Quanta Services Inc (PWR) 2010 Q4 法說會逐字稿

Ladies and gentleman, thank you for standing by, and welcome to the Quanta Services fourth quarter and full year 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) Conference is being recorded today, Wednesday, February 23, 2011.

I would like to turn the conference over to Kip Rupp, with DRG&L. Please go ahead sir.

Great. Thank you Tadeo, and welcome everyone to Quanta Services conference call to review fourth quarter and full year results. Before I turn the call over to Management, I have the normal housekeeping details to run through. If you would like to be on the email or fax distribution list to receive future press releases for Quanta, or if you had technical difficulty this morning and did not receive your email or fax, please call our offices at DRG&L at 713-529-6600. You can also sign up for email information alerts by going to the Investors and Media section of Quanta Services website at QuantaServices.com.

If you would like to listen to replay of today's call it will be available via webcast by also going to Quanta's website at QuantaServices.com. In addition, there is a telephone recorded instant replay that will be available for the next 7 days, 24 hours a day that can accessed as set forth in the press release.

Please remember that information reported on this call speaks as of today February 23, 2011, and therefore you are 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 is Safe Harbor 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 should not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or 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 under take 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 affect Quanta's forward-looking statements, please refer to the Company's annual report on Form 10-K for year ended December 31, 2009, its quarterly reports on Form 10-Q, and its other documents filed with the Securities and Exchange Commission, which maybe 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?

Morning everyone, and welcome to the Quanta Services fourth 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 operational review by Jim O'Neil, President and Chief Operating Officer, and review of our financial results by James Haddox, our Chief Financial Officer. Following our remarks, we will welcome your questions.

Revenues for the fourth quarter increased to $1.1 billion compared to $985 million in the prior year's fourth quarter. Fourth quarter and full year revenues for 2010 include revenues of approximately $25.7 million, from Valard Construction, which was acquired October 25 of 2010. Revenues for the full year 2010 were $3.93 billion compared to $3.32 billion in 2009.

While revenues were strong in the quarter, we continued to experience margin pressure in the Natural Gas and Pipeline segment of our business. We discussed this at the end of third quarter. While this had a near-term impact on our financial results, it does not reflect a change in our approach to bidding this work at acceptable margins.

Although we are happy that 2010 is over and hopefully taking the recession with it, our accomplishments were significant and many during the year. During the year, we had $116 million of free cash flow, which James will discuss later.

We significantly expanded our Canadian presence with the acquisition of Valard Construction. We supported transmission reliability efforts through the application of our project management engineering and construction services, both energized and de-energized, for various utilities throughout the United States. We initiated construction of the first transmission lines as part of the Texas Competitive Renewable Energy Zone or CREZ program to support delivery of renewable energy.

We've provided construction services and more than 700 miles of transmission pipeline across 9 states and Canada. We secured our first construction projects under the broadband stimulus program awards with this momentum continuing with ongoing awards for engineering and construction services. We secured contracts and initiated construction of 70-megawatts of solar facilities through 17 projects in the United States and Canada, and we strategically strengthened our international operations.

We are optimistic that 2011 will bring increased visibility and additional project activity for several reasons. One, a strengthened economy. A recent poll of economists by the Wall Street Journal predicts that the US economy will grow at better than 3% this year. Two, if the first 7 weeks of the year are an indication of what the year holds for our Electric Power segment, we expect a significant increase in project activity in 2011. Transmission projects awarded in 2010, such as Sunrise Powerlink and Tehachapi are beginning construction while other much anticipated transmission projects, such as CapX2020 and Central Maine Power have progressed with construction contract awards.

Three, we are also beginning to see awards related to the Texas Competitive Renewable Energy Zone or CREZ. Today, I'm proud to announce that we have been awarded by two contracts by Lone Star Transmission as part of its plan to help deliver clean, renewable energy through CREZ transmission line construction. Jim will provide more information on these projects during his remarks.

We expect to perform work on the following major electric transmission projects in 2011. Sunrise Powerlink for San Diego Gas and Electric, Tehachapi, sections 6 and 11 for Southern California Edison, New England East-West Solution or NEWS for Northeast Utilities, specifically the greater Springfield Reliability Project, CapX2020 Group 1 projects, the Maine Reliability project for the Central Maine Power Company, Rhode Island Reliability project for National Grid, Bruce to Milton transmission line for Hydro One, Allegheny Power's TrAIL project, and several additional CREZ projects yet to be announced.

Looking to the future, industry experts project an increase in power investment. For instance, the North American Electric Reliability Council predicts that investment and reliability and interconnections will triple, going 1000 miles per year between 2000 and 2008, to 3000 miles per year through 2017. Edison Electric Institute estimates that investor-owned utilities will spend $9.7 billion on electric transmission projects this year, and increase $12.3 billion annually by 2013. We believe that Quanta remains the leader in providing electric transmission infrastructure services.

Our Natural Gas and Pipeline segment continues to actively participate in a robust bidding season for projects that are expected to commence in 2011. Natural gas pipeline safety continues to garner attention nationwide. Various legislative proposals are being considered, and utilities are scrutinizing maintenance practices. As legislation progresses, it has the potential to drive demand for pipeline integrity, maintenance and new construction, all services which we offer our customers.

Opportunities may also arise from the expected increase in natural gas production. Natural gas is projected to surpass coal as the leading US source of power generation by 2035. In addition to creating demand for our pipeline services, this shift will also positively impact various energy policies and regulations such as renewable portfolio standards, and transmission siting.

During the third and fourth quarters, we began to see significant bidding and award activity as a result of the American Recovery and Reinvestment Act, or the ARRA, broadband stimulus program. Most of the awards to service providers were for engineering services, but we also received awards to provide construction services, most notably the KINBER or PennRen project we previously announced. We expect bid awards for construction services to accelerate through the year and for awards to be largely complete by year end.

On the wireless side we expect LTE, or long-term evolution and 4G rollouts to gain momentum throughout 2011, and we expect to capture project awards as this technology rollout accelerates. Our fiber leasing business met our expectations for 2010, and we are beginning to see increased opportunities as the economy begins to recover particularly in the enterprise and carrier verticals. Jim will provide more details concerning our telecom segment in his remarks.

