Quanta Services Inc (PWR) 2010 Q2 法說會逐字稿

Thanks for standing by, ladies and gentlemen, and welcome to the Quanta Services second quarter 2010 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, August 4, 2010. I will now like to turn the conference over to Mr. Kip Rupp with DRG&E. Go ahead, sir.

Great. Thank you, Jo, and welcome, everyone to Quanta Services conference call to review 2010 second quarter results. Before I turn the calls over to management, I have the normal housekeeping details to run through. If you would like to be on the e-mail or fax distribution list to receive future press releases for Quanta, or if you had any technical difficulties this morning and did not receive your e-mail effect, please call our offices at DGR& E at (713)529-6600. You can also sign up for our e-mail information alerts by going to the Investors and Media section of Quanta Services website at quantaservices.com.

If you'd like to listen to ra eplay of today's call, it will be available via webcast by also going to Quanta's website at quantaservices.com. In addition, there's a telephonic recorded instant replay that will be available for the next several days, 24 hours a day that can be accessed as set forth in the press release [by dialing (303)]590-3030 and using the pass code 4340335 pound. Please remember that information reported on this call speaks only as of today, August 4, 2010, and therefore, you're advised that any time sensitive information may no longer be accurate as of the time of any replay of this call. This conference call will include forward-looking statements intended to qualify under the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward looking statements include any statements reflecting Quanta's expectations, intentions, assumptions or beliefs about future events or performance or that do not solely relate to historical or current facts.

Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or are beyond Quanta's control, and actual results may differ materially from those expected or implied as forward-looking statements. Management cautions that you should not place undue reliance on Quanta's forward-looking statements, and Quanta does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after this call. For additional information concerning some of the risks, uncertainties and assumptions that could effect Quanta's forward-looking statements, please refer to the Company's annual report on Form 10K for the year ended December 31, 2009, its quarterly reports on Form 10Q and its other documents filed with the Securities and Exchange Commission which may be obtained through the SEC's website at sec.gov. With that, I would now like to turn the call over to Mr. John Colson, Quanta's Chairman and CEO. John?

Good morning, everyone. Welcome to the Quanta Services second quarter 2010 conference call. To start the call this morning, I will provide a summary of the quarter results with added insight on the impact of current industry circumstances and overall economic conditions. My comments will be followed by an operational review by Jim O'Neil, President and Chief Operating Officer and a review of financial results by James Haddox, Chief Financial Officer. As always, we welcome your questions following our remarks. Revenues for the second quarter were $871 million compared to $813 million in the prior year second quarter. Emergency restoration revenues had no significant effect on the quarterly comparisons.

During the second quarter, our revenues were impacted by decreased spending by certain customers, which was offset by increased revenues from our natural gas and pipeline segment. Some of the notable accomplishments during the quarter were we increased gross margins quarter-over-quarter by 100 basis points, despite having no significant storm revenues, the twelfth consecutive quarter-over-quarter increase Initiated transmission pipeline construction on seven projects across North America, secured contracts for the construction of various transmission pipelines, including 210 miles of natural gas pipeline in Wyoming for Bison Pipeline LLC, began construction of two solar parks in Ontario, Canada, totaling 18 megawatts under a contract with Sun Edison and continued to strategically expand our international operations.

There are several key drivers of our future growth. Today's power infrastructure had difficulty supporting power delivery requirements during the recent heat wave across the northern and eastern United States, even with a lackluster economy. Alternative power resources, whether nuclear, natural gas or renewable, are required to reduce emissions and reliance on foreign oil. North American natural gas and oil resources are accessible and plentiful. Exploration of these resources creates jobs and helps support local economies. And today's technology-driven world requires more than bandwidth to support 4G and LTE devices and associated applications. These factors keep us confident in Quanta's solid position for long-term growth and the potential for a strong future.

Several utilities, particularly in the east and midwest regions, experienced historically high summer peak loads and increased consumption, encouraging utilities to remain focused on their goal to strengthen the grid, improve infrastructure to improve liability and prepare the grid for future. Relevance in the second quarter have the potential to minimize what is often the largest obstacle to large interstate transmission projects cost allocation. During the quarter, the Federal Energy Regulatory Commission, or FERC, proposed new rules as part of its open access transmission reforms. The rules improved cross regional coordination and established a closer link between regional electric transmission planning and cost allocation to help ensure that needed transmission facilities actually are built.

Offsetting this good news is the fact that there have been recent delays and postponements on some large transmission projects. Any of these delays are a direct result of the cumbersome, sighting ,permitting and other regulatory or environmental processes. These processes are presenting significant obstacles for utilities that are committed to infrastructure enhancement. Projects are planned, engineered, funding secured and are ready to go. Yet utilities are unable to proceed because of regulatory road blocks that must be overcome. While the specific provisions of the proposed energy legislation called the American Power Act are yet to be determined, the intent of the bill is clear. Reduce oil consumption and dependence on oil imports, cut carbon pollution 17% below 2005 levels by 2020 and over 80% by 2050 and create domestic jobs and restore US global economic leadership. This legislation, however, has stalled, creating an environment that encourages inaction rather than action.

The wide scale focus on reducing carbon emissions increases attention on natural gas as a clean fuel choice. In fact, according to the American Gas Association, the natural gas sector is the only group that has reduced carbon emissions by 40% over the past 40 years. With plentiful shale resources, Americans can rely on clean, abundant and affordable American gas resources for generations to come. Additionally, Canadian oil sands are poised to become the main source of crude imports by the United States.

Looking forward, a recent MIT study suggests that natural gas will double its share of the energy market to 40% from 20% over the next several decades as it displaces coal generation. This positive outlook is reflected in the number of pipeline projects in the planning, bidding and award stages which are slated for construction in the next several years. We believe this momentum will continue for the foreseeable future.

Telecommunications is plagued by slow moving regulatory developments as well. Although it has been 18 months of the implementation of the American Recovery and Reinvestment Act, or the ARRA, most first round stimulus winners have yet to receive the funding which was awarded to them, and we are now well into the second round of awards. Environmental permitting is also delaying the start of numerous ARRA broadband projects. We believe that these funds will come and the projects will happen. It is simply a matter of time. When they do happen, we believe there will be -- be on a fast track because of the short deployment schedule enforced by the Broadband Stimulus Act. We expect other regulatory developments related to the telecom as the Federal Communications Commission's twenty-first century road map for giving all of America access to internet based communications progresses through the legislative process.

The United States has the largest market for annual electric transmission investments. However, opportunities beyond our borders are growing. We've had success in South Africa, the middle east and the Caribbean and expect to leverage the successes of these projects to actively pursue other international opportunities.

In closing, during the quarter, the term spending on hold resonated through certain segments of our business because of uncertainty related to legislative hurdles and the slowing recovery economy. Because of this, we have adjusted our revenue forecast for the full year to between $3.8 billion and $4.1 billion and diluted earnings per share between $0.85 and $0.90. We believe that the second half of the year will bring increased activity and infrastructure spending in the industries we serve compared to the first half. But the lack of regulatory progress will keep it from being significantly robust to offset the lack of spending experienced in the first half of the year. We remain confident that in the long term, our strong balance sheet, strategic comprehensive service offerings and extensive resources remain competitive advantages through which we will maintain our leading position in the industries we serve. Now, I'm turning the call over to Jim O'Neil who will talk in more detail about key operational accomplishments during the quarter.

