Quanta Services, Inc. · NYSE:PWR
Quanta Services — Investor Presentation (December 2019)
40 slides from Quanta Services's investor presentation, December 2019
Slide 1: Investor Presentation Nov./Dec. 2019
Investor Presentation __ Nov. / Dec. 2019 C@BY, QUANTA
Slide 2: Forward-looking statements
This presentation (and oral statements regarding the subject matter of this presentation) includes forward- looking statements intended to qualify under the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include any
Slide 3: Contents
Contents ™ Key Takeaways l@ Strategic & Financial Objectives ™ Quanta’s Customer Focused & Collaborative Strategy @ End Market Trends & Services Overview ™@ Select Financial Discussion ™ Closing Thoughts ™ Reconciliation Tables & Forward Looking Statement Disclaimers 3 @UANTASERVICES.COM
Slide 4: Key Takeaways
Key Takeaways QUANTA Quanta is the leading specialty infrastructure solutions provider serving the utility, energy and communications industries We self-perform more than 85% of our work, which de-risks projects and ensures efficiency, safety and cost-certainty for our customers Infrastructure oppor
Slide 5: Who Is Quanta Services?
WHO IS QUANTA SERVICES? Leading Specialty Infrastructure Solutions Provider Ww N Recognized market leader in the utility, energy and communications infrastructure industries i] . ¢ . . More than 60% of revenues from ¢ — “ aege regulated utilities Entrepreneurial business model P= and culture Largest
Slide 6: Key Strategies for Sustainable Success
KEY STRATEGIES Key Strategies for Sustainable Success Grow Base Business Expand Service Offerings Develop Craft Skilled Labor Disciplined & Value Creating Capital Deployment +$3.7 billion estimated increase in base business revenues from 2015-2019E Equates to 12% CAGR Base business revenues estimate
Slide 7: 2015 2019E $918 $526 2015 2019E 2015 2019E 2015 2019E
2015 2019E $918 $526 2015 2019E 2015 2019E 2015 2019E
Slide 8: Sustainable Value Creation
SUSTAINABLE VALUE CREATION How We Are Driving Long-Term, Sustainable Value Creation Key Strategies Grow Base Expand Service Develop Craft mS ting Capital Business Offerings Skilled Labor ‘Deployment Portfolio Approach <.5% to 10%+ Revenue CAGR 10% or Better Adjusted EBITDA Margins < EPS Growth > Rev
Slide 9: End Markets, Select Industry Data Points
Select Industry End Markets Data Points Select Customers * Largest customer accounted for < 8% of 2018 revenues * Top 10 customers accounted for ~ 37% of 2018 revenues Sources: The C Three Group, Douglas-Westwood and Verizon
Slide 10: Grow Base Business
Grow Base Business • • • • • • • • • • • • • • • • • •
Slide 11: 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2015 2016 2017 2018
45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2015 2016 2017 2018 • • •
Slide 12: Project Management, Installation, Maintenance, Replacement
Project Installation Maintenance Replacement Management
Slide 13: Strategically Focused, Operationally Diverse
Strategically Focused, Operationally Diverse Approx. 77% of 2018 Revenues Estimated to Come From Utilities, Industrial and Communications Customers, Which Provide Visible and Growing Capital Programs 2018 Consolidated Revenue = $11.17 Billion* 2018 Revenue By Segment Est. 2018 Revenue By Customer Ty
Slide 14: Quanta has Evolved Its Business Model with the Utility Industry