In closing, 2011 project awards are already off to a good start, and we believe we will experience strong demand for our services and increased infrastructure spending in the industries we serve. Quanta's strong balance sheet, strategic comprehensive service offerings, and extensive resources remain competitive advantages that should enable us to maintain our leading position in the industries we serve.

Now, I will turn the call over to Jim O'Neil who will present the details of our operations.

Thank you, John, and good morning everyone.

Our Company is sitting a at very different position as to our outlook for this year compared to the same time last year. We continue to build backlog and see noteworthy indicators of increased spending, strong bidding activity and the release of stimulus funds. These positive signs are building momentum in all segments of our business.

We expect 2011 to deliver meaningful revenue and margin growth despite a slow first quarter. That has been affected, so far, by extreme winter weather conditions, costs associated with ramping down two major electric transmission projects, and mobilizing resources to 5 new major transmission contracts, and the lower revenues from our Natural Gas and Pipeline business caused by the normal seasonality of this business. My comments today will address this outlook, while providing an overview of each industry segment.

In the fourth quarter of 2010, revenues from our Electric Power segment were approximately $595 million, an increase of 15% compared to approximately $516 million in revenue for the fourth quarter of 2009. The increase in this segment's revenues was primarily related to increased activity in electric transmission and renewable energy construction.

12 month electric power backlog was $1.8 billion at December 31, 2010. This is a 37% increase over backlog at December 31, 2009. This backlog increase is largely attributed to the increase in transmission awards during the past several months. Total backlog was up 11.8% to $6.3 billion at December 31, 2010, compared to last year.

During the first quarter, we initiated pre-construction activities or performed construction services on electric transmission projects throughout the US and Canada. Under our 4-year contract with Central Maine Power Company, we will provide construction services jointly with our Maine-based partner to build approximately 200 miles of transmission infrastructure in central and western Maine. We have initiated pre-construction activities and project's completion is projected by mid 2015.

We are also continuing pre-construction activities for San Diego Gas and Electric's Sunrise Powerlink project. The underground portion of this project is underway. For Southern California Edison's Tehachapi project, sections 6 and 11, we are performing pre-construction activities and expect to mobilize crews by the end of the first quarter.

We initiated work on Northeast Utilities or NU's greater Springfield Reliability Transmission project, which is the first of 3 major construction projects for end used portion of the New England East-West Solution or NEEWS. Currently, we are performing pre-construction activities and will soon begin installing tower foundations. Construction will be in full swing in the second half of 2011 with the completion anticipated in 2015.

Outside of the NEEWS project, we continue to provide NU with specialty energized services to support their structure upgrade initiatives throughout their service area. Our work continues on National Grid's Rhode Island Reliability project. Our crews are currently studying foundations and structures as well as stringing conductor. This project is less than 10% complete with expected completion in the spring of 2013.

We continue to provide substation and transmission services for ITC holdings in Michigan and Iowa, and we expect ongoing activity throughout 2011. Under our contract with American Transmission Company, we expect activity levels to increase in 2011 as compared to last year. We are already in the pre-construction phase and ramping up for construction of the Rockdale to West Middleton transmission line construction on this 345,000-volt, 32-mile line is expected to begin in April of this year with completion in January of 2013.

For Hydro One, our crews continue to work on the Bruce to Milton transmission reinforcement project. The project consists of a 108-mile, double circuit, 500,000-volt transmission line. The new line doubles current transmission capacity to accommodate additional wind and nuclear generation sources to load centers in the Toronto area.

We completed LCRA's Clear Creek to Hudso, 345,000-volt lines spanning approximately 88 miles in January of this year. Originally this project was scheduled to be completed in June of 2011. We will continue to work on smaller scale transmission projects for LCRA throughout this year and expect construction activity to increase in 2012.

Last week, we substantially completed construction under our project with Allegheny Energy on the TrAIL project. This project was originally scheduled to be completed June 1st of 2011. On a scale in expertise, allowed us to deploy additional resources both LCRA and TrAIL projects ahead of schedule.

In the first quarter of this year, we are have been awarded significant electric transmission contracts by CapX2020 and Lone Star Transmission, estimated revenues from these projects are not in total or 12-month backlog. CapX2020 is a joint initiative of 11 transmission owning utilities proposing to build infrastructure under what is expected to be the largest transmission expansion in the upper Midwest in 30 years.

Quanta's subsidiary, MJ Electric was one of two contractors selected for this project. CapX2020 has released the first group of projects known as Group 1, which includes four transmission projects totaling over 700 miles. The construction portion of the CapX2020 Group 1 expansion is estimated to be $660 million. Quanta's fist project is the Bemidji to Grand Rapids project, which is a 230,000-volt, 70-mile transmission line that will start this fall, with the targeted completion in 2013.

Today, we are also announcing that Quanta was awarded contracts for two projects for Lone Star Transmission related to the Texas Competitive Renewable Energy Zone, or CREZ. These awards showcased our diverse service offering and ability to meet customer requirements on all project phases. Under the transmission contract, Quanta will oversee, manage it, perform all activities related to the construction of more than 90 miles of 345,000-volt, double circuit, two bundle transmission line, which spans across Fisher, Jones, Scurry and Shackleford Counties. Specific services include site preparation, foundation and structure installations, wire stringing and interconnections.

The other contract is for the engineering, procurement and construction services for five separate switch yard facilities to support the 345,000-volt transmission system. Under the switch yard contract, Quanta will provide engineering design, procurement, installation, commissioning and testing services for five switch yards in Bosque, Eastland, Field, Navarro and Shackleford Counties in Texas. We continue to be actively engaged in pursuing other CREZ projects with proposals outstanding with three additional utilities. We expect additional awards to be made over the next several months.

In the fourth quarter, we continue to see positive indications that utilities are increasing their spending on distribution maintenance as we have had requests for additional crews from utilities in California and in the Southeast US. We believe we need to wait at least another quarter to determine whether the positive activity we are seeing in this area is sustainable. Our smart grid efforts continue throughout the US, we are actively supporting smart grid efforts for utilities including Center Point Energy, American Electric Power, and utilities in Alabama and Florida.

The fourth quarter brought increased momentum to the renewable portion of our business as well. We exceeded our 2010 renewable energy revenue projections. Renewable revenues for the fourth quarter of 2010 totaled $69 million. For the full year, renewable energy revenues were $313 million, as compared to $120 million for the full year of 2009.

