All righty. Everyone ready? I know we're still in a little bit of this transition period, but thank you guys for joining again. Appreciate, we're gonna keep going on the panels. I'm gonna try to be as timely as I can here. Let's talk with the Quanta team here. So, look, guys, if you've got questions, comments, ping me here, email, chat, whatever you guys want. I got a laptop up front here. I'm gonna try to be dynamic in moderating the conversation here. But with that, let's just kick this off. We'll keep on time with everyone. So, Jayshree, say good afternoon to you guys now, right?
Thank you.
Yeah. Feels like it was morning a second ago. But thank you guys both so much for taking the time. It's nice to have you guys. Look, let me let me start off with this. I mean, you guys have great perspective across the space. I mean, and there's been a lot of conversation on renewable development. Let's just start there, right? Renewable development's been a subject that's gotten a lot of attention, mostly because people are talking about delays and just, you know, just have various hangups. What are you guys seeing real-time in terms of the ability to get projects off the ground, right? Like, this has been the big question through fourth quarter. Would love to get sort of your real-time assessments, if you will.
I mean, I think when we look at it, we certainly see the demand, the overall demands there for renewables and batteries, wind, solar, certainly is a bigger piece. But in general, the demands there, and from our standpoint, we certainly feel confident in the guidance we're getting in 2024. We it looks good 2025 and beyond. Normally, we're dealing with the, you know, top 10, developers or, you know, from what I consider, renewable customers. So I think we have a very good backlog, it's solid, that we don't see any, you know, in fact, we see more opportunity than we do, decline, and it not even push-outs, really, from my standpoint, Julien. I think it's solid. Seeing some repowering come in, seeing, you know, we have SunZia as a backstop as well on wind. So the SunZia project's going nicely.
There was a little noise on it, but it's already moved through. So I feel confident in that one as well, moving like we thought it would in the cadence we thought we're going in. So look, we're on between 50 and 60 large, you know, utility-scale type renewable projects today. And I continue to think that'll grow as we move forward.
How do you, I mean, maybe I should put you a little bit on the spot on growth. I mean, you know, there's always this sort of hockey stick dynamic in the renewable space. And then kind of as you get to nearer term, things become a little bit more pragmatic, I suppose. How do you see that growth trajectory here today? And again, I get that the medium term might be a little opaque, too. So whatever you'd wanna offer on that.
Yeah. I mean, I think last year, based on our balance of plant in that segment, you know, solar, wind, batteries, we grew beyond 50%. We're not gonna see that type of growth.
Right.
You know, but I do see double-digit-plus type growth within those segments this year and beyond, at this point.
Within each of those segments.
Yeah, and beyond. It doesn't matter. Wind is obviously something that is coming off a lower base, but.
Yeah.
Today, it used to be the bigger piece of the segment when you're looking at balance of plant. Now, it doesn't really matter to us, honestly. But together, for sure, you'll see double-digit-type growth.
Yeah. And I do think, on growth, you and I have talked about this, Julien, many times, that those of us who've been in the industry a long time, the growth is there. But I don't think there's as much of an appreciation, and there is now. It's getting there. But development risk is an issue that better developers know how to deal with. And so hockey stick growth, I've never been a fan of. I mean, and I don't believe that is the right way to look at this industry. But it's our preference. We like the steady growth for longer. That's how we look at it. And we believe that's the right way to think about the market on the renewable side.
Let me ask the question slightly differently, 'cause you guys have this remarkable track record in just being steady, right? I mean, if there was to be a handful of companies that you would name out there as having just exceptional execution in terms of steady delivery, I think you guys would be on that shortlist, if you will. How are you guys able to manage the stops and starts, the fits, all the various litany of, you know, more modest issues that maybe your peers have encountered, right, or the sectors encountered, right?
Yeah. I mean, if you walk it back, if you go back, early days, there's actually from 1998, I saw the other day where we were with Blattner on a wind project, and building balance of plant. We weren't very good at it. We built 1,000 meg solar probably, I don't know, 10 years ago, 15 years ago on California. It was a great project. It didn't last. We were done. Couldn't stay with it. And the issue is, scale matters in this business. And to get that kind of scale where we're able to, you know, talk about programmatic spends on gigs versus one-off projects, I think it matters greatly, not only to us but to our clients. And that's where the company's trying to go, is be more program nature. And so it keeps us away from one-off projects.
