Filed by Quanta Services, Inc.
Pursuant to Rule 425 under the Securities Act of 1933, as
amended, and deemed filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934, as amended
Subject Company: InfraSource Services, Inc.
Commission File No.: 001-32164
||In connection with the proposed acquisition, Quanta Services, Inc. (Quanta) and InfraSource
Services, Inc. (InfraSource) will file with the Securities and Exchange Commission (the SEC) a
joint proxy statement/prospectus and other documents regarding the proposed transaction. A joint
proxy statement/prospectus will be sent to stockholders of Quanta and InfraSource, seeking their
approval of the transaction. STOCKHOLDERS OF QUANTA AND INFRASOURCE ARE URGED TO READ CAREFULLY
THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION ABOUT QUANTA, INFRASOURCE, AND QUANTAS ACQUISITION OF INFRASOURCE. Such proxy
statement/prospectus, when available, and other relevant documents may be obtained, free of charge,
on the SECs web site (http://www.sec.gov).
||The joint proxy statement/prospectus and such other documents (relating to Quanta) may also be
obtained for free when they become available from Quantas website at
www.quantaservices.com or from Quanta by directing a request to Quanta Services, Inc., 1360
Post Oak Blvd., Suite 2100, Houston, TX 77056, Attention: Corporate Secretary, or by phone
||The joint proxy statement/prospectus and such other documents (relating to InfraSource) may also be
obtained for free when they become available from InfraSources website at
www.infrasourceinc.com or from InfraSource by directing a request to InfraSource, 100 West
Sixth Street, Suite 300, Media, PA, 19063, Attention: General
Counsel, or by phone 610-480-8000.
||Quanta, its directors, executive officers and certain members of management and employees may be
considered participants in the solicitation of proxies from Quantas shareholders in connection
with the acquisition. Information about Quanta and its directors and executive officers and their
ownership of Quanta securities will be contained in the joint proxy statement/prospectus when it is
filed with the SEC.
||InfraSource, its directors, executive officers and certain members of management and employees may
be considered participants in the solicitation of proxies from InfraSources shareholders in
connection with the acquisition. Information about InfraSource and its directors and executive
officers and their ownership of InfraSource securities will be contained in the joint proxy
statement/prospectus when it is filed with the SEC.
||Statements about Quantas and InfraSources outlook and all other statements in this document other
than historical facts are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of uncertainties and factors, many of which
are outside Quantas and InfraSources control, which could cause actual results to differ
materially from such statements. Forward looking information includes, but is not limited to,
statements regarding the new combined company, including Quantas and InfraSources expected
combined financial and operating results; the expected amount and timing of cost savings and
operating synergies and whether and when the transactions contemplated by the merger agreement will
be consummated. There are a number of risks and uncertainties that could cause results to differ
materially from those indicated by such forward-looking statements including the failure to realize
anticipated synergies; the result of the review of the proposed merger by various regulatory
agencies; the transaction may involve unexpected costs or unexpected liabilities, or the effects of
purchase accounting may be different from the companies expectations; the businesses of the
companies may suffer as a result of uncertainty surrounding the transaction; the industry may be
subject to future regulatory or legislative actions that could adversely affect the companies; and
the companies may be adversely affected by other economic, business, and/or competitive factors and
any conditions imposed on Quanta in connection with consummation of the merger; the failure to
receive the approval of the merger by the stockholders of InfraSource and failure to receive the
approval of the issuance of Quanta common stock in connection with the merger by the stockholders
of Quanta and satisfaction of various other conditions to the closing of the merger contemplated by
the merger agreement. These forward-looking statements are also affected by the risk factors,
forward-looking statements and challenges and uncertainties described in Quantas and InfraSources
filings with the SEC, which are available free of charge on the SECs web site at
http://www.sec.gov and through Quantas and InfraSources websites at
www.quantaservices.com and www.infrasourceinc.com, respectively. Quanta and
InfraSource expressly disclaim any intention or obligation to revise or update any forward-looking
statements whether as a result of new information, future events, or otherwise.
Moderator: John Colson
March 19, 2007
9:00 a.m. EDT
OPERATOR: Good morning, and welcome to the Quanta Services and InfraSource analyst conference
Before we get started, the press release and presentation for todays call are available on
www.quantaservices.com and www.infrasourceinc.com. This call will be available for replay and will
be archived on both websites later today.