During the quarter, we continued to work under three EPC contracts secured in the third quarter of 2010 for utility-scale solar installations owned jointly by Eurus Energy America and NRG Solar. We completed the engineering phase and initiated construction on the 20-megawatt Sun City project, the 19-megawatt Sand Drag project, and the 6-megawatt Avenal Park project.

Also, during the quarter we continued to work on our third utlities scale solar project at the Denver International Airport under our contract with Constellation Energy. We continue to expect double-digit growth in renewable energy revenues for the full year of 2011 compared to 2010 with solar opportunities contributing significantly to the growth. We expect the wind market to continue to be depressed through 2011 while solar opportunity will almost double to a 2-gigawatt market in North America compared to last year.

Overall, we are encouraged by trends we are experiencing in Electric Power segment, particularly the increase in electric transmission and renewable energy activity. We expect strong growth in revenues and improving margins in 2011 in this segment despite a slow start to the year. First quarter results for this segment were impacted by adverse weather, which has slowed production on all of our projects, particularly in the Midwest and Northeast, as well as costs associated with ramping down on the LCRA and TrAIL projects; and beginning to mobilize resources on Sunrise, Tehachapi 6 and 11, the greater Springfield Reliability project and the Central Maine Power project. We should begin to recognize revenue and margin benefits once these projects ramp up construction in the second quarter and beyond.

During the quarter, revenues from our Natural Gas and Pipeline segment were approximately $399.5 million. This compares to approximately $351.5 million for the fourth quarter of 2009. We continue to experience weather challenges in executing gas pipeline projects in the fourth quarter, which adversely affected margins.

Despite the project challenges we have discussed during the last two quarters, we have had many projects that have met or exceeded expectations. The Natural Gas and Pipeline segment generated a respectable 8.5% operating margin for the full year of 2010. 12-month backlog in the Natural Gas segment was $744 million, down $104 million over the same period last year. The largest contributor to this decrease in the lack of gas transmission was the lack of gas transmission backlog, which is not unusual given the timing of project awards that are individually large in size and scope.

We are currently in the height of the bidding season for transmission pipeline work, and are confident we will secure additional pipeline opportunities over the next be 3 to 4 months. Currently , we are bidding or negotiating over $1.1 billion of proposed projects yet to be awarded that will be built this year. Additionally, we are beginning to see pipeline construction capacity tightening for 2011 work, especially capacity to build larger diameter pipelines. We anticipate our Natural Gas and Pipeline segment revenues and margins in 2011 to be comparable with 2010, and will provide more clarity once we get through the bidding season.

Building on the success for our electric power construction and maintenance outsourcing agreement, we also recently announced a five year contract with Puget Sound Energy for natural gas construction and maintenance services across the utility's six county service area. The contract is expected to produce approximately $400 million in revenue during this five year term.

In the fourth quarter of 2010, revenues from our Telecommunications segment were approximately $83.4 million compared to approximately $94.3 million in the fourth quarter of 2009. This decrease in revenue is primarily due to reduced spending by service providers on their fiber build-out initiatives.

Solar backlog in this segment increased approximately 46%, to $415 million at December 31, 2010, compared to December 31, 2009. This increase can be attributed to the growing momentum in broadband stimulus project awards. During the second half of 2010, we were awarded $176 million in engineering and construction contracts related to stimulus. We expect the rate of awards to accelerate throughout the first half of 2011. We have already been awarded approximately $50 million of additional engineering and construction projects related to the stimulus program since the first of this year.

Broadband stimulus revenues recognized in the fourth quarter of 2010 were approximately $3 million. Most of our customers are expected to begin construction in the second quarter. With that said, we expect revenue in margin improvement in the second quarter in very strong -- in the second half of this year. Our largest single stimulus award which we recently announced was the KINBER project to engineer and construct a 1600-mile fiber ring throughout 39 counties in Pennsylvania.

KINBER, or the Keystone Initiative for Network-Based Education and Research is a coalition of colleges, Universities, research institutions and health care organizations, which received approximately $100 million in federal grants to connect the state's higher institutions of learning to national research institutions throughout a 10-gigabit ethernet network. As part of the contract, Quanta, through its Sunesys fiber licensing subsidiary, will provide $24 million in matching funds over a two year period, and in return receive certain rights related to the access to the network.

The 4G and LT rollouts by wireless carriers are expected to accelerate this year after delays in 2010, primarily related to technology availability. We believe we are in the early stages of a major upgrade by wireless carriers striving to keep up with increasing bandwidth requirements to support the ever increasing demands of technology platforms such as iPad and Netflix.

Looking forward we expect long-term evolution, or LTE initiatives, to continue to gain momentum over the next 12 to 24 months. We expect WiMAX and LTE initiatives to stimulate capital spending by wireless carriers over at least the next 5 years, and we are certainly pursuing opportunities in this area. Despite challenges in the fourth quarter of 2010 and the first quarter of 2011, we expect our Telecommunications segment revenues to show double-digit growth for the full year of 2011, with an improvement in margins compared to 2010.

In the fourth quarter of 2010, revenues from our Fiber Optic Licensing segment were approximately $28 million. This compares to approximately $23 million in revenue for the fourth quarter of 2009. Our Fiber Optic Licensing segment will benefit greatly from the KINBER contract, which allows us priority access to the 1600-mile loop. Fiber overbuilds on this network will be at significantly reduced construction and right away costs. Also, backhaul fiber from cell sites related to LTE initiatives is also providing to be a nice opportunity for our Fiber Licensing business moving forward.

In summary, we expect revenue and margin growth in 2011, 2012, and beyond, despite a slow start to this year. Collectively, across all segments of our business, we are seeing market momentum and a strong positive outlook for our Company. We maintained our market and pricing leadership coming out of this recession, and we are optimistic about capturing our share of the opportunities going forward.

Now, I will turn the call over to James

Thanks, Jim, and good morning everyone.