Thank you, John, and good morning everyone. As expected, the second quarter brought a period of transition in our electric power and natural gas industry segments as large projects began to mobilize. We expect a meaningful ramp up in these business segments starting the second half of this year, however, we have experienced project delays.

Before I give you details on each of our business segments, I want to update you on how these delays affect the status of the $1.4 billion in project bids submitted in the five weeks subsequent to the end of the first quarter. There were four projects that comprised the $1.4 billion. Two electric power transmission, one solar and one transmission pipeline project. To date, none of the four projects has been awarded. The delay in the award of these projects influenced our lowering guidance for the remainder of this year. The two transmission projects were Southern California Edison's Tehachapi four through 11, which is expected to be awarded later this year and PSE&G's Susquehanna to Roseland transmission line, which is now been delayed up to two years due to extended environmental review process. We believe the transmission pipeline project is facing permitting challenges and the solar project was facing industry challenges which I will discuss in more detail shortly.

In the second quarter of 2010, revenues from our electric power infrastructure services segment were approximately $463 million. This compares to approximately $504 million in revenue for the second quarter of 2009. The decrease in revenues was primarily related to reduced customer spending on maintenance on their distribution infrastructure and the timing of large transmission projects. While distribution spending levels are lower compared to last year, they have been stable since the fourth quarter of 2009. We expect electric distribution revenues to remain flat this year and do not anticipate recovery until the middle of 2011 or beyond. This trend continues to be driven by a weak housing market and the slow release of stimulus funds to support smart grid initiatives. We expect smart grid to formally present on going strategic opportunities for our business.

It is estimated that utilities currently install between 15,000 and 20,000 smart meters every day and that by 2009, more than half of all US households will use smart meters. Estimates indicate that as much as $10 billion of stimulus money and utility matching funds will be invested in smart grid programs over the next three years. We are pleased to report that at the end of July, we have installed more than 500,000 smart meters and related infrastructure such as distribution switch gear and Wi-Fi technology for Center Point Energy in the Houston area under our agreement with Itron. We also recently completed a 30,000 meter installation in Louisiana and are ready to begin a 71,000 meters installation for an electric cooperative in Florida. While we're beginning to see to momentum in smart grid deployments, we do not expect opportunities from smart grid contract awards to offset the overall softness in the distribution market.

We remain bullish on the outlook for our electric transmission services and made significant progress on key projects during the quarter. Work continues under our new energy alliance with National Grid. We are working to refurbish a critical 230,000-volt 47 mile transmission line utilizing our proprietary energized services. We are also reconductoring an eight mile section of 115,000-volt transmission line. We continue to work on transmission projects in the Texas Competitive Renewable Energy Zone, or CREZ, for the lower Colorado River Authority. We're working on drill peer foundations as part of the construction of the Clear Springs [Sahoto] line which incorporates 88 miles of double circuit 300 to 45,000 volt transmission line, and it's scheduled for completion in June of 2011. We are also performing maintenance on 35 miles of existing transmission line which will be completed by the end of 2010. For as utilities with non-priority lines are still in the process of filing for approval with the Texas Public Utility Commission, and the bulk of this work will not begin until early 2011. Work under our contract with Allegheny Energy on the Trail project is progressing on schedule. This work is scheduled to be 100% complete in the spring of 2011. This timeline will meet all contractual requirements.

We anticipate significant construction activity to begin this year on Northeast Utility's portion of the New England east/west solution, or news project before harsh winter weather sets in. This much anticipated project will provide stronger interconnections across Connecticut, Massachusetts and Rhode Island. Our work on this project should continue to ramp up and is expected to be in full swing in 2011, with completion anticipated in 2015. San Diego Gas and Electric's Sunrise Powerlink project recently received four service approvals, and we expect construction to begin on this project in September of this year. Other opportunities include PacifCorp's [Samona to Oaka] line, which was bid earlier this year and rebid in June due to design changes. No contract or awards have been made on this project to date. The Southern California Edison Beavers line is expected to bid in the fourth quarter of this year. DC Hydro's northwest transmission line and ILM line are expected to bid in the fourth quarter of this year as well.

After (inaudible) studies and reviews by PJM to determine the need, the 275 mile path transmission line from West Virginia to Maryland received a favorable ruling from a Maryland public service commission at PJM. ADP and Allegheny announced that the total project cost increased to $2.1 billion due to route adjustments and line relocations. The in service date remains as originally planned at June of 2015. Central Main power company received approval from the main public utility commission for segments of 400 mile, 345,000 volt transmission line. Half of the 81 communities along the route have approved the line. This project also received confirmation for regional cost sharing from the independent service operator for New England and represents a significant milestone for the utility's multi-year, $1.4 billion investment in its transmission system. This project is expected to bid sometime this year, with construction beginning in late 2010 and a projected in service date of 2015. We recently provided indicative pricing for CapEx 2020 by joint initiative of 11 transmission owning utilities in Minnesota and the surrounding region, including North Dakota and Wisconsin, to build three 345,000 volt transmission lines, one 230,000 volt transmission line and associated substations. We expect some portions of this line to be awarded by the end of this year with construction beginning next year.

We continue to remain very bullish on electric transmission, particularly as we move into 2011 and beyond. Despite delays in renewable portion of our business, we remain on track to meet our 2010 renewable energy revenue projection of $300 million. Renewable revenues for the first six months of 2010 totaled $96 million compared to $27 million through the same period last year. In the second quarter, we initiated work under a contract with Sun Edison for the engineering, procurement and construction, or EPC, of two 9-megawatt solar parks in Ontario, Canada. Both solar facilities are projected to be completed in the second half of this year. Renewable backlog for the remainder of this year is $111 million at June 30.

Backlog does not include several large renewable project opportunities we are currently pursuing, including a utility scale solar opportunity where we are working under a limited notice to proceed as the EPC contractor. We expect to execute the contract in the next few weeks, and a full notice to proceed is expected to occur in mid September. The size of this project is approximately 40-megawatts. We have experienced project delays or cancellations on certain solar projects totaling approximately 134-megawatts of solar installations that were awarded because a delivery commitment for solar panels could not be secured. This year to date, solar panel suppliers have been redirecting product to feed in tariff markets in Europe and Canada in pursuit of higher markets, creating a panel shortage in the United States.

Approximately $200 million of solar projects were in the $1.4 billion of bidding activity. It appears that European subsidies may be decreasing, and we anticipate that the supply shortage may end as early as the fourth quarter of this year. This seems to be validated as several panel suppliers have contacted us in the past few weeks seeking opportunities to sell product in the United States. We continue to aggressively pursue solar opportunities and over the last month, we have seen a noticeable increase in proposal activity related to solar. Additionally, we are actively engaged in negotiations for EPC work on large commercial and utility scale projects throughout the US, some of which could start in the fourth quarter of this year.