TANA POOL, GENERAL COUNSEL, QUANTA SERVICES: Some of the information discussed today will contain
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are not guarantees of future performance, and management
cautions that any and all of these forward-looking statements may turn out to be incorrect.
Forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult
to predict or control, including consummation of the transaction. Please refer to page three of
todays presentation and our annual report on Form 10-K for the information regarding
forward-looking statements, and some of the risks, uncertainties and assumptions associated with
Quanta Services and InfraSource will file materials related to the proposed transaction with the
Securities and Exchange Commission. Investors and security holders are urged to read such
material. I will now turn the call over to John Colson, Chairman and CEO of Quanta Services.
COLSON, CHAIRMAN, CEO, QUANTA SERVICES: Good morning everyone and thank you for joining us on
short notice. Im joined on todays call by Dave Helwig, Chairman, President and Chief Executive
Officer of InfraSource, and James Haddox, Chief Financial Officer of Quanta. Well start on slide
five for those of you that are following along on the presentation.
This is a very exciting and important day for both Quanta Services and InfraSource. We think that
the transaction we announced this morning has a clear and compelling
strategic rationale, combining
two leading specialty contractors with complimentary capabilities. This combination will enhance
our service offerings and geographic reach in fast growing end markets, including electric power
transmission and distribution, telecommunications, and natural gas.
The timing is right for this transaction. As a larger, stronger company Quanta will be in an
optimal position to leverage the industry trends that were now seeing across the power and
telecommunications sectors. These include capitalizing on increased transmission spending, utility
outsourcing and providing additional capacity to meet the demand for fiber to the premises. The
transaction will unlock value for shareholders, as the two companies combined create significant
upside potential including synergy realization.
We expect to achieve cost and operational synergies of approximately $20 million in 2008. And
while its too early to give a specific number, we expect to realize additional synergies including
increased sales opportunities as we continue to integrate our two companies in 2008 and beyond. In
addition, we expect this transaction to be EPS accretive for Quanta in 2008.
Go to slide six, please. Let me quickly run through the details of this mornings announcement.
Quanta will acquire InfraSource in an all stock merger transaction, with an implied value of $1.26
billion based on Quantas closing stock price on March 16, 2007. InfraSource stockholders will
receive 1.223 shares of Quanta common stock for every one share of
InfraSource common stock, which
represents a per share value of $30.13 or 17.4 percent premium over the closing price of
InfraSource stock on March 16, 2007.
On closing, which is expected in the third quarter of 2007, subject to stockholder and customary
regulatory approvals, Quanta and InfraSource stockholders are expected to own approximately 75
percent and 25 percent respectively of the combined company on a fully diluted basis, including
options and convertible notes. The
combined company will keep the Quanta Services name and New York Stock Exchange ticker symbol and
will continue to be headquartered in Houston, Texas. I will remain as CEO and our Senior
Management Team will remain in place. Following the closing, the Board will be comprised of 11
Quanta representatives and three InfraSource representatives including David Helwig.
Based on 2006 results, the combined company had revenue of $3.1 billion and adjusted EBITDA over
$270 million. Before I go into detail about what the combined company looks like, I would like to
turn the call over to David Helwig, so he can tell you a little bit about InfraSource. David.
HELWIG, INFRASOURCE, CHAIRMAN, PRESIDENT, CEO, INFRASOURCE SERVICES: Thanks, John. I am, indeed, very pleased to
be here today to announce this exciting news with you. Turning to slide seven, bringing
InfraSource together with Quanta will have significant benefits for our customers, our employees,
and our investors.
Our customers will benefit from gaining access to Quantas expanded services and capabilities, our
employees will gain additional opportunities to support the growth of the company and our investors
will receive a premium for their investment and share in the tremendous upside potential of the
combined company. For those of you who may be less familiar with who we are, InfraSource is a
leading provider of design, engineering, installation and maintenance services for utility level
infrastructure. We have significant operations in electric power and natural gas, and smaller but
distinct operations serving telecommunications customers.
InfraSources electric power operations make up approximately 60 percent of our revenues. We also
have strong operations in natural gas, which represents nearly 30 percent of revenues. And our
telecom operations, which includes leasing of dark fiber networks, represents just over 10 percent
Turning to slide eight, for our electric power customers, InfraSource has been primarily focused on
transmission and sub station projects, while our natural gas operations are primarily focused on
Slide nine, please. Our telecommunications business, on the other hand is very unique. With our
dark fiber business we build, own and lease point to point fiber connectivity. We sign long term
lease contracts with our customers, and refrain from speculative cap ex spending by not beginning
installation until the long term lease is signed. This has proven to be a profitable business
platform with strong margins and compelling return on our invested capital.