Today, we announced revenues of $1.11 billion for the fourth quarter of 2010 compared to $985.4 million in the prior year's fourth quarter, reflecting growth of approximately 12.3%, quarter over quarter. Net income attributable to common stock for the quarter was $33.7 million, or $0.16 per diluted share. The growth in consolidated revenues in the fourth quarter of 2010 was driven primarily by an increase in revenues from our Electric Power Infrastructure Services segment of 15.3%, quarter over quarter. A portion of this growth resulted from an acquisition during the quarter; however, excluding the acquisition, the Electric Power's segment revenues would have grown 10.3% quarter over quarter. An increase of 13.7% in revenues from our Natural Gas and Pipeline Infrastructure Services segment also contributed to our revenue growth during the quarter.

These revenue increases were partially offset by decreased revenues from our Telecommunications segment of 11.6%. Our consolidated gross margin declined from 19.4%, in 4Q 2009 to 14.4% in 4Q of 2010. The decrease in gross margin was primarily due to lower gross margins than our Natural Gas and Telecommunications segments.

Selling, general and administrative expenses were comparable to last year's fourth quarter at approximately $95 million. We completed major acquisitions during the fourth quarters of both 2009 and 2010, which resulted in an acquisition and integration expenses during both quarters. Excluding these expenses, our G&A expenses would have been $86.5 million in 4Q of 2010 compared to $88.8 million in 4Q of 2009. Selling, general and administrative expenses, excluding acquisition and integration costs, decreased from 9%, to 7.8% of revenues during the fourth quarter of 2010, primarily due to the increase in overall revenues while G&A expenses remained relatively flat.

Our consolidated operating margin before amortization expense decreased from 9.8% in 4Q of 2009 to 5.9% in 4Q of 2010 as a result of the lower gross margins previously mentioned; partially offset by lower G&A as a percentage of revenues. Amortization of intangibles assets decreased from $23.7 million in 4Q 2009 to $10.2 million in 4Q 2010, due to the runoff of amortization related to backlog intangibles associated with a large acquisition we completed in the fourth quarter of 2009; partially offset by amortization related to intangible assets recorded from our 4Q of 2010 acquisition.

Drilling further down into the details of our results by segment, Electric Power segment revenues were up about $79 million quarter over quarter, or 15.3%. This increase was due to increases in all major types of work in the Electric Power segment, transmission, distribution and alternative energy, coupled with approximately $26 million in revenues from the acquisition of Valard in the fourth quarter of 2010. Emergency restoration revenues were flat at about $16 million for the fourth quarters of both 2009 and 2010. The operating margin in the Electric Power segment was 10.0% for the fourth quarter compared to 9.2% in last year's fourth quarter, primarily due to increases in revenues described earlier, while G&A costs within the segment remained constant, and therefore, decreased as a percentage of revenues.

Our Natural Gas and Pipeline segment revenues increased quarter over quarter, approximately 13.7%, to about $399.5 million in 4Q 2010, due primarily to increased gas transmission revenues from new projects. The majority of the larger projects in 2009 were substantially complete earlier in the fourth quarter of 2009; however, due to combined effects of delays in the second quarter and third quarters of 2010, a larger portion of project work was performed in this year's fourth quarter. Operating margin in the Natural Gas and Pipeline segment was 5.5% in 4Q of 2010 compared to 15.5% in 4Q 2009. This decrease is due to difficult weather patterns, which carried over from the third quarter into an early winter season, and led to higher than anticipated costs on certain larger gas transmission jobs.

Revenues from our telecommunications segment decreased approximately $10.9 million, or 11.6%, to approximately $83.4 million in 4Q of 2010. Primarily due to lower revenues from fiber to the premise build-out initiatives as well as lower long haul fiber revenues as result of reduced capital spending by our customers, partially offset by increased revenues from telecom engineering services associated with stimulus related projects. Operating margin in the telecommunications segment was 2.8% in 4Q of 2010, compared to 7.1% in 4Q of 2009. This decrease is a result of continued competitive pricing pressure due to the lower overall customer spending as well as the overall lower revenues, and its impact on this segment's ability to cover certain fixed overhead costs.

Fiber Optic Licensing segment revenues were approximately $28 million for the fourth quarter of 2010 for an increase of about 21% as a result of our continued investment in fiber optic network expansion and associated the revenues from licensing the right to use point to point fiber optic telecommunications facilities. Operating margin in the Fiber Optic Licensing segment was 48.0% in 4Q of 2010, which is typical for this segment. When discussing operating margins by segment, we do not allocate certain selling, general and administration expenses and amortization expense to our segments. Therefore, the previous discussion about operating margin by segment excludes the effects of such expenses.

Corporate and unallocated costs decreased about $5.8 million to $42.4 million in the fourth quarter of 2010 as compared to 4Q 2009. Primarily due to $13.5 million in decreased amortization expense due to the amortization of backlog related intangibles associated with a major acquisition in 4Q of 2009; partially offset by amortization related to intangible assets recorded from our 4Q 2010 acquisition. This decrease in amortization expense was partially offset by higher acquisition and integration costs during 4Q of 2010 as compared to 4Q of 2009, as well as higher salaries and related benefits costs, primarily due to increased personnel.

Our tax rate of 37.2% this quarter was lower than we forecasted as a result of the release of a portion of evaluation allowance on certain foreign tax credits due to better visibility on foreign sourced income due to the acquisition of Valard. The ability to deduct a higher portion of the Valard acquisition cost than we originally expected, and the recording of tax benefits resulting from the filing of certain amended tax returns.

Net income attributable to common stock for the quarter was $33.7 million, or $0.16 per diluted share. Net income attributable to common stock in 4Q of 2009 was $43.9 million or $0.21 per diluted share. Adjusted diluted earnings per share as calculated in today's press release was $0.23 for the fourth quarter of 2010, as compared to $0.31 for 4Q of 2009.

Cash flow from operations less net capital expenditures of about $31 million, resulted in approximately $230 million in free cash flow for the quarter. The free cash flow during the fourth quarter of 2010 was primarily due to the significant reduction in receivables and unbilled balances from the third quarter, the result of the seasonal nature of our work. For the full year of 2010, cash flow from operations less net capital expenditures of about $124 million, resulted in approximately $116 million in free cash flow despite revenue growth of 18.5% for the year.