We don't add value there, at, well, I don't know, one-off project. We add value on programs. So I think for us, we're looking towards the customer base we have doing more, as well as others that have big programs. I—that's where that's our sweet spot. And we need to stay there 'cause that's where the value is from us. So it keeps us away from that one-off. And even if, you know, if our customers move off a project, there's another one behind it. So we're just moving from one to the other versus having to go look for something.
Right. Do you wanna talk? Actually, let me come back to this point. You brought up storage a second ago.
Mm-hmm.
How do you guys think about that as an opportunity, right? 'Cause there's an interesting, you know, sort of gray area between the E&C and the integrator. You know, it seems to be something of an evolving question about how involved some of these companies wanna be.
Yeah.
But also, at the same time, what is the growth trajectory, right? If not 50, then what, right? 'Cause again, I get there's a lot of probably variation in that.
I mean, I think, you know, batteries are certainly growing for us. It's a big piece of the bi.
Yeah.
I mean, it's gonna be a big piece of the business. I say big. It's growing nicely. You know, we still in that space, the integrators, the way we see it, you can get very modularized in it and do things in a modular way. The technical piece is substation, your integration piece. Tesla's not changing the type of battery they give you. You get a Tesla battery, and, you know, that's what the way it is. It's our job to integrate it back into the systems. Our substation business against that is nice. We do quite a bit of EPC substations against those battery projects. So while the business is growing, we have a big business in Australia as well that's done a lot of battery work over in Australia. So we like it.
We understand it. There's, you know, get into it early. You think it's easy. And the integration piece and how you look at those batteries is difficult. So I think we have it down. And it'll continue to grow nicely for us.
That's awesome. Wonderful. And then, you know, another big subject here. Guess what I'm gonna ask about? If there's one big subject at this conference, it happens to be load and data centers and all this fun stuff. And, you know, look, I get that you guys have, you know, you wanna talk about your ability to tap that opportunity. Like, again, it's probably multi-part.
No, I think when we look at the data centers, what we see there, and we've seen it a long time, the demand on the systems. So your ancillary issues are your transmission, your redundancy in transmission. I mean, I'm watching it now real-time. You're seeing it move from Virginia to Tennessee to Ohio, back into Atlanta, into Oklahoma, into Texas, over into New Mexico. And all those are gigs and gigs, multi-gigs. So you can just see the demand on a system. And you're in a rate base that's about 2% growth globally from the power side. So you got that going. And you're backstopped by tech that's probably 30%-40% of the renewables that we're building as well.
Yeah.
From a capacity standpoint, when you look at load. So it's driving load at that level. And it, and you're already fuel switching. So it's backstopping. No one's waiting for interest rates to go down in the tech sector. No one's waiting for people to go get equity.
Right.
And so what they're saying is, "We need redundancy. We need renewables. And we need it now.
Right.
And I think that's driving the whole utility business in a different manner. No one expected 6 gigs to show up. And you're planning, if you're a planner and 6 gigs show up, you go, "What?
Right.
What happened?
Yeah. Right.
It's got the industry in a whole dilemma about how to finance it, how to pay, who pays. I think, as an industry, we'll figure that out.
Right.
We always do. The question is how quickly, and is it quick enough? So that's my concern. But the demand is amazing from my standpoint on the back looking in. Even the centers that are in, they're gonna go in and put bigger chips in. The use of power goes up substantially. Data centers, you saw the thing happen, you know, where they took the whole nukes site. So look, it's there. It's here. It's right in front of us. Opportunities are great for us. You know, we'll stay around the ancillaries at this point. We get asked to do, you know, about 60% of a data center is electric when you look at it. We stay on the high voltage, build the subs, obviously, the ancillary interconnects, things like that at this point.
Do you guys see another opportunity to do more of that behind-the-meter type work that you saw with Talen's announcement this week?