With our telecom business, we also provide installation services in select geographic regions. We
think this will compliment Quantas FTTx capabilities and enhance its inside and outside plant
service offerings. Ill now turn the call back over to John to discuss the combined company.
JOHN COLSON: Thanks, Dave. As you can see on this next slide, that would be slide 10, Quanta and
InfraSources respective strengths in their complimentary businesses make the two companies a
perfect fit. The combined company will have the ability to offer an even more comprehensive
portfolio of services to our customers, from design and engineering,
to installation and maintenance,
to energized services and emergency restoration.
Lets to go slide 11, please. Quanta will have the ability to cross sell its enhanced services to
InfraSources customers giving them access to its nationwide transmission and distribution
services, leading emergency restoration services, energized services, and nationwide
telecommunications installation and maintenance capabilities.
With the addition of InfraSource, Quanta will be gaining enhanced capabilities in transmission and
distribution installation and maintenance, sub station engineering services, gas distribution
capabilities, industrial services in the Gulf of Mexico region and dark fiber leasing.
Go to slide 12, please. Our broad combined geographic footprint will reach every state in the
United States and Canada. On this slide, you can see the areas where Quanta is gaining significant
strength in its electric power operations from InfraSource. While InfraSource has operations in
many other states, weve highlighted the ones that will make a notable impact on Quantas presence
and help to fully flesh out our national coverage.
As you can
see, the North Central and Northeast United States are strong geographic areas for
InfraSources electric power operations, and this transaction will expand our presence there. As
for natural gas, Quanta is gaining
InfraSources strong distribution operations throughout the nation, particularly in the
North Central, Northeast, and Southeast regions of the United States. And our telecom operations will
be bolstered in the Midwest and the Northeast.
Slide 13. The combined company will have approximately 74 percent of revenues coming from electric
power and natural gas operations, approximately 13 percent from telecommunications and cable, and
approximately 13 percent from ancillary services.
Slide 14. In addition to taking advantage of the strategic fit of our businesses, the current
positive industry dynamics, and the need to upgrade the aging and overloaded transmission and
distribution infrastructure, make this an opportune time to create a larger, stronger player.
There are several key trends, which are having increasingly positive impacts on our businesses,
including the utility companies increased spending on core T&D assets, and the continuing
implementation of the Energy Policy Act of 2005, which we believe are driving increased investment
in the electric power infrastructure.
To support the substantial growth in spending, utility companies are increasingly choosing to
outsource the projects to compensate for the steady declines of their internal workforce. The
utilities workforce has been reduced by 20 percent in the past decade and is expected to continue
this decline. Were also seeing increases in power generation, which fuels transmission and
substation spending. To meet the demand of their increasing expenditures, utilities are
increasingly relying on outsourcing to specialty contractors like Quanta to meet their growing
Combining our businesses with InfraSources gives us the enhanced capabilities, superior product,
service portfolio and larger workforce to support these industry trends, and to be an even better
partner for our clients.
Slide 15, before we move on, we know many of you are interested in trends
in transmission and distribution spending, and thought you would appreciate this slide, which shows the Edison Electric
Institutes data on transmission cap ex spending. Here, you can see that the five year window
between 1999 and 2003 saw $18 billion of transmission cap ex spending. 2004 to 2008 shows a 60
percent increase to $28 billion in expenditures. The window between 2009 and 2013 shows a
forecasted increase of up to 150 percent over the 1999 to 2003
timeframe, with as much as $46 billion forecast by some estimates. The projected growth is incredible. And well be able to take
advantage of that growth as a result of this transaction.
Slide 16, now Ill take a few minutes to help paint a picture of what the company will look like
financially post closing. Based on 2006 results, the combined company had revenues of $3.1
billion, adjusted EBITDA of over $270 million and adjusted net income of $100 million. And with a
low debt to cap ratio, the combined company will have an extremely healthy balance sheet.
Slide 17. Quanta has a 10 year track record of successfully integrating more than 80 companies.
