Quanta Services, Inc. · NYSE:PWR
Quanta Services — Investor Presentation (November 2023)
57 slides from Quanta Services's investor presentation, Nov 27, 2023
Slide 1: Investor Presentation
Repeatable. Sustainable. RESILIENT Investor Presentation November 27, 2023 A Leading Energy Transition Infrastructure Solutions Provider
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: Key Takeaways
KEY TAKEAWAYS Quanta is a leading specialty infrastructure solutions provider for the utility, 1 renewable energy, communications and energy industries The combination of our comprehensive power grid and renewable 2 generation capabilities provides a leading infrastructure solutions platform to coll
Slide 4: Who Is Quanta Services?
WHO IS QUANTA SERVICES? Leading Specialty Infrastructure Solutions Provider Largest and preferred employer of craft skilled Growing Total Addressable labor in the industry. We Industry leading Market (TAM) driven typically self-perform safety and Recognized market leader in by megatrends with +80% o
Slide 5: Focused on Long-Term Corporate Responsibility and Sustainability
QUANTA IS FOCUSED ON LONG-TERM CORPORATE RESPONSIBILITY AND SUSTAINABILITY • Safety drives everything we • Facilitating efficient and • Board-level oversight of do – our employees are safe delivery of clean ESG-related matters our #1 asset energy and the migration towards a reduced-carbon • Experien
Slide 6: Key Strategies for Sustainable Success
KEY STRATEGIES FOR SUSTAINABLE SUCCESS Disciplined & Value Grow Base Improve Expand Service Develop Craft Creating Capital Business Margins Offerings Skilled Labor Deployment +$11B Acquired leadership position +$150M incremental Working capital to support in renewable generation investment in traini
Slide 7: Strong, Consistent Financial Improvement Driven by Key Objectives
STRONG, CONSISTENT FINANCIAL IMPROVEMENT DRIVEN BY KEY OBJECTIVES Revenue (1) (1) $20.25 Adjusted EPS (2) $bn $7.10 Grow Base Business $7.57 $1.11 Improve 2015 2023E 2015 2023E Margins Adjusted EBITDA (2) Adjusted EBITDA Margin (2) (1) (1) $mm $1,931 9.5% 6.9% Expand Service Offerings $526 2015 2023
Slide 8: How We Are Driving Long-Term, Sustainable Value Creation
HOW WE ARE DRIVING LONG-TERM, SUSTAINABLE VALUE CREATION Key Strategies Develop Craft Disciplined & Value Grow Base Improve Expand Service Skilled Labor Creating Capital Business Margins Offerings Deployment Portfolio Approach ◄ 5% to 8% Organic Revenue CAGR ◄ Double Digit Adjusted EBITDA Margins ◄
Slide 9: High-Quality and Diverse Customer Base with Critical Assets
HIGH-QUALITY AND DIVERSE CUSTOMER BASE WITH CRITICAL ASSETS SELECT CUSTOMERS – Many of Our Customer Relationships Span Decades LOW CUSTOMER Electric Power CONCENTRATION Largest Top 10 customer customers Renewable Generation accounted for accounted for ~ 9% ~ 36% Communications of 2022 revenues of 20
Slide 10: Collaborative and Comprehensive Solutions
COLLABORATIVE AND COMPREHENSIVE SOLUTIONS • • • • • • Page 10
Slide 11: Consistent and Growing Spend from Top Customers
CONSISTENT AND GROWING SPEND FROM TOP CUSTOMERS Driving Repeatable, Consistent Revenue Through Deep and Collaborative Customer Relationships Top 20 Customers Based on 2022 Top 20 Utility Customers Based on 2022 Base Business Revenues(1) Base Business Revenues $8 $7 $7 $6 20% $6 CAGR 23% $5 $5 CAGR $
Slide 12: Massive and Growing Energy Transition TAM Driven by Megatrends
MASSIVE AND GROWING ENERGY TRANSITION TAM DRIVEN BY MEGATRENDS Carbon Capture Utilization & Storage $90BN NET ZERO Low Emission Fuels $132BN $3.0TN • • • • • • • • Estimated Annual Nuclear Generation Battery Storage Required Global $90BN Hydrogen End Use $49BN $52BN Green Capex Hydrogen Infrastructu
Slide 13: Levered to Megatrends That Provide Multiple Paths for Growth
LEVERED TO MEGATRENDS THAT PROVIDE MULTIPLE PATHS FOR GROWTH Leveraging our Solutions Portfolio, the Continued Successful Execution of our Strategic Initiatives and Megatrend Drivers Provide Multiple Paths for Near- and Long-Term Profitable Growth System Modernization UNDERGROUND UTILITY Grid Redund
Slide 14: Aging Utility Workforce Contributes to Outsourcing Trend
AGING UTILITY WORKFORCE CONTRIBUTES TO OUTSOURCING TREND Additive Long-Term Tailwind Outsourcing is expected to increase across electric • Tight labor market for lineman and other skilled employees and gas utilities over the next five years • Quanta is focused on recruiting, training and developing
Slide 15: Industry-Leading Training Is a Competitive Differentiator