Turning to wind power, according to the American Wind Energy Association, or AWEA, wind power installations this year have dropped 71% nationwide to date from 2009 levels. Only 700-megawatts of wind was installed in second quarter of this year which is near 2007 levels. According to a recent survey of the wind industry by WEA, the decrease is due to a lack of national energy policy project financing and transmission interconnects. Contrary to industry trends, we have performed work on more than 20 wind related projects across Oregon, Texas, North Dakota, California, Nevada and Arizona in the second quarter and have secured 15 new contracts valued at an estimated $70 million.

During the quarter, revenues from our natural gas and pipeline infrastructure services segment was approximately $263 million. This compared to approximately $190 million in the second quarter of 2009. The significant increase is due to the acquisition of Price Gregory in October of last year. During the quarter, we mobilized on seven projects and worked to construct more than 500 miles of natural gas and oil transmission pipeline to be completed in the next several months. These projects are located in Montana, North Dakota, Wyoming, Kansas, Oklahoma, Missouri, Alabama and Florida and involve the installation of pipe with diameters from 30 to 42 inches in size.

Our natural gas and oil transmission pipeline activity is robust. We expect infrastructure will build out from the unconventional shale formations to gas markets throughout the country to be active over the next several years. Our expertise continues to be well received and applicable to the evolving requirements in this emerging market. Additionally, our horizontal directional drilling pipeline integrity and automatic welding capabilities remains a competitive advantage. Similar to the electric power distribution market, spending on gas distribution remains flat. We do not expect an increase until there is an economic recovery fueling new housing starts. In the second quarter of 2010, revenues from our telecom infrastructure services segments were approximately $118 million. This represents an increase of approximately 22% when compared to revenues of approximately $97 million in the second quarter of 2009. This increase in revenue is due primarily to long haul fiber projects being constructed in the northeast United States which are expected to be completed in the third quarter of this year.

Despite delays, we continue to view stimulus projects as an important opportunity for which we are well positioned. During the quarter, the second round of stimulus awards totaling $795 million was announced. We have engaged many awardees and are in various stages of contract discussions representing more than $365 million in opportunities. Considering the deadline to award all of the stimulus funds is less than two months away ,and over half of the announced funds, or roughly $4.2 billion, is yet to be awarded, we expect opportunities to increase in the coming weeks. However, to date, very little stimulus money has been issued to our customers. The issuance of federal funding requires our customers to file an environmental impact statement on any stimulus project, thereby causing long delays. While the timing of funding is uncertain, once funds are received, projects will have a very aggressive deployment schedule to meet stimulus timeline requirements.

Our competitive advantage remains our turnkey solution and exclusive Q-Trench micro trenching solution. In the second quarter, we set aside a contract to construct backhaul fiber to over 300 sales sites for a significant customer in the western United States. Work on this project has started and will be completed by year end. We were selected for this work primarily based on our unique turnkey service offering and our Q-Trench solution.

Looking forward, we expect Long Term Evolution,or LTE initiatives to continue to gain momentum over the next 12 to 24 months. AT&T, Verizon, Metro PCS and Sprint are all in completed stages of LTE equipment testing and the beginning stages of LTE performance measurement. We expect LTE installations to ramp up significantly in the second half of this year once equipment testing and measurement is complete. We expect purchase orders for additional sites to come through over the next couple of months. Certain wireless projects have experienced slight delays due to oversea production issues, however, we are closely monitoring supply data to evaluate the potential for equipment delays.

In the second quarter of 2010, revenue from our fiber licensing segment were approximately $26 million. This compares to approximately $23 million in revenue for the second quarter of 2009. Our fiber licensing segment continued to grow revenues at a double digit pace. We are seeing signs of weakness in our government sponsored markets as stress on local taxing authorities continues in this challenging economic environment. However, our carrier opportunities remain strong as we leverage the density of our network by leasing dark fiber to cellular backhaul carriers to support increased broadband requirements of LTE rollouts.

In summary, we are very optimistic about the future opportunities in all of the industries we serve. We expect a robust second half of this year and profitable growth in 2011 and beyond. The diversity of our revenue continues to provide a strong foundation and enables us to navigate these uncertain times. We are confident in our business, but are mindful of additional project delays and even possible cancellations because of heightened environmental scrutiny, nimbyism and regulatory uncertainty. And now I will turn the call over to James Haddox, our CFO.

Thanks, Jim and good morning, everyone. Today we announced revenues of $871 million for the second quarter compared to $813 million in the prior second quarter, reflecting growth of approximately 7%. The growth in consolidated revenues and 2Q 2010 was driven primarily by an increase in revenues from our natural gas and pipeline infrastructure services segment as a result of a major acquisition on October 1, 2009, as well as increases in our telecommunications infrastructure services and fiber optic licensing segments. These increases were partially offset by decreased revenues from our electric power infrastructure services segment, primarily due to a decrease in spending by on customers on their distribution networks and timing of the start up of major transmission jobs.

Our consolidated gross margins improved by 100 basis points from 16.9% to 2Q '09 to 17.9% in 2Q 2010. The increase in gross margins was due to higher margins at our natural gas and pipeline infrastructure segment due to the major acquisition in late 2009, coupled with the completion of certain low margin gas transmission contracts in 2009 that did not reoccur in 2010. Higher margins in our natural gas an pipeline infrastructure segment were partially offset by lower margins from our electric power infrastructure segment due to the timing of major electric transmission projects, along with decrease in electric power distribution services, due continued decrease spending by our customers. Our G&A expenses increased $9.2 million to $82.1 million quarter-over-quarter, primarily due to additional administrative expenses associated with the acquisition of 4Q '09.

Administrative expenses also increased as a result of $3.2 million in higher salaries and benefits cost from increased personnel and incentive compensation cost associated with current levels of operating activity and $1 million in loss on the sale of equipment. Selling, general and administrative expenses as a percentage of revenues increased from 8.9% to 9.4% during the second quarter of 2010, primarily due to increases in expenses described above. Our consolidated operating margins before amortization expense increased from 8.0% in 2Q '09 to 8.5% in 2Q 2010. Amortization of intangible assets increased from $4.9 million in 2Q '09 to $9.1 million in 2Q 2010 due to increase in intangibles and amortization resulting of the large acquisition completed in the fourth quarter of' 09.

Delving further down into the details of our results by segment, electric power revenues were down about $40.6 million quarter-over-quarter, or about 8.1%. Revenues were negatively impacted by a decrease in electric power transmission services revenues due to the timing of major projects, along with a decrease in electric power distribution services revenues due to decreases in spending by our customers. Operating margins in the electric power segment were 10.9% in 2Q 2010 compared to 11.7% in 2Q '09 due to lower margins on certain commercial and industrial projects as compared to last year, due to lower productivity, a lesser contribution of relatively higher margin transmission revenues due to the timing of projects and less ability to cover fixed costs as a result of decreased revenues. Our natural gas and pipeline revenues increased quarter-over-quarter approximately 38.4% to about $363.1 million in 2Q 2010, due primarily from the contribution o gas transmission services from the major acquisition in 4Q '09. Operating margins in the natural gas and pipeline segment were 9.8% in 2Q 2010 compared to 3.9% in 2Q '09. This increase is primarily due to the increased revenues in 2010 associated with higher margin gas transmission services and the completion of certain lower margin gas transmission contracts in 2009 that did not occur in 2010.