EBITA for the fourth quarter 2010 was about $64.7 million or 5.9% of revenues, compared to about $96.1 million, or 9.8% of revenues for the fourth quarter of 2009. EBITA for all of 2010 was $294.8 million. Adjusted EBITDA was about $105 million for the quarter, for the fourth quarter of 2010 compared to $132.8 million for the fourth quarter of 2009, and adjusted EBITDA for the full year 2010 was $434.2 million.

Our day sales outstanding, or DSOs, were 68 days at December 31st of 2010, versus 76 days at September 30th of 2010, and 63 days at December 31st of 2009. Costs in excess of billings, which is a component of DSO calculation, was $135 million at December 31st, and compares to $266 million at the end of 3Q of 2010, and $61 million as of the end of the fourth quarter of last year.

The increase in costs in excess of billings since 12/31 of 2009 was due primarily to the timing of the completion of various gas transmission projects, and the nature of the contractual billings. In last year's fourth quarter, certain gas transmission projects were completed earlier in the quarter and the contractual terms were such that billings were allowed earlier in the projects as compared to this year's fourth quarter where a number of the projects continued to work throughout the fourth quarter, and also did not allow for billing until various milestones were met. The calculation of EBITA and EBITDA and adjusted EBITDA, all non-GAAP measures, and the definitions of these and DSOs can be found on the Investors and Media section of our website at QuantaServices.com.

At the end of the year, we had about $539 million in cash after utilizing cash of $146 million to redeem our convertible debt and $130 million, net of cash acquired, for an acquisition during the year. We had $177 million in letters of credit outstanding under our $475 million credit facility, primarily to secure our insurance program, with no outstanding loans leaving $298 million of availability. The combination of our cash balance and availability under our credit facility gave us about $837 million in total liquidity as of December 31st of 2010.

Concerning our outlook for the future, our estimate of 1Q 2011 EPS, based on revenues of between $775 million to $825 million, is $0.02 to $0.03 per diluted share on a GAAP basis. This estimate compares to $0.11 in GAAP EPS in the first quarter of 2010. Our GAAP EPS forecast for 1Q 2011 includes an estimate of $6.2 million for non-cash compensation expenses and another $6.2 million of amortization expenses. Excluding these expenses, our non-GAAP adjusted diluted earnings per share for the quarter expected to be $0.06 to $0.07.

Our estimate for 2011 EPS based on revenues of between $4.1 billion and $4.4 billion, is $0.80 to $0.90 per diluted share on a GAAP basis. This compares to $0.72 in GAAP EPS in 2010. Our GAAP EPS forecast for 2011, includes an estimate of $25 million for non-cash compensation expenses and $26 million of amortization expenses. Excluding these expenses, our non-GAAP adjusted diluted earnings per share for 2011 are expected to be $0.95 to $1.05.

We are currently forecasting net income attributable to non-controlling interest to be approximately $1.5 million in the first quarter of 2011, and $11 million for the year. This ramp up over 2010 is due to increases in work on existing joint venture projects as well as increased amounts associated with our contract with Central Maine Power. For additional guidance we are currently projecting our GAAP tax rate to be approximately 39% to 39.5% for 2011.

We expect our diluted share count be about 216 million shares for 2011. We expect CapEx for all of 2011 to be approximately $180 million to $210 million, which includes CapEx for our Fiber Licensing segment of about $35 million. This compares to CapEx for all of 2010 of about $150 million.

This concludes our formal presentation, and we will now open the line for Q&A. Tadeo?

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from the line of Tahira Afzal with KeyBanc.

Good morning. I've got two questions, and I will put them both together. Number one, if you look at the guidance and outlook you've issued for 2011, and really putting that together with your qualitative commentary on improving revenues and improving margins, could you talk a bit about the traverse you are seeing this year versus last year, and where you have been perhaps conservative versus at this point last year when you issued 2010 guidance? And number two, could you tell us about what you assuming for pipeline spread utilization for outside of the first quarter, and how that compares to what it's likely to be as embedded in your guidance for the first quarter?

Tahira, I'll start with the pipeline question. We've got-- At the end of the year, we were $104 million short on backlog. We've signed the Puget Sound contract. That's going to add about $60 million in backlog for the year, and that's $400 million in total backlog. We think that we will need about $300 million, $350 million in additional transmission work. We see visibility into that this year in order to meet the numbers, the guidance numbers. So, utilization right now, we are working for four or five customers right now, doing various pipeline work, and we think that there is still plenty of opportunities this year. We are in the middle of the bidding season and see some good visibility into additional work this year. On your electric power question, I didn't quite catch the comparison, I think you're trying to say what is different this year than last?

Yes. Generally, given that last year's guidance ended up being a little aggressive or there were things that ended up working against you. What have you built in or embedded in your guidance that might be a little bit more conservative, and where are you a little more optimistic?

Let me try to answer that. If you are looking at 2011 and looking at a very slow start in the first quarter of this year, it's very hard to be too optimistic going forward. These days it seems it's difficult to get projects started on time, and so timing of projects is a big part of trying to make a forecast for the year. We have a lot of things going for us this year. We have stronger backlogs than we did last year, and more project awards even after the first of the year than we did last year; however, again, because if we do have such a slow start this year in the first quarter because of the things that Jim outlined, the extreme weather conditions that everyone has seen, the ramping down of two major transmission projects, and the mobilization of resources, and starting five major new transmission projects. And plus of course the normal seasonality in our Natural Gas business contributing to a very low first quarter. I think it probably pays to have some conservatism when you are giving guidance for the year.

Our next question is from the line of Dan Mannes with Avondale Partners.

I was actually going to ask the same question, but in a different way. Given what your guidance was last year, how much did your experience given the timing of some of the occurrences of projects last year impact your decision making on giving guidance this year, especially in the context of, at least in Jim's comments, what was a pretty bullish outlook for the ramp of a lot of these projects like Sunrise and Tehachapi, et cetera?

I think that you have to be very cautious, as I say, because of the way the world is today, projects sometimes don't start as they are anticipated to start. So, you have to be very cautious when giving yearly guidance. Last year, I think everything worked fairly well except the margins fell short in the third and fourth quarter because of some weather events in areas that shouldn't have had weather events, and we are seeing changing weather patterns where we are seeing the swamps of Louisiana are dry and the plains of Kansas are wet. It's just crazy stuff. Those things will all work their way out. You will have some bad weather events and then you'll have bad weather events that cause increased revenues. So, those will all work out over time, but it's the timing of projects that you have to be cautious with in giving guidance for a year.