Yeah. I mean, we could do it. It's certainly something we look at quite quite a lot.
Yeah.
There's no reason why we can't do it. So yes, it's certainly a vertical that.
Yeah.
You would have to be blind not to look at it, of course.
Totally. Absolutely. Lots of angles here. Look, maybe another angle to go down. You brought it up with that. You alluded to it 'cause I think this is a point, again, to drive home. Talking about stability. You know, people talk a lot about IRA, what happens next, etc. You could talk about whether you need, like, sort of a, you know, you know, call it a full wave versus just an executive branch change. But also, you just alluded to yourself. Look, the tech demand is there irrespective. They're willing to pay high PPA prices. You remove IRA off an elevated PPA price, the percent increases aren't as much as it once was. And that's actually a really big change.
It is.
Do you wanna talk about how, like, how you see demand going in under the various scenarios? 'Cause I think you underscore a really important point about the visibility.
Yeah. I think the industry's been in two decades of non-load growth. And so when you roll it back, it should be the most prolific time. It is. As far as demand goes, it's one of the prolific time of anyone's career in this business. And it's it hit quick. It's here. When you start looking at load demand long-term, going double, triple, I think Elon's been out saying triple for a long time and telling the industry, "Hurry up. Hurry up." He's not wrong about it.
Yeah.
Now whether it's two times, three times, it's a bunch. And we're seeing it in the West. As it penetrates, stuff penetrates, you need this load. And so there's no denying the fact that we're under any administration, whether you look at blue states, red states, I believe we've moved off that we're going to do it. It's just you could see some timing where you could delay pieces of it, of the transition. But we're moving that direction as a country. So I don't see the administrations. I don't see them with PTCs. Maybe pieces of IRA, you could see them mess with. But PTCs, the tax credits, which are meaningful to the bigger, your bigger renewable developers than everyone else, they remain intact under any scenario. In my mind, and tech drives so much of that.
You know, the auto manufacturing moving off towards batteries, the things that you see that we've asked our countries asked everyone as an industry to move towards, I can't see a reversal in it. And I think the red state like I said, the red states and the blue states, they're aligned on this. And, even if you're big oil or gas or whatever you're at, you have absolutely moved your business towards somewhat, for the most part, somewhat of a renewable state, or you have a long runway over in your own business. But I just can't see a path where you're gonna hear it's gonna be noisy. But in the end, I think you come to the fact that under any administration, red, blue, you go back to the PTCs are probably intact for the.
Right. Maybe just a quick on supply side also, gas, gas gen build. How, like, A, timelines seem protracted. We would love to get your thoughts on this. And then B, how much backlog? How can you think about that expanding here? Sounds like there's a good bit of, like, activity to bid on from what I can tell. A lot, actually.
Yeah.
Coming in.
There's a bunch of gas.
For AltaStable.
There's a bunch of gas commodity cycles coming in. I don't wanna say a bunch. I, you know, I kinda think around 10 that I hear.
Yeah.
but I don't know that close. We can build them. I don't like the risk on them. They're not something we do every day at this point. So I don't see that being a big business for us. The lines going in, some things around that, there's others that build them better than we do, or at least from my standpoint.
Right.
I think with our generation business will stick to renewables. But I do believe wholeheartedly, natural gas will be a part of the solution, Julien.
Right.
I don't see how you can go away from it. Part of the reason you need it now is 'cause you need way more renewables, and the batteries aren't catching it quick enough no matter how you think about it.
Right.
So, you know, to keep it PC, I'm gonna say this really quick. People want affordable, cheap, sustainable, secure power. Like, that you can say it real fast, and it sounds easy.
Yeah. Exactly.
But when you start to back that up, you know, you kinda need natural gas to balance it, to keep everything kinda in balance for a period of time, and to bridge to be a bridge fuel in many ways, to keep the grid secure. And I continue to believe that'll be a big piece of it. Don't, you know, 20% or so.
Yeah. But to that end, when you say the risks, the risks are what? Gas pipe, permitting.
Yeah.
Just, procurement.