Revenues from our telecommunications infrastructure services segment increased approximately $21.1 million, or 21.9% to approximately $117.7 million in 2Q 2010, primarily due to increased activity with long-haul fiber installation projects during the quarter ended June 30, 2010. Partially offsetting this increase were lower revenues from fiber to the premise buildout initiatives as a result of reduced capital spending by customers in the second quarter of 2010 as compared to the second quarter of 2009. Operating margins in the telecommunications segment were 6.5% in 2Q of 2010 compared to 5.6% in 2Q '09. This increases is a result of overhead cost -- this increases result of reduced overhead cost due to various cost cutting initiatives while telecom revenues increased quarter-over-quarter. Fiber optic licensing revenues contributed approximately $26.4 million to the second quarter for an increase of about 15.7% as a result of our continued investment in fiber optic network expansion and the associated revenues from licensing the right to use point to point fiber optic telecommunications facilities. Operating margins in the fiber optic licensing segment were 52.6% in 2Q of 2010, which is typical for this segment.

When discussing operating margins by segment, we do not allocate certain selling, general and administrative expenses and amortization expense to our segments. Therefore, the previous discussion about operating margins by segment excludes the effects of such expenses. Corporate and unallocated costs increased about $9.9 million to $33 million in the second quarter of 2010 as compared to 2Q '09, primarily due to $4.2 million in increased amortization expense of intangible assets associated with acquisitions, as well as an increase in non-capitalizable costs of $1.1 million associated with the ongoing implementation of information technology solutions and higher salaries and benefits expenses of $1.9 million.

Net income attributable common stock for the quarter was $33 million, or $0.16 per diluted share. Excluding a loss on early extinguishment of debt of $4.5 million net of tax, or $0.02 per diluted share would result in net income of $37.5 million, or $0.18 per diluted share. Net income in 2Q '09 was $33.4 million, or $0.17 per diluted share. Adjusted diluted earnings per share as calculated in today's press release rose to $0.22 for the second quarter of 2010 as compared to $0.20 for 2Q '09. Cash flow from operations less net capital expenditures of about $24.2 million resulted in approximately $4.4 million in free cash flow for the quarter as compared to free cash flow of $16.7 million in second quarter of 2009. This decrease is primarily due to increased working capital requirements associated with ramp up of gas transmission projects during the quarter.

EBITA for the second quarter of 2010 was about $73.9 million, or 8.5 % of revenues of compared to about $64.8 million, or 8.0% of revenues in the second quarter of 2009. Adjusted EBITDA was about $106.2 million, or 12.2% of revenues for the second quarter of 2010 compared to $89.9 million, or 11.1% of revenues for the second quarter of 2009. Second quarter adjusted EBITDA includes an adjustment for the approximately $7.1 million in losses associated with the redemption of our convertible securities consisting of $2.3 million in redemption premium and a non-cash loss of $3.5 million on the early extinguishment of debt, couped with a non-cash writeoff of the remaining $1.3 million in deferred financing cost.

Our day sales outstanding, or DSOs were 79 days at June 30, 2010 versus 80 days at March 31 of 2010 and 79 days at June 30 of 2009. We saw an increase of costs in excess of billings this quarter which are a component of the DSO calculation as a result of several projects ramping up as our busy season begins. The calculation of EBITA and EBITDA and adjusted EBITDA, all non-GAAP measures and the definitions of DSOs can be found in the investors and media section of our website at quantaservices.com.

At the end of the quarter, we had about $520 million in cash. We had approximately $284 million in available borrowing capacity under our $475 million credit facility. We had about $191 million in letters of credit outstanding, primarily to secure our insurance program. The combination of our cash balance and availability under credit facility gives us about $804 million in total liquidity as of June 30, 2010.

Concerning our outlook for the future,our estimate of revenues for the third quarter of 2010 is from $1.15 billion to $1.25 billion. Our estimate for 3Q 2010 EPS based on revenues of between $1.15 billion and $1.25 billion is $0.29 to $0.31 per diluted share on a GAAP basis. This estimate compared to $0.32 in GAAP EPS in 3Q '09, which included $0.11 per share related to the reversal of tax reserves. Our GAAP EPS forecast for 3Q 2010 includes an estimate of $19.0 million for amortization and non-cash compensation expenses. Excluding these expenses, our non-GAAP adjusted diluted earnings per share for the quarter expected to be $0.34 to $0.36.

Additional guidance, we are currently projecting our tax rate to be approximately 40% for 2010. We expect our diluted share count to be about 211 million shares. We expect intangible amortization for rest of 2010 to total about $21 million, broken down by quarter as follows, 3Q of about $13 million and 4Q of about $8 million. For the fiscal year 2010, we're now forecasting earnings in the range of $0.85 to $0.90 per diluted share on revenues of $3.8 billion to $4.1 billion. We expect our adjusted diluted EPS to be between $1.05 and $1.10 for all of 2010. We expect Ca[Ex for all of 2010 to be approximately $180 million to $190 million, and this compares to CapEx for all of '09 of about $165 million. This concludes our formal presentation. Joe, we're ready for questions now.

Thank you, sir. (Operator Instructions) Our first question comes from the line of Tahira Afzal with KeyBanc. Go ahead, please.

Good morning gentlemen.

Good morning.

I apologize about the reception, all our phone lines were down this morning. My first question is in regards to the second quarter, the revenues were light, seems electric transmission was a little light, at least versus my expectations. Would you comment on what -- how electric transmission fared in the second quarter versus your expectations and whether there was any slowness in the start of some of your key projects there.

I think that was the main reason for it to be down a little bit, it was just some lumpiness in the start of some projects. Again, we don't want to over emphasize the delays, but minor delays in the start of some of the transmission work that we have in backlog caused some gaps in our transmission revenues. Nothing too significant, but as you can tell by reading the headlines, there are some projects that have been delayed, and there were some minor delays that caused some lumpiness in our transmission work.

Got it, thank you. And a follow-up question and then I jump back in queue, as you look at the second half of the year, it seems like your guidance assumes that some of the incremented projects pushed out, are you assuming any conservatism in terms of the ramp of the rest of the work you have on these key projects that you've already booked? I would love to get a sense of that.

Not too much. Here is the issue, the solar projects and telecom projects that we expected to see awarded and started in the second half of the year are very slow to start. So, to a lesser degree, there is some transmission projects that have some delay, and then to a lesser degree than that even, transmission has some projects that have been delayed. But the bigger impact is we're not getting the help from the solar in the second half that we expected or the telecommunications group that we expected.