Got it. And then the follow-up question, I guess this would be for the cynical people out there, as you look at the guidance, is there also not just the timing aspect, but when you look at the margin in your backlog is that different than maybe last year or what your expectations were coming in, or is that still in line with what you have talked about previously?

No, the margins of backlog continue to be strong, and there is reason for optimism in our backlog numbers.

Thank you. Our next question is from the line of Will Gabrielski with Gleacher & Company.

Good morning. My question following up on the margin question first. So, in Q1 you were mobilizing and not working, and for the rest of the year you should be working more and doing less mobilization work. So, can we say that maybe 2009 would be the margin level we should use as a baseline for what this year might look like for rest of year, or is that still something that we really can't pinpoint yet?

We always have talked about our margins goals at 9% to 12% operating income, and except for the first quarter this year, we expect to be in that range for the rest of the year.

Okay. Then the follow up quickly just on Pipeline business, what is your expectation on timing? And then the mix US versus Canada, and any impact from some of the rigs moving out of gas shale into more liquid-rich shales like the Bakken or Eagle Ford, and what your expectation would be if that happens over the next two years? Is that a positive or a negative for you?

We continue to see the shale build out well. Obviously, the oil rich areas are very active right now, the Bakken and the Eagle Ford, but we are starting to see work start on the Marcellus as well, and certainly the work in the oil sands continues as well in Canada. So, it's a very active market across both shale and oil sands, and we don't see that letting up any time over the next few years.

Thank you. Our next question is from the line of Jamie Cook with Credit Suisse.

It's actually Peter Chang in for Jamie. Is there any way that you could quantify the Q1 impact of the harsh weather, and then maybe if there were ramp up costs on these four or five projects or wind-down costs?

Yes, I don't know that --I think there is three things there that are negatively affecting the first quarter. It's hard the say that one is 30%, one is 35%, another is 25%, but it's kind of three things and equally important. Extreme weather certainly has had the biggest impact in January, we expect that to moderate, of course, in February and March, but we do have the ramp up timing of projects, a lumpiness of projects, finishing early on a couple of projects, and not being able to start on the five projects immediately after the ramp down of the first two. So, some of those issues that are causing it, and I wouldn't hesitate to say--I would hesitate to say that one was more than the other. We will have to wait and see, and look at it in hindsight and tell you a little better after it's over, I think.

Right, all right. The cadence of the quarters for the year, usually Q3 is seasonally your strongest, but given Jim's comments about expanding margins and revenues as the year progresses, should we think about Q4 as possibly being the most robust quarter for 2011?

I think that they could possibly be. Weather will play a factor into that, Peter, but we should have momentum into the fourth quarter and into the first quarter of next year. A lot of these projects are multi-year. John and I listed a list of eight to 10 projects, and they should continue through the fourth quarter in to the first quarter next year, and into 2013 and beyond.

We will still have the seasonal aspects and that the fourth quarter is worse weather and holiday seasons, and so forth and so on, but the timing of some of these natural gas project awards could kick in, in the fourth quarter and offset that. It's just difficult to say at this point in time.

Your next question is from the line of Steve Sanders with Stephens inc.

Good morning. A couple of questions, I don't know if you gave the approximate dollar value of Lone Star and or the three other CREZ projects that you are bidding, but if you could that would be helpful. And then, just give us a sense of in the Electric segment, what have you baked into guidance with regard to projects that could get awarded and actually start construction this year.

Steve we can't talk about Lone Star specifically and the dollar value, but if you look at the ones that we announced this year, the Puget gas contract, Group 1 CapX2020, our portion of that, and Lone Star, the project, you are in excess of $1.2 billion in total backlog, and probably $200 million of that will come this year.

Okay. All right. And then how do we think about your guidance on the electric sides relative to projects that could potentially get awarded here in the next few months and actually hit the P&L by the fourth quarter?

CREZ is a big piece there. We expect more CREZ awards that will be released this year that will start construction this year. That's the big opportunity, and then you've got the projects up for BC Hydro as well that you could potentially start towards the end of this year. Those are the two big ones that I'm thinking of right now that we haven't discussed.

Your next question is from the line of Craig Irwin with Wedbush securities.

Good morning gentlemen. Thank you for taking my question. Sorry to go back to the same subject of guidance again and again, but I guess this is a pretty important topic. If we take the midpoint of your revenue guidance range for the fiscal year and your 12-month backlog, and then adjust that for Valard, the roughly $125 million to $150 million in implied book and burn in that business this year, suggests that you are looking for fast book and burn business around $1.25 billion and that compares to roughly $1.6 billion a year ago. Given all the data points out there showing that there is a fairly substantial improvement in your end markets, did you change the parameters to include projects in your backlog, or become more conservative about certain types of work when you put the forecast together?

I think that goes along with what I said earlier is when you are looking at a first quarter start as we are, you have to be a little bit cautious in giving the guidance for the year. Again, projects have a tendency to be delayed and whether they start in the fourth quarter of next year, or third quarter of--excuse me, fourth quarter of this year or third quarter of this year, or the first quarter of next year, makes a big difference in your guidance. So, there is certainly some caution that needs to be used in providing that yearly guidance.

Maybe Craig to help you guys out a little bit, I don't know if this is what you guys are pointing at, but conservatism in guidance, to give you a feel for that, if go back and you look at last year's backlog compared to where our revenues ended up, excluding the $26 million from Valard, which was an acquisition, we were about 63% in backlog. And if you take the low end of our guidance this year, we are at about 70% in backlog. So, you could interpret that as being some conservatism as far as the revenue guidance because backlog is to much stronger this year than last year at this time. You still have to factor in the other things that these guys are talking about, which is weather and delays on projects. So, just using the numbers, you could infer that we are somewhat conservative this year as far as our revenue guidance is concerned, and we are also following up a year where we had to change our guidance during the year, last year.

We should have more visibility in to next quarter, too of the overall business, especially on these transmission projects and gas awards.

I guess nobody is going to fault you for being conservative. Just one thing to check, there were a few pretty large projects that were in the outlook last year potentially could have been awarded last year. Now, we've got others showing up, particularly the projects in Canada and the CREZ awards. Have there been any major projects that have disappeared or gone into sustained delays where you don't think they are likely to be awarded in the next several quarters?