Procurement pipe. I mean, for us to build it, though, I just don't like, we don't like to build them. I mean, you're dealing with labor that we don't, we self-perform about 85% of anything we do. And so you're just dealing a little different with different labor, with different unions, different things that you have to hire them and, like, on the spot. It just becomes a total different business for us. And so we typically stay away from that. We understand it. We know how to do it. It's just not something we do every day.
Yeah. No, I hear you.
Not a growth vertical, I would say.
Actually, since I'm gonna ping-pong over to you, talk about labor and how you guys contract meet. What are you seeing on distribution work right now in on that side of the equation, right? I mean, you guys have talked about this. Where are we in that cycle? I mean, 'cause CapEx is up across the board holistically. Rate base is up across the board covering utilities. But what are you guys seeing?
I mean, I think utilities have to make decisions at this point where they spend their capital.
Yeah.
And you have transmission interconnections and data breathing down your neck and fire hardening and things of that nature, you know, that's breathing down your neck. So trying to plan for EV and how fast that penetrates, I think, is one of the things that the industry has to solve, is how do we plan for that penetration, and how quickly does it happen? And right now, it's not penetrating quick enough to really you don't have to spend the capital today.
Mm-hmm.
But it's gotta be spent. It's it's gonna happen. And so you just compress what you're doing, and it just gets longer in many ways. So we're able, as an industry, to probably move capital from that business over into transmission for a bit. But I don't think that I don't think that can last very long. I mean, California was down, let's call it a couple years. And you're starting to see California move back because of EV penetration. And it's starting to hit your circuitry out below out, you know, from my standpoint, a distribution level. I do think technology's gonna help there. We've got to know, as an industry, more than the charger. The charger's telling us, like, "I'm gonna shut off because I don't have enough capacity.
Mm-hmm.
So I think, as an industry, that we'll start to see the grid get much more at a distribution level, and the planning get much better at a distribution level. And I just it'll all come together, longer cycles. I think we're in decades of distribution cycle here. It's not gonna happen overnight. We've gotta talk a lot about Europe. When you go towards a total cost of energy, you start looking at it. It is NPV positive to the rate payer.
Mm-hmm.
That voice has to get out there and be said, like, because I think that's the regulator at the state level is going, "Well, my pricing's going up at the customer level.
Yeah.
That affordability issue at the distribution level is something that we're seeing. It's not everywhere, but it's impacting certain areas. Typically, we'll move in resources from one to another or moving towards transmission in those areas. So kind of know where the CapEx is going and make and move accordingly. But I do think this is just building from a distribution level. And what we're seeing, the impacts of EV as it penetrates is, you know, I say $ trillions are spent.
Yeah.
Even at the distribution level.
Right. Yeah. It's certainly the big distribution topic of the day, as you say.
Mm-hmm.
or over time. In terms of the CapEx cycle, like, sort of trickle, if I can use the expression, trickling down to you guys, how do you think about where we are? I mean, we've seen another wave of uptick here in sort of nominated spend, right? CapEx budgets are up, especially on the transmission side, which is, I think, a point that you guys are trying to get across.
Mm-hmm.
Generation, again, you know, depends on the specific geography.
Mm-hmm.
How are you thinking about that for translating back to your business and awards and and just, you know, your effect on bookings, if you wanna call it that?
Yeah. I think you'll see us continue. I mean, we're, you know, backlog is kinda flat, based on timing, really. I mean, our MSA business is good. They're usually five years in nature. It takes us a little longer at times to, it's timing of bookings. But your larger programs as well, when we're starting to look at multi-year programs on transmission, your bigger interconnections are out there, certainly. The bigger work, like the SunZia of the world, probably smaller than that. That'll win component. But in general, the bigger work, what I would consider bigger work that stacks upon our growth, you know, we're seeing those come faster. Some of the things they're doing at FERC will help. Some of the permitting, you know, siting, those kinda things, the corridors, those things can help.
We're not gonna meet the demand unless we build transmission. And it's the cheapest form of renewables, really, in my mind, that you can do is build. It'll solve some battery issues if we build transmission.
