked at it, look, it's an opportunity where we performed this type of arrangement [indiscernible] as well. It's a little different than the one in Puerto Rico. But as we see opportunities to look at these type of arrangements, yes, we will look at them. And I think what the -- what they did yesterday was the management team voted for Quanta. I thought it was very well done, a very good process. The Board did not take the recommendation, but gave no remedy. So I think from our standpoint, we'll clarify with the Board, their concerns, certainly much different than what we faced in Puerto Rico, where we built a utility essentially. So much, much different.

And I think we'll be able to basically give them the feedback that's necessary. I can understand where they were coming from, having not talked to us and we'll get in front of that and see what happens there. And these opportunities happen. We get asked to do a lot of different things, as we differentiate ourselves in the market. So I do think you'll continue to see outliers that you may not hear about every day, but we're not a utility. We understand that. We support them, and there'll be opportunities every now and then that we get involved in these kind of arrangements.

[Jayshree Desai, executive]

And yes, it was not -- this was not anticipated in our guide.

[Earl Austin, executive]

No.

[Operator]

Our next question is from Andy Kaplowitz from Citi Research.

[Andrew Kaplowitz, analyst]

You mentioned the largest expansion of high-voltage transmission, I think you said in generation. Maybe you could elaborate on that and how you think this cycle plays out? Do you see a bigger slug of transmission projects starting to actually move forward now, as I'm sure you saw recent developments in Texas with a big line being approved. And would you expect to continue to see sequential backlog growth moving forward despite all the macro uncertainty out there?

[Earl Austin, executive]

Yes. You need transmission in order to move generation. And so we've said this all along. I think you have to think about it. You hear a lot about the grid only at 60% capacity, things like that. But I go and say, we have a freeway here in Texas that goes from San Antonio to Houston, it's 24 lanes here in Houston. It's about probably 50% full because you see it in the mornings and the afternoons. If I took 8 lanes out, it would back all the way up to San Antonio, I never get in the Houston. So you have to look at it like that, that the grid needs the stability of transmission going to load sources and going into data centers, things of that nature.

We continue to see firm demand and hundreds of gigs, honestly, across the board. And so as we see that, as it firms up, that's transmission behind it. And I don't think off-grid is the answer. I think it will be primarily on grid for our utility customers. And this is a big build. I would relate it back to the '70s when you had major expansion within your transmission system. And that's what we see. It's -- I've not seen a line yet that's built in North America. It's not paid itself back very quickly at this point. So you'll see a lot of -- for the ultimate customer, it's the right answer, and you'll continue to see a lot of transmission.

[Operator]

Our next question is from Philip Shen from ROTH Capital.

[Operator Instructions] It looks like we're having a problem with Philip there. If we could go to Joe Osha from Guggenheim Partners.

[Joseph Osha, analyst]

We have seen a lot in terms of incremental tariffs being imposed on imports for solar modules, and this is something that came up when First Solar reported earlier this week. Is this materializing as a problem for any of your customers at all to the extent you're hearing about it?

[Earl Austin, executive]

Thanks for the question. We have not seen that within our customer base. We certainly are keeping our eyes on it, listening. We're not seeing pull in. We're not seeing pushout per se. I think '25 is baked into '26. So we'll continue to look at it, but it's not affecting us at this point. And I would say this, too, the company is built to have pushouts. It's not -- the portfolio allows us to have things move along with service lines and our customer base. So it's not an issue, if something pushes here or there. It's never -- the company -- I've not -- I wish it would perform at 100%, but we're doing really good if we get 80% kind of online and at the times that we think they're going because you're always going to have pushes and pulls.

So the tariffs, if they were to come in and affect us, I do believe the portfolio is such that we could weather much of it, and we see multiyear builds coming at us. And I do think solar is the cheapest form of energy in many ways, and you'll see a lot of solar build and gas and about everything we can build probably.

[Operator]

Our next question is from Philip Shen.

