Quanta Services, Inc. · NYSE:PWR
Quanta Services — FY2020 Earnings Presentation
38 slides from Quanta Services's earnings presentation, Feb 25, 2021
Slide 1: 4Q & Full-Year 2020 Earnings Call Presentation
4Q & Ful l - Year 2020 Earnings Call Presentation F e b r u a r y 2 5 , 2 0 2 1
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 • 2020 Results, Operational and Strategic Chief Financial Officer Commentary • Financial Review and Discussion Kip Rupp Vice President, Investor Rela
Slide 4: Select Full-Year 2020 Accomplishments
Select Full-Year 2020 Accomplishments • Continue to execute our strategic plan and achieved a great deal in 2020, but remain focused on getting better Grow Base Improve Expand Service Develop Craft Disciplined & Value Business Margins Offerings Skilled Labor Creating Capital Deployment • Record Elec
Slide 5: Well Positioned for Continued Profitable Growth
Well Positioned for Continued Profitable Growth Adj. • Strategic position in the marketplace remains EBITDA(1) Operating Adj. strong EPS(1) Income $1.05 B • Solid 2020 performance - which included +11% $3.82 $611 MM numerous accomplishments - despite challenges +10% +15% from the global pandemic Cas
Slide 6: Utilities Leading Carbon Reduction Efforts with Renewables
Utilities Leading Carbon Reduction Efforts with Renewables 100% Clean Energy Commitments & Renewable Portfolio Standard (RPS) Requirements (1) • Utilities are actively pursuing grid modernization (as % of 2018 retail electricity sales) and hardening of their systems and are 100% State expanding thei
Slide 7: Electrification and Electric Vehicles
Electrification and Electric Vehicles Electrification Adoption Rates (1) • Over the coming decades, developed economies are expected to be increasingly driven by electricity to meet carbon reduction/neutrality goals • Vehicle electrification offers a large carbon reduction opportunity, in addition t
Slide 8: Communications Infrastructure Solutions (within Electric Power Segment)
Communications Infrastructure Solutions (within Electric Power Segment) • Strong 2020 performance Multi-Year Drivers / Opportunities • +40% revenue growth • Meaningfully improved profit margins • Total backlog of ~$900 million at Dec. 31, 2020 • Outlook remains bright • Estimate ~$700 million in rev
Slide 9: Underground Utility & Infrastructure Solutions
Underground Utility & Infrastructure Solutions • Renamed segment to reflect the strategic changes implemented over the past five years Focus on Base Business Focus Services Base Business Revenues Pipeline • Operations repositioned to emphasize base Gas Utility Integrity Larger Project Revenues busin
Slide 10: Levered to Favorable Long-Term Trends
Levered to Favorable Long-Term Trends Quanta’s Solutions for Modern Infrastructure Facilitate Movement Towards A Carbon Neutral Economy and New Technologies • Utility Grid Modernization – The majority of the North American electric power and natural gas utility system is approaching or beyond its us
Slide 11: Focused on Growing Long-Term Shareholder Value
Focused on Growing Long-Term Shareholder Value Return of Capital Strategic Acquisitions Double Digit ROIC Sustainable Cash Flow Generation EPS Growth > Improving Revenue Growth Adjusted 5% to 10%+ EBITDA Margins Revenue CAGR Actual Performance Through the Cycle, 2010 – 2020: • Revs. CAGR of 12% • Ad
Slide 12: 4Q 2020 Segment Results versus 4Q 2019
4Q 2020 Segment Results versus 4Q 2019 ($MMs) Revenues Op Inc % Commentary Change (bps) Electric + Revenue increase driven by mid-single digit growth in our base business, increased contributions from the timing of certain larger projects, and $75MM in revenues from acquired businesses. Power ex $2,