INDUSTRY-LEADING TRAINING IS A COMPETITIVE DIFFERENTIATOR Dedicated Training Facilities Northwest Lineman College (NLC) – Postsecondary education institution that has provided world-class electric training curriculum for +25 years. Added communications and gas distribution curriculum Quanta Advanced
Slide 16: Construction-Led Infrastructure Solutions Through Portfolio Approach
CONSTRUCTION-LED INFRASTRUCTURE SOLUTIONS THROUGH PORTFOLIO APPROACH Revenues - 2023E(1) Electric Power Renewable Energy Underground 48% Infrastructure Solutions 29% Infrastructure Solutions 23% Utility & Infrastructure Solutions Engineering Program Gas Pipeline Downstream Transmission Distribution
Slide 17: Revenue Mix – Strategically Focused, Operationally Diverse
REVENUE MIX – STRATEGICALLY FOCUSED, OPERATIONALLY DIVERSE ~90% of 2022 Revenues Came From Utilities, Renewable Developers, Communications and Industrial Customers, Which Provide Visible and Growing Multi-Year Capital Programs 2022 Consolidated Revenue = $17.1 Billion 2022 Revenue By Segment 2022 Re
Slide 18: Base Business Activity
BASE BUSINESS ACTIVITY Large Portion of Revenues are Visible and Consistent Base Business Tends to Follow Industry Drivers and Customer Investment Trends, Which are Longer Term in Nature Est. ’22-’26 Consolidated Organic BASE BUSINESS: Revenue CAGR = 5%-8%(1) • Repeatable, sustainable revenues • Pri
Slide 19: Portfolio Approach and Diversity of Revenue Helps Mitigate Risk
PORTFOLIO APPROACH AND DIVERSITY OF REVENUE HELPS MITIGATE RISK Superior Risk Profile Fiscal Year 2022(1) Estimated Revenue by Geography Estimated Revenue by Project Type Estimated Revenue by Contract Type Large Project Unit Price Cost Plus 35% & Other Repair, Replace New 22% United States & Upgrade
Slide 20: Electric Power & Communications
ELECTRIC POWER & COMMUNICATIONS Page 20
Slide 21: Transition to Advanced Utility Model Has Driven Spending
TRANSITION TO ADVANCED UTILITY MODEL HAS DRIVEN SPENDING Utility Industry is a Large, Attractive and Visible Addressable Market Advanced Integrated Utility Model Transmission Distribution Generation Pipelines U.S. Investor-Owned Electric Company CapEx $155 B(2) +$105 B(2) 5% Gas Distribution Renewab
Slide 22: Significant Grid Modernization and Hardening
SIGNIFICANT GRID MODERNIZATION AND HARDENING Widespread Need for Grid Modernization and Hardening – Maintenance, Upgrade, Repair and Replacement Representative Utility - Projected Transmission Circuit Miles Replaced/Upgraded and Total Projected Investment ($ in millions) (1) Age • From 2022 - 2042,
Slide 23: Electrification and Electric Vehicles
ELECTRIFICATION AND ELECTRIC VEHICLES Movement Towards A Reduced-Carbon Economy Will Require Significant Power Grid Investment • Over the coming decades, developed economies are Electrification Adoption Rates(1) expected to increasingly utilize electricity to meet carbon reduction/neutrality goals •
Slide 24: Puerto Rico Electric T&D System Operation & Maintenance
PUERTO RICO ELECTRIC T&D SYSTEM OPERATION & MAINTENANCE LUMA Energy – A Transformative Opportunity • 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 transmis
Slide 25: Communications Infrastructure Services
COMMUNICATIONS INFRASTRUCTURE SERVICES Compelling and Complementary Growth Opportunity Goals Multi-Year Drivers / Opportunities To be a leading communications infrastructure solutions provider in the markets we serve Opportunity for +$1 billion annual revenues in the medium-term • Ongoing core fiber
Slide 26: Enabling Technology: Connectivity of Everything
ENABLING TECHNOLOGY Quanta is Uniquely Positioned For advanced technologies to work, it requires infrastructure. Technology is advancing Connectivity faster than required infrastructure. Quanta is uniquely positioned to provide critical of Everything infrastructure services that enable the technolog
Slide 27: Renewable Energy Infrastructure Solutions
RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS Page 27
Slide 28: Renewable Energy Infrastructure Solutions
RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS Significant Upgrading of Transmission and Grid Infrastructure Required to Support Renewable Energy Growth U.S. Renewable Electricity Generation Est. $14T in Global Grid Investment Required by Est. Incremental Transmission Requirements Annual Energy Outlook 2
Slide 29: Inflation Reduction Act Expected to Drive Renewable Generation Investment
RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS Inflation Reduction Act (IRA) Expected to Drive Significant Renewable Generation and Related Investment Est. Incremental Energy Spending from the IRA(1) Expected Decarbonization Capital in the U.S. Annual Installation of Renewable Energy Assets Mobilized by
Slide 30: Acquisition of Blattner - Strategic Rationale
ACQUISITION OF BLATTNER - STRATEGIC RATIONALE Premium Solutions Provider to the Renewable Energy Industry With A Market Leading Position & Attractive Financial Profile 1 Enhanced alignment with energy transition trends and access to the attractive wind, solar and energy storage markets, which are po
Slide 31: Blattner - Market Leader & Premier Partner
BLATTNER - MARKET LEADER & PREMIER PARTNER Extensive Track Record of Successful Project Execution Across Renewable Technologies enhanced Quanta’s capabilities and geographic reach of the total ~227 gigawatts Page 31 (1) As of December 31, 2022
Slide 32: Deep Relationships with Leading Renewables Developers
DEEP RELATIONSHIPS WITH LEADING RENEWABLES DEVELOPERS Blattner Has Strong & Longstanding Relationships That Have Driven Repeat Business Select Customers Revenues from Repeat Customers 94% 100% 100% 98% 100% Wind 80% 60% Solar 40% 20% 0% 2019A 2020A 2021A 2022A Storage Repeat Customer Revenue Blattne
Slide 33: Underground Utility & Infrastructure Solutions
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Page 33
Slide 34: Underground Utility: Strategic Focus on Base Business
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Strategic Focus on Base Business Strategy Focus Services Steps Taken Expectations 2023E Underground Utility & Gas LDC(1) Infrastructure Solutions • Create a more sustainable • Organic expansion of gas Segment Revenues and consistent operation utility se
Slide 35: Underground Utility: Gas LDC and Pipeline Integrity Services
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Strategic Focus on Base Business Gas LDC Services Pipeline Integrity Services • As of 2019, the U.S. natural gas distribution system consisted of more • There are ~544,000 miles of hazardous liquids, gas transmission and than 2.2 million miles of pipeli
Slide 36: Downstream Industrial Services Drivers
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Strategic Focus on Base Business U.S. Refiner Capital Spending ($ in MM) Decline primarily Downstream Industrial Services Drivers due to impact of $12,000 COVID-19 • Plant spending and upgrades have similar drivers to electric power and pandemic midstre
Slide 37: Energy Delivery and Ancillary Services Drivers
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Energy Delivery and Ancillary Services Drivers Production • Need for pipeline and related infrastructure is being driven by the Grows significant increase in hydrocarbon availability from North American unconventional natural gas and oil production from
Slide 38: Pursuing Energy Industry Carbon-Reduction Opportunities
UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Well Positioned and Actively Pursuing Energy Industry Carbon-Reduction Opportunities System Modernization Methane Emission Reduction GAS Gas Utilities and the Traditional Energy UTILITIES Industry are in the Early Stages of Hydrogen Blending Adoption of
Slide 39: Balance Sheet, Cash Flow and Capital Deployment
BALANCE SHEET, CASH FLOW AND CAPITAL DEPLOYMENT Page 39
Slide 40: Balance Sheet Strength Provides Flexibility
BALANCE SHEET STRENGTH PROVIDES FLEXIBILITY Strong Financial Foundation ($ in millions) 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2023 (September 30, 2023) Cash and Equivalents $ 165 $ 185 $229 $429 $305 Other Debt 21 40 54 70 119 Net Debt / 0.95% Sr. Notes due Oct. 2024 -- -- Adj. EBITDA(2)
Slide 41: Cash Flow Is Counter Cyclical
CASH FLOW IS COUNTER CYCLICAL Change in Revenue vs Free Cash Flow(1)/Adjusted EBITDA(1) For the Years Ending December 31, • Quanta’s cash flow generation is typically counter to revenue growth, primarily due to working capital demands and to a lesser 35% 90% extent, capex investment 30% 80% • This d
Slide 42: Debt Maturities and Capital Structure
DEBT MATURITIES AND CAPITAL STRUCTURE Investment Grade With Opportunity to De-Lever Debt Maturities(1) Amounts shown in millions • Well positioned balance sheet with 2.90% Senior long-term capital structure at Notes attractive interest rates $1,000 Term Loan • Cash flow should provide the 0.95% 2.35
Slide 43: Flexible and Strategic Capital Allocation
