Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q2 2020 Earnings Presentation
31 slides from Quanta Services's earnings presentation, Aug 6, 2020
Slide 1: 2Q20 Earnings Call Presentation
2Q20 Earnings Call Presentation Au g u s t 6 , 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 • Second Quarter Results, Operational and Chief Financial Officer Strategic Commentary • Financial Review and Discussion Kip Rupp Vice President, Inv
Slide 4: 2Q20 Highlights
2Q20 Highlights Adj. EBITDA(1) • Solid 2Q20 results that exceeded expectations Operating Adj. EPS(1) • Electric Power and Pipeline & Industrial segment Income $214 MM margins • Adjusted EBITDA $113 MM $0.74 • Earnings Per Share Cash from • Cash flow Revenue Operations • Strong balance sheet and ampl
Slide 5: Update to Quanta's COVID-19 Response and Impacts
Update to Quanta’s COVID-19 Response and Impacts Employees & Proactive Expense & Quanta Strengths Customers Capex Management 2Q20 Impacts • Solid 1H20 results • Remain focused on health • Proactively implemented • As expected, April was and safety of our cost management most challenging month • Succ
Slide 6: Electric Power Infrastructure Services
Top 25 Quanta Utility Electric Power Infrastructure Services Customer Spend CAGR: 2000-2018 ($ in billions) • Strong execution across operations and service lines coupled with successful cost management 8% drove solid profitability CAPEX • Demand for our services remains strong 5% OPEX • Utilities c
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, has been selected for this historic opportunity – the transformation and modernization of the Puerto Rico electric transmission and distribution (T&D) system, in or
Slide 8: Communications Infrastructure Services (within Electric Power Segment)
Communications Infrastructure Services (within Electric Power Segment) To Meet Future Broadband Needs, The U.S. Needs Est. • Continue to perform well with ample growth $130-$150B of Fiber Infrastructure Investment(1) opportunities in the near and longer term • COVID-19 / work-from-home / shelter-in-
Slide 9: Pipeline and Industrial Infrastructure Services
Pipeline and Industrial Infrastructure Services • Results impacted by COVID-19 as expected. Rapid adjustment to changing market conditions, effective cost management and operational excellence resulted in better than expected margins Other P&I Gas Utility Pipeline Integrity Industrial Services Infra
Slide 10: Pipeline and Industrial Infrastructure Services
Pipeline and Industrial Infrastructure Services Strategy Focus Services Steps Taken Results 2020E Pipeline & Industrial Gas Utility • Create a more sustainable • Organic expansion of gas Segment Revenues and consistent operation utility services • Increase and gain scale of • Acquisition of Hallen b
Slide 11: Solid 2Q20 Results, Increased 2020 Outlook and Commitment to Stockholder Value
Solid 2Q20 Results, Increased 2020 Outlook and Commitment to Stockholder Value • Increasing Quanta’s full-year 2020 outlook • Solid 1H20 results • Contribution from ownership of LUMA Energy • 80% to 90% of estimated 2020 revenues from services and end markets we believe are resilient • Have executed
Slide 12: 2Q 2020 Segment Results versus 2Q 2019
2Q 2020 Segment Results versus 2Q 2019 ($MMs) Revenues Op Inc % Commentary Change (bps) + Revenue growth reflects continued base business strength; communications revenues, included in the electric Power ex America Electric segment, grew ~50% versus 2Q19 Latin $1,790 11.1% + Higher margins due to st
Slide 13: Free Cash Flow & DSO
Free Cash Flow & DSO Free Cash Flow (1) ($MMs) Days Sales Outstanding (2) (DSO) 2nd Quarter Recap 2Q20 2Q19 Free Cash Flow driven by: $457 $(173) • Decrease in working capital requirements due to lower revenues compared to 2Q19 and a decrease in DSO • Deferred payment of $58MM of federal and state i
Slide 14: Balance Sheet & Liquidity
Balance Sheet & Liquidity Dec 31, Jun 30, ($MMs) 2017 2018 2019 2020 Liquidity Highlights Cash 138 79 165 531 Debt • Ample liquidity and balance sheet Term Loans - 593 1,241 1,209 strength to navigate operational Credit Facility 668 479 105 153 uncertainties due to COVID-19 Other 4 34 21 25 dynamics