There are certain key components that will go into the successful integration plan and risk
management. First, we will put in place an experienced integration team at Quanta, which will
implement the integration plan. Following the closing, we will continue to improve project
management and productivity and enhance resource utilization, while at the same time, of course,
reinforcing a strong culture of safety. Importantly, the vast majority of both workforces will
experience increased opportunities, which should ensure that our people remain focused on meeting
the needs of our customers.
Slide 18. As for the transaction synergies, we expect to realize approximately $20 million of cost
and operational synergies in 2008 from rationalization of administrative functions, working
together in project and asset management, improving equipment utilization, identifying workforce
efficiencies, and combining our procurement functions. And its too soon to put a number on it,
but we expect we can accelerate revenue growth through cross selling and marketing opportunities.
Slide 19. Its clear that this
transaction is not only strategically compelling, but it is
financially compelling as well. Were combining two highly complimentary businesses to enhance our
service offerings and geographic reach in growing end markets. We are excited about adding this
talented group of employees to our current workforce. Together, they will focus on serving our
customers better. Were also going to be well positioned to capitalize on positive industry
trends, and stockholders of both companies will share in the combinations significant upside
potential which includes synergy realization and an even stronger financial profile. In addition,
the transaction is expected to be EPS accretive in 2008.
We want to thank everyone for joining us this morning to discuss this exciting transaction on short
notice. Dave, James, and I will be happy to now take your questions. Operator.
COMPANY REPRESENTATIVE: Operator, were ready to open the call for questions.
OPERATOR: Thank you. At this time, I would like to remind everyone if youd like to pose a
question, press star then the number one on your telephone keypad. Well pause for just a moment,
to compile the Q&A roster. Thank you. Our first question comes from Sanjay Shrestha from Lazard
SANJAY SHRESTHA, LAZARD CAPITAL: Good morning, guys. First of all, congratulations. A couple of
quick questions here. First one, now given that, you know, theres a number of projects moving
forward, and the two of you guys were the potentially biggest contenders to win those jobs, now
both of you guys coming together as a single company, you know, how do your clients feel
about that, in terms of are they going to be too dependent on one larger company? Or are you
actually in a position based on all of the synergies that its a net-net win situation for both
parties involved, so that they also get the better pricing and maybe even a better execution and a
better service. So can you talk about that some more?
DAVID HELWIG: Sanjay, this is Dave, Ill take a shot at it. First of all, neither one of us or
combined is dominant in the market for those projects. There are quite a few competitors as you
SANJAY SHRESTHA: Yes.
DAVID HELWIG: And the trend is to divide them into more manageable scopes of work. So actually,
the response of our customers, thus far has been quite favorable. They recognize that as utilities
grow and merge and combine and increase their expenditure on investment, that they need larger
scale suppliers with the breadth of services that the combined organization represents.
SANJAY SHRESTHA: OK.
JOHN COLSON: Ill add to that, Sanjay, that its a highly fragmented market out there.
SANJAY SHRESTHA: Exactly.
JOHN COLSON: And that together, we probably only have less than 10 percent of most of the markets
that we serve.
SANJAY SHRESTHA: Got it. So that was kind of my follow up question, so given that you guys have
less than 10 percent of the market, its a fragmented industry, and at the end of the day, it
results in the savings for the end customer, so from a regulatory standpoint, it should not be an
issue from actual closing of the transaction.
JOHN COLSON: Thats correct. We think that we wont have any problems with the regulatory
agencies in closing the transaction.
SANJAY SHRESTHA: Perfect. One last question then guys, can you sort of update us in terms of
some of the, you know, last call you guys did talk about several projects on the drawing board, has
there been any significant changes, any new things that have shown up on the drawing board, or
anything that has been cancelled from the larger scale transmission project standpoint?
JOHN COLSON: Those four projects that we talked about on our last earnings call are still all
being teed up. And we expect awards or announcements or requests for quotations shortly on all of
those. And we should have some news for you by the end of the second quarter, I would think.
SANJAY SHRESTHA: OK. Thats great. Thanks a lot guys. And once again, congratulations.
JOHN COLSON: Thank you.
OPERATOR: Thank you. Our next question comes from Alex Rygiel with Friedman Billings Ramsey.
ALEX RYGIEL, FRIEDMAN BILLINGS RAMSEY: Good morning gentlemen, pretty exciting transaction here.
JOHN COLSON: Very exciting. Were excited about it.
