Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q1 2021 Earnings Presentation
30 slides from Quanta Services's earnings presentation, May 6, 2021
Slide 1: First Quarter 2021 Earnings Call Presentation
First Quarter 2021 Earnings Call Presentation May 6, 2021
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 • 1Q21 Results, Operational and Strategic Derrick Jensen Commentary Chief Financial Officer • Financial Review and Discussion Kip Rupp • Outlook Vice President, Inv
Slide 4: First Quarter 2021 Overview
First Quarter 2021 Overview Adj. EBITDA(1) Adj. • Solid start to 2021 Operating EPS(1) Income $220.2MM • Record backlog(1) of nearly $16 billion. $113.7MM $0.83 • Multi-year growth opportunities driven by solutions- based strategy and growth of programmatic Cash from Revenue Operations spending with
Slide 5: Recognition of the Need for Infrastructure Modernization
Recognition of the Need for Infrastructure Modernization • Infrastructure modernization is necessary to support economic growth, improve safety and reliability and for a cleaner environment • The Biden administration's infrastructure proposal could incrementally benefit several of our core markets,
Slide 6: Electric Power Infrastructure Solutions
Electric Power Infrastructure Solutions • Solid and safe execution in the first quarter of 2021 • Reflects broad base business strength driven by grid modernization, system hardening and renewable interconnections • Signed a significant, multi-year master services agreement with a utility in the wes
Slide 7: Communications Infrastructure Solutions
Communications Infrastructure Solutions • Majority of our operations off to a solid start, driven by fiber densification and early stages of 5G network deployment • Experienced short-term challenges in 1Q21, largely due to deficient subcontractor work in a specific geographic area • Expect high sing
Slide 8: Underground Utility & Infrastructure Solutions
Underground Utility & Infrastructure Solutions • Performed well, with better than expected Focus on Base Business Focus Services profitability, despite seasonality, severe weather and Pipeline Gas Utility challenges related to COVID-19 Base Business Revenues Integrity Larger Project Revenues • Solid
Slide 9: Quanta's Solutions Have Favorable Environmental and Social Impact
Quanta's Solutions Have Favorable Environmental and Social Impact Electric Power Planet People Grid Modernization Power Grid Hardening Renewables Integration Electrification / Electric Vehicles LUMA Energy Communications 5G Rural / Underserved Broadband Underground Utility & Infrastructure Gas LDC M
Slide 10: Increasing 2021 Outlook; Positive Multi-Year Outlook
Increasing 2021 Outlook; Positive Multi-Year Outlook • Increasing Quanta's full-year 2021 outlook • Expectations demonstrate the strength and sustainability of our business and long-term strategy, favorable end-market trends, our ability to safely execute and our strong competitive position • Our en
Slide 11: 1Q21 Segment Results versus 1Q20
1Q21 Segment Results versus 1Q20 ($MMs) Revenues Op Inc % Commentary Change (bps) + Revenue increase driven by contributions from the larger projects underway in Canada, as well as growth in our base business activities, including approximately $70 million in revenues from acquired businesses; reven
Slide 12: Backlog
Backlog (1) ($B) Total Backlog +5% • Record total backlog of $15.8B at the end of the first quarter, which is 5% higher than $15.8 backlog at year-end and 7% higher than $15.1 backlog at the end of the first quarter of 2020 $14.7 • Backlog growth further validates the repeatable, sustainable nature
Slide 13: Free Cash Flow & DSO
Free Cash Flow & DSO Free Cash Flow (1) ($MMs) Days Sales Outstanding (2) (DSO) 1st Quarter Recap Free Cash Flow decrease driven by: 1Q20 1Q21 • Increased working capital requirements related to the ramp up of two larger electric $164 transmission projects in Canada • Receipt of $82MM of insurance p
Slide 14: Balance Sheet & Liquidity
Balance Sheet & Liquidity December 31, March 31, ($MMs) 2018 2019 2020 2021 Liquidity Highlights Cash 79 165 185 200 Debt • Ample liquidity and investment grade Credit Facility 479 105 149 322 credit rating allow management to Term Loans 593 1,241 — — maintain opportunistic approach to Senior Notes
Slide 15: Capital Allocation Priorities
Capital Allocation Priorities Capital Deployment – 2016 thru 1Q21 ($MMs) Capital Allocation • Working capital and capex required to support the organic growth of the business remain our first priorities and have been Working Capital & CapEx, net of sales Working Capital $654 Capex $1,200 $1,854 the
Slide 16: Electric Power Solutions Segment Guidance
Electric Power Solutions Segment Guidance 2021 ESTIMATED RANGE 2020 Initial Guidance 1Q Guidance + Strong first quarter results + Continued base electric Revenues growth + Continued confidence in + Continued U.S. telecom $7.8B growth $8.3B - $8.5B growth opportunities $8.4B - $8.5B + Larger proj
Slide 17: Underground Utility & Infrastructure Solutions Segment Guidance
Underground Utility & Infrastructure Solutions Segment Guidance 2021 ESTIMATED RANGE 2020 Initial Guidance 1Q Guidance + Gas distribution and Revenues maintenance and integrity growth opportunity driven = In line with original $3.4B by multi-year capital $3.65B - $3.85B expectations $3.65B - $3.
