Quanta Services Inc (PWR) — Q3 2025 Earnings Call Transcript

Great. Thank you, and welcome, everyone, to the Quanta Services Third Quarter 2025 Earnings Conference Call. This morning, we issued a press release announcing our third quarter 2025 results, which can be found in the Investor Relations section of our website at quantaservices.com. This morning, we also posted our third 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, October 30, 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 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 Mr. Duke Austin, Quanta's President and CEO. Duke?

Thanks, Kip. Good morning, everyone. Quanta delivered another quarter of strong results, achieving double-digit growth in revenue, adjusted EBITDA and adjusted EPS compared to the prior year, along with record backlog of $39.2 billion and a number of other record financial metrics. These results reflect accelerating demand in our Electric segment, robust activity across our end markets and positive momentum headed into 2026. They demonstrate the strength of our portfolio, the capability of our craft-skilled workforce and our ability to provide certainty through world-class execution as customers modernize and expand critical infrastructure. Our performance continues to be powered by Quanta's core drivers, craft-skilled labor, execution certainty, and disciplined investment, which are critical to how we operate and create long-term value. Our craft workforce remains the foundation of our business, executing with safety, quality, reliability across diverse infrastructure solutions. Execution certainty reinforces our reputation as a trusted partner capable of consistent high-quality project delivery and disciplined investment ensures capital is allocated toward opportunities that strengthen our platform, deepen customer relationships and support sustainable growth. Quanta's integrated solution-based model continues to differentiate our platform. By combining craft labor with engineering, technology and program management expertise and critical supply chain capabilities, we deliver comprehensive self-perform solutions across the full infrastructure life cycle. This approach deepens customer partnerships and positions Quanta as a long-term collaborator, not a traditional contractor. Quanta operates at the center of a fundamental transformation in the energy and infrastructure sectors. 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 to support electrification, data centers and domestic manufacturing. These structural drivers are fueling a generational investment cycle and critical infrastructure. And Quanta's diversified scalable platform is well positioned to capitalize on these opportunities. To that end, this morning, we announced the expansion of our Total Solutions platform that builds upon our world-class craft-skilled labor capabilities and history of constructing more than 80,000 megawatts of power generation through our industry-leading renewable energy and battery energy storage solutions as well as other forms of generation. Our Total Solutions power generation platform leverages these capabilities to address growing generation and infrastructure needs due to the rapidly increasing demand for electricity from data centers, manufacturing and reshoring, industrialization, electrification and power grid expansion. This platform is focused on providing a fully integrated solution to high-quality customers for their generation development strategies. As a demonstration of this platform strength and scalability, NiSource has engaged Quanta for a design, procurement and construction execution of generation and infrastructure resources capable of producing approximately 3 gigawatts of power for a large load customer. This project highlights the strength of our Total Solutions platform, spanning power generation, battery energy storage, transmission, substation and underground infrastructure and underscores the value of our collaborative approach and builds on our relationship with NiSource and strong presence in Indiana. We believe these announcements reinforce our strategy to lead in large converging markets where utilities, power consumers and industrial operators require scalable integrated solutions. We expect to achieve record backlog and another year of double-digit earnings per share growth in 2026. Our strategy remains focused on delivering certainty to customers, investing in talent and technology and expanding our addressable markets through disciplined strategic growth. Quanta's resilient solution-based model has performed well through varying market conditions. Our strong execution, disciplined investment and commitment to safety and quality continue to differentiate our platform and support sustainable value creation for our shareholders. I will now turn it 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.