ALEX RYGIEL: Congratulations. A few questions. First, is there any breakup fee, and how large is
JOHN COLSON: We dont anticipate that there will be any issues with that. But the breakup fee if
under certain circumstances will be approximately $40 million.
ALEX RYGIEL: And, you know, in the past, InfraSources business has been a little bit lumpier than
yours with from time to time a cost overrun associated with the project. And for Quanta, we
havent heard too much of that discussion through the years. John and James, can you talk a little
bit about your due diligence process on InfraSources backlog and how comfortable you feel with
that, right now.
JOHN COLSON: We were fairly acquainted with their backlog, because we bid also on most of those
projects that they did. And of course, we did extensive due diligence on their progress on their
projects, and felt comfortable with their estimates to complete on those projects.
ALEX RYGIEL: One part of their business thats different than yours is definitely that dark fiber
business. Can you comment on your longer term plans for that business segment?
JOHN COLSON: Thats a pretty exciting piece of business. And we actually complement that business
with our installation services. Actually, weve been providing services to them theyre a
customer of ours, installing dark fiber for them. So I think, it fits pretty well with us, and
were pretty excited about that business and the growth potential in that business.
ALEX RYGIEL: And lastly, as it relates to the natural gas business, obviously this is going to
expand your exposure to the natural gas segment. Can you talk a little bit about the growth
opportunities and the margin dynamics and the risk profile of the business, versus the electrical
JOHN COLSON: In general, I think that that business carries a lower margin than the electrical
business. But its certainly a good business, and a growing business, as there have been several
regulatory changes that have caused the utilities to spend more money in upgrading their gas
distribution business. So its a growing business as well, although margins in that business are
slightly lower than in the electrical side.
ALEX RYGIEL: Thats great. Thank you very much. Congratulations.
JOHN COLSON: Thank you. I appreciate it.
OPERATOR: Thank you. Our next question comes from Jeff Beach with Stifel Nicolaus.
JEFF BEACH, STIFEL NICOLAUS: Yes, good morning. Neither of the two companies, InfraSource and
Quanta, have been constrained in any way with their capital available and their balance sheet. So
with this combined company and Im expecting a lot of capital available, are there any
businesses between the two companies that you feel you can exploit, or particularly Ill say IFS
businesses that you feel you can exploit with more capital?
JOHN COLSON: I dont think that InfraSource really had any capital constraints on them in the
DAVID HELWIG: No.
JOHN COLSON: Were going to have a very strong balance sheet when this transaction is completed,
but both companies have a fairly strong balance sheet at this point in time. So although we will
be stronger, I dont think that theres anything that InfraSource will lack capital wise that
prohibited growth in the industry.
I think more important than the capital, are the things that InfraSource brings to Quanta and
Quanta brings to InfraSource that will spur growth and help us serve our customers better.
JEFF BEACH: Are there any particular market segments that you think between the two companies can
be a whole lot bigger over the next couple of years?
JOHN COLSON: I expect most of the market segments are going to be much bigger over the next
several years, particularly the T&D business, the gas business, the telecom business, all of those
are growing very rapidly now. And we expect them to grow further in the future, and together, I
think that well be able to grow them faster than we would have apart.
JEFF BEACH: All right, thanks, John.
JOHN COLSON: Thank you.
OPERATOR: Thank you. Our next question is coming from John Rogers with DA Davidson.
JOHN ROGERS, DA DAVIDSON: Hi, good morning. Congratulations, as well.
JOHN COLSON: Thank you. Good morning.
JOHN ROGERS: Im just curious, as you look at the and I realize its early, but as you look at
the combined businesses, do you have any duplicative assets or units that you might look to either
divest even if theyre small asset sales?
JOHN COLSON: Well this really is a story of growth and we intend to grow the businesses that were
acquiring, as well as to use those businesses to help our existing businesses to grow. Its
really a growth story more than a divestiture or an employee layoff situation. Its a growth
story. Its a benefit to all of the employees of both companies, in that theyre going to have a
larger platform to grow from.
JOHN ROGERS: OK. But John, theres no offices that you can close or anything like that?
JOHN COLSON: There will be some things that we will look at as far as combining facilities. That
always is the case in a situation like this, and there are opportunities to do things like this.
But as far as closing a business, no. Combining operations, combining facilities and sharing of
equipment, certainly those are things we will be doing.