Thank you, and our next question comes from the line Carter Shoop with Deutsche Bank, go ahead please.

Good morning. Historically, you guys have provided very conservative quarterly guidance, but hasn't been as conservative on longer term targets. That said, how should investors think about your implied fourth quarter guidance for 2010?

Well, I think the message we're trying to send to our investors is that projects out there are rather uncertain at this point in time. There are a number of projects that we know are there on the telecom side, the solar side, the transmission side, the smart grid side and the transmission gas side that are ready to go, that have financing, the plans are all drawn. Everything is ready to go except there's permitting delays, some type of regulatory process that's incomplete or extended and so, yes, we don't know if that's really conservative or not because of the unknown. When these projects -- one way to look at it is we think these projects are really extended backlog. When they come, they're going to come in a flood, I think. And if they come in the fourth quarter, then our guidance is very conservative. But if they don't, why, we'll have to struggle to make those numbers. So, we'll just have to see how it plays out.

A good way to put it is, I think we shot right down the middle of the road as far as our guidance for the fourth quarter.

That's helpful. As then as a follow-up question, you mentioned briefly in your prepared remarks about strategically expanding international opportunities. Can you elaborate a little bit what you're doing organically and potential opportunities for acquisitions there?

Yes, we're looking -- I think we've talked earlier in the year about the international opportunities. But particularly using some of our proprietary technologies, both in the electric and gas transmission to promote international revenues in places like India, like South Africa, much of Africa, across the world. And then once we're in those countries and competing, look at some of the competitors and pick our best competitors and then perhaps make some international acquisitions. But our first move will be with our proprietary services and greenfielding operations right now.

And our next question comes from the line of Steve Sanders with Stephens Incorporated, go ahead, please.

Hello, good morning, guys.

Good morning.

First question, can you just talk a little bit about the revenue lift 2Q to 3Q by segment and maybe work a general back comment in there? And then the second question is in this quarter, we saw a pretty modest sequential increase in the electric revenues, very nice margin expansion. And on the other side, we saw a nice sequential uptick in gas revenues, but fairly flat margins. If you could provide some additional color on that. Thank you.

There were several questions there, so you might have to repeat them, but I'll try to answer the first question. We don't typically provide guidance for the next quarter by segment. However, I would say it's a pretty even lift across all the segments when you look between the second and third quarter. We're all going -- all segments are going into their busy season, so there's a pretty good ramp in gas, there's a pretty good ramp in electric and telecom going from second quarter to the third quarter. So what was your second question?

Okay. The second question was we saw a decent backlog lift this quarter, how should we be thinking about that in the back half? And then the related question was just, this quarter we saw 2Q revenues increase nicely in the electric segment -- or I'm sorry, we 2Q revenues relatively flat in the electric segment, but a nice margin lift. And we saw nice sales lift in gas, but flat margins. So I just wanted to get a little more color on those segment results.

Okay. Well margins, I think if I understand your question, margins generally do increase between the second quarter and the third quarter, and that's typically due to better efficiencies -- two reasons, better weather and higher revenues to absorb fixed cost. So, you're also -- you should also see a lift in margins across the board in all of the segments between the second and the third quarter. Backlog increase, I don't know that we can say that -- backlog did go up, because it typically does go up in the next quarter out compared to last quarter. But quite a bit of increase in backlog that we saw this quarter compared to last quarter actually falls into the full 12 month period as opposed to major increases in backlog within the next quarters -- next couple of quarters. I don't know if that answers your question or not, does it?

Apparently he's gone.

And our next question comes from the line of Jamie Cook with Credit Suisse, go ahead, please.

Hi, good morning, it's actually [Peter Chang] for Jamie Cook. I had a question on your electric power backlogs. Did you -- do you find it necessary, or have you scrubbed your backlog for projects that have been awarded or are in backlog but could possible face cancellations?

Yes, we have, and we're fairly confident in our backlog numbers.

And as far as electric power revenues, particularly transmission, with the delays, do you still expect transmission revenues to be up double digits, or is that going to be a little bit of a stretch?

No, Peter, we don't think double digits is realistic now.

Okay. And as far as bids outstanding are, outside of the $1.4 billion that you guys gave a pretty good commentary on, would you be able to quantify what's out there right now?

Jim, you had that in your script?

Well, we did --

I'm sorry, I apologize.

(inaudible) of the $1.4 billion that I commented on, we have bid some other large transmission jobs since then. We bid the LS Power job, we've rebid the (inaudible), we submitted some pricing on Central Main Power, we submitted pricing on CapEx 2020. So, there's still robust activity with those projects, we'll probably start in 2011 and not 2010. So the projects in the $1.4 billion affected 2010 revenues.

Got you, sorry I missed that. I'll jump back in queue. Thanks, guys.

And our next question comes from the line of Scott Levine with JPMorgan, go ahead sir.

Good morning, guys.

Good morning.

It sounded like regulation and permitting is behind, a lot of the delays you're talking about here. But could you talk about whether the cycle is maybe more of an impact to the way the year is playing out and the pipeline is playing out versus your initial expectations?

You're right. It's permitting delays and so forth. Financing doesn't seem to be a major problem for the -- our customers. And just recently in the last month or two, those delays have seemed to become more significant or more impactful to our customers than they have been in the past. Does that answer your question?

And those delays, it seems like they affect the number of different areas and number of individual projects differently. So, is it a bunch of these types of things or is it a uniform driver that's causing the same thing to happen with regard to a number of different projects?

I think that different areas are impacted more. Renewables, as Jim said, wind is down 71% according to the wind energy group. Solar has been affected, although we're beginning to see quite a bit of activity on the solar side, it's a little later in the year than we anticipated that it would be, again, because of regulatory processes and permitting. Telecom, obviously the RUS funding for rural telecom has been delayed. We anticipated we'd be working on several of those projects in the third quarter and really, we don't have any in-house and very few across the country have been awarded. And that's almost directly a result of permitting issues, they are having to go get environmental permits.

Transmission electric is effected less than the other two industries we talked about there, but there are some delays and obvious major -- couple of major projects have been delayed, the Pat project and the Roseland to Susquehanna project have been delayed. And then there are normal or more normal slower delays, 30-day delays, 60-day delays in transmission electric. And then there's some in the gas transmission or pipeline transmission side, there's some delays there as well, although not as significant.

Got it. One follow-up question if I may, is the bidding environment for the transmission pipeline work and the gas pipeline work proven to be more competitive? Has there been any change with regard to the competitive environment in the last three, six months?

No, it's -- the small projects are very competitive, as they have been for the last year. But the larger projects are pretty much the same margin profile and competitiveness as before, not near as competitive as the small stuff.

And our next question comes from the line of Stuart Bush with RBC Capital Market, go ahead, please.

Yes, hi guys, a couple questions on the transmission project. The PUC of Nevada has improved NV Energy's southwest energy project. So, other than FERC approval, are there other regulatory hurdles needed to mobilize this project, and can construction start this summer?