[Philip Shen, analyst]

Okay. Sorry about that, having trouble with the Zoom. So first question is on interconnection work. We recently hosted a webinar with Grid Strategies, and they highlighted that 50 gigawatts of coal plants may not be decommissioned, and this could result in tens of billions of interconnection work proximate to coal plants stranded, as the renewable projects planning to access the coal interconnection points could be at risk. What are your thoughts on this potential? And how could this impact your backlog?

And then second one, very quick one on the renewables subsegment, if you will. If you were to think about your total megawatts of construction starts in 2025 now that you expect compared with what you expected for those 2025 construction starts at year-end '24? Has that changed at all? Or has it remained steady?

[Earl Austin, executive]

Yes, I'll go backwards. Look, I think it's steady. It's certainly not at the pace of growth over last year, but it's steady and climbing. I like where we sit with that business. We're doing very well with battery, solar, even onshore wind. So I like where we sit. I think the inbounds are good. It's -- if you want power quickly, you're going to have to look at renewables for the next 3 years because of the turbine deliveries, but I do think it's always going to be a part of the grid. And we've always said natural gas will be a big piece of it. We've said that for a decade.

We're going to catch up a little bit here, and it will be a part. As far as coal, not a lot of investment in coal over the last call it, 10 years. And it costs a lot of money to run coal plants right now. So there's not been that investment in them. And most thought they were going to retire, so you've got to keep them going. That said, yes, I do think we're going to either see some colocations in areas where they'll build gas on a coal site and you're going to need transmission or you're going to continue to see transmission come out of coal facilities to upgrade. But look, it's -- I don't think there's any shortage of projects on the wall, I'll say that. If they all go, then we've got a lot of work for the next 2 decades. So -- but I think we got it either way.

[Operator]

Our next question comes from Jamie Cook from Truist Securities. [Operator Instructions].

[Jamie Cook, analyst]

Sorry about that. So nice quarter and congrats on the transmission upgrade win this morning. I guess just my first question, just as I think about -- understanding you guys have a targeted margin range for your electric infrastructure business or what we're calling it now. But just pushing you as you continue to win larger projects and the mix towards larger CapEx projects versus maintenance sort of continues, why wouldn't that create a positive upward momentum on your margins to some degree, even though you might not want to guide there over the longer term, but I would think in the next sort of 12 to 18 or 24 months, the margin trajectory should be higher. So just what your pushback would be on that?

And then my second question, and I'm sorry, I'm going through multiple earnings this morning. I don't think you provided an update on Cupertino, but how that business is doing versus your expectations for 2025. And then, Duke, I think last quarter, you suggested there are some very large wins on the come as you benefit from synergies with Cupertino and Quanta. I'm just wondering if you could update us on that and any potential wins on the revenue synergy side in 2025.

[Earl Austin, executive]

Thanks, Jamie. I think the target margins, they remain what we've said. If you're adding 4,000 employees, we're pacing even more than that at this point. You're going to have the training cost in there. And so the training costs will keep the margins about where they're at. They could move a bit here or there in the upper end of what we've said. I know it's a different segment, but you can infer the electric what it used to be and infer some uplift on the segment. But I do think we're executing very well in the field, and we're proud of kind of first quarter of last year versus this year and what we've been able to do at scale.

So the biggest thing is to scale the business, and we're doing that nicely now. You are seeing more material pull-through as well at the same margins. The return on invested capital is going to come through higher. So I think returns go up as well in this market. But again, I mean, I think we want to be a solution provider and provide more services and create more value along the supply chain. So we're going to do that.

Cupertino is ahead of schedule. I think even that by backlog and some of the things, we're doing there, it's ahead. So we're really, from our standpoint, great business. I've been around a bunch of acquisitions, and I would tell you it's in the top 5 from my standpoint as far as having a good acquisition that we can lean into and scale. They're there. We're getting synergies all the time. I do think you're going to see big awards out of that because the technology, when we think through it, your total addressable market on technology is, call it, $300 billion a year. That's global. So -- let's just call it $200 billion in North America.