The PATH project was a notable project last year, is the only one that really got delayed for an extended period of time. I guess there was the one in New Jersey. (multiple speakers) Yes, Susquehanna to Roseland was another one I guess that got put off for extended period of time. No cancellations that I'm aware of, but those two did get pushed out quite a ways.

Your next question is from the line of Carter Shoop with Deutsche Bank.

Hi. I was hope you could clarify on earlier comment where you said you had $1.1 billion of business in the Natural Gas Pipeline business that you're bidding and negotiating on, how much is that is actually being negotiated on versus bidding on?

I don't really want to get into that. It's kind of sensitive, but I think the way to answer that is we are going to probably have about $350 million of opportunities that seem real. I would say it's 50/50 negotiated and embedded if you want to get a break on that, and that's how we came up with the $350 million in opportunities we have for the year that we feel are real for this year; that are in uncommitted right now.

Okay, and then shifting to Telecom, as mentioned, the business sounds like it will be booked and shipped in 2011 as it relates to the stimulus. Can you give us a sense on to how much capacity you have in this space and what's a reasonable range for Telecom revenue in 2011?

We have certainly more capacity than there is work we are likely to get to this year. Hopefully, we can reach some capacity constraints in later years, but I don't think the capacity in telecom is going to be an issue at all in 2011.

Your next question is from the line of Stuart Bush with RBC Capital Markets.

Hi, guys. First question is, given that we have seen continued delays for the US approval of the Keystone XL project, is there any chance that spans for that project could be out for bid before timing is determined, and what would be the trigger for you to be able to put any wins there into backlog later in the year?

That project is up in the air. We will have to be very cautious before we put any bid in backlog because of the difficulties that everyone is aware of with the regulatory process, but I truly believe that project will go forward and there will be some reasonableness, I guess I should say, to the process and that project will get built.

Okay, and then secondly, can you comment on the trends in the utility O&M budgets, and what you foresee for distribution spending in 2011?

Distribution is difficult. We are seeing some signs, but there is going to be some recovery this year in distribution spending. But we are every bit cautious about that because it's not as robust as we would like to see, and so we are very cautious in projecting much growth in distribution spending this year. I think it will be better definitely than last year, but it may not be much better.

Your next question is from the line of Adam Thalhimer with BB&T Capital Markets.

Good morning guys. I wanted to ask you -- I'm a transmission bull, but there is a couple of things out there that I look at and wonder should I be concerned about the potential impact to transmission projects. Let me just throw out three things, we had a bill introduced in the Senate a couple of days ago challenging the FERK on cost allocation. Also, we are in a world of higher commodity prices, and I wonder if a rise in construction costs would cause some utilities to push out projects. And then the third issue could be slow down in renewables construction, particularly wind with the expiration of the tax credits. Should I be worried about any of those factors as it relates to the transmission cycle here?

I have never seen a project here--Address your middle question first about commodity pricing, I have never seen a project once it has momentum to be stopped because of the cost of commodities. The utilities are able to pass those costs onto the rate payers if they are legitimate costs. So, that has never really been a factor. Regulatory issues are always a factor, and whether they are state, local, or federal, those are always a factor, and those are probably the most destructive, if I can say that, things for construction work, are those regulations.

Whether a senator is opposed or whether a politician likes the line or doesn't like the line, and is getting pressure from environmentalists, those kinds of things are difficult to predict, they cause our utility customers lots of problems and cost the rate payers lots of money because of that uncertainty. So, those are factors that we have lived with for decades, and once they are to the point where these projects are that we've listed, typically they move forward. Now, they can be delayed for 30 days, 60 days, 90 days, 120 days if someone files a lawsuit, and so forth, but typically, they would move forward once they are in the status that they are in at this point.

To address the wind question, Adam, yes, we think that wind is going to be depressed this year as well, but we are very optimistic that solar will replace the downturn in any wind revenues plus add additional revenues to get us some nice growth in '11 over '10.

And as a follow up, I would be really interested, when you guys think about the natural gas business and you look back at the prior peak, '07, '08, fist half of '09, really strong margins in nat gas, lots of long haul wide diameter pipe projects. As we think about the current cycle, '11, '12, '13, a lot of shale wok, smaller diameter, smaller length to haul, more competition, how would you compare last cycle to this cycle, particularly as it relates to the margin opportunity?

I think there are different factors in play as you pointed out; however, there is a lot of long haul as well. When you count in the oil sands in Canada, and getting that product piped around the country as well as all of these little pipes that you are talking about. Certainly, that's a very, very competitive business, but all those little pipes lead to a big pipe. Therefore, I think that you are going to see a lot of large diameter construction as well. So, there are some differences, but I don't think they are meaningful overall.

Your next question is from the line of William Bremer, Maxim Group.

Good morning gentlemen. A lot of my questions have been touched upon. Can we just go into pricing, what you are currently seeing as of today per nat gas as well as the electrical side?

I think electric side, you're seeing a lot of the capacity being used up on the transmission side. So, we haven't really changed our pricing, but I think that some of our competitors have started to increase their pricing as the capacity is out of the market. And to some degree, that's probably the case on the gas side. Historically, we have not been very successful in the early bidding seasons because we always put pretty good margins in our gas work, and then as capacity works out from our competitors, then prices tend to get to our levels and we are typically more successful later in the bidding cycle than we are in the early cycle. And I think that will be the case this year as well.

Okay gentlemen, thank you.

Your next question is form the line of Steven Gambuzza with Longbow Capital.

Do you have a renewable revenue target for 2011 that you can provide?

That would be about $350 million, Steve.

How would you expect that to be split between solar and wind, roughly?

$250 million on solar.

And then, in terms of the pipeline outlook, it sounded in your opening remarks that you were looking for approximately flat revenue and operating profit in 2011 versus 2010. Is that right?

That's right. With the current guidance we've given that's correct.

Okay. Thank you very much.

Thank you, our next question is from the line of Alex Rygiel with FBR Capital Markets.

Thank you gentlemen, What is the organic revenue growth assumption embedded in your guidance?

I think just the electric was 16%. With Valard Electric we had forecasted that it would grow somewhere in the mid to high 20%s, but without Valard Electric, should grow about in the 15% to 20% range.