Jim, do you have the answer to that? I think that construction can go forward. I think they were a little slower coming with their permits than were anticipated on that project, but I'm not totally up to speed there.

Yes, I'm not sure whether it got all the permitting or not. It seems like on some of these larger projects, these permitting issues are coming up toward the end of the progress near the construction award. So, I would guess that they may have all of their permits, but perhaps not.

(inaudible) a couple of small local permits that they might have to get, but all the major permits are out of the way, and I don't see that the others are significant at all.

Okay. And then for the Sunrise project, can you give us the dollar amount that you booked in backlog for that project in Q2, and should that start in the back half of 2010?

I'm sorry, we cannot disclose that information at the customer's request.

Okay. And the last question is on Tehachapi, I notice that the US Forest Service environmental impact statement requires strict emissions requirements construction on federal land, and I've noticed that your power electric has invested in a lot of vehicles with these emission requirements. Does that give you guys a competitive advantage on that project?

Yes, I think so. Also, because we went through the national forest on the Tehachapi project that we just completed and very successfully. I think that gives us an advantage as well.

And our next questions comes from the line of Justin Hott with Robert W. Baird, go ahead please.

Good morning guys, thanks for taking my call.

You bet, thank you.

So just a little bit more drilling into the guidance, I guess I'm trying to understand it a little bit better. With the backlog being up sequentially and you adjusting already for these delays that you've seen in the bid awards, I'm just a little surprised to hear you say that if we see things delayed further, that there still could be risk to the full year guidance. Also on that note, I think you said that the biggest delays you were seeing were on the renewable side, but it sounds like your 2010 guidance of $300 million is still in place. So maybe just a little bit more color on where the risk to the guidance still is.

Sure, backlog is up, but it could have been up a lot more. Solar is up, it could have been up a lot more. Telecom, I think, what, 12% growth? 22% growth this quarter, but we were really expecting to be much higher than that. So yes, there's been delays, but a lot of these things are doing very well. But they could have done a lot better, and we expect them to do a lot better than we think they're going to do now in third and fourth quarter because of the reasons we've talked about.

So then is the biggest driver of the guidance reduction, and I think you may have said this in prepared remarks, but that was primarily the telecom and the renewables? And then some of the larger transmission projects that you're talking about, were you planning on those having a 2010 impact, or were they more of a 2011 impact?

Some of those projects would had some revenues in 2010 as well.

Our next question comes from the line of Sanjay Shrestha with Lazard Capital Markets, go ahead please.

Great, thank you. Just to follow up on that question then ,guys. So, how do we then think about your renewables business here? There's a short of modules in 2010, so your solar is down. But does it mean that you're going to have a ridiculously strong renewables business in 2011?

Sanjay, it could stack up to be that way. We expected to better than the $3 million internally, and we have had delays because we couldn't get panels. We've had commitments pulled from us well into the planning process with customers that we were dealing with on an exclusive basis. So, now we're seeing things turn, we really think that there will be panel availability here as the subsidies in Europe seem to be reducing. So I think that could very well happen. I think the next few months are going to hopefully set up nicely for solar and hopefully, we can capture some of that revenue in 2010, but certainly in 2011.

Okay, one follow up question for me then, guys. Jim I think you said this in your prepared remarks, that you guys are very bullish on the transmission business long term, and a lot of the regulatory issues seems to be coming up. So, what I'm really trying to understand here is some of the -- and it's a lumpy business, I get that. So, some of the pushout on the transmission side and regulatory dynamics, how much of that is really a function of reduction in load, economic recession that we're in? Or how much of that is really new versus all of the regulatory challenges that have been there in the past? And two, when you say kind of long term, does it mean it really starts to see a major uptick in 2011, or are we talking about long term is 2012 and beyond that massive opportunity?

Sanjay, this is Jim. I think the answer to your question on the load is zero. None of these projects have anything to do -- delays have anything to do with the load reductions because of the economy. It has everything to do with heightened environmental scrutiny.

Okay.

It just seems like the -- our customers are having to go through more hurdles in order to get regulatory approval in some areas. That's been our concern when we talk about the timing. We're very excited about transmission, our excitement about transmission in the future has not waned at all. It's just the timing of the end of this year versus work into next year. And yes, we believe 2011 will be a good year for transmission.

Okay, that's great.

And our next question comes from the line of Alex Rygiel with FBR Capital Markets, go ahead.

Thank you good morning gentleman.

Good morning.

If we look into your 12 month backlog on $2.6 billion and we compare that to last year's of $2.2 billion, but add in some amount for Price Gregory, maybe $500 million, it would appear that your 12 month backlog is flat to down on a pro forma adjusted basis. First of all, is my math in the ballpark there? And second of all, how does that give us confidence that 2011 there is growth, and the second half of 2010, we're going to see very significant double digit growth year-over-year?

You have to remember that we had robust pipeline group going last year prior to Price Gregory ,and they have been fully integrated into Price Gregory, so it's hard to tell which is Price Gregory and which is our old pipeline business. So, I wouldn't draw any deep conclusions from that. I think that the confidence in 2011 is what we were talking about, these projects that are -- have been delayed, the start has been delayed or the bidding has been delayed, both in solar, telecom, to some degree transmission and some degree transmission gas. Those are all backlog that has to flow through the pipeline, so to speak, and it's going to come through and pretty big globs, we think.

And our next question comes from the line of Steven Gambuzza with Longbow Capital, go ahead, please.

Good morning.

Good morning.

Just wanted to make sure I understood one answer to a previous question about revenue growth, transmission revenue growth not hitting double digits. Was that focused on the 2010 revenues, and do you expect to be able to grow transmission double digit sales in 2011?

Yes, it's a timing issue on transmission. We don't believe we'll get double digit growth this year because of the issues with fermenting that we mentioned on the call. We think 2011 is going to get pushed into 2011, except for the PSE&G, Susquehanna to Roseland line, which sounds like it could be delayed up to two years. But we have all the CREZ non-priority lines that are going to start construction in 2011 that haven't been awarded yet. Central Maine Power, you have got DC Hydro. You've got the Tehachapi four through 11 line, you've got other projects, the Power Swift line, the Mona to Oquirrh line, you've got Sunrise that's going to be in full swing, we've got Northeast utilities and national grid. In our contracts, these are going to be peak years next year as we accelerate build. So, the dynamics in 2012 -- in 2011 and 2012 haven't changed, just looks like the schedules are going to be compressed.

Okay, I guess it would even seem like 2011 growth might even be better versus 2010 if 2010 is actually rebased lower.

Absolutely.

Okay, thanks very much.

And our next question comes from the line of Adam Thalhimer with BB&T Capital Markets. Go ahead.

Thanks, good morning guys.

Good morning.

Wanted to ask about the -- first of all, when you look at the delays in permitting. It's not like the -- it's not like FERC isn't trying to fix that. What do you see moving through Congress, what's the outlook for some of those issues being ameliorated?