Yeah. Totally.
I think that's going to be the case, like, we're gonna have to put some numbers against it and say, "This is what we need to do and how we're gonna get it done." And the business is growing nicely.
Yeah.
I think it'll continue to grow.
I mean, maybe more for Jayshree, given the transmission backdrop. I'm just thinking, how do you think about the large projects out there, the SunZia, right? We see a number of them moving, right, like our mutual friend. You know, there's a number of these moving at this point. Transmission's clearly the topical subject. How do you see that translating? And also, I suppose, at the same time, you know, again, there too, there's permitting issues and stops and starts that could create more lumpiness in your business profile. How do you guys mitigate that?
Yeah. So, just to step back for a second, 85% of our business is what we call base business, right? It is not these.
Yeah.
SunZia-type projects. That's Duke's point. That's additive. That's what stacks on when those projects are in front of us.
Yeah.
But the predominant part of our business is the MSA work. It's renewable generation. It's the interconnections. It's the substation work. It's the day-in, day-out work that the utilities expect us to do as part of their systems. And we're talking about these programs on transmission. That those are happening, you know, the SunZia are these point-to-point interstate transmission projects, which need to happen. But that isn't what a lot of the transmission investment is we're talking about, right? A lot of that transmission investment's happening anyway at the utility level. And we're on those systems and doing that work. In my opinion, you know, you know, you're asking me the question 'cause I did this for you know, almost 10 years trying to get, interstate transmission built point-to-point interstate transmission built.
It's great to see how much progress is being made, but that progress takes decades. So those projects are out there. They've Grain Belt Express, one of my old projects, TransWest Express, those are moving forward. But they're still not ready. They haven't achieved FID, unlike SunZia has. So I think we're not dependent on those projects. We like those projects. We wanna do them when they're ready. But those are, again, what would stack onto our 85% base business. And you asked earlier, why are we having steady results? Well, that was a big push when Duke took over as CEO, where we wanted to make sure we weren't so dependent on these lumpy projects. We made a conscious effort to shift spend, prioritize that base business work.
You're seeing that in our results with the ability to stack on when these projects come up.
Yeah. I think it's key. The 85%, you know, we can see it. We can talk upper single digits. We've been growing past upper single digits. I think, you know, I'm not comfortable saying out five years, but I'm comfortable saying we've grown past that. It wouldn't surprise me if we continue on 85% of the business to go past in the double-digit type ranges forward. But it's very difficult for us to predict when a SunZia goes, or.
Yeah.
So it's better for us and our investor base to let us get our head around it. And we can give you better clarity. And with the top side of it can grow much greater than double digits 'cause we're stacking. And if you believe all the verticals that we have and our ability to win the awards, then we will stack. We will go past that. But to try to give guidance on it, very difficult.
Yeah. Well, all right. So let me flip that around, actually. Let's focus on the core. I mean, the base. You're like, "85% of the business is base." Our mantra is to create and enable stability where others may be stuck with lumpiness. What about doubling down on that in terms of saying, "Look, we're gonna focus on utility services that are more stable, that have that profile"? And how do you get bigger in that, right? You talk about that double digit. I mean, is this organic? Is this inorganic? How do you think about really leaning into that, right, expanding regionally, again, as far as I can think about it?
Yeah. No, I think we have. When you roll it back, we talked about front-end services five years ago, started building our engineering capabilities, our permitting. I mean, we can certainly get the front side of it. About 30% of any kinda bigger project or any projects that are transmission-driven will have, you know, components of what I would consider heavy engineering, project management, the front side, no capital, things that we can be very helpful with. We're doing it anyway. So we're working with clients from a construction-led platform and engineering behind us. And I think that model's working well. And so we're able to really take more of what's available to us. And so you've seen us do that. We went vertical in supply chain. We met all the manufacturer transformers.
Mm-hmm.