DAVID HELWIG: Thats a big one, actually, equipment utilization.
JOHN ROGERS: OK. And in terms of then, capital expenditures, would I think about it as what
Dave, you would plan to spend, and John, what you would plan to spend, just combine those
numbers? Or will you see some savings immediately there?
JOHN COLSON: Initially, well
probably combine the two numbers. Thats
because were growing so rapidly. But over the long term, well see more efficient use of our
equipment assets. And so cap ex would be lower going forward than it would have been if you added
the two together over the period of years.
DAVID HELWIG: If I might add one
thing, I remind you John that more than half of our cap ex was
going into the dark fiber installation.
JOHN ROGERS: Right. And thats still going forward, then.
JOHN COLSON: Thats right. We intend to grow that rapidly, as well.
JOHN ROGERS: OK. And then, just lastly, if I could in terms of your debt or bank and bonding
covenants, are there any changes there or renegotiations that have to be done?
JAMES HADDOX, CHIEF FINANCIAL OFFICER,
QUANTA SERVICES: No. Theres an amendment
that we would have to receive this is James. Theres an amendment that we have would have to
get under our credit facility, but we dont foresee any problems with that. And its anticipated
that we would pay off InfraSources debt at closing.
JOHN ROGERS: OK. Great. And sorry, Dave, did anybody else approach you about an acquisition?
DAVID HELWIG: John, it sounds like a simple question, Ill give you a fairly lengthy answer, if
you dont mind.
JOHN ROGERS: No.
DAVID HELWIG: Youll recall that
our heritage here comes from an involvement with an equity
investment group, the Power Opportunities Fund owned by GFI Energy and OakTree Capital. So as we
kind of reached the end of the equity investor horizon about a year ago, we began to explore
strategic options for the company on a broad range, yes, about a year ago, even a bit longer ago
than a year ago. Resulting from that during 2006, we did have two secondary offerings, and sold
off their position, one of those was in March, the other was in August. But the point of that is
throughout that entire period, we were exploring strategic alternatives to go forward. So after a
rather exhaustive review process, it is our conclusion that a strategic combination of these two
companies would be most beneficial. And actually, the deal structured as it is as a stock deal,
not only gives our investors an upside premium on the acquisition but fully provides for their
participation in the upside of the combined companies, which we think is just fantastic.
JOHN ROGERS: OK. Great. Thank you. And congratulations.
JOHN COLSON: Thank you.
OPERATOR: Thank you. Our next question comes from Dan Bandi with Integrity Asset Management.
DAN BANDI, INTEGRITY ASSET MANAGEMENT: Hi. I just wanted to clarify on your $20 million number
that you had mentioned, is that just cost savings, or is that cost savings plus revenue synergies
that youre looking at?
JAMES HADDOX: This is James. Thats just cost savings. There arent any revenue synergies in
DAN BANDI: OK. Great, thanks. And then, on the breakup fee you had said 40 million under certain
circumstances, could you just list, you know, maybe one or two of what those circumstances might
JOHN COLSON: Id rather not go into all of the details of the agreement on this call. But they
will be public information and posted later on.
DAN BANDI: And would them walking away for a competing bid be one of them?
JOHN COLSON: Yes, certainly.
DAN BANDI: OK. Just wanted to check, thanks a lot guys, congratulations.
OPERATOR: Thank you. Our next question comes from Alex Johnson with JP Morgan.
ALEX JOHNSON, JP MORGAN: Good morning.
Im on for Curt Woodworth. I have a couple of questions. The
first question is on slide 12, where you showed the updated electric service territory. Can you
just address how many what the customer overlap actually is in terms of either number of
customers or percentage of revenue?
JOHN COLSON: Yes, I dont know that I have all of those. It was remarkably smaller than I would
have thought. Although we have a presence across the United States and InfraSource also services
customers across the United States, the number of customers that we share to any degree was
On the electric power side, I think that there were two customers that probably, maybe three
where we both were fairly dominant. So it really is a good fit, geographically and customer wise.
We inherited the strength in a much larger customer base than I would have thought when I first
started looking at it.
DAVID HELWIG: If I can add, John, even where we had commonality of customers, we typically were
providing different services at those same customers.
JOHN COLSON: Good point.
ALEX JOHNSON: Thanks. And on slide 18, where you show the different cost synergy opportunities,
can you maybe rank them in terms of level of importance or even perhaps give a number as these five
relate to the 20 million amount that each of these five would add up to the 20 million.