That's an interesting question, and heaven forbid that I try to guess what Congress is going to do. Certainly there's initiatives by FERC to try to relieve some of these problems. They can look around the country and see that these lines are needed. They're needed not only for reliability, but they also are needed to transport the renewable energy to load centers. So, they're trying, but I would hate to predict what Congress might do. I would have thought by now we would have seen an energy bill that made some sense and that perhaps helped with some of the siting of transmission lines. But nothing yet, and I just can't predict what Congress might do.

Then as a follow up, I wanted to ask about a specific product, and that is Path. I continue to hear in the marketplace that you are well positioned for that when it moves forward. What would be your expectation, if that's the case, if you're in line to win that project? When do you think they're going to bid that? When would you be able to put that in the backlog, given the fact that the job has just started to get back up and running here?

I have to say, I don't want to be smart about this, but we're well positioned for every transmission job across the United States with every customer. Path is no exception to that. I think we're well positioned, but if you ask me about Mona to Oquirrh, I'd say we were, trail -- not trail, but Tehachapi, I'd say we were well positioned for that. BCPC, we're well positioned for all of those. So, we'll have to see how Path comes along. But certainly, I think that it's late 2011 before we see any revenues from that and maybe 2012 before there's any revenues for Path for whoever the successful contractor is.

And our next question comes from the line of Michael Coleman with Sterne Agee, go ahead.

Good morning. How are you?

Great, how are you doing?

Doing well. Just wanted to understand a little better on the third quarter revenue guidance, the midpoint of which is $330 million above what you realized in a second quarter. How much of that is coming from pushouts, and can you break that $330 million down into a couple of buckets just so we can get more conferrable with it?

Well, you typically have increase in revenues between the second quarter and third quarter, and it's even more so I think now with gas transmission. Because gas transmission typically, especially in today's market, will be more in the better weather months, the third quarter and the fourth quarter than in the worst weather months, which is disbursed in second quarter. So you are going to see -- you should see an increase in revenues in the third quarter pretty much across the board, but probably more so in gas than the others.

Okay, and a quick follow-up. Something you said earlier, Jim, on the transmission projects being delayed more on regulatory as opposed to economic concerns. And just looking at Path, Map and now Susquehanna, all projects related to liability that have been pushed out for some time, how is it that the transmission or the reliability portion of the transmission market hasn't peaked from a cyclical perspective?

When you look at the Path project, for instance, that was initially delayed due to the lack of load growth or decline in load requirements. But PJM determined that that line was necessary. So, we -- again, these lines are being delayed, but none of them are -- any of these lines that we discussed are being delayed -- if they are delayed, are being delayed because of environmental permitting or siting issues. None of them are associated with load growth or the lack thereof.

And our next question comes from the line of Jeff Beach with Stifel Nicolaus. Go ahead, please.

John, James, Jim.

Good morning.

Two questions, I'll ask them both together here so that I get them in. First of all, to change the subject, can you expand a little bit on the current activity in the gas pipelines, the bidding activity, is it developing out as strong as you thought? Make a comment in that regard looking out into 2011. And then back to the electric transmission, can you tell us if there's -- it doesn't sound like it, but tell us if there's been any major wins since June 30 in the backlog and transmission, how many bids you have outstanding on major projects that are over $100 million in size. I think there's quite a few of them out there that have been -- have cleared almost all of the regulatory approvals except maybe a minor permit issue that could proceed ahead here over the next three to six months.

Starting with your first question about the permit status of gas and oil transmission pipeline, it's pretty much as we expected. I don't think there's any surprise there. I think last year when we bought Price Gregory, we thought we'd do $700 million to $900 million in transmission pipeline revenues, and we're going to do somewhere near the top end of that, as we've stated before. So I think it's pretty much where we expect it to be. We are seeing some delays in pipelines because of permitting issues. Less so in the pipeline business, I think, than any of our other business segments. So it's pretty much on schedule with what we expected.

Transmission bids outstanding, I think we have four or five major projects that we have bid that we haven't -- the projects have not been awarded to anyone. So, yes, there's a lot of those projects. Now that they haven't been awarded in the second quarter, they should be awarded perhaps in the third quarter or perhaps fourth quarter. So, we probably won't get much revenue from them in the third and fourth quarter as we originally had expected to get some revenues out of them in the third quarter or fourth quarter. But there's a number of bids of large projects that are outstanding. Projects have been bid, projects are pretty much ready to go except for maybe some permit delays and that sort of thing.

And our next question comes from the line of William Bremer with Maxim Group, go ahead please.

Hi, John, James, Jim. Good morning.

Good morning.

Many of my questions have been answered. Let's go to the balance sheet. With close to $2.50 per share in cash, what's the plan here?

The plan hasn't changed a whole lot as far as far utilization of cash. Number one, for working capital to fund some of these big projects, that Jim and John have been talking about. Number two, we did decrease our forecast for CapEx, but still, that's probably -- number two is CapEx tied with acquisitions. We continue to be very, very active in looking at acquisitions. And then to the extent that -- we've said this in the past many times, to the extent we get to where it looks like we've got more cash than we need for any of those, then we'll start looking at things like cash stock repurchases or dividends.

Okay, that's all I have, gentleman. Thank you.

Thank you.

And our next question comes from the line of Craig Irwin with Wedbush, go ahead, please.

Good morning, gentleman. Thank you for taking my question. Just wanted to drill down on guidance a little bit more. I know there have been several questions asked on this already, but you dropped your revenue range by about $100 million, but your earnings range has dropped by about $0.10. It seems that possibly there's some fairly significant profitably assumptions around either the self telecom or solar revenue that got pushed out, or maybe you're using some more conservative assumptions for the other business segment. Was wondering if you can speak to that a little bit and help us understand how that comes together.

Well, you're right. But generally, the projects that we're talking about being delayed, that the guys have talked about this morning are all high margin projects. So, when you put the conservatism in there for those projects being moved out, it's going to naturally affect the EPS more than it does the revenues.

Okay, excellent. And in the past, James, you've shared more detail on the Price Gregory acquisition, how that's tracking with revenue, total backlog and 12 month backlog. Was wondering if you might be able to share that with us this time.

I think that we haven't changed what we've said in the past -- what we said in the first quarter as it relates to Price Gregory. We still -- last year we gave guidance that we thought Price Gregory would do somewhere between $700 million to 900 million. Just as Price Gregory by itself, not counting our other gas transmission work. And we are still --, we continue to believe that, that -- we think that Price -- we continue to believe what we said last quarter, which was that we thought Price Gregory would end up at the higher end of that range that we gave last year when we acquired them, so it would be closer to $900 million.

And our next question comes from the line of Dan Mannes with Avondale Partners. Go ahead.

Good morning.

Good morning.

Two quick questions. First, and I don't think I heard this in the prepared comments, have you guys indicated relative to your guidance how much business there is to go for this year, i.e., what needs to be booked and billed this year to get your guidance number that's not already in backlog?

No, I don't think we addressed that. I don't know that I can answer that question. I think he's talking about how much backlog we need to (inaudible)

How much would you need to book and bill --

Repeat the question, please.

In order to get your guidance number, how much business needs to be booked and billed this year to get there, relative to what's already in backlog?