So we've gone more vertical within material. I think that's a bigger opportunity than it is for us. I'm not saying we're gonna go, be a transformer manufacturer per se. But to have that solution and to be able to understand, we're probably the call it fifth, sixth largest buyer of HV equipment today. And we should know how to do that very, very well, and be able to help our clients as we move forward on how they buy materials, as well. And so that material component will be a piece of the business that should afford us some opportunities across all of our verticals. So as you see the company, we're moving in those directions while still looking at our you know, kind of we just bought, recently in our industrial business, bought an environmental solution business to the industrial base.
Mm-hmm.
So we do believe in a portfolio. I do think it's really, really important for us to continue to look at it as a portfolio business. It's very much an 85% because the lumpiness of big projects is not going away. It's not. It's still gonna be around. Whether they all need to happen, need to happen yesterday, but they're still gonna be lumpy. And we know this. So we just gotta really watch it and make sure that the base is moving up. And we're talking about how we stack so we can give good clarity to it, our investors.
Awesome. Maybe actually, since you were talking about supply chain, can we talk about that a little bit more, right, in as much as one of the factors that's been cited with accelerating, with greater frequency in the last few months even, right? So we went through the supply chain issue with COVID. Now it seems like we're back in this world, especially in electrical equipment. How long do you see this lasting? How much of an impact do you see that in your business, right? And it's not just so for as much as some folks may have safe harbor transformers, now it's breakers, right? It's sort of a little bit of whack-a-mole, it feels like. How do you guys see this? How protracted is it?
I don't, we're not seeing it in a big way in the projects that we have. I mean, our development, our customer base is, you know, they've got supply chain down.
Mm-hmm.
And so we're not really seeing it. But we do see it in smaller things. We do. And some of the, I hear it a lot. And part of the reasons that we about let's call it 17%-20% of call it 69 kV and above transformers are made in the U.S. Everything else so call it 80% is overseas or not domestic. It and it concerns me. And it concerns because I do think we've gotta be careful. We've gotta understand it. That's why we acquired about 3% of the man 2% of the manufacturing capabilities in the U.S. 'cause I think we can expand a little bit. But it's also to make sure that we internally, we can be beneficial to the client.
And if they wanna move up, if something happens, then we can certainly have those discussions to move it forward and do some things there that'll allow that opportunity. But I do believe China, the content from China that's in the grid, I think the security of this grid is paramount. And it will continue to be a focal point going forward. And the industry's gonna continue to get challenged on China supply chain. It will. And so we have to get it in our head on how to, you know, at least have backstops against it in many ways. And it'll be a challenge for the industry to get their head around.
It's still, yeah, a challenge because of the international.
Mm-hmm.
Actually, let me pivot one more time here. I'll try to, let's talk about the business in terms of, you know, so labor has been a constraint. But it almost seems like your construction services seems like a constraint. Engineering services seems like a constraint. And so in many respects, some of the feedback we get is that actually, you all, as a business, as a sector, are able to maybe improve your margins here with some of the counterparties. I mean, that's the feedback that we're hearing from the developer renewable community real large. How real is that? 'Cause at the same time, you guys are realizing some inflationary pressures that effectively, you guys are passing on. So again, I hear them, you know, whether it's words of complaining or understanding that you're passing up costs.
How real is that for you guys, though?
I mean, we've seen labor increases around 5%, really, you know, year after year for 20 years. So I don't see any exorbitant increases there. Our margins, I like, I say it all the time, I on the electric power, they're double the 10%, call it, 10.5% with Puerto Rico in. I think it maintains that. It has for many, many years. And then, you know, you start to look at your renewables. We got it to 9%. It's typically been around 10%.
Mm-hmm.
So I think it'll come up eventually. I mean, 20 years, you operate in an area. That's what it'll operate. The industry doesn't afford more than that. I it's not you get it outside of prudency. You get issues. Our viewpoint is we wanna do more. We wanna help more. We wanna be more of a solution provider at, you know, the pricing levels that allow us to do those things and to put our heads around technology to help. And so that's the level that I believe we'll stay at. We're not trying to gouge the client or get higher margins. I don't think it's possible long term. There's still a lot of internal workforce as well. And so, you know, you can't get your stuff outside of what the market will afford.
To me, we can do other things, get better returns versus margins by utilizations, by pulling through material, less capital, things of that nature, more solutions versus trying to say, "We're gonna make 15 points.