FLEXIBLE AND STRATEGIC CAPITAL ALLOCATION Opportunistic and Disciplined Approach 2018 – 2022 Sources & Uses of Cash (Amounts in millions) Capital Deployment Preference $6,674 $6,384 • Working Capital 3% $201 Investments Organic Growth $127 Dividends • Capital Expenditures 2% Stock 14% $905 • Acquisi
Slide 44: Financial Goals for Growing Long-Term Shareholder Value
FINANCIAL GOALS FOR GROWING LONG-TERM SHAREHOLDER VALUE Multi-Year Profitable Growth Return of Capital Strategic Acquisitions Double Digit ROIC Sustainable Cash Flow Generation EPS Growth > Revenue Growth Improving Adjusted EBITDA Margins 5% to 10%+ Revenue CAGR Actual Performance Through the Cycle,
Slide 45: 2022 Sustainability Report
2022 Sustainability Report https://sustainability.quantaservices.com/ Quanta's 2022 Sustainability Report provides information about our sustainability strategy and how we are measuring the continued progress we made in 2022. Titled "Building Momentum," the report discusses Quanta's leading role in
Slide 46: Our Sustainability Strategy
Through our leading role in building the energy transition, OUR SUSTAINABILITY STRATEGY our vision is to leave a measurable, sustainable legacy on people and our planet with a steadfast focus on our customers, employees, and communities. 46
Slide 47: 2022 Social Highlights
SAFETY TRAINING DIVERSITY A portfolio of operating companies, Quanta has been Our goal is to complete every project without built on a foundation of diversity, and we are stronger incident or injury. Quanta’s management team when we recognize each person’s unique strengths creates a culture in which
Slide 48: 2022 Environmental Highlights
Our approach to environmental stewardship is twofold — we aim to minimize the environmental impacts of our activities and work in partnership with others to contribute to 2022 ENVIRONMENTAL HIGHLIGHTS a resilient environment. Our projects and operations are designed to have minimal impact on the env
Slide 49: Connect With Quanta Services Investor Relations
Connect With Quanta Services Investor Relations @QuantaIR 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 Page 49
Slide 50: Reconciliation Tables and Cautionary Statement
APPENDIX RECONCILIATION TABLES AND CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
Slide 51: Reconciliation of Adjusted Net Income and Adjusted Diluted EPS
RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS For the Years Ended December 31, (in thousands, except per share information) (Unaudited) As of November 2, 2023 Estimated Guidance Range 2023E 2010 2015 2022 Low Midpoint High Reconciliation of adjusted net income from continuing operat
Slide 52: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA For the Years Ended December 31, (in thousands) (Unaudited) As of November 2, 2023 Estimated Guidance Range 2023E 2010 2014 2015 2016 2017 2018 2019 2020 2021 2022 Low Midpoint High Net income from continuing operations attributable to common stock (as de
Slide 53: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW Free cash flow is defined as net cash provided by (used in) operating activities less net capital expenditures. Net capital expenditures is defined as capital expenditures less proceeds from sale of property and equipment and from insurance settlements related to pro
Slide 54: Reconciliation of Return on Invested Capital
RECONCILIATION OF RETURN ON INVESTED CAPITAL Return on invested capital ("ROIC") is calculated by dividing Adjusted EBITA, net of tax (a non-GAAP measure) by average invested capital. Adjusted EBITA, net of tax, is calculated as Adjusted EBITDA (a non-GAAP measure), less stock-based compensation exp
Slide 55: 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 56: Cautionary Statement About Forward-Looking Statements and Information
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS AND INFORMATION • Trends and growth opportunities in relevant markets, including Quanta's ability to obtain future project awards; • Delays, deferrals, reductions in scope or cancellations of anticipated, pending or existing projects as a result
Slide 57: Cautionary Statement About Forward-Looking Statements and Information
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS AND INFORMATION • The potential that Quanta's participation in joint ventures or similar structures exposes Quanta to liability or harm to its reputation as a result of acts or omissions by partners; • The inability or refusal of customers or thi
Quanta Services — Investor Presentation (November 2023) on 6ix