And the utility business is about $250 billion. So it's as big as addressable market for us, and we're up less than probably 5% in backlog in technology. So we're just starting. I see opportunity after opportunity. Can we execute it? Can we go get it? I like our chances.

[Operator]

Our next question is from Ati Modak from Goldman Sachs.

[Ati Modak, analyst]

Duke, you spoke about the transmission opportunity broadly earlier. But in the supplemental disclosure, you kind of noted that the larger projects are becoming increasingly visible. Can you talk about that visibility? What stages do you see these at? And then when should we expect these to show up in the backlog? How should we think about revenue and margin impacts from there?

[Earl Austin, executive]

I mean I think you're hearing it. There's 765 builds across the country. You've heard that. Someone just mentioned coal. I hadn't heard that one yet, so that's good. But I think you have to look at the RTOs of what they're saying, your MISOs, your PJMs and you can hear all the auctions that are there, you can hear that as well as the CapEx spend. And I know there's just disclaimer where generation is going to replace transmission, that couldn't be more false. So that's just wrong. I don't know how else to say it. I'm with them every day. I'm on the ground. I hear it. That's wrong. So that's a policy.

Transmission will be very robust here and distribution will be fine. It won't grow as fast as transmission, but it's here. And so those are the places I would point to where you can see large transmission getting built. We're in early stages of it -- at the very early stages. And I do think you'll continue to see us stack work over the next 5 years. And I'll leave it there.

[Operator]

Our next question is from Steven Fisher from UBS.

[Steven Fisher, analyst]

Just wanted to ask you, Duke, in terms of your solution strategy, how would you characterize the white space from here based on kind of what you're hearing from your customers about the solutions that they need? And I guess from an M&A perspective, is 2025 more of kind of a continued fill in the white space kind of year? Or is this sort of a digest what you have at the moment kind of year?

[Earl Austin, executive]

Thanks, Steve. I'll go backwards on it. Good question. So when we look at M&A, we can't time it. And as we see great companies that fit the strategic rationale that we're looking for, we'll lean into them. I can't tell you the pace. I can tell you there's a lot of inbounds that we see really nice companies out there, have opportunities all the time to look at them. So as we see them, if they fit the rationale, we'll certainly try to lean into them. I'm not concerned with our balance sheet at this point. We'll always protect it, but I'm not seeing us stress it at this point.

So that -- all things are on the table. You saw us buy $134 million worth of stock back this year, as it got disconnected. We said we would, we did. You can expect us to acquire when we see great companies as well. And I forgot the first part of the question.

[Jayshree Desai, executive]

White space around...

[Earl Austin, executive]

So I think I try to -- in the paragraph, I try to explain it. I think if you're isolated on a service line, you're a contractor, if you can put them all together and go form a service, you're providing a solution. So we're looking in areas where the customer is struggling to ramp. And we're able to do multiple service lines for them, whether it be engineering, whether it be procurement. Each customer has a different set of, I guess, needs.

And so we're really trying to do more than just be a service line provider or a contractor. And that's -- in my way of saying that's a solution because I'm going to listen to what they have to offer it, collaborate with them, get very sticky in their organization and then trust us to go build it on time, on budget with our own labor. I think us self-performing 85% of the business and that self-perform capability and that certainty that we give a client bankable as far as investment grade, we check the boxes and why wouldn't you want to us to do it all, is what I would say.

[Operator]

Our next question is from Steve Fleishman from Wolfe Research.

[Steven Fleishman, analyst]

Okay. A little more specific on the transmission question. Just the -- Texas just approved the 765 kV plan. Any sense on when that would actually be business that could be backlog and just view of likelihood of you getting a fair share of that?

[Earl Austin, executive]

Yes, Steve, we built a lot of the 765 in the country and the majority of it over time. And so I do believe it's a core competency of ours to build it. So I always like our chances when we're building 765. We've been in front of this a long time. I'm not surprised by the amount of it. I'm not surprised by the inbound discussions. We're doing some things there that I think are unique with the client. So I think we're in good shape. I would say I'd be surprised if it's not in the third quarter or maybe early fourth quarter, you would start to see us have the opportunities to book work.

