QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

Conclusion
We are currently seeing growth opportunities across all of the industry segments we serve, despite
continuing negative effects from restrictive regulatory requirements and challenging economic conditions, which
caused spending by our customers to decline in 2009 and remain slow through 2010 and portions of 2011.
Constraints in the capital markets have also negatively affected some of our customers’ plans for projects in the
past and may do so in the future, which could delay, reduce or suspend future projects if funding is not available.
We are benefiting from utilities’ increased spending on projects to upgrade and build out their electric
power transmission infrastructure to improve system reliability and to deliver renewable electricity from new
generation sources to demand centers. We also expect utilities to outsource more of their work to companies like
Quanta, due in part to their aging workforce issues. We believe that we remain the partner of choice for many
utilities in need of broad infrastructure expertise, specialty equipment and workforce resources.
We believe that we are one of the largest full-service providers of natural gas and oil pipeline infrastructure
services in North America, which positions us to leverage opportunities driven by the development and
production of resources from unconventional shale plays and the Canadian oil sands. We also believe that our
strategy to pursue midstream gathering system opportunities in liquid-rich unconventional shales, as well as the
anticipated increase in demand for our pipeline integrity, rehabilitation and replacement services from pipeline
integrity initiatives, will create attractive growth potential for us and also further diversify the services provided
by our Natural Gas and Pipeline Infrastructure Services segment. As a result, we expect additional opportunities
and improved results in this segment in 2012 as compared to 2011.
We also expect spending on electric distribution and gas distribution services, both of which have been
significantly affected by the challenging economic conditions that have existed during the past two years, to
experience limited growth in the near-term. We expect recovery in electric and gas distribution spending to be
driven primarily by improving economic conditions, as well as increased maintenance needs driven by
heightened reliability regulations.
Demand for our telecommunications infrastructure services is increasing primarily as a result of
construction activities related to projects funded by ARRA stimulus funds and fiber to the cell site initiatives by
wireless carriers. Deployment of 4G and LTE wireless technologies is in the early stages and is also anticipated
to increase demand for our services in the near- and long-term. As new technologies emerge in the future for
communications and digital services such as voice, video, data and telecommunications, we expect service
providers to work quickly to deploy fast, next-generation fiber and wireless networks, and we are and believe we
will continue to be recognized as a key partner in deploying these services.
We expect to continue to see our margins generally improve over the near and long-term, although
competitive pricing environments and project delays and other effects from restrictive regulatory requirements
have negatively impacted our margins in the past and could further affect our margins in the future. Additionally,
margins may be negatively impacted on a quarterly basis due to adverse weather conditions, timing of projects
and other factors as described in “Understanding Margins” above. We continue to focus on the elements of the
business we can control, including costs, the margins we accept on projects, collecting receivables, ensuring
quality service and rightsizing initiatives to match the markets we serve.
Capital expenditures for 2012 are expected to be between $190 million to $225 million, of which
approximately $40 million to $50 million of these expenditures are targeted for fiber optic network expansion,
with the majority of the remaining expenditures for operating equipment. We expect 2012 capital expenditures to
be funded substantially through internal cash flows and cash on hand.
We continue to evaluate potential strategic acquisitions or investments to broaden our customer base,
expand our geographic area of operation, grow our portfolio of services and increase opportunities across our
operations. We believe that additional attractive acquisition candidates exist primarily as a result of the highly
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