Thanks, Duke, and good morning, everyone. This morning, we reported third quarter results with revenues of $7.6 billion, net income attributable to common stock of $339 million or $2.24 per diluted share, adjusted diluted earnings per share of $3.33 and adjusted EBITDA of $858 million. Based on our continued backlog momentum and strong revenue growth during the quarter, we are raising our full year revenue expectations to a range of $27.8 billion to $28.2 billion. We are also raising our full year free cash flow expectations to $1.5 billion at the midpoint, driven by another quarter of healthy free cash flow, which totaled $438 million. During the quarter, we issued $1.5 billion of notes to recapitalize the balance sheet and enhance our liquidity position following the acquisition of Dynamic Systems. The interest rate on these notes was approximately 40 basis points lower than our issuance in the third quarter 2024 reflecting the benefit of our recent ratings upgrade and the stability of our earnings outlook. This transaction reinforces our ability to support operations, maintain financial flexibility and deploy capital strategically while preserving our investment grade rating. Our customers continue to value Quanta's differentiated self-perform craft labor solutions, and we are expanding our platform for growth as evidenced by the power generation platform we announced today. These dynamics, coupled with another quarter of record backlog, give us confidence in our ability to drive sustained revenue and earnings growth over the coming years. As we look toward 2026, the end market momentum and our consistent execution position us to deliver another year of double-digit adjusted EPS growth and attractive returns. We believe the opportunities ahead represent the next phase of a generational investment cycle in critical infrastructure, and Quanta is well positioned to lead through it, delivering consistent performance, disciplined capital deployment and long-term value creation for our stakeholders. Additional detail and commentary on our 2025 financial guidance can be found in our operational and financial commentary and outlook expectation summary both available on our Investor Relations website. With that, we're happy to take your questions.

I will follow the rule and try to stick to one question. Yesterday, we heard from AEP talking about a potential partner for their high-voltage transmission opportunities. Maybe I'd be curious if you could comment on whether that would likely be you? And then also just how much of the kind of high voltage transmission that's being discussed in Texas, PJM is kind of already in any backlog? Or is that all mainly to come? And when might we see it?

Thank you, Steve. AEP is a long-standing and significant customer for us, and we have strong relationships there. We are working together on 765 capabilities and engaging in various collaborative efforts. However, as it stands today, none of the 765 work is currently in our backlog. We are having numerous discussions and verbal agreements, and we have LNTPs and various other arrangements, but nothing has been added to our backlog at this time. We are taking a careful approach to ensure we execute it correctly, allocating the right resources, providing necessary training, and collaborating closely with our clients. I believe there are opportunities ahead. We have made investments in our transformer facility and have undertaken cooperative projects with our clients. Overall, we maintain a great relationship and expect more developments, and I feel optimistic about our prospects regarding the 765 work.

Duke, Jayshree, obviously, the Total Solutions platform announced today, I think, can provide a whole new driver of backlog growth. But how do you think about execution risk for these larger total solution jobs that include power generation? I don't think you ever really left power generation, but Duke, as you know, when you've focused on bigger power generation, you've had a little more variable performance. So can you get favorable terms and conditions and get comfortable? How do you protect Quanta as you enter these larger jobs?

Yes, that's a great question. We've developed 8 gigawatts of generation, and Zachary has contributed 6, totaling 14 gigawatts. They constructed 100 CCGTs. In our partnership, we collaborated closely with the client, focusing not only on our needs but also on those of the end users, ratepayers, and large load customers. When we look at the overall picture with Total Solutions, we effectively mitigated risks on cost escalations and similar issues. We have publicly stated that we won’t take on risks for these types of projects. I believe we’ve successfully worked alongside the client in a collaborative manner to ensure the right costs for both the ratepayers and large load customers. By planning ahead, we can provide a comprehensive cost solution that reduces risk for everyone involved in the value chain, and I think we've accomplished that.

So in 2019, you rolled out this Utility Services model, which reduced the reliance on larger discrete projects and focused I guess it was around 80% plus or so more on kind of Utility Services. And I think that's obviously been a very, very successful strategy. And I'm just curious how we should think about your overall strategy. I know, obviously, it's very heavily focused on being a solutions provider in this new platform. I think you would say is clearly part of providing solutions. But just curious how we should think about framing the strategy between being sort of this more base-level recurring services type strategy versus more of a discrete EPC project delivery that may be a little bit lumpier?

