PWR
#Yes, I think we would say that our goals and targets for both segments are still to be at or near the double-digit range.
The biggest thing driving electric power is the headwinds relative to the Canadian market.
If you were to look a 2016 and remove the effects of the power plant in Canada, the rest of the electric operations are operating solidly in the double-digit range.
The headwinds right now are still the softness in the Canadian market.
The larger transmission opportunities that we see here coming into 2017 in Canada, obviously, give us some potential for the upside.
With the remaining portion of the business, you're still dealing with some degree of headwinds, and we try to factor that into the overall range ---+ to factor in a degree of prudency to the overall execution.
But, again, it's pretty important, I think, to recognize that the rest of the business is operating strongly in the double-digit range.
For the oil and gas segment, it's the complement and the mix of work.
We've talked extensively over the last few years about how the degree of mainline opportunities and how they flow into the year will heavily influence our ability to be at a stronger margin profile.
Our original commentary over the years has also ---+ before we ran into some of the headwinds associated with the broader energy market.
As oil prices declined, the remaining portion of our business is still yet functioning in an oppressed oil price environment to an extent, and that is putting pressure on some of the other areas of our business.
Working against some of the complements or upside potential we see on the mainline side.
So, as the mainline gets a complement of work that happens to be more spread through the given year rather than just being front-end or back-end loaded, as well as the mix of work and energy dynamic changing, we still believe that we can see upward momentum to those margins in the long term.
Yes, the spread capacity, <UNK> ---+ we are not at capacity on either side so the way those spreads come on and off projects it is very difficult to give you numbers.
But, in either case, we were not at capacity and certainly have room in the first quarter here and onward to book work.
As far as ---+ .
It's legal costs.
As it relates to how [it goes in] 2017, I wouldn't anticipate right now anything truly abnormal.
This was more from the fourth quarter accelerated timing.
But, as we go into 2017, we haven't factored into any substantial uptick or downtick in that regard.
Yes.
I would say that as we stand here today with the potential for the fourth quarter to have a lack of an uncommitted filling as an example.
The fourth quarter is probably where you'd see the biggest portion of the pressure from the margins.
So, I don't know if I necessarily see it relative to the entire back half the year, but the third quarter has a tendency for us to have the highest overall margin profile because of the good seasonality.
But, yes, there could be specific softness in the fourth quarter if we are not able to fill it with other larger diameter work
On the first part, for the margins and the remaining portion of work, we haven't factored in any sizable uptick in our margins there despite what we are seeing.
Potential on the rig count-type dynamic, I think in our mind, it's a bit too soon to have an expectation of 2017 immediate benefit, but we do look at that as potential for a positive upside.
<UNK>, also in general, on the pipe margins and the seasonality.
There's normal seasonality in the business, and so I think as you see us fill up work and execute, the margin has the potential to move upward.
We will be cautious about how we guide again.
As far as FERC, our forecast ---+ we don't need any large pipe to meet the midpoint of the range so we are confident in our year-end guidance on the gas side.
Yes, storm came in at around $35 million for the quarter.
Maybe just slightly above what we had otherwise forecasted in our original thoughts for the year.
But, from a margin perspective, there wasn't any substantial difference.
Realistically, if you recall in our previous commentary, we had said that the number of customers that we were working for were customers that we dealt with on a regular basis.
And, from a strategic perspective, you don't see maybe quite as much upside from a margin perspective.
So, very much in line with our original expectations.
Overall, for the quarter itself, just having some degree of seasonality which we had already factored in and expected to somewhat offset that margin expansion.
T he second part of your question was the timing.
We did come in at the lower end of our overall revenue guidance, and most of that came out of the oil and gas segment.
There was a degree of some level of push of that revenue from 2016 into 2017.
Some of which would have been attributable to some of the heavier rainfall.
On the oil and gas side ---+ excuse me, on the oil and gas side, it did impact some of those spreads, and we were delayed some time there.
So, you had some revenue impact there.
In the southeast where the storm hit, we have a large concentration of day-to-day, MSA-type work, and that work was delayed along with it.
So, there's some offset in the storm.
We see our customers expanding their capital budgets in multi-year fashion next three to five years.
You start to see visibility in those capital programs.
So, as that happens, we will continue to grow that base business.
The recurring revenue-type MSA work will continue to grow with our customers' capital budgets.
As far as the larger projects, as we see Canada ---+ as we see Wolf-Mac go in.