Slide 13: Backlog
Backlog (1) ($B) +0.4% Total Backlog $15.0 $15.1 $15.1 • Total backlog of $15.1 billion dollars at the end of the fourth quarter is slightly higher than 4Q19 and comparable to the third quarter of 2020, yet remains at record levels largely due to continued demand for base business activities • Altho
Slide 14: Free Cash Flow & DSO
Free Cash Flow & DSO Free Cash Flow (1) ($MMs) Days Sales Outstanding (2) (DSO) 4th Quarter Recap 4Q20 4Q19 Free Cash Flow Decrease driven by: $200 $581 • 4Q19 benefiting from lower DSO primarily due to the collection of several significant retainage balances during the quarter • Partially offset by
Slide 15: Balance Sheet & Liquidity
Balance Sheet & Liquidity As of December 31, ($MMs) 2018 2019 2020 Cash 79 165 185 Liquidity Highlights Debt Credit Facility 479 105 149 • Ample liquidity and investment grade Term Loans 593 1,241 - balance sheet allow management to Senior Notes - - 1,000 maintain opportunistic approach to Other 34
Slide 16: 2021 Consolidated Revenue Guidance
2021 Consolidated Revenue Guidance 2020 Actual 2021 Guidance Consolidated Revenues Consolidated Revenues 2021 Initial Guidance Highlights More $11.2B $11.95B - $12.35B Resilient(1) • Electric power and communications continue to see robust growth opportunities; we expect mid- to upper-single digit g
Slide 17: Electric Power Segment Guidance (excluding LATAM)
Electric Power Segment Guidance (excluding LATAM (1) ) GUIDANCE 2021 2019 D 2020 D Range Revenues + Continued base electric + Continued base electric growth growth $7.1B + U.S. telecom growth $7.8B + Continued U.S. telecom $8.3B - $8.5B + Larger projects increase growth - Fire hardening normalizes +
Slide 18: Electric Power Segment Guidance (excluding LATAM)
Electric Power Segment Guidance (excluding LATAM) (1) ($B) • 2020 Electric Power segment margins of 11.6% 11.6% were the segment’s highest since 10.5% 2013, driven by record Emergency 10.2% Restoration Services (ERS) revenues of 10.1% close to $450MM which drove increased 9.6% $8.4 9.4% utilization
Slide 19: Underground Utility & Infrastructure Solutions Guidance
Underground Utility & Infrastructure Solutions Guidance GUIDANCE 2021 2019 D 2020 D Range Revenues - Reduced industrial + Gas distribution and revenues and LDC (2) maintenance and integrity revenues due to COVID- growth opportunity driven $5.0B 19 disruptions beginning $3.4B by multi-year capital $3
Slide 20: 2021 Guidance Summary
2021 Guidance Summary ($MMs except per share data) LOW MID POINT HIGH Revenues $11,950 $12,150 $12,350 (1) Adj. EBITDA $1,085 $1,138 $1,190 (2) Free Cash Flow $400 $500 $600 Net Income $458 $494 $531 Diluted EPS (GAAP) $3.16 $3.41 $3.66 (3) Adjusted Diluted EPS $4.02 $4.27 $4.52 (1) Refer to the app
Slide 21: Influence of Revenue Growth on Cash Flow Generation
Influence of Revenue Growth on Cash Flow Generation Change in Revenue vs Free Cash Flow / Adjusted EBITDA (1)(2) Free Cash Flow Drivers 30% 90% • Quanta’s cash flow generation is generally 25% 80% counter to revenue growth primarily due to working capital demands and, to a lesser 20% 70% extent, cap
Slide 22: 2015 – 2021 Financial Performance
2015 – 2021 Financial Performance (1) Revenues ($MMs) EBITDA & Adj EBITDA (2) ($MMs) $11,202 $12,150 $1,138 $1,050 $1,053 $923 $7,572 $526 $422 (1) 2015 2020 2021 2015 2020 2021 Electric Power Underground Utility & Infrastructure Solutions EBITDA Adj EBITDA (1) GAAP Diluted EPS Adj Diluted EPS (3) $
Slide 23: Capital Allocation Priorities