Yes. Thanks, Steve. Look, I think when you look at the company, nothing's changed. We certainly believe that craft skill is at the core. It's fungible. We'll move across different platforms from MSAs to larger projects and solve the solution-based approach to the client. We're not going to turn down because it's a large project, I mean I think that's part of this and projects are getting bigger. But we're working for clients that we work for decades. And that hasn't changed. We continue to do that. We're also discussing technology as necessary. And I do believe we're addressing that. And so our clients there, we work for decades. So as we look at both sides of this, and I would tell you that we're still around 80% of base business even with what you see today. Now we've talked about this before, I do believe you're going to get in a period where you start stacking large projects on top of that base. And I've been consistent in that. You're just now starting to see it go up. So I would expect the backlog to continue to increase. I would expect us to stack and continue to. Nor the power plant nor green belt is in our backlog and it will continue to stack. So at the larger projects, LNTPs, no 765 in there. I really like our chances of stacking this for decades or more. And we're giving long-term growth profiles. We're doing the things that we need to do to be a consistent compounding earnings platform.

So can I ask a follow-up on the JV that you announced this morning for the large load center. I'm assuming that this is mostly all your basic high voltage work that you do. But I'm wondering if there's a potential to add further scope to this with the customer itself for low-voltage electrical or mechanical work?

No, Sangita. This is a full CCGT, meaning it's a complete build. It's a 50-50 partnership. We have parts of this that we will execute internally, and Zachary has components they will handle effectively. So it's a full joint venture, a complete turnkey project focused on electric Scope 2. In the program with NiSource, we will continue to explore additional opportunities. In general, what you see is us expanding the platform related to the CCGT, which includes 3 gigawatts and the associated batteries. That's what we are developing. I hope I answered your questions.

If I could expand on the topic of business scope, you are clearly venturing more into the generation side. However, how do you view the potential for growth in the data center sector? You're focusing on generation for significant loads, but what about integrating more closely within the operational space? You've made several acquisitions that align with this strategy, so how do you envision growing in this area and what is your outlook for that growth?

Yes, Julien. I think we are currently down to the essentials, and from what I can gather, we have the capability to construct a data center. When it comes to our customers and the solutions we provide, if they request a balanced plan for the entire data center, we're able to deliver that. We can manage the mechanical, electrical, and plumbing aspects and do whatever is needed. I believe we will encounter those opportunities along the way, likely collaborating with a general contractor here and there. However, we are well-positioned to build virtually the entire data center, including the generation and everything up to the racks. I'm very confident in our strategy and readiness to capitalize on these opportunities. We aim to move quickly, and we can do that. Our collaboration with clients and utilities is also crucial, and I see real potential in that convergence of generation, labor certainty, and our role in that space. I'm pleased that we are at the forefront of this and believe we have significant opportunities to expand our offerings through technology.

Excellent. We'll hear about it grow next year maybe.

Yes.

Duke, I just want to build on your announcement this morning with the total solutions power generation platform and the joint venture with Zachary to build power plants. I guess just taking this a step further, this is sort of unlike you to sort of joint venture with someone. So I'm just thinking longer term, is this sort of you dipping your toe in power generation and getting more comfortable. To what degree do you think you need to do an acquisition and acquire someone to do full EPC power plants? Like is this a step in dipping your toe and then over time, you would do an acquisition so you could do everything, I guess, by yourself.

Yes, Jamie, I look at it like we're listening to our customer and they're asking us to expand our services. And I believe we've got the capabilities to do so. So we're working with select customers on this and long-standing customers on power generation. I do think it's a great business for the foreseeable future. Zachary was a great company, very much valued the same as us, know them well, know the family well, a great opportunity for us to work together on some things that they do better than us. And we have the capabilities internally to do everything so do they. We felt like this was a great venue for us in Indiana to work together to build this plan. Risk is always concerning me in these combined cycles. And I believe we've done a nice job here of working collaborative with the client. So I feel real comfortable with that. Yes, we can expand here. It can be a large, what I consider, opportunity for the company, and we'll take advantage of it. But in select cases, I'm not going to get pressured to go sign up 10 combined cycles. It's just not who we are and we'll make sure that we limit ourselves to strategic partners and people that will collaborate with us on a total solution. This is a large program. It's very much a solution for us. And I think we've done it the right way with the JV to mitigate some risk for the client and ourselves. So I think it's a smart way to kind of for us to go into Indiana and other places, other kind of machines, we would look at it differently. But for this one, this was a great opportunity for us. And I think what we've leveraged our capabilities along with Zachary is to have a complete solution for the client.