[Steven Fleishman, analyst]

One other quick question, a very simple one, just is the upgrade in guidance midpoint for the year, is that just first quarter beating your expectation? Or is there anything you'd specifically point to for raising the midpoint?

[Earl Austin, executive]

I mean we were looking at the whole year and how we see it laying out, I thought we had a nice quarter. I felt like we're trying to be prudent about the back half with everything moving around. But the way we see it laying out and the way the work is flowing and the things that we know, I felt comfortable enough to move it a bit just to show confidence in the business and -- as well as where we think we're going to end up for the year. And I do still think we're prudent about how we're looking at it. I think there's a lot of opportunity for us. If you ask me to kind of look at the high side of the range and the low side of the range, I would lean to the high side for sure.

[Operator]

Our next question is from Mike Dudas from Vertical Research Partners.

[Michael Dudas, analyst]

Duke, maybe you can share the -- how you've seen the strategic benefits from your -- increasing your own supply chain access for your clients. And as you're looking to help them access elsewhere, what are the dynamics of -- because I'm sure everybody plus 3, is trying to figure out similar solutions. How is that market and the dynamics there? And how your internal opportunities are helping you provide better, more of those solutions? And is that part of what you'll be looking for on the acquisition front over the next several quarters?

[Earl Austin, executive]

Yes, Mike. So the transformers, I think, that we acquired, we did it on purpose. It was purposeful. It was U.S.-based. I was concerned -- we were concerned with China and the amount of China transformers that were in utility systems. So that concern led us to U.S.-based transformers in Pittsburgh. It's a 100-year-old company with a lot of IP that allows -- allowed to expand. It had UL codes across the country. It's not easy to have transformer manufacturing out of the class of, call it, 138 up to 765.

So if we can do that, if we can execute through there, we're not trying to be a manufacturer per se. We want to get the pull-through. We want to do the work. So we do have great, what I would consider, relationships with other transformer manufacturers, breaker manufacturers, and we'll keep those as well. But we've learned a lot about our supply chain internally with our EPC business. So I do think we're able to really have a solution base to clients as they come in. And it is a core competency.

It's something now where it was -- it used to be labor equipment. Now it's a labor equipment supply chain. And if we get -- if we continue down the path and get it right over and over again, we'll get better internally and externally. So I really like what we're doing there. I think it's -- our clients like it, and we're able to really expand the business through that mechanism.

[Operator]

Our next question is from Justin Hauke from Robert W. Baird.

[Justin Hauke, analyst]

I guess I have one maybe larger question and then I got just a small technical one. But I guess on the large 500 kV line that you announced this morning that starting in mid-2026, I was just hoping maybe you could give us some perspective on kind of the size or scope of that, particularly as that's coming on or starting kind of as you're ramping down on SunZia. So just trying to understand kind of maybe the relative size between those 2.

And then also, what's the status and risk on the permitting side, given that, that's not starting construction for another year or so, just what needs to happen? And then my small technical one for Jayshree, I guess, is the 2 acquisitions in the quarter. I just wanted to confirm, those are the ones you announced last quarter on the earnings release. They weren't incremental ones. So are there any incremental acquisitions as part of the guidance increase?

[Jayshree Desai, executive]

No, I'll quickly answer that and let Duke answer the other question. But yes, those are the 2 acquisitions we announced last quarter, and there are no additional ones at this stage.

[Earl Austin, executive]

And as far as the LADWP line, that is public. So I'll give you some -- you can go look at it, but it's $1 billion plus. And that's the only reason I'm going to give it to you because it's public. But -- so I think from that standpoint, I do think the permitting and things like that are on target, and we'll be getting into it in '26.

[Operator]

Our next one is from Adam Thalhimer.

[Adam Thalhimer, analyst]

Nice quarter. I wanted to ask about the pipeline market. Are you seeing anything interesting in the long-term bidding or planning, Duke, that would make you think that 2026 could be a recovery year for large pipe?