Quanta has Evolved Its Business Model with the Utility Industry Legacy Utility Model Advanced Integrated Utility Model Transmission Distribution Generation Pipelines Transmission Distribution | Generation apt & _ TTT ¥ TT] Gas Distribution Renewables Communications zr (p) “ @ sali @ * Investment foc
Slide 15: Quanta's Estimated Aggregate Average Employee Count for These Customers
Quanta’s Estimated Aggregate Average Employee Count for These Customers in 2018 = +11,000
Slide 16: $5 $4 $4 $3 $3 $2 $2 $1 $1 $0 $0 2015 2018 2015
$5 $4 $4 $3 $3 $2 $2 $1 $1 $0 $0 2015 2018 2015 2018
Slide 17: • $95.0 • • • • • • $83.9 • • 2017E 2018F 2019F
• $95.0 • • • • • • $83.9 • • 2017E 2018F 2019F 2020F 2021F 2022F •
Slide 18: Significant Opportunity With Our Clients
Significant Opportunity With Our Clients Multi-decade modernization initiatives $37B 2019-2023 $2.8B $26B $33B Annually-2021 2019-2023 2019-2023 GNkoy, Firstinergy —- Paminion EE zens POWER + Electric T&D 48% * Electric Transmission * Electric Power * 75% allocated to wires * Gas distribution 8% 42%
Slide 19: Aging Utility Workforce Contributes to Outsourcing Trend
POSITIVE OUTSOURCING TREND Aging Utility Workforce Contributes to Outsourcing Trend Outsourcing expected to increase across electric and gas distribution over next five years % T&D workload outsourced (over time) 60% 40 20 @ g is @ ES 2 ° > ° a G > wo > 2 @ Q @ 2 © * & g A g 2 % o G z G 2 4 ® © 5 o
Slide 20: Communications Infrastructure: Compelling and Complimentary Growth Opportunity
URE SERVICES COMMUNICATIONS INFRASTRU Compelling and Complimentary Growth Opportunity Goals Growth Strategies L 4 To be a leading communications infrastructure * Primarily organic growth and greenfield expansion solutions provider in the markets we serve Select strategic acquisitions play a role, bu
Slide 21: 5G Coverage Example
• • • • • 4G/LTE 5G 5G Enabled Across Coverage Macro-Cell Small Cells Top 25 U.S. Metro Mkts. Example Square Miles 1 1 174,000 Cells Per Sq. Mile (Urban) 1 60 10,440,000 Miles of Fiber Backhaul/Site 1-5 8 1,392,000 Miles of Fiber/Sq. Mile 1-2 480 83,520,000
Slide 22: Applicable Infrastructure Requirements
Applicable Infrastructure Electric 5G and Autonomous Cloud / Internet of Things Requirements Vehicles Mobility Vehicles Data Centers & Connected Objects Smart Cities Electric Power Communications
Slide 23: Industrial Services Overview
CRITICAL PATH & SPECIALTY SOLUTIONS Industrial Services Overview Projected North American Downstream Maintenance Spending 2018 — 2022: ” $105 Billion Gas Proc. Refine: ¥ LNG PetChem Source: Douglas Westwood Downstream Industrial Services Drivers * Plant spending and upgrades driven by similar driver
Slide 24: Pipeline Infrastructure Investment Drivers
ENERGY DELIVERY Pipeline Infrastructure Investment Drivers Shale Gas & Tight Oil Plays Drive U.S. Natural Gas Production 2000-2050 (trillion cubic feet) 45 2018 Reference history | projections 2000 2010 2020 2030 2040 2050 Source: EIA, Annual Energy Outlook 2019 Canadian Oil Sands & Conventional Oil
Slide 25: Larger 2021E
$10 $8 Larger $6 $4 $2 $0 2015 2018 2021E
Slide 26: Larger Projects Provide Incremental Opportunity
COMPLEMENTARY TO BASE BUSINESS Larger Projects Provide Incremental Opportunity Larger Electric Transmission Project Drivers Larger Pipeline Project Drivers +$3B of ° Overall industry avers affecting | +$3B of * Overall growing natural gas and oil production Opportunities Fansmission development prev
Slide 27: Collaboration with Customers on Advanced Opportunities