I'm just wondering, as you think about the JV opportunities in general, is there a way to think about the dollar value of the project, maybe on a gigawatt basis or whatever way you would like to guide us? And what's the view on the total market opportunity that you have for CCGTs as it stands today? And what is a reasonable market share for you longer term?

I think the joint venture should be viewed similarly to SunZia. We're looking at our share of it, which is half of the CCGT, while Quanta is pursuing other opportunities related to battery and other projects. I would consider it comparable to SunZia in terms of our revenue base. Even though the joint venture is 50-50, Jayshree can explain the accounting details. Regarding the market, I wouldn’t get overly excited about pursuing every CCGT opportunity available. That’s not our focus. We're concentrating on our customers and specific programs where we can provide a complete solution, similar to what we've done with NiSource in Indiana. We want comprehensive solutions and are unlikely to pursue one-off opportunities unless they make complete sense, which I doubt will happen. Therefore, we plan to be very selective in how we approach the market for combined cycles.

I wanted to discuss the significant increase in demand for natural gas as feed fuel. Are there discussions happening regarding this? The pipeline business is expected to decline this year. I am curious about the current infrastructure in the United States and the need for expansion. Are people beginning to address this issue, or is it still too early to tell?

No, I think we discuss a piece of pipe almost every day. Looking ahead to next year, we're guiding for $500 million. We won’t pursue this unless we have work secured, as our focus is on building only when it's certain. We definitely see potential; we have excellent customers in that space. However, our approach will be selective due to the risks associated with large diameter pipes, which can be unpredictable. Our goal is to compound earnings and provide solid guidance over multiple years and decades. This becomes challenging with the unpredictability of big pipes, which isn't our usual strategy. Yes, we can construct billions worth of pipe, but it heavily depends on client demand, and we need to manage risks effectively. I am cautious about weather risks and other uncertainties. If we can mitigate those risks, we are ready to build. The opportunity exists; the market is promising, but permitting at the state level remains a significant hurdle that we have yet to overcome.

On one of your earnings supplements, I think kind of said that your solar and storage backlog increased pretty significantly versus last quarter. I was just wondering if you guys could provide a little bit more color on how much did it increase? And then what do you guys see as the kind of drivers of that? Is that more from the legislative and safe harbor certainty? Or is this kind of just more follow-through from kind of the power demand environment that's out there?

Our renewable business hasn't let up. We said it last quarter, I'll say it again. It's just LNTPs that are coming into FNTPs. Nothing new. I think we're growing the business. Obviously, power is in need. And if you can build it faster with renewables and batteries, that's what's happening. The fastest thing in the market right now is we'll be all encompassing in power and generation. The fact that we put in this, what I consider, as total solution now, it will continue. And I think backlog in the renewables side has been great. The inbounds are great. And I don't think it's pull-in, I think it's just the normal course. And we're seeing a nice market there. We continue to see it. Battery storage business is fantastic. We're happy with where we sit in the market. And now that we can provide a larger solution, I think it's great. And you'll continue to see us follow our customers. I mean if you look at our bigger customers and look at what they're saying, I think we're right there in front of them or right there with them. And it's important to us to be able to say yes to a customer app when they ask us to do something and they ask us to go with them that we can say yes and have the capabilities to do so. The 67,000, 68,000 employees we have out there, they're fungible in many ways that we can move them around. We have to do a great job up here of making sure that we have, what I consider, the end markets to move to, and we can be more selective and we have been. So that renewable piece is a part of it. We're building a lot of renewables in Indiana. And so that same workforce will move over and do some CCGT work. So I just think we're extremely fungible. We're happy with where we sit. And backlog was broad-based, and we had not put the bigger projects in it.

