Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q3 2020 Earnings Presentation
30 slides from Quanta Services's earnings presentation, Oct 29, 2020
Slide 1: 3Q20 Earnings Call Presentation
3Q20 Earnings Call Presentation O c t o b e r 2 9 , 2 0 2 0
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 Derrick Jensen • Third Quarter Results, Operational and Chief Financial Officer Strategic Commentary • Financial Review and Discussion Kip Rupp Vice President, Inve
Slide 4: 3Q20 Highlights
3Q20 Highlights Adj. EBITDA(1) • Strong 3Q20 results that exceeded expectations Operating Adj. • Electric Power and Pipeline & Industrial segment margins Income EPS(1) • Adjusted EBITDA $353 MM • Earnings Per Share $1.40 $242 MM • Cash flow • Record backlog of $15.1 billion Cash from Revenue Operati
Slide 5: Electric Power Infrastructure Services
Top 25 Quanta Utility Electric Power Infrastructure Services Customer Spend CAGR: 2000-2018 • Record quarterly revenue and solid operating income ($ in billions) margins 8% • Driven by strong demand, effective cost management, CAPEX high utilizations, operational excellence and record levels 5% of e
Slide 6: Electric Power Infrastructure Services
Electric Power Infrastructure Services • Significant resources deployed to provide emergency 2020 Atlantic Hurricane Season response services to utilities • Hurricanes Isaias, Laura, Sally and Delta, and the Midwest derecho storm • Supported efforts to restore power to millions of people • Quanta cr
Slide 7: Puerto Rico Electric T&D System Operation & Maintenance Agreement
Puerto Rico Electric T&D System Operation & Maintenance Agreement LUMA Energy, LLC (LUMA), 50% owned by Quanta and 50% owned by ATCO, was selected in June 2020 for this historic opportunity – the transformation and modernization of the Puerto Rico electric transmission and distribution (T&D) system,
Slide 8: Communications Infrastructure Services (within Electric Power Segment)
Communications Infrastructure Services (within Electric Power Segment) • Performed extremely well in 3Q • Strong double digit revenue growth • Double-digit operating income margin • Total backlog of $975 million – a record • Recent acquisition of Utah-based specialty contractor serving mountain west
Slide 9: Pipeline and Industrial Infrastructure Services
Pipeline and Industrial Infrastructure Services Focus Services • Gas utility services operations gradually returning to pre-COVID-19 Gas Utility Pipeline Integrity activity levels • Multi-decade modernization programs to replace aging gas utility infrastructure • Demand for pipeline integrity servic
Slide 10: Increasing 2020 Outlook and Positive Multi-Year Outlook
Increasing 2020 Outlook and Positive Multi-Year Outlook • Increasing Quanta’s full-year 2020 outlook • Strong third quarter results • Healthy end market drivers • Contribution of recently announced acquisitions • Currently expect growth in consolidated revenues, net income, adjusted EBITDA and earni
Slide 11: 3Q 2020 Segment Results versus 3Q 2019
3Q 2020 Segment Results versus 3Q 2019 ($MMs) Revenues Op Inc % Commentary Change (bps) Power ex America + Revenue growth due to increased contributions from large projects, ~40% increase in communications revenues versus Electric Latin $2,107 13.5% 3Q19, and a $65MM increase in incremental revenues
Slide 12: Free Cash Flow & DSO
Free Cash Flow & DSO Free Cash Flow (1) ($MMs) Days Sales Outstanding (2) (DSO) 3rd Quarter Recap 3Q20 3Q19 Free Cash Flow driven by: $70 $30 • Increased earnings compared to 3Q19 • Deferred payment of $41MM of payroll taxes as permitted under the CARES Act and related state actions $115 DSO of 82 w
Slide 13: Balance Sheet & Liquidity
Balance Sheet & Liquidity Dec 31, Sep 30, ($MMs) 2017 2018 2019 2020 Liquidity Highlights Cash 138 79 165 217 Debt • Completed offering of $1B aggregate principal Credit Facility 668 479 105 195 amount of 2.9% senior notes due in 2030; received net proceeds of $987MM which, Term Loans - 593 1,241 -
Slide 14: Capital Allocation Priorities
Capital Allocation Priorities Capital Deployment – 1Q16 through 3Q20 ($MMs) Capital Allocation • Working capital and capex required to Working Capital & CapEx, net of sales Working Capital support the organic growth of the business $647 Capex $1,048 remain our first priorities and have been the larg
Slide 15: Electric Power Segment Guidance (excluding LATAM)