We don't typically disclose backlog by quarter, we typically just disclose it for the 12 months. But we're comfortable with the guidance based on historical percentages of revenues that are in backlog at this point in time.

Okay, maybe I'm not asking the question well. Let me try one other thing I wanted to ask about. You mentioned on the CREZ work on the non-priority lines, you're expecting construction actually to start in 2011. Does that assume that the certificates in need on a lot of this are actually issued at that point, or -- I guess I'm trying to understand your thoughts on timing there, and when do you think bidding activity will take place as it relates to the non-priority CREZ work?

The CCMs are in the process of being filed now with the Texas PUC, and there's a six month waiting period after those certificates are filed. So, that takes us into the first quarter of 2011. Of course, that's where you're seeing some of these lines -- couple of -- one notable of line challenge with LCRA. It's going through the CCM process. So, we see that most of the CREZ work will begin in the first quarter of 2011.

And our next question comes from the line of John Rogers with DA Davidson, go ahead, please.

Hi, good morning. Just wanted to follow up, in terms of the regulatory environment, has there been anything that you can point to that's a change that's caused the slowing? And the follow up to that, and you touched on this a little bit, John, in terms of the political environment, but is there anything to suggest that it will change?

I think that because this is such a hotly contested election year, that most politically motivated agencies are somewhat reluctant to make controversial decisions, and perhaps things will loosen up after the election. We know for instance that there have been a number of rate cases by public service commissions that have been denied because the politicians certainly don't want to see an down economic times that they've given utilities rate increases. For political reasons more than need of the utilities. But I think some of that comes into play, and it may be more a factor than what we're thinking, but it just seems like the last 30 to 60 days, we've seen a significant amount of problems obtaining permits and hedging by the agencies and issuing permits for some of these controversial projects.

Okay. Thank you.

You're welcome.

And our next question comes from the line of Morris Ajzenman with Griffin Securities. Go ahead, please.

Hi, guys, I guess being last in line, not too many questions left to ask here. But a small one on the telecom business, revenues year-over-year of 22% and then it gives us a 12 month backlog. And basically, no matter how you look at it, it's down about 13%. Though it's not a big part of the overall profitability of the company in operating income, are we going to first see declining rates of growth or actually declining revenues year-over-year in the third and fourth quarter? And can there be some sort of adverse impact on the operating margins?

The -- certainly we hope not to see that We expect there will be some projects awarded over the next couple of quarters, but not the -- apparently not the rush of projects that we expected to have in hand right now from the fiber to the rural area buildout for the RUSs.

So, let me ask it differently. If revenues do come in materially, will the operating profits decline commensively and the margins stay at the current level? How do the margins play versus the change in revenues?

Well, there's a couple of things. One, obviously, if your revenues are dropping off rapidly, then your SG&A is going to effect your margins as you try to match your SG&A to the revenues you have left. However, offsetting that is third and fourth quarter, typically good weather quarters. Now in the northern United States, December can be problematic, but certainly third quarter is our best quarter weather wise. That enhances productivity and enhances margins as compared to, say the first quarter where regardless of what the revenues are, your margins are going to be down because you're digging in frozen ground, snow and ice and so your productivity is down and your margins are down.

And our next question come -- is a follow-up question from the line of Tahira Afzal with KeyBanc, go ahead, please.

Hi gentleman, just one last question and again, I'm trying to get comfortable around the guidance and what's changed over there. You said one of the reasons that you had taken down guidance was because of one particular solar project, but as someone pointed out earlier on,, it seems like your renewable guidance is still intact. And I'm trying to figure out, did I assume that implies that you've built in a big cushion into guidance and the cushion has gone away. I guess cannot reconcile those two statements.

Wind is performing higher than what we expected, Tahira. And frankly, the $300 million guidance that we gave you, we expected to do better than that as well. So, the solar opportunities, if you want to reconcile it, I think we'll probably end up at $150 million to $170 million in solar for the year. But if we get some of these larger contracts, we could do better than that, better in the fourth quarter. So, it's more a timing issue than anything. But I think the two factors are that we expected to do better in renewables internally than the $300 million, and wind is doing better than expected, solar is down.

That makes more sense, Jim. And does that mean that if I was to look at the bits that have slowed down versus your expectations, which are the ones that you're the most positive around, will likely come back? Is the visibility really poor?

With regards to renewables?

Well in general, you mentioned natural gas, some small work there, electric transmission and then renewables. My sense is from what you're saying that gas opportunities will come back perhaps the fastest in terms of the large projects that have been delayed while the electric transmission will probably be the most pushed out. Would that be correct read over there?

No, I don't think so. I think that what I was saying is that solar has probably been the one that's pushed the most out. Telecom second, electric transmission and smart grid was the third and gas transmission, we've seen less impact from project delays this year. However, I think visibility on electric power, particularly large transmission projects is very high, and there's no doubt that those projects have momentum, that they're generally ready to go. They have the financing available. There's just permitting and regulatory issues in that regard. So, I would say transmission electric, transmission gas are more certain, with telecom probably being next,.

The certainty is there, they're having the telecoms go back and get additional environmental permits that were either not required or not realized that were going to be required in the beginning. And then solar is probably not as certain, although we have good visibility as Jim said on several projects that are there, but solar not only has permitting issues, they also have some financing issues and panel issues as well that are affecting them. So, that's the way I would look at it. Electric transmission and transmission gas visibility is very good. Telecom is good, less certain on the timing and then solar is next.

An our final question is a follow-up question from the line of Alex Rygiel with FBR Capital Markets. Go ahead, sir.

Thanks. John, I wanted to follow up on a question a few minutes ago, and it kind of followed with your response last quarter as a question from Sanjay. And I think the question is trying to get at exactly how much in revenue -- or how much in uncommitted revenue is required to be won or bid on and won over the next six months to achieve your guidance? Last quarter, you went through real nice scenario of explaining backlog and so on and how to get to that. Could you attempt to quantify that for us again?

Alex, I don't know how to answer the question. A second ago, I said that we give 12 month backlog, but we don't usually get into the granularity of talking about backlog by quarter, which is what you're asking for. And we've looked at it and that's what caused us to reduce our guidance, actually, was backlog that looked like was going to happen in the third or fourth quarter. So, we reduced guidance to a level that we were comfortable based on historical averages of revenues that are in backlog going into the next quarter and the next quarter out.

Last conference call you said that -- or John said that you needed about 750 to $1 billion dollars in revenue in the remaining nine months of the year to achieve your guidance, that was the -- that's the number I'm sort of looking for. Where does that stand at now?

I don't have that number, Alex. I'm sorry.

Thank you.

And I will turn the call back to management for any closing remarks. Go ahead.

I'd like to thank you again for your participation in our second quarter conference call, which is, by the way, our fiftieth quarterly conference call. We appreciate your questions and ongoing interest in Quanta, and we'll see you next quarter.

Ladies and gentlemen, this does conclude your conference call for today. Thank you for using ACT Conferencing, you may now disconnect.