Great. I guess I just wanted to build on Jamie's question. The thing, I guess, you guys have always self-performed so much of your work and that's sort of a way that you've mitigated risk. And so just with the joint venture, maybe you can clarify kind of what's in your wheelhouse that you'll be doing and what's in Zachary's in terms of the combined cycle gas plants. And then also just on the margin profile. I know you're not looking to do kind of discrete one-off plants. But I guess, how we would think about it is historically, the margins on those have been a little bit lower than the grid work just because the utilities, the ROEs are lower on that CapEx versus the spend on grid with some of the adders. So anything different from the margin profile on the work that would be coming in on that? So kind of those are the questions.

Yes. Both of us can handle total solutions, but they excel in certain areas more than we do. From an engineering perspective, they have the necessary staff and capabilities, which makes sense for Zachary on both the front end and back end. We will coordinate across the plant, whether it's through internal subcontracting or other methods, but we are capable of managing everything. The key is to continue utilizing local content in Indiana, where we have a strong presence. We'll collaborate with the client to ensure we incorporate local content, as we have offices there. We can independently handle all mechanical and electrical work; we are fully equipped to do it all. This project is projected for a '27, '28 build with a ramp-up in '28, and we will assess our status at that time. We possess all required internal capabilities and will support one another effectively. Regarding the margin profile, I can confirm it is at parity or better within the segment.

I know you haven't given guidance for '26. But as we wind down '25, can you share what the growth trajectory for organic growth might look like for '26? Perhaps comments on the different outlook for Electric Infrastructure and UUI. If you can't take that, perhaps you can comment on the margin profile, the expanded total solutions platform compared to the current electric power margins. Is the deal with NiSource margin accretive or in line with current run rate?

It's consistent with what we've discussed previously. Regarding guidance, for 2025, we are on track. Some may speculate about a variation of $10 million around the $2.8 billion mark, but I wouldn't be concerned about that. We've positioned ourselves well and provided conservative guidance. More importantly, when I look ahead to 2028 and 2029, we're projecting a minimum of 10% and around 15% adjusted earnings per share at the midpoint, considering all factors affecting our balance sheet, with a potential for 20%. As far as I'm concerned, I've given you guidance for the next five years, and that's what we can expect as we communicate with the market.

So a big picture question for you guys. So over the medium and long term, how do you think the power industry evolves to serve large load customers like data centers? Is it some hybrid model like we're seeing with NiSource? Is it behind the meter? Is it traditional grid connection? I know it's a combination of all the above, but I would love to get a sense for like how you think that mix evolves? And then I guess, secondly, when it comes to the JV just announced, how do we think about the contract structure, and just like how you guys are thinking about bidding? Is it competitive? Is it open book? Any color on that would be helpful.

I think all of those factors come into play when we assess these situations. Some aspects are clear and without issues for us. As long as we can define the scope and feel confident, we are willing to accept lump sums. That's manageable for us. However, if there are elements we don't fully understand, we will protect ourselves from potential risks. As I've stated before, we won't take on significant risks associated with larger projects involving our workforce and resources when we have a guaranteed outcome; that approach doesn't serve the client's best interests. Therefore, collaborating and planning together in advance is crucial for us as we consider the future of our construction methods, especially in today's environment.

I just wanted to touch on M&A a bit. Just as your backlog builds on multiyear demand, would you ever consider shifting your M&A focus to complement your craft labor pool by acquiring smaller service providers? Or do you feel that the steps you've taken internally to grow the labor pool are able to match the workload that you want to take on in the coming years?

We don't buy for capacity, which has never been part of our strategy. When we consider acquisitions, we're filling a strategic gap, and we've been doing that effectively. We've focused on our vertical supply chain, which may not receive much attention, but we've been enhancing it with about 10 ongoing projects that aren't widely discussed. Our goal is to meet the needs of our clients through solution-based approaches, and we will continue to do that. We're expanding fabrication and other areas strategically around client needs. I believe we are leading in this area, and we'll keep acquiring great family companies that will significantly impact our approach. The culture of the company is more important than anything else, and we start with that before ensuring it fits our strategies and financials. I feel we pay a reasonable multiple for excellent companies, and our transitions from civil work to transformers and other areas serve specific purposes and strategies. We'll continue to leverage this strategy as we move forward in promising markets with technology and utilities.