Electric Power Segment Guidance (excluding LATAM (1) ) 2020 GUIDANCE RANGE 2020 Initial 1Q20 2Q20 3Q20 2019 D D D D Guidance Guidance Guidance Guidance - Reduced levels + Continued base of electric electric growth Revenues infrastructure + U.S. telecom services + Increase due to growth provided to =
Slide 16: Pipeline & Industrial Segment Guidance
Pipeline & Industrial Segment Guidance 2020 GUIDANCE RANGE 2020 Initial 1Q20 2Q20 Current 2019 (1) D D D D Guidance Guidance Guidance Guidance - Reduced levels of - Further deferral of gas distribution customer spend + Full year of services due to on smaller capital - Further reduced Revenues Hallen
Slide 17: 2020 Guidance Summary
2020 Guidance Summary ($MMs except per share data) LOW MID POINT HIGH Revenues $11,100 $11,200 $11,300 (1) Adj. EBITDA $986 $998 $1,010 (2) Free Cash Flow $600 $700 $800 Net Income $378 $387 $395 Diluted EPS (GAAP) $2.61 $2.67 $2.72 (3) Adjusted Diluted EPS $3.52 $3.58 $3.64 Net Income and Adjusted
Slide 18: Closing Remarks
Closing Remarks • Continue to deliver solid results driven by the resilient nature of the largest portions of our revenue, which represent a repeatable, sustainable foundation for the future • Full-year expectations include Adjusted EBITDA of approximately $1B at the midpoint, which we believe is se
Slide 19: Appendix
Appendix • Definitions • Reconciliation Tables • Forward Looking Statement Disclaimers 19
Slide 20: Definitions
Definitions • Days sales outstanding is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets, less contract liabilities and divided by average revenues per day during the quarter. • Free cash flow is defin
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 as described below: • Non-cash stock-based compensation expense may vary due to acquisition activity, changes in the estimated fair value of performance-based a
Slide 22: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ESTIMATED RANGE ($000s) 2020 FY 2020 3Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 162,913 $ 377,600 $ 386,050 $ 394,500 Interest expense, net 10,969 43,000 43,000 43,000 Provision for income taxes 70,477 164,000 167,500 171
Slide 23: Reconciliation of Adjusted Diluted Earnings per Share
Reconciliation of Adjusted Diluted Earnings per Share ESTIMATED RANGE ($000s, except per share information) 2020 FY 2020 3Q Low Mid High Reconciliation of adjusted net income attributable to common stock: Net income attributable to common stock (GAAP as reported) $ 162,913 $ 377,600 $ 386,050 $ 394,
Slide 24: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ESTIMATED RANGE ($000s) 2019 2020 FY 2020 3Q 3Q Low Mid High Net cash provided by operating activities (GAAP as reported) $ 91,167 $ 114,859 $ 850,000 $ 950,000 $ 1,050,000 Less: Net capital expenditures: Capital expenditures (66,244) (50,780) (250,000) (250,000) (25
Slide 25: Reconciliation of Electric Power Segment excluding Latin America
Reconciliation of Electric Power Segment excluding Latin America 2020 GUIDANCE RANGE ($000s) 2019 2020 Initial Guidance 1Q Guidance 2Q Guidance Current Guidance FY 3Q Low High Low High Low High Low High Revenues: Electric Power Infrastructure Services $ 7,121,837 $ 2,107,621 $ 7,620,000 $ 7,840,000
Slide 26: Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments
(1) Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments 2020 GUIDANCE RANGE ($000s) 2019 2020 Initial Guidance 1Q Guidance 2Q Guidance Current Guidance FY 3Q Low High Low High Low High Low High Revenues $ 4,990,316 $ 912,540 $ 4,600,000 $ 4,800,000 $ 3,900,000 $ 4,100,000 $ 3
Slide 27: Cautionary Statement About Forward-Looking Statements
Cautionary Statement About Forward-Looking Statements 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 Litigation Reform Act of
Slide 28: Cautionary Statement About Forward-Looking Statements
Cautionary Statement About Forward-Looking Statements Although Quanta’s management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements can be affected by inaccurate assu
Slide 29: Cautionary Statement About Forward-Looking Statements
Cautionary Statement About Forward-Looking Statements • The failure of existing or potential legislative actions and initiatives to result in increased demand for our services; • The future development of natural resources; • Fluctuations of prices of certain materials used in Quanta’s or its custom
Slide 30: Connect With Quanta Services Investor Relations
Connect With Quanta Services Investor Relations @QuantaIR QuantaServicesIR 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 30