[Earl Austin, executive]

Look, I think there's more opportunity for certain. You're hearing it. You're hearing the President get behind more pipe, more drilling, more pipe, more drilling. So I do think that's out there. Obviously, the shippers are -- and our pipeline customers, we've maintained all kinds of discussions going on. I don't think it -- from my standpoint, we need some pipe, obviously, with the amount of natural gas on the books for combined cycles, things of that nature, especially on the Eastern Seaboard.

So I do think you'll get some built. I don't -- I just don't think the business is going to be super. I mean, LNG takeaways is good. It will be better, and we're looking forward to capturing some of that work. But again, I think very difficult still to build linear construction pipelines.

[Operator]

Our next question is from Sangita Jain from KeyBanc.

[Sangita Jain, analyst]

Just a couple of questions. One, maybe for Duke, some companies have recently alluded to the lack of a good workforce to execute on natural gas generation projects on time and on budget. Since you have the largest draft labor force, would you consider -- or what would you need to consider branching out into natural gas generation EPC to help your customers?

[Earl Austin, executive]

Yes. I mean -- thank you for the question. I do think it's something that it's needed. We have what I would consider a contractor approach, where we have the sum of the parts. We've built them before. We can certainly have a resume to build them. The way I would characterize it is if we decide to do that and if we lean into them, we're not taking risk. There's too much risk on the unknowns of the new turbines and things of that nature. We'll just shy away from the risk, and we can grow the business nicely without the risk. That's how I would look at it.

[Sangita Jain, analyst]

And another one, maybe it's for Jayshree. So your revenue performance this quarter was really strong. Book-to-bill was kind of 1. And I'm wondering if that is a sign of the times that your customers are more willing to do faster turnaround projects versus taking longer to book large projects?

[Jayshree Desai, executive]

No, I don't think you should read anything into that, Sangita. I think it's just normal timing around our backlog. We're pleased with how the backlog is growing. As Duke talked about, the relationships with our customers just keep getting stronger and stronger. And so we see growth across project-based MSA work. It's across the board. And so I think there's nothing more to read to it than just timing around those things.

[Earl Austin, executive]

I also think some of the work that Cupertino books, when you look at it, it's very programmatic, almost base business type work, and it's book-to-bill month -- almost in months. So nice jobs and -- but it comes in $10 million to $50 million type spurts. And that's the way that business has gone. So they can book-to-bill quite a bit in a given quarter. And that's same with most of the businesses. You'll get a lot of that, that happens. But I still believe you'll see a lot of programmatic. MSA renewals are there. They're larger. So I continue to think that the backlog will be at record levels.

[Operator]

Our next question is from Drew Chamberlain from JPMorgan.

[Drew Chamberlain, analyst]

I just want to look a little deeper into what's hitting the backlog on the power generation side. I mean can you kind of talk through what's coming in between solar, storage and wind? And then how have conversations with customers maybe changed since the tariffs have been announced, particularly on storage? And I appreciate that 2025 probably has some pretty good visibility on what's going to be installed and put in place. But are you worried at all about the tariff impact to '26, '27 projects where equipment is not yet in the States?

[Earl Austin, executive]

Yes. Look, I worry about everything. And so -- but I would tell you the business is set well past '26. And so I'm worried about '27, '28, '29. And I think what we see is a good visibility in supply and demand. And that supply side is not going to match demand without renewables. It's not going to get close. And you need the renewables to match the demand. You need them. And I just -- under any scenario, you can't see yourself not building solar and scale and -- utility scale solar for a long period of time here. It makes so much sense.

Batteries are shaving peak. I looked at some load growth and some graphs in Texas of how it's shaving peak quite a bit in Texas. So it's making a lot of sense, and you can see it showing up. And so from a flexibility standpoint to the grid, if you can back it with natural gas and you can have a line with natural gas, solar, wind, even -- and battery on it, it's the lowest cost of energy to the consumer. And that's what you're really -- you'll hear a lot about addressable spend.