Yeah.
I just don't think it's smart for the company. I've never thought it was and fought it for, I don't know, 7 years since I've been in this role.
Totally.
I just don't think it's prudent.
How do you think about backlog the nature of backlog? 'Cause what's another interesting point of feedback is, like, the issue, so if there's a constraint out there, it's like, "Well, there's only so much services, so much labor. So therefore, let's just continue back, you know, ordering backlog even further," right? So it seems like, you know, we're out there looking at 26 build projects now, at least in terms of awards and BPAs, 27. Are you guys seeing sort of greater duration in what you guys are looking at in terms of your backlog here? It feels like we're seeing that on the front end. It would. I feel like we should be seeing that on your side as well increasingly.
Yeah. I mean, we're seeing more backlog long term. I definitely, the durations are getting longer. I think when you think about it, if utility's doing $3 billion of CapEx, and their internal workforce is doing $1 billion, if they go to $5 billion, it's highly likely they're not gonna do more than they did yesterday. And so that incremental backlog is really flowing through at a higher rate as capital moves up. So because they can build a little bit. They're not, you're not gonna build for peak at a utility. You're gonna build to be moderate. And, you know, we know our role, and we know how it works.
So I do believe as utilities start to move that backlog up, we can play a bigger role as you start to see those incremental spins come in, in these outer years. So I do think our MSAs get bigger, our programs get bigger, and our backlog increases against it. I mean, that's it, you know, we continue to see it. Our margins are going up and not down. And, so we watch all those things. And I you know, we think we'll be at record levels this year, again. And, you know, how it when, how it CAGRs, some of it's timing. Some of it's, you know, we're negotiating or whatever it may be. But we see high demand, longer and outer years. And so I do believe we'll continue to see our backlog rise.
Yeah. That's great. And in fact, just someone else came back to me or from the earlier conversation about, like, where you build this business, right? And we talked about, like, do you build it regionally? Do you add more MSAs? And your thought was your reaction at the time was, "Look, let's also look at vertical," right? How do we expand out the products we're offering?
Mm-hmm.
Is that something that you continue to look at in terms of, like, using capital dollars? And is it that maybe regional dynamics here are already well-played in a lot of geographies?
Yeah. I mean, we have a regional structure internally and then service lines that come against it. So that would continue to play a role. All those service lines are driving those regions, whether it be engineering, whether it be batteries. It does, so their expertise is coming across those six regions in Canada, Australia. So that's how it's designed. And the vertical piece of it is basically centralized. And so we have centralized vertical supply chain working on, you know, pricing. Can we get better relationships with vendors? Or is it something that we need to lean into because we can't? What can happen is we can't have an impediment. I mean, for self-performed 85%, our customers are asking us to get something in on time, but it affects their EPS.
I'm 100% on that if we don't get it in. And I'm not like, "That's not. We're not doing that." So we have got to get ourselves around. We own 90 helicopters, heavy-lift, 10 heavy-lift helicopters. We own those because we can go faster. We can do some things with the helicopters. And we're not dependent on someone else. And so anything that we believe that we're dependent on someone else to get the numbers that we believe that we've laid out will certainly lean into the vertical piece of it.
Yeah. Nice. Excellent. That makes sense. Look, I maybe another angle that we haven't talked about as much is, you know, how do you think about how do you think about, like, building the business overall, like, the different building pieces, right? Like, let me step back. I've been so focused on, like, asking about renewables. And within each part part, like, let's just step back. How do you think about building out this business? You talk about the grid, big opportunity. What are the bigger chunks that you're gonna focus on? You talk about the base. How do you build the base out, you know, in a kinda more conceptual? Your own slides talk about there's a gas be a gas LDC piece.
Mm-hmm.
There's all different buckets. I've been very much fixated on generation. Look, at the core of Quanta is craft skill labor. Like, that's what I know in my.
Totally.
