Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q2 2023 Earnings Presentation
29 slides from Quanta Services's earnings presentation, Aug 3, 2023
Slide 1: Second Quarter 2023 Earnings Call Presentation
Second Quarter 2023 Earnings Call Presentation August 3, 2023
Slide 2: Notice to Investors
Notice to Investors 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 stat
Slide 3: Call Participants and Agenda
Call Participants and Agenda Duke Austin • Introduction and Forward-Looking President and Chief Executive Officer Statements Disclaimer • 2Q23 Results, Operational and Strategic Jayshree Desai Commentary Chief Financial Officer • Financial Review and Discussion Kip Rupp • Outlook Vice President, Inv
Slide 4: Second Quarter 2023 Overview
Second Quarter 2023 Overview • Second quarter results continue our solid start to the year *Adj. • Solid execution and profitable growth EBITDA(1) ◦ Record quarterly revenues exceeded $5 billion for the Operating *Adj. first time Income EPS(1) $472.1MM • Record total backlog(1) of $27.2 billion $1.6
Slide 5: Electric Power Infrastructure Solutions
Electric Power Infrastructure Solutions • Another quarter of profitable growth, reflecting solid and safe Historical U.S. Electric Grid Capex: 8.6% CAGR execution and robust demand for our services • Double-digit segment operating income margins despite pressure from lower than anticipated utilizati
Slide 6: Renewable Energy Infrastructure Solutions
Renewable Energy Infrastructure Solutions • Segment revenues grew significantly in 2Q23 ◦ Driven by increased renewable generation, high-voltage transmission and substation activity • Segment total backlog reached a record $7 billion ◦ Driven by the addition of the SunZia transmission and HVDC conve
Slide 7: Underground Utility & Infrastructure Solutions
Underground Utility & Infrastructure Solutions • Pleased with 2Q23 performance ◦ Double-digit revenue growth ◦ Record second quarter operating income profitability • Solid performance was broad based across service lines within the segment ◦ Strong execution ◦ Solid demand SOLID AND BROAD BASED PERF
Slide 8: Solid Year-to-Date 2023 Performance and Positive Multi-Year Outlook
Solid Year-to-Date 2023 Performance and Positive Multi-Year Outlook • Year-to-date 2023 performance and full-year financial expectations demonstrate our confidence in the strength and sustainability of our business and long-term strategy, favorable end-market trends, our ability to safely execute an
Slide 9: Across Our Portfolio, Megatrends Provide Multiple Paths for Growth
Across Our Portfolio, Megatrends Provide Multiple Paths for Growth SOUND STRATEGY * STRENGTH AND SUSTAINABILITY * FAVORABLE LONG-TERM TRENDS * STRONG FINANCIAL PROFILE 9
Slide 10: 2Q23 Segment Results versus 2Q22
2Q23 Segment Results versus 2Q22 ($M) Revenues Op Inc %(1) Commentary Change (bps) + The increase in revenues was primarily due to growth in spending by our utility customers on grid modernization and Electric hardening, resulting in increased demand for our comprehensive solutions, as well as appro
Slide 11: Backlog
Backlog ($B) Backlog • Total backlog as of 2Q23 was a record $27.2B, primarily attributable to additional awards in our Renewable Energy Infrastructure Segment. +6.9% over 1Q23 • Twelve-month backlog of $15.6B was also a record, driven by increased renewable project activities. (1) (1) RECORD BACKLO
Slide 12: Free Cash Flow & DSO
Free Cash Flow & DSO 2nd Quarter Recap Free Cash Flow (1) ($M) Days Sales Outstanding (2) (DSO) Free Cash Flow increase mainly driven by: 2Q22 2Q23 • Increased levels of renewable projects, which typically have more favorable cash flow profiles. DSO of 78 was: • 3 days lower than 2Q22 partially due
Slide 13: Balance Sheet & Liquidity
Balance Sheet & Liquidity December 31, June 30, ($M) 2020 2021 2022 2023 Liquidity Highlights Cash and Cash Equivalents 185 229 429 362 Debt • We expect second half earnings Credit Facility 149 450 37 217 growth and cash generation to Commercial Paper — — 373 699 support our ability to efficiently d
Slide 14: Electric Power Solutions Segment Guidance
Electric Power Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 1Q Guidance △ 2Q Guidance Revenues + Base business growth led by continued investments supporting = Continued confidence $8.9B grid modernization, $10.0B - $10.1B in full-year revenues $10.0B - $10.1B hardening and relia
Slide 15: Renewable Energy Solutions Segment Guidance
Renewable Energy Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 1Q Guidance △ 2Q Guidance Revenues + Solid growth compared + 2Q23 performance $3.8B to prior year with ramp $4.5B - $4.7B plus new project $5.2B - $5.4B in 2H23 momentum Op Inc % (1) + Improved margins with higher volu