Some other larger projects that are out there.
Certainly, the opportunity to win and execute on those, I do think the electric segment is in a multi-year cycle, an upward cycle, and we're optimistic in the environment that we are in.
Yes.
No, there's nothing that's unique or specific.
I think what we've done is we've not factored in a marked improvement in the Canadian environment.
We know ---+ as we've talked through 2016 we saw a degree of stabilization, but I think it's too soon in the year to factor in some sort of distinctive improvement in the non-larger transmission side of the equation.
We do have those larger projects that are coming in.
Specifically, Fort McMurray.
But, that's going to be backend loaded into the year, and so the first half of the year I think you still see with seasonality the aspect of being able to have some degree of margin pressure in the broader Canadian side of the equation.
But, we think we've got the ability to go through and potentially see some degree of upside to the extent that you'd be looking at, but I think it's just too soon in the year to factor that in.
Yes, the base business on the gas side continues to improve.
The LDC market, local distribution market with the [FEMSA] rules and rules that are in place to repair infrastructure, we're in a good environment to continue to see CapEx in those markets.
I think we will continue to expand, albeit off a smaller base, but that will continue to grow.
As far as telecom, we have our Latin America and Canadian construction going.
We are ---+ they are good markets.
We have about $150 million to $200 million in our forecast that ---+ with those along with the lower 48 here getting started.
We will be cautious about how we talk about large pipe.
The book environment and the amount of regulatory process that's involved in those projects ---+ they're distinct.
And, we need to make sure that we have them, we are moving, and we are mobilize before we communicate on them.
I do like the end markets in 2018.
It's a in robust market.
I do think we will fill up early and be able to talk more about that.
If we get some ease on regulation through FERC through the administration, we will continue to talk to the Street about as we get more positive and move into construction.
Those things slip three months ---+ it is just a big impact to us, and we will be cautious about how we talk to you.
I think the midstream business ---+ it is a good business.
We need to take away that capacity to go to the end markets.
As you start to see larger pipe get built, you will see the midstream pick up, and the rig counts ---+ obviously, there's take away.
We are starting to see more rigs so you will start to see all those things happen.
We're optimistic on that as well.
Good morning
As I said in my prepared comments, we can see the margins rising into the third quarter.
Part of that will be a contribution of the work associated with Fort McMurray, but at the same time I think it's just broader to the seasonality of our business.
I think I'd still factor in a degree of decline potentially in fourth quarter.
Again, just driven largely by seasonality.
One individual project is not going to offset the broader overall segment seasonality is what I'd expect at this stage.
We are continuing to work on those items.
We had not anticipated those items to be soft in the latter part of 2016.
We've not factored in any recovery of that into 2017.
The work is ongoing.
We are in the process of quantifying and having those discussions with the customer, but as of today, we are not in a position to quantify.
Hey, good morning.
Yes, we never got out of the telecom business to be clear.
We were always in the telecom business.
We had certain things under the non-compete we could not do, and basically the primary drivers where we were the telecom contractor or general contractor in the lower 48, we have the ability to do that today.
So, as we move forward, you will see us in that market on the general side of this and not just the electric make-ready work.
So, we're optimistic.
The market is good.
It's a robust market.
We built our Canadian operations and our Latin American operations so we will participate both in North America as well as Latin America.
We like the markets ---+ we've stated all along, and I'll talk more about strategy as we move forward.
I'll leave it at that.
Yes, it's both.
In Latin America, I would say 70% wire line, 30% wireless.
Canada is primarily wire line, and the business has been growing double digits-plus year-over-year.
Yes, I think, in general, it does rely on some Canadian work to fill the back half.
But, again, I think that the markets are there.
The lower 48 could fill as well and bring the back half up.
So, the opportunity on both sides of the border are there in the back half.
We are building our base business nicely.
The opportunities are there.
You get people constrained at some point and so you have to be careful about where you're at in the world geographically.
Mountainous terrain, the qualified personnel that we have in the field, and we will be cautious about how we move forward in those markets due to the constraints on some of the people in the field.
We train people every day.
We are hiring every day.
So, as we get people trained, we will put them to market and how fast we can do that will dictate how our revenues go in the future.
Yes, I'd like to thank you for participating in the fourth-quarter 2016 conference call.
We appreciate your questions and ongoing interesting in Quanta Services.
Thank you.
This concludes our call.