You can say, hey, we're going to put coal on, but no one looks at the cost or we're going to put nuc on, but the cost is going to be a factor here at some point. And so we got to look at the most economical ways to fill the line up. And I think if you have a blended resource like we've had for the last 5 decades, as long as you look at it all forms of energy, you'll be in good shape. But when you ask us what we're booking, we're booking all of it, repowers in the wind side, some wind work. It's probably off a bit, but our solar is more robust, and our batteries is even more robust than our solar. So I like where we sit in the business.

[Operator]

Our next question comes from Brian Brophy from Stifel.

[Brian Brophy, analyst]

Under the new kind of key market disclosure, there's a technology and load center bucket there. Can you help us understand what is all in there? Is that primarily Cupertino? And what's driving that particularly strong growth rate this year?

[Jayshree Desai, executive]

Yes. That is a lot of the work that Cupertino is doing. It's around -- but it's also some of the work we at legacy Quanta around our inside electric work in data centers, semiconductors, chip plants, it's all of that, will be captured in that bucket.

[Earl Austin, executive]

Yes. I think that's the kind of the -- when we talked about TAM earlier, we were saying it was kind of $300 billion, which I think is a remarkable number that technology on infrastructure is going to spend $300 billion this year and probably more next. So in saying that, that's that bucket.

[Operator]

Our next question is from Laura Maher from B. Riley.

[Laura Maher, analyst]

Two questions. My first one is just with the growth of data centers, which stages of data center build are you seeing the most activity in? And then the second one would just be, could you provide any color on the underground business and particularly how it relates to potential tailwinds ramping up with the new administration and the pull away from renewables?

[Earl Austin, executive]

Yes. So I would say on the last part of the question -- I missed the first, maybe Jayshree heard it, but on the underground side of the business, there's opportunities in large diameter pipe. You're hearing the administration get behind that. I do think natural gas is coming back in certain places where we are building natural gas. We never really stopped. But I do think you can plan a bit better that natural gas here for a long period of time. That will be a source of energy and then our LDC business is nice. We'll continue to give people options. It's not going to be all electric.

They'll have natural gas options. So I do see that as continuing to be a nice piece of the business. Canada year-over-year is off on the big pipe. So it's down. I do see Canada coming back in this market. I mean, given the fact that the tariffs it woke Canada up that we do need infrastructure in Canada, they do need to build energy sources. And I think you'll see a more robust Canada over the next few years, that business will come back. So I like what I see up there as well. Yes -- I mean, it's certainly incrementally better than it was.

Our industrial business performed probably at record levels in the first quarter, very close to it. It was a nice quarter. So I like the quarter from that standpoint. There's growth there. We like it. We'll continue to invest in it. And the first part, I'm sorry, I missed it.

[Jayshree Desai, executive]

I think the first part is around data center growth, if I heard that right.

[Earl Austin, executive]

Was it where it's at the data center growth? Was that the question?

[Laura Maher, analyst]

Which stages are you seeing the most activity in with data center builds?

[Earl Austin, executive]

Yes. I mean it's broad-based. I would say anywhere you can find a line that has 300 megawatts is they want a data center. So Ohio, Indiana, Virginia, all the way through Arizona. I mean, even California, if you look at it, if you go off grid -- I was out in the West. And if you're off grid, it's extremely expensive. So California has a lot of areas where you could put data centers. It's not near as expensive in California than off-grid. So it makes sense to build in California. So we're seeing a lot of it to the West. But there's not a place that I know of that we provide services to that doesn't have data centers planned or planned and paid for, for that matter.

[Operator]

Thank you, Laura. There are no more questions at this time. I'd now like to turn the call back over to management for any closing remarks.

[Earl Austin, executive]

Yes. Thank you. I want to thank our 61,000-plus employees. They're the very best in the world. We couldn't do this without them. They make our lives easy and make our jobs easy. And I want to thank everyone participating on the conference call. We appreciate your questions and your ongoing interest in Quanta Services. Thank you. This concludes our call.