Collaboration with Customers on Advanced Opportunities Believe the evolution of our business model over the last 20+ years, through strategic initiatives, safe and world class execution and deep collaboration with our customers, has put Quanta into a unique position to partner with our customers to
Slide 28: Portfolio Approach & Diversity of Revenues Mitigates Risk
SUPERIOR RISK PROFILE Portfolio Approach & Diversity of Revenues Mitigates Risk Estimated Revenue by Geography* Estimated Revenue by Contract Type* Estimated Revenue by Project Type* Canada i i New 18% Fixed Price Unit Price Construction, 34% 47% Master Service Agreement (MSA) Australia 3% 40% LATAM
Slide 29: Liquidity
Larger 12/31/15 12/31/16 12/31/17 12/31/18 9/30/2019 Cash Credit Facility (Unused)
Slide 30: • • 50% 100% 90% 40% • 80% 70% 30% 60% 20% 50% 40%
• • 50% 100% 90% 40% • 80% 70% 30% 60% 20% 50% 40% 10% 30% 20% 0% 10% -10% 0% 2013 2014 2015 2016 2017 2018 2019*
Slide 31: Flexible & Strategic Capital Allocation
OPPORTUNISTIC & DISCIPLINED APPROACH Flexible & Strategic Capital Allocation — A Competitive Advantage Capital Deployment Preference Working Capital Capital Expenditures Acquisitions Investments Return of Capital Capital Deployment Posture Generally in sync with preference, however ... Financial str
Slide 32: Financial Goals for Growing Long-Term Shareholder Value
FINANCIAL GOALS Financial Goals for Growing Long-Term Shareholder Value Return of Strategic Double Digit ROIC Sustainable Cash Capital Acquisitions Flow Generation EPS Growth > 10% or Better Revenue Growth Adjusted EBITDA 5% to 10%+ Margins Revenue CAGR a Actual Performance Through the Cycle, 2010 —
Slide 33: Investor Contact
Investor Contact Corporate Office Kip Rupp, CFA 2800 Post Oak Blvd., Suite 2600 Vice President – Investor Relations Houston, TX 77056 713-341-7260 713-629-7600 investors@quantaservices.com www.quantaservices.com
Slide 34: Reconciliation Tables & Forward Looking Statement Disclaimers
34 Reconciliation Tables & Forward Looking Statement Disclaimers QUANTASERVICES.COM
Slide 35: Reconciliation of adjusted net income
For the Years Ended December 31, (in thousands, except per share information) (Unaudited) As of October 31, 2019 Estimated Guidance Range 2015 2016 2017 2018 2019 2019 Reconciliation of adjusted net income from continuing operations attributable to common stock: Net income from continuing operations
Slide 36: EBITDA reconciliation
(Unaudited) As of October 31, 2019 Estimated Guidance Range 2015 2016 2017 2018 2019 2019 Net income attributable to common stock (as defined by GAAP) $ 120,286 $ 198,725 $ 314,978 $ 293,346 $ 367,400 $ 385,300 Interest expense 8,024 14,887 20,946 36,945 65,000 66,000 Interest income (1,493) (2,423)
Slide 37: Free cash flow reconciliation
2015 2016 2017 2018 Net Cash Provided by Operating Activities of Continuing Operations 627,762 390,749 371,891 358,789 Less: Net Capital Expenditures: Additions of Property and Equipment (209,968) (212,555) (244,651) (293,595) Proceeds from Sale of Property and Equipment 26,178 21,975 23,348 31,780
Slide 38: Revenue Growth impact on Free Cash Flow
Revenue Growth impact on Free Cash Flow $MMs 2013 2018 Change Revenue, reported $6,412 $11,171 $4,760 NWC $750 $1,507 $757 Revenue @ 3% growth per year $6,412 $7,433 $1,021 Implied NWC $750 $1,003 $253 Excess NWC to support Revenue Growth $504 Cumulative '13-'18E $MMs Actual NWC Impact Pro Forma Adj
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