Capital Allocation Priorities Capital Deployment – FY16 thru FY20 ($MMs) Capital Allocation • Working capital and capex required to Working Capital & CapEx, net of sales Working Capital support the organic growth of the business $578 Capex $1,124 remain our first priorities and have been the largest
Slide 24: Closing Remarks
Closing Remarks • 2021 expectations include record Adjusted EBITDA and Adjusted EPS at the mid-point, while continuing to deal with COVID-related headwinds across portions of our operations • Utility-backed customer base represents greater than 70% of our consolidated revenues and provides the oppor
Slide 25: Focused on Growing Long-Term Shareholder Value
Focused on Growing Long-Term Shareholder Value Return of Capital Strategic Acquisitions Double Digit ROIC Sustainable Cash Flow Generation EPS Growth > Improving Revenue Growth Adjusted 5% to 10%+ EBITDA Margins Revenue CAGR Actual Performance Through the Cycle, 2010 – 2020: • Revs. CAGR of 12% • Ad
Slide 26: Appendix
Appendix • Definitions • Reconciliation Tables • Forward Looking Statement Disclaimers 26
Slide 27: 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 28: 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 29: Reconciliation of Electric Power Infrastructure Solutions excluding Latin America
Reconciliation of Electric Power Infrastructure Solutions excluding Latin America ESTIMATED RANGE ($000s) 2017 2018 2019 2020 FY 2021 FY FY FY 4Q FY Low Mid High Revenues: Electric Power Infrastructure Solutions $ 5,599,836 $ 6,415,562 $ 7,121,837 $ 2,105,777 $ 7,773,343 $ 8,300,000 $ 8,400,000 $ 8,
Slide 30: Reconciliation of Underground Utility & Infrastructure Solutions excluding Asset Impairments
(1) Reconciliation of Underground Utility & Infrastructure Solutions excluding Asset Impairments ($000s) 2019 2020 2021 GUIDANCE RANGE FY 4Q FY Low High Revenues $ 4,990,316 $ 806,408 $ 3,429,329 $ 3,650,000 $ 3,850,000 Operating income $ 332,011 $ 41,327 $ 170,074 $ 200,800 $ 231,000 (1) Plus: Asse
Slide 31: Reconciliation of Backlog
Reconciliation of Backlog ($MMs) December 31, 2019 September 30, 2020 December 31, 2020 12 Month Total 12 Month Total 12 Month Total Electric Power Infrastructure Solutions Remaining performance obligations $ 2,483.1 $ 3,957.7 $ 2,639.1 $ 3,747.7 $ 2,511.2 $ 3,547.8 Estimated orders under MSAs and s
Slide 32: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ESTIMATED RANGE ($000s) 2010 2014 2015 2016 2017 2018 2019 2020 FY 2021 FY FY FY FY FY FY FY FY Low Mid High Net income attributable to common stock (GAAP as reported) $ 142,693 $ 269,224 $ 120,286 $ 198,725 $ 314,978 $ 293,346 $ 402,044 $ 445,596 $ 458,0
Slide 33: Reconciliation of Adjusted Diluted Earnings per Share
Reconciliation of Adjusted Diluted Earnings per Share ESTIMATED RANGE ($000s, except per share information) 2010 2015 2020 FY 2021 FY FY FY Low Mid High Reconciliation of adjusted net income attributable to common stock: Net income attributable to common stock (GAAP as reported) $ 142,693 $ 120,286
Slide 34: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ESTIMATED RANGE ($000s) 2014 2015 2016 2017 2018 2019 2020 FY 2021 4Q 4Q 4Q 4Q 4Q 4Q FY 4Q FY Low Mid High Net cash provided by operating activities (GAAP as reported) $ 247,742 $ 627,762 $ 390,749 $ 371,891 $ 358,789 $ 626,798 $ 526,551 $ 276,090 $ 1,115,977 $ 725,0
Slide 35: 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 36: 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 37: 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 38: 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 38