JOHN COLSON: Were not really prepared to go into the details of that right now. But most of the,
as far as ranking is concerned, in the numbers that we have given so far, the biggest one is the
top one, the rationalization of administrative functions throughout the company. That makes up the
predominant portion of what weve talked about so far, or quantified so far.
ALEX JOHNSON: Is it like maybe 75 percent or ...
JAMES HADDOX: Yes.
ALEX JOHNSON: OK. And a final question. Just in terms of the timing, you say Q3 is that are
you expecting early Q3, late Q3, can you just maybe refine down that date a little bit?
JOHN COLSON: Were very anxious to close the deal so were pushing and want to close in early
third quarter, if we can. Well leave it at third quarter. One thing about synergies too is that
the number were throwing out there is certainly not all of the synergies. Its the ones that are
easy to identify and easy to talk about. The others are much larger, but of course, more
difficult. We have to go harvest those. We have to make those happen.
The synergies that were enumerating here are relatively easy synergies.
ALEX JOHNSON: OK. Thank you.
OPERATOR: Thank you. Once again, if youd like to ask a question, please press star one on your
telephone keypad. Our next question will come from Ilan Sender of Jefferies Asset Management.
ILAN SENDER, JEFFERIES ASSET MANAGEMENT: Hi, my questions have all ready been answered, but thank
JOHN COLSON: Thank you.
OPERATOR: Thank you. Our next question is coming from Chris Lippincott with Standard and Poors.
CHRIS LIPPINCOTT, STANDARD AND POORS: John, quick question just actually two questions, first
off, when you look at InfraSources non core revenues, clearly a small amount, but do you see
any of that, that perhaps either might be divested, or something, perhaps spun off because its so
non core, and perhaps maybe a distraction?
JOHN COLSON: Well I dont think that theres too much there thats really non core. Much of the,
what they call other is really complementary to some of our businesses, or to their existing
businesses. So right now we dont anticipate spinning anything off.
CHRIS LIPPINCOTT: OK. And the second question, from your perspective, when you look at some of
perhaps the greatest risk, clearly this is one of your larger transactions, where do you see some
of the greater risks that perhaps may delay the transaction or perhaps cause you problems down the
JOHN COLSON: I dont anticipate a lot of problems as far as getting approvals from the
authorities. Luckily, I think that this is a relatively easy integration process. This company
fits our company very, very well. And I think that the integration progress should go fairly
rapidly and fairly easy considering the size of it.
Now thats not to say that there wont be problems and hurdles in the integration process. Weve
had a lot of experience integrating companies, although smaller companies, but the way well look
at this is were integrating four or five smaller companies. And I think well be able to
integrate it relatively easy for the size of the company than it is.
CHRIS LIPPINCOTT: Is there one particular risk that is in the front of your mind?
JOHN COLSON: Well sure, we want everybody at both companies to keep their eye on the ball. We need
to continue our margin enhancement initiatives that both companies have started independently. And
we need to encourage our employees to stay focused on doing their work and not take their attention
away from our customers. And we dont want them focusing on this merger. Well focus on that.
And we need them to focus on working for the customers.
CHRIS LIPPINCOTT: Thanks.
OPERATOR: Thank you. Our final question will be coming from William Maze with Ecofin.
WILLIAM MAZE, ECOFIN: Good morning, guys. Congratulations. A quick question for you, just to
pick up on the last callers question, I was wondering if you could just address any FTC, you know,
thoughts on the FTC approvals? And then, also, I just, I didnt see anything on the collars, is
there any collar on the deal?
JOHN COLSON: No. There is not a collar. I think we addressed earlier the HSR questions. And we
dont anticipate there being any issues. Again, this is a highly fragmented business with lots of
competitors out there, and we dont think theres going to be any problem with that regard.
WILLIAM MAZE: Great. Thanks. And congrats again.
OPERATOR: Thank you. I would now like to turn the floor back over to John Colson for any closing
JOHN COLSON: We certainly appreciate your interest in Quanta and InfraSource and in the merger of
the two companies. We appreciate you attending the call particularly on very short notice. Thank
you very much for your attention. Good bye for now.
OPERATOR: Thank you. That does conclude todays Quanta Services and InfraSource conference call.
You may now disconnect and have a wonderful day.