Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q3 2023 Earnings Presentation
30 slides from Quanta Services's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings Call Presentation
Third Quarter 2023 Earnings Call Presentation November 2, 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 • 3Q23 Results, Operational and Strategic Jayshree Desai Commentary Chief Financial Officer • Financial Review and Discussion Kip Rupp • Outlook Vice President, Inv
Slide 4: Third Quarter 2023 Overview
Third Quarter 2023 Overview • Pleased to report strong 3Q23 results *Adj. • Electric Power Infrastructure Solutions and Renewable EBITDA(1) Energy Infrastructure Solutions segments drove strong *Operating *Adj. Income EPS(1) revenue and profit growth $592.5MM • Total backlog(1) exceeded $30 billion
Slide 5: Electric Power Infrastructure Solutions
Electric Power Infrastructure Solutions • Another quarter of profitable growth, reflecting solid and safe execution and robust demand for our services • Meaningful sequential increases in segment backlog • Communications operations continued to perform well - double- digit revenue growth and operati
Slide 6: Renewable Energy Infrastructure Solutions
Renewable Energy Infrastructure Solutions • Segment revenues grew significantly in 3Q23 as compared to 3Q22 ◦ Driven by increased renewable generation, high-voltage transmission and substation activity • Segment total backlog reached a record $7.9 billion ◦ Driven by the addition of a portion of the
Slide 7: Acquisition of Pennsylvania Transformer Technology
Acquisition of Pennsylvania Transformer Technology • Recently acquired Pennsylvania Transformer Technology, LLC (PTT) ◦ Founded in 1996 and headquartered in Canonsburg, Pennsylvania, with two manufacturing facilities • PTT is an established domestic manufacturer of power transformers and components
Slide 8: Acquisition of Pennsylvania Transformer Technology Cont.
Acquisition of Pennsylvania Transformer Technology Cont. Strategic Financial End-Markets for Transformers Overlap • Provides Quanta and our clients • Significant growth opportunities with Quanta's Markets with an important, secure and over the next several years without domestic solution that is con
Slide 9: Underground Utility & Infrastructure Solutions
Underground Utility & Infrastructure Solutions • Pleased with 3Q23 performance ◦ Double-digit revenue growth ◦ Solid operating income profitability • Performance was broad based across service lines within the segment ◦ Strong execution ◦ Solid demand • Regulation and policy creating energy-transiti
Slide 10: Solid Year-to-Date 2023 Performance and Positive Multi-Year Outlook
Solid Year-to-Date 2023 Performance and Positive Multi-Year Outlook • Year-to-date 2023 performance and full-year financial expectations demonstrate our confidence in the strength and sustainability of our business and long-term strategy, favorable end-market trends, our ability to safely execute an
Slide 11: 3Q23 Segment Results versus 3Q22
3Q23 Segment Results versus 3Q22 ($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 12: Backlog
Backlog ($B) Backlog • Total backlog as of 3Q23 was a record $30.1B, attributable to both large project awards and base business growth. +8.8% • Twelve-month backlog of $17.0B was over 2Q23 also a record, driven by increased renewable project activities. (1) (1) RECORD BACKLOG LEVELS 12 (1) Refer to
Slide 13: Free Cash Flow & DSO
Free Cash Flow & DSO 3rd Quarter Recap Free Cash Flow (1) ($M) Days Sales Outstanding (2) (DSO) Free Cash Flow increase mainly driven by: 3Q22 3Q23 • Increased levels of renewable projects, which typically have more favorable cash flow profiles. DSO of 79 was: • 2 days lower than 3Q22 partially due
Slide 14: Balance Sheet & Liquidity
Balance Sheet & Liquidity December 31, September 30, ($M) 2020 2021 2022 2023 Liquidity Highlights Cash and Cash Equivalents 185 229 429 305 Debt • Second half earnings growth and Credit Facility 149 450 37 230 cash generation has continued to Commercial Paper — — 373 397 support our ability to effi
Slide 15: Electric Power Solutions Segment Guidance
Electric Power Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 2Q Guidance △ 3Q Guidance - Mix of work between Revenues + Base business growth the electric and led by continued renewable segments investments supporting $8.9B grid modernization, $10.0B - $10.1B - Supply chain $9.6B -
Slide 16: Renewable Energy Solutions Segment Guidance
Renewable Energy Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 2Q Guidance △ 3Q Guidance + Solid growth compared Revenues to prior year with ramp in 2H23 + Improved visibility and $3.8B $5.2B - $5.4B new awards $5.8B - $5.9B + 2Q23 performance plus new project momentum Op Inc % (1
Slide 17: Underground Utility & Infrastructure Solutions Segment Guidance
Underground Utility & Infrastructure Solutions Segment Guidance Full-Year 2023 Estimated Range 2022 △ 2Q Guidance △ 3Q Guidance Revenues - Lower volumes of larger pipeline projects + Large project and $4.4B + Continued base $4.4B - $4.5B base business growth $4.7B - $4.8B and improved visibility bus
Slide 18: 2023 Guidance Summary
2023 Guidance Summary GUIDANCE ($M except per share data) Low Mid High Revenues $20,100 $20,250 $20,400 Adj. EBITDA (1) $1,907 $1,931 $1,955 Free Cash Flow (2) $800 $900 $1,000 Net Income (Loss) $729 $744 $759 Diluted EPS (GAAP) $4.90 $5.00 $5.10 Adjusted Diluted EPS (3) $7.00 $7.10 $7.20 NARROWING
Slide 19: Closing Remarks
Closing Remarks • Growing backlog and favorable multi-year outlook give us confidence in our ability to achieve the multi-year targets we presented at our April 2022 Investor Day • The acquisition of Pennsylvania Transformer further cements our ability to provide differentiating solutions to our cor
Slide 20: Appendix
Appendix • Definitions • Reconciliation Tables • Cautionary Statement About Forward-Looking Statements and Information 20
Slide 21: 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 22: 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 23: 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 3Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 272,836 $ 729,000 $ 743,900 $ 758,800 Adjustments: Acquisition and integration
Slide 24: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ($000s) 2023 FY 2023 GUIDANCE RANGE 3Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 272,836 $ 729,000 $ 743,900 $ 758,800 Interest and other financing expenses, net 45,538 168,000 169,500 171,000 Provision for income taxes 77,
Slide 25: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ($000s) 2022 2023 FY 2023 GUIDANCE RANGE 3Q 3Q Low Mid High Net cash provided by operating activities (GAAP as reported) $ 343,362 $ 406,592 $ 1,200,000 $ 1,300,000 $ 1,400,000 Less: Net capital expenditures: Capital expenditures (105,958) (139,800) (400,000) (400,00
Slide 26: Reconciliation of Backlog
Reconciliation of Backlog (In thousands) September 30, 2022 June 30, 2023 September 30, 2023 12 Month Total 12 Month Total 12 Month Total Electric Power Infrastructure Solutions Remaining performance obligations $ 2,207,737 $ 2,854,847 $ 2,584,140 $ 4,128,988 $ 2,693,352 $ 4,383,055 Estimated orders
Slide 27: 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 28: 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 29: 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 30: 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 30