Slide 16: Underground Utility & Infrastructure Solutions Segment Guidance
Underground Utility & Infrastructure Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 1Q Guidance △ 2Q Guidance Revenues - Lower volumes of larger pipeline projects + Solid 2Q23 and $4.4B $4.1B - $4.3B improved visibility $4.4B - $4.5B + Continued base business growth Op Inc % (1) +
Slide 17: 2023 Guidance Summary
2023 Guidance Summary GUIDANCE ($M except per share data) Low Mid High Revenues $19,600 $19,800 $20,000 Adj. EBITDA (1) $1,877 $1,922 $1,966 Free Cash Flow (2) $800 $900 $1,000 Net Income (Loss) $705 $735 $765 Diluted EPS (GAAP) $4.75 $4.95 $5.15 Adjusted Diluted EPS (3) $6.90 $7.10 $7.30 INCREASING
Slide 18: Closing Remarks
Closing Remarks • First half performance and strengthening outlook give us confidence to raise our expectations for full year revenues, adjusted EBITDA, adjusted EPS and free cash flow • Continued momentum behind electric power and renewable energy segments bolstered by multi-year outlook for utilit
Slide 19: Appendix
Appendix • Definitions • Reconciliation Tables • Cautionary Statement About Forward-Looking Statements and Information 19
Slide 20: Definitions
Definitions • Backlog is defined as performance obligations, plus estimated orders under master service agreements, including estimated renewals, and non-fixed price contracts expected to be completed within one year. Quanta’s methodology for determining backlog may not be comparable to the methodol
Slide 21: Definitions
Definitions • Adjusted Earnings Per Share is defined as diluted earnings per share adjusted for the after-tax impact of certain other items, in the current year, as described below: ◦ Non-cash stock-based compensation expense varies period to period due to acquisition activity, changes in the estima
Slide 22: Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share ($000s, except per share information) 2023 FY 2023 GUIDANCE RANGE 2Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 165,899 $ 705,000 $ 734,750 $ 764,500 Adjustments: Acquisition and integration
Slide 23: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ($000s) 2023 FY 2023 GUIDANCE RANGE 2Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 165,899 $ 705,000 $ 734,750 $ 764,500 Interest and other financing expenses, net 46,741 160,000 162,000 164,000 Provision for income taxes 69,
Slide 24: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ($000s) 2022 2023 FY 2023 GUIDANCE RANGE 2Q 2Q Low Mid High Net cash provided by operating activities (GAAP as reported) $ 118,731 $ 127,413 $ 1,200,000 $ 1,300,000 $ 1,400,000 Less: Net capital expenditures: Capital expenditures (121,574) (105,278) (400,000) (400,00
Slide 25: Reconciliation of Backlog
Reconciliation of Backlog (In thousands) June 30, 2022 March 31, 2023 June 30, 2023 12 Month Total 12 Month Total 12 Month Total Electric Power Infrastructure Solutions Remaining performance obligations $ 2,149,469 $ 2,779,227 $ 2,420,570 $ 3,986,724 $ 2,584,140 $ 4,128,988 Estimated orders under MS
Slide 26: Cautionary Statement About Forward-Looking Statements and Information
Cautionary Statement About Forward-Looking Statements and Information This presentation (and oral statements regarding the subject matter of this presentation) contains forward-looking statements intended to qualify for the “safe harbor” from liability established by the Private Securities Litigatio
Slide 27: Cautionary Statement About Forward-Looking Statements and Information
Cautionary Statement About Forward-Looking Statements and Information • Market, industry, economic, financial or political conditions that are outside of the control of Quanta, including economic, energy, infrastructure and environmental policies that are adopted or proposed by the U.S. federal and
Slide 28: Cautionary Statement About Forward-Looking Statements and Information
Cautionary Statement About Forward-Looking Statements and Information • The failure of existing or potential legislative actions and initiatives to result in increased demand for our services or budgetary or other constraints that may reduce or eliminate tax incentives or government funding for proj
Slide 29: Connect With Quanta Services Investor Relations
Connect With Quanta Services Investor Relations @QuantaIR QuantaServicesIR Investor Contact Corporate Office Kip Rupp, CFA, IRC 2727 North Loop West Vice President – Investor Relations Houston, TX 77008 713-341-7260 713-629-7600 investors@quantaservices.com www.quantaservices.com 29