A bit of a follow-on to that last question. But when you look across this sort of massive craft workforce you've accumulated here, are there trades in particular where you see real scarcity such that it's actually somewhat of a limiting factor to our growth? The growth has been good, obviously. And maybe where you're especially focused on sort of recruiting talented folks out there?

Yes, we've gained about 6,000 workers through acquisitions this year compared to last year. We've been investing in our skilled workforce across colleges and campuses, which allows us to expand our curriculum across various trades. We are in the early stages of our technology initiatives, and the Cupertino acquisition has provided a solid foundation. I've noticed a scarcity in skilled inside wiremen, which is where we see the biggest gap. We've managed to increase our fabrication and are adding pre-manufactured products to help us scale. We plan to strengthen our program and recruit more inside wiremen, and we are also expanding into plumbing and mechanical trades. We'll continue to develop our curriculum, understanding that some students are not inclined toward air conditioning, and different trades have varying local demands. In high voltage, we typically travel for work, but there's a shift towards more local operations. We need to enhance our local presence significantly. Overall, we recognize that we're still early in developing our inside and mechanical trades, and closing that gap is a priority for us.

Duke, given the extraordinary demand you're seeing and the tightness in capacity, are your customers starting to recognize they need to secure your time, your MSA, your resources at a quicker rate? And does that lead to maybe better scale and execution on margins as we move forward? And maybe an ancillary to that, any concern on how the industry is going to pay for all this capacity that's coming through, certainly living in New Jersey, we've been seeing a lot of issues on rates going up, et cetera. Just wanted to get your thoughts on how that's plays through as you're talking to utilities and your developers?

Yes, affordability is always a concern. Fuel makes up a significant portion of the bill, around 60%, alongside interest. As interest rates decrease, it's important to also consider fuel costs. These two factors are major components of bills. However, I believe we will see significant transmission projects developed, as PJM is investing in infrastructure. There are various models in play. If you examine technology and the future energy demands, new transmission lines in the U.S. are not currently favorable in terms of net present value. Additionally, more generation capacity can benefit ratepayers, as demonstrated by the NiSource example. These models do exist, and I believe technology will prove its worth. Therefore, we see utilities and technology collaborating for the benefit of ratepayers. While this process is gradual, we must remain mindful of affordability. The net present value on the other side trends downward, which is encouraging. I am optimistic about the progress we are making, which should yield positive results for ratepayers. We all need to stay aware of these considerations.

Nuclear power is gaining momentum here. Can you talk about how Quanta might get involved in that?

Yes. I mean, look, as long as we don't have to go behind that, what I would consider NERC-fence and the nuclear fence, we're good. I mean I think once you get behind there, we have to derisk ourselves and think hard about it. It's not something that the company is jumping up and down to take a risk on. So we're always around the edges on things. And I think as long as we can do the things that we know how to do and stay out of the nuclear fence, we feel real comfortable that we're not the reactor person, and we're not the person inside the fence. There's a lot of ancillary things we can do and will do. But once we cross the line of that fence, it's not us.

Just following up on the NiSource project. Curious if you can comment on whether that is structured as a cost plus or a fixed price project. I would assume it's fixed price, but I think you've alluded to in the past, potentially structuring those on a cost-plus basis to derisk it. Just curious if you can provide any color.

Yes. I won't discuss the specifics of our contract structure, but I stand by my previous comments that we will not take on certain risks with these types of projects. I'm confident in our current position and the conduct surrounding it. I can assure all investors that we have not taken on the risks associated with combined cycle projects. I'm satisfied with our current situation and the collaborative contract structure we have with our client, which helps to minimize risks for both parties and provide a fair outcome for ratepayers and large load customers. Although I won't go into the exact details of the structure, Abbey has done an excellent job, and I'm very pleased with how things are progressing. We're proud of our partnership with Zachary, who has built 100 plants, and our own completion of 8 gigawatts of generation. I'm thrilled with our activities in Indiana and the positive impact on the local economy. This partnership with NiSource is valuable, and I look forward to its continuation.

Maybe just one question on the JV and maybe this is for Jayshree. Can you just talk about the accounting here? It seems like 50-50 JV and NiSource talked about like a $6 billion, $7 billion CapEx. Could we assume that $3 billion coming to some backlog here? And in terms of the rev rec, could you share that? Or how to think about that here?