Slide 18: 2021 Guidance Summary
2021 Guidance Summary ($MMs except per share data) LOW MIDPOINT HIGH Revenues $12,050 $12,200 $12,350 Adj. EBITDA (1) $1,104 $1,151 $1,197 Free Cash Flow (2) $400 $500 $600 Net Income $469 $501 $533 Diluted EPS (GAAP) $3.25 $3.47 $3.69 Adjusted Diluted EPS (3) $4.12 $4.35 $4.57 INCREASING MIDPOINT E
Slide 19: Closing Remarks
Closing Remarks • Solid first quarter results validate confidence in the strength of our operations and near-term outlook • Continued backlog growth and increasing visibility into the duration of this infrastructure cycle strengthens conviction in our ability to capitalize on the long-term opportuni
Slide 20: Appendix
Appendix • Definitions • Reconciliation Tables • Forward Looking Statement Disclaimers 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 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 23: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ESTIMATED GUIDANCE RANGE ($000s) 2021 FY 2021 1Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 89,761 $ 468,600 $ 500,850 $ 533,100 Interest expense, net 12,358 48,000 48,500 49,000 Provision for income taxes 13,724 160,000 173
Slide 24: Reconciliation of Adjusted Diluted Earnings per Share
Reconciliation of Adjusted Diluted Earnings per Share ESTIMATED GUIDANCE RANGE ($000s, except per share information) 2021 FY 2021 1Q Low Mid High Reconciliation of adjusted net income attributable to common stock: Net income attributable to common stock (GAAP as reported) $ 89,761 $ 468,600 $ 500,85
Slide 25: Reconciliation of Backlog
Reconciliation of Backlog ($MMs) March 31, 2020 December 31, 2020 March 31, 2021 12 Month Total 12 Month Total 12 Month Total Electric Power Infrastructure Solutions Remaining performance obligations $ 2,696.8 $ 3,987.1 $ 2,511.2 $ 3,547.8 $ 2,562.0 $ 3,494.6 Estimated orders under MSAs and short-te
Slide 26: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ESTIMATED GUIDANCE RANGE ($000s) 2020 2021 FY 2021 1Q 1Q Low Mid High Net cash provided by operating activities (GAAP as reported) $ 227,549 $ 125,613 $ 725,000 $ 825,000 $ 925,000 Less: Net capital expenditures: Capital expenditures (68,109) (83,486) (325,000) (325,
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 • Quarterly variations in operating results, liquidity, financial condition, cash flows, capital requirements, reinvestment opportunities or other financial results, including the ongoing and potential impact to Quanta's business, operations and
Slide 29: Cautionary Statement About Forward-Looking Statements
Cautionary Statement About Forward-Looking Statements • The future development of natural resources; • Fluctuations of prices of certain materials used in Quanta’s or its customers' businesses, including as a result of changes in U.S. trade relationships with other countries; • Cancellation provisio
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