Telecom is about the same.

Yes, well telecom doesn't have any acquisitions. So, telecom is in the 15% to 20% range. Gas is flat to down in the embedded guidance.

That's helpful. As it relates to CapX2020, Jim, you mentioned or referred to Group 1 being a total of $660 million construction value. Is that the total opportunity for Quanta or is that the shared value between Quanta and MYR?

That's the shared value in the Group 1 projects between us and the other contractor, and we will get at least half of that, but half is the middle.

And is it relates to the fiber leasing CapEx, what was the Fiber Leasing CapEx in 2010, and can you comment on the Fiber Leasing margins? I know they were 48% in this current quarter. Is that the expectation that you believe will play out over the next 12 to 24 months as well?

I think your CapEx for Fiber Leasing was about the same, maybe it was high $20 million.

I think it was $25 million for '10.

$25 million for '10, and we are saying $30 million to $40 million, probably $35 million for '11. I think Fiber Optic will probably grow in 2011 in high-single digits, maybe double-digit.

Thank you, our next question is from the line of John Rogers with D.A. Davidson.

Hi, good morning. I'm not quite sure how to define this by the various end segments, but can you give us a sense of how much of your work now is large projects versus smaller work?

I think that the large projects are becoming increasingly a higher percentage of our work, but they are still not 50% of our work, more like 40% large project work. And I'm talking large project being over $25 million to $30 million. The rest is small contract.

And is that across both the electrical and the natural gas segments?

Yes, probably it's true in electric and natural gas, but probably telecom, more of it comes from smaller projects.

Got it. Okay, and does that just inherently mean that we are going to have more volatile quarters?

Well, no it shouldn't. It should provide some stability.

I see that it would improve near term visibility, but looking out a couple of quarters, I would think it get more difficult.

No it shouldn't. Actually, the further out, I think the better the visibility. The near term is those big projects get delayed for a few weeks and that can cause you some difficulties. Long-term, it'll work itself out.

Thank you, our next question is from the line of Jeff Beach with Stifel Nicolaus.

Good morning. More questions guess on the gas pipeline opportunity right now and the outlook. I think that during the last few months, you've seen a larger bidding opportunity 2x a year ago. You're talking about flattish revenues, flattish operating profits. You're operating profits were hurt pretty badly by the flooding in the last half of last year. So, it sounds like to me that there may be a lot of projects out there, but your expectations to win are not as great. And it sounds like the margins backing out the impact of that flooding are lower in gas. Can you just expand on the whole bidding environment and the outlook going through 2011? And is there a large pipeline of additional gas projects that hasn't come up for bid yet?

I think there is couple of points we should make. One is projects biding doesn't mean that projects will start in 2011, or that they will have significant revenues in 2011. So, a lot of the projects that are bidding are not going to have a lot of revenue in 2011, that they will be, of course, 2012 type projects, or more revenue in 2012. Now, while we haven't changed our bidding outlook, if anything we have become conservative in our guidance, recognizing that we have to fill those voids that we have in that, and we don't have it yet. So, we are probably a little bit more cautious this year than we were last year.

Your next question is from the line of Michael Coleman, Sterne, Agee.

Good morning. I want to go back to the telecom cable and the broadband stimulus award that you announced in the quarter. The NTIA is administrating a handful of other projects that are equivalent or larger than the project you won, and I'm wondering if you could comment on how many of those you are bidding on, if there is similar situations in terms of putting money into the project as you did on the KINBER, and when those projects are likely to be awarded.

This is Jim. We are actually looking at a lot of projects, various sizes for stimulus funding. We continue--that bidding activity continues to be robust. We think it will be robust through the first half of the year, and start winding down towards the second half of the year. But there are big opportunities out there and smaller opportunities. There is just a lot of activity in that space right now, and we think it will be a benefit us for the next two to three years on the construction side, and engineering side.

Okay. You gave a number of $1.1 billion on the gas side in terms of what you are bidding. Any kind of dollar figure in terms of what you are bidding on the telecom cable?

I don't think we have quantified those numbers for this year. It continues to grow. We have pretty good visibility on what is bid or going to be bid on the gas side, but telecom, because of the stimulus spending that just keeps increasing, and I don't think we can quantify that very well.

Just one quick follow up. On the outlook for 2011, what are you targeting for corporate?

Hang on just a second. Corporate expenses are targeted to be about in the $80 million range. You have to be careful as to how you use that number because corporate and unallocated also includes non-cash compensation and amortization. So, I gave you guys guidance on what we expected those two numbers to be. Total of about $51 million for 2011. So, corporate should be somewhere around the $80 million number.

Your final question is a follow up from William Bremer, Maxim Group.

Hello gentlemen. Just a little color on the expected run rate just for some housekeeping on SG&A going forward and bidding Valard as well as price.

You are asking for guidance on the SG&A right as a total?

If you want to provide that for '11, sure, or give us a little color on the run rate; how we should reflect it quarterly.

I would look at the -- I have to be careful to make sure I give you apples and apples because of the fact that stock compensation is included in G&A expenses. So, if you include stock compensation in G&A expenses, I would say we are going to be running somewhere -- we will start somewhere around the say $84 million to $86 million level for the first quarter, and then ramp up closer to the $88 million to $92 million level for the rest of the quarters.

Okay. So, nothing as high as what we are seeing in this current quarter of $94.5 million.

Wait, I have got to include stock compensation in those numbers, and I didn't do that just then. So, you are talking about $95 million to $97 million, somewhere in that range including stock compensation expense in, and G&A expenses for the second, third and fourth quarters.

So, second third and fourth, $95 million to $97 million, and the first quarter a little lighter than that?

Right. You should be, let's say, closer to $90 million in the first quarter, including stock comp.

Okay, I appreciate it.

Thank you, and that concludes the question-and-answer session. Please continue with any closing remarks.

I just want to thank everyone for your participation in our fourth-quarter and year-end conference call. We appreciate your questions and your ongoing interest in Quanta Services.

Ladies and gentlemen, this concludes the Quanta Services fourth-quarter and full-year earnings conference call. If you would like the listen to a replay of today's conference, please dial 303-590-3030 followed by the access code of 441-0774, and the pound sign. Thank you for your participation. You may now disconnect