I believe the backlog will increase due to that. The main factor contributing to this is the air permits, which are expected to be included in the backlog in the second half of next year. You can view our portion similarly to how SunZia was structured. Regarding the combined cycle, it’s split evenly.

Yes. The accounting will be proportional, so the income statement will reflect our share of that work, from revenue all the way down to profit and the balance sheet as well.

There's parts of the it with the battery and things like that are straight to Quanta and parts of it that are part of the JV.

Yes. To clarify, as Duke mentioned earlier, the backlog will progress along with the work. We are currently in the LNTP phase and will advance in that direction. As Duke pointed out, we need to obtain an air permit by the middle of next year, which is when we'll transition to FNTP. Therefore, you can anticipate the majority of the revenue increase starting in the latter half of 2026 and continuing more significantly into 2027 and 2028.

Yes. There won't be anything meaningful as far as going to construction or revenues in '26.

Correct.

Guys, nice quarter.

Thank you.

If you can comment on the Dynamic acquisition, how the integration is going? What kind of demand you're seeing generally in Texas? And what would be your appetite for more mechanical construction acquisitions?

We are very pleased with the acquisition. We acquired an excellent family business that has been around for a long time, and we would do it all over again. In terms of integration with our current offerings, we've seen an increase in inquiries, especially on the mechanical side. We are addressing this and making investments in it. There's a lot we can do in fabrication, and they already had substantial facilities and a wide-ranging service offering, which we will expand rapidly, similar to our experiences with Cupertino and Blattner. You can expect to see a similar type of expansion with DSI. Regarding the mechanical aspect, we are open to exploring opportunities as long as they align with our profile and trades. We are just starting this process and will collaborate with DSI to identify opportunities as they arise. While nothing is imminent, we will keep an eye on that area. I have a positive view of the business. Although we have competition there that is ahead of us, we are closing the gap quickly, and I am optimistic about our trajectory.

Lots of talk about combined cycle gas. I'm a little curious, we hear a lot about single cycle going inside the fence alongside some of these big data centers to complement grid scale renewables. I'm wondering if that's perhaps part of the work that you're seeing or perhaps contemplating.

Yes. I mean we said that before. I mean when we started putting this group together, it was really around the single cycle. So we felt like that was something right down the road for us. But it's led to where we're at today and having more of a total solution to it. But we have a nice group that we're looking at it all. I mean, I think it's important for us not only for the technology or the large load customer on the other side, but the utility as well and how we interface that and speed this process up. Everyone right now is around speed. And I think we can provide a unique solution with the moat around the utility and helping both sides of this. So like I said, it comes together at generation and craft skill, which we check both boxes and the certainty thereof. And can we move faster with single cycles? It's speed to market, whether it's solar, batteries, single cycle, the combined cycle lead times, if you have the engines, just all those things matter here. It's a race. And I think in general, for generation, and we're right in the middle of it. So I'm pleased with where we sit.

My question is, is the utility experiencing any regulatory pushback regarding funding for T&D growth?

I believe there are affordability challenges in certain areas, but most commissions are primarily focused on ensuring positive outcomes for ratepayers. Typically, most transmissions are net present value positive. Each commission and state has its unique approach, but generally, there is a recognized need for infrastructure, and we aim to have a modern and robust grid. A modern grid is essential for the economy we experience today. We are not only seeing new projects but also have to manage ongoing operations despite negative load growth over the past three decades. This ongoing operation is necessary, and the demand is broad-based. Commissions exist to serve, and as an industry, we are committed to maintaining affordability for ratepayers. There are considerations regarding fuel purchases and risks associated with larger projects. Everyone is cautious about risks related to stranded assets, which has contributed to a slower pace of technological advancements. However, I believe that now that the appropriate models are in place, we can accelerate progress, ensuring that ratepayers benefit in most situations.

I want to thank the 68,176 men and women in the field who make these calls possible and our field leadership who continue to make us look good. And thank you for participating in our conference call. We appreciate your questions and your ongoing interest in Quanta Services. Thank you. This concludes our call.