Slide 15: Capital Allocation Priorities
Capital Allocation Priorities Capital Deployment – 1Q16 through 2Q20 ($MMs) Capital Allocation • Working capital and capex required to Working Capital & CapEx, net of sales Working Capital $837 Capex $1,003 support the organic growth of the business remain our first priorities and have been Revenue
Slide 16: Electric Power Segment Guidance (Ex-LATAM)
Electric Power Segment Guidance (Ex-LATAM (1)) 2020 GUIDANCE RANGE 2020 Initial 1Q20 Current 2019 D D D Guidance Guidance Guidance + Continued base electric growth Revenues - Reduced levels of + U.S. telecom growth electric = Revenues in line $7.1B + Larger projects $7.6B - $7.8B infrastructure $7.5
Slide 17: Pipeline & Industrial Segment Guidance
Pipeline & Industrial Segment Guidance 2020 GUIDANCE RANGE 2020 Initial 1Q20 Current 2019 D D D Guidance Guidance Guidance - Reduced levels of - Further deferral of gas distribution customer spend on + Full year of Hallen services due to smaller capital Revenues + Continued base regional COVID-19 pr
Slide 18: 2020 Guidance Summary
2020 Guidance Summary ($MMs except per share data) LOW MID POINT HIGH Revenues $11,000 $11,200 $11,400 (1) Adj. EBITDA $903 $934 $964 (2) Free Cash Flow $600 $700 $800 Net Income $338 $360 $382 Diluted EPS (GAAP) $2.33 $2.49 $2.64 (3) Adjusted Diluted EPS $3.18 $3.33 $3.48 Net Income and Adjusted EB
Slide 19: Closing Remarks
Closing Remarks • Resilient nature of the largest portions of our operations delivered solid results in 2Q20, validating the sustainable foundation that exists to drive future shareholder value • LUMA joint venture represents a proof-of-concept for Quanta and provides significant opportunities for r
Slide 20: Appendix
Appendix • Definitions • Reconciliation Tables • Forward Looking Statement Disclaimers 20
Slide 21: 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 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 RANGE ($000s) 2020 FY 2020 2Q Low Mid High Net income attributable to common stock (GAAP as reported) $ 73,946 $ 337,800 $ 359,800 $ 382,000 Interest expense, net 8,379 38,000 36,500 35,000 Provision for income taxes 32,989 141,800 151,850 161,9
Slide 24: Reconciliation of Adjusted Diluted Earnings per Share
Reconciliation of Adjusted Diluted Earnings per Share ESTIMATED RANGE ($000s, except per share information) 2020 FY 2020 2Q Low Mid High Reconciliation of adjusted net income attributable to common stock: Net income attributable to common stock (GAAP as reported) $ 73,946 $ 337,800 $ 359,800 $ 382,0
Slide 25: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ESTIMATED RANGE ($000s) 2019 2020 FY 2020 2Q 2Q Low Mid High Net cash provided by (used in) operating activities (GAAP as reported) $ (108,664) $ 497,479 $ 850,000 $ 950,000 $ 1,050,000 Less: Net capital expenditures: Capital expenditures (72,775) (48,148) (250,000)
Slide 26: Reconciliation of Electric Power Segment excluding Latin America
Reconciliation of Electric Power Segment excluding Latin America 2020 GUIDANCE RANGE ($000s) 2019 Initial Guidance 1Q Guidance Current Guidance FY Low High Low High Low High Revenues: Electric Power Infrastructure Services $ 7,121,837 $ 7,620,000 $ 7,840,000 $ 7,520,000 $ 7,740,000 $ 7,520,000 $ 7,7
Slide 27: Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments
(1) Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments 2020 GUIDANCE RANGE ($000s) 2019 Initial Guidance 1Q Guidance Current Guidance FY Low High Low High Low High Revenues $ 4,990,316 $ 4,600,000 $ 4,800,000 $ 3,900,000 $ 4,100,000 $ 3,500,000 $ 3,700,000 Operating income $
Slide 28: Forward Looking Statements
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 1995. Forward-looking state
Slide 29: Forward Looking Statements
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 assumptions and by known and un
Slide 30: Forward Looking Statements
Forward Looking Statements • Fluctuations of prices of certain materials used in Quanta’s or its customers' businesses, including as a result of the imposition of tariffs, governmental regulations affecting the sourcing of certain materials and equipment, or changes in U.S. trade relationships with
Slide 31: 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 31