Generation since my background. So it doesn't the craft, if it's inside electric, if it's mechanical, if it's as long as the macro market's there, we understand craft. And so we can bolt on engineering. We have, you know, between 1,000 and 2,000 engineers and staff and, you know, that are around that support that business, that front-end business. And technology, I think, is a part of it. So we always look at we're in two separate funds there on technology with our customers that so we're looking at technology. How does that play a role in the whole thing? AI is obviously a big piece of this thing. And you have to have your head in the sand if you're not looking at that internally.
So I think anything that we're doing today drives, like, both the project and the base at the same time, honestly. And in the verticals, as we start to a lot of times, it's the customers that are coming to us saying, "Can you? Will you? What about this? Can you do this for me?" Logistics is a big piece of the business today.
Yeah.
So, I mean, how much can we expand logistics? Because, like, people are struggling. And I'll say, "Well, FOB port. We'll figure it out from there.
Right.
Don't worry about it." Or, you know, "Well, my ship's Turkey, coming in from Turkey, and I'm stopped." And I'm like, "Well, it's 8 days to go around. Why don't you just go around? We're good." Like, just.
Right.
Get me to a point, and we'll get it.
Right.
I got it. We'll handle it." So just stuff where we're solving problems, and you go, "Well, hell, that's a business.
Right.
We have a fleet, an EV fleet coming in that's, you know, we've talked about 1,500-2,000 trucks going to the west. We've got about 40. We're way behind. You know, deliveries are behind. So then you get out, and you go, "Well, how am I gonna charge these?
Right.
We're in the business.
Right.
And I'm looking at our people, and we're looking at, well, so you take it home, and you put it in yours, and do you pay that, or you pay?" "Well, yeah. That's gonna be different." So we can, like, model things around what we see and say, "That's a business." Like, if we figure out we have third, fourth largest fleet in North America. If we figure this fleet out, well, we can figure it out for others. And so I think you'll start to see us, like, anytime that there's an issue or us providing solutions. And we are a solution provider. So if we're gonna say we're a solution provider, we need to be thinking like that. And so I think that's where the company gets sticky.
It's where the company can benefit, both the ultimate customer and our customer, both renewables and utilities.
Awesome.
Yeah. It sounds like there's an element of, like, distributional logistics that really gets you a lot of credit with your customers.
Yeah. And you got data centers. You know, balance-of-plant data centers. I mean, you know, that's a big piece of the AI of what I see is a long-term growth cycle. Yes. You know, we talked about the inside piece. And the pieces that we don't do of data centers is a, you know, something we would look at. I see no reason why we wouldn't.
Yeah. Last super quick question. With LUMA and with Puerto Rico, fascinating development with you guys getting involved there. Again, I know it's a unique situation. Is there an ability to scale up those kinds of it's.
That's a unique.
Chunky, right?
You know, we kinda heard you this week about public power.
Yeah.
The island's public power. It was probably the most robust system in 1984 that was out there that it degraded to a point where it couldn't get the lights on. You got load shedding every day. So I'm not a big fan of public power. I think our ROUs and our ROU customers getting the right returns and the right.
Yeah.
Restrictions, they're fantastic. We'll figure the grid out. I think we were able to prove what can be done, on an island like that. We learned a ton. Spent way more time in D.C. and able to really get my head around what it's gonna take. So yeah, they want it to be 100% renewable island. Hey, we need natural gas too, down there to balance it. So we understand you gotta balance it first. Then you can build renewables all the way around it. Then eventually, you can start shedding off natural gas. So we love what we've done down there. It's getting better and better. The people are starting to benefit from it, which makes me happy.
We're starting to see, like, the FEMA dollars that are actually for construction move in for construction finally. They are. You'll probably hear about their bankruptcy, ongoing, trying to get out of bankruptcy. It doesn't affect us at all. But we do help them try to make sure that it's stabilized, and they can. And you can see it. So, it'd be ongoing bankruptcy discussions. I hate to put a no when that's gonna happen. It doesn't affect us at all.
Right. Awesome. Guys, I know I'm past time here. So but thank you, guys.
Yeah. Thanks, man.
Really. It was such a pleasure.
Yeah.
Yeah.
Oh, thanks again.
Thank you, guys.