There's always a new horizon.

Quanta excelled in 2013. We safely and successfully executed on a multitude of projects that expanded, improved and maintained the electric power grid and oil & gas energy infrastructure throughout North America. We continued to progress our strategic initiatives to advance our leadership position in the markets we serve and to position Quanta for profitable growth into the future. Quanta remains the industry leader in providing innovative, comprehensive infrastructure solutions and is a partner of choice for many of our customers throughout the industry.

In 2013, Quanta generated record revenues of $6.5 billion. Operating income grew 13% to a record $526.9 million, and operating income margin improved to 8.1%. Our year-end backlog of $8.73 billion set a new record, improving nearly 25% over the record backlog levels we achieved in 2012. Our backlog reflects the robust market environment we are currently operating in and provides a clear view toward future growth.

Electric Power Services Segment

Strong demand for nearly all of our electric power offerings drove record revenues for the segment. We also achieved operating income margins of 11.6% as we safely executed on projects. We accomplished this despite having approximately $140 million less in emergency restoration revenues in 2013 compared to 2012.

We see double-digit growth opportunities for our electric segment over the next two years, driven primarily by grid reliability challenges. The North American power grid continues to age and has been underserviced for years. Repairs, replacements, upgrades and maintenance are needed now to ensure adequate reliability, which will necessitate significant investment for many years. Other trends also add to our near- and long-term opportunities. Renewable and natural gas generation are being integrated into the grid, coal generation is being retired, and reliability requirements and favorable regulation continue to encourage transmission and distribution investments. With this dynamic market environment, we believe our track record for safe execution, our scope and scale and the excellence of our people in the field are valued by our customers.

Oil & Gas Infrastructure Services Segment

This segment experienced 22% revenue growth in 2013, driven by strong demand for our services. More importantly, this segment’s profitability more than doubled during the year. We also gained momentum in awards for mainline projects throughout the second half of 2013, as demand increased for new pipelines to transport oil and natural gas to market, which we believe will carry into 2014 and beyond.

Demand for our pipeline engineering and construction services continues to be driven by robust development in North America’s unconventional shale formations and the Canadian oil sands. Most of these developments are in geographic areas where there is little to no energy infrastructure in place to gather, store, process and transport the fossil fuels to markets. We believe we are the leading pipeline construction company in North America and are well positioned to grow our services with our customers as they continue to expand in these markets.

Fiber Optic Licensing and Other Segment

Revenues in this segment declined slightly in 2013, primarily due to variation in our ancillary telecom and wireless infrastructure services. However, we did grow our core fiber optic licensing operations within the segment and see solid growth in demand for our fiber optic networks and services going forward. In late 2013, we launched our lit services strategy to complement our well-established fiber optic licensing operations. We believe leveraging our existing fiber networks to provide lit services will expand our customer base and open a larger end-market opportunity that should accelerate revenue growth once the strategy is fully implemented.

We believe our primary markets are in the most prolific time in the history of the energy industry and the early stages of a multiyear investment cycle. Near and long-term growth opportunities are more visible than ever before, and we will continue to strategically position the company for sustainable and profitable long-term growth. To that end, we continue to expand our service offerings, both organically and through acquisitions to meet our customers’ growing needs. In 2013, we acquired several excellent companies that either expanded our footprint, added differentiating technologies and solutions, or opened adjacent market opportunities that leverage our core offerings.

We acquired two electrical transmission and distribution contractors that enhanced our presence in the Northeast, Midwest and Western areas of the United States, and a Canadian generation, transmission and distribution engineering company. We acquired a pipeline logistics management company with operations in key U.S. shale plays, and we acquired a leading company to extend our offerings to the offshore oil & gas infrastructure markets. We also acquired a company in Australia to capitalize on the need for pipeline and related infrastructure to serve the coal seam gas, LNG export, and shale oil & gas markets. Going forward we will continue to strategically pursue acquisitions and investments to support our objectives for long-term profitable growth.

Quanta ended the year with $489 million in cash, no long-term debt and $1.085 billion of borrowing availability under our credit facility, for total liquidity of approximately $1.574 billion. This is the strongest liquidity position in our company’s history.

We increased the capacity under our senior secured revolving credit facility to $1.325 billion and sold our equity ownership interest in Howard Midstream Energy Partners, LLC (Howard Energy) for approximately $221 million in cash, more than doubling our investment in just over two years. This capital and our strong cash flow from operations during 2013 supported our growth and funded an active acquisition program.

In December 2013, the Board of Directors authorized the repurchase of up to $500 million of common stock over the next three years. This authorization further reflects the Board’s and management’s confidence in Quanta’s long-term growth opportunities and serves as an additional means for delivering value to our shareholders.

Our financial strength and flexibility is the foundation of our strategic growth initiatives and allows us to be opportunistic and prudent with our capital deployment decisions. It also differentiates Quanta from the competition in our customers’ eyes.

The safety of our employees, our customers and the community is an unwavering commitment from the leadership of this organization. This passion is expressed and demonstrated by our executive and operational leadership and is embraced by our front line employees. Safety management and continued operational performance improvement is the core focus of this company and paramount to our past and future success.

In 2013, our man-hours worked increased 18% to 46 million, however our incident rates continued to trend downward and remain well below the industry average. This is a credit to every employee in our organization and their diligence to own safety and drive continuous improvement throughout our company.

Today, Quanta is in the most exciting time in its history. We see multiple years of growth opportunity ahead of us in the United States, Canada, Australia and other parts of the world. Both 2012 and 2013 were record years for Quanta, and if our expectations for 2014 come to fruition, Quanta is positioned to achieve another record year. Still, we will continue to forge ahead, driven by the commitment that we will never stop working to lead our industry, to grow profitably, and to serve our customers, employees and shareholders.

As always, I extend my thanks to our shareholders for your continued support and confidence in Quanta. I also thank our great family of employees. Your hard work and dedication is the reason we have achieved record results year after year. We look forward to many more to come.

Respectfully,