Quanta Services, Inc. · NYSE:PWR
Quanta Services — Q1 2020 Earnings Presentation
29 slides from Quanta Services's earnings presentation, May 7, 2020
Slide 1: 1Q20 Earnings Call Presentation
1Q20 Earnings Call Presentation M a y 7 , 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 • Quanta’s COVID-19 Response Derrick Jensen Chief Financial Officer • First Quarter Results, Operational and Strategic Commentary Kip Rupp • Financial Review and Di
Slide 4: Quanta's COVID-19 Response
Quanta’s COVID-19 Response Proactive Expense & Quanta Strengths Employees Customers Capex Management • Solid 1Q20 results • Focused on health and • Customers and end • Experiencing COVID-19 safety of our employees markets are critical disruptions and adjusting • Successful execution of infrastructur
Slide 5: Electric Power Infrastructure Services
Electric Power Infrastructure Services • Demand for our services remains solid • Utilities continue to actively deploy capital into their systems • Grid modernization, storm and fire hardening, renewables integration, reliability, etc. • Most utilities have confirmed 2020 and multi-year transmission
Slide 6: Communications Infrastructure Services (within Electric Power Segment)
Communications Infrastructure Services (within Electric Power Segment) To Meet Future Broadband Needs, The U.S. Needs Est. $130-$150B of Fiber Infrastructure Investment(1) • Solid first quarter • COVID-19 / work-from-home / shelter-in-place has highlighted the need for bandwidth intensive, reliable,
Slide 7: Pipeline and Industrial Infrastructure Services
Pipeline and Industrial Infrastructure Services • Solid first quarter. Began to experience COVID-19 and challenging energy market effects late in the first quarter that have continued into 2Q20 Other P&I Larger Pipeline Gas Distribution (Utility) Maintenance & Integrity Infrastructure Services Proje
Slide 8: Strength and Flexibility to Navigate Uncertainty
Strength and Flexibility to Navigate Uncertainty • Have executed well on our strategy to mitigate risks through diversification and a strong financial profile • Diverse, high-quality customer base with low customer concentration • Broad and diverse geographic presence • Diverse and expanding line of
Slide 9: 1Q 2020 Segment Results versus 1Q 2019
1Q 2020 Segment Results versus 1Q 2019 ($MMs) Revenues Op Inc % Commentary Change (bps) Power ex + Revenue growth reflects continued base business strength; aggregate communications revenues, included in the America Electric Latin $1,762 8.2% electric segment, grew revenues almost 40% versus 1Q19 Up
Slide 10: Free Cash Flow & DSO
Free Cash Flow & DSO Free Cash Flow (1) ($MMs) Days Sales Outstanding (2) 1st Quarter Recap 1Q20 1Q19 Free Cash Flow driven by: $164 $(141) • A decrease in working capital requirements due to lower revenues compared to 4Q19 • Collection of $82MM of insurance proceeds related to insurance matters set
Slide 11: Balance Sheet & Liquidity
Balance Sheet & Liquidity Dec 31, Mar 31, ($MMs) 2017 2018 2019 2020 Liquidity Highlights Cash 138 79 165 377 Debt • Ample liquidity and balance sheet Term Loans - 593 1,241 1,225 strength to navigate operational Credit Facility 668 479 105 410 uncertainties due to COVID-19 Other 4 34 21 28 dynamics
Slide 12: Electric Power Segment Guidance
Electric Power Segment Guidance (Ex-LATAM (1)) 2020 GUIDANCE RANGE Pre-COVID-19 Current 2019 D D Guidance Guidance + Continued base electric - Reduced levels of Revenues growth electric infrastructure + U.S. telecom growth $7.1B $7.6B - $7.8B services provided to $7.5B - $7.7B + Larger projects incr
Slide 13: Pipeline & Industrial Segment Guidance
Pipeline & Industrial Segment Guidance 2020 GUIDANCE RANGE Pre-COVID-19 Current 2019 D D Guidance Guidance - Reduced levels of gas distribution services due Revenues + Full year of Hallen to regional COVID-19 + Continued base business stay-at-home orders $5.0B growth $4.6B - $4.8B - Reduced levels o
Slide 14: Supplemental Segment Guidance Information
Supplemental Segment Guidance Information Pre-COVID-19 Current Revenue Revenue More Guidance Guidance Resilient $12.2B - $12.6B $11.4B - $11.8B Electric Power, Communications 62% +/- 62% +/- 66% Gas Distribution (1)(2) Revenues Estimate approx. 80%-90% of revenues are Maintenance & Integrity(1)(3) r
Slide 15: 2020 Guidance Summary
2020 Guidance Summary ($MMs except per share data) LOW MID POINT HIGH Revenues $11,400 $11,600 $11,800 (1) Adj. EBITDA $860 $893 $925 (2) Free Cash Flow $400 $500 $600 Net Income $325 $348 $370 Diluted EPS (GAAP) $2.25 $2.41 $2.57 (3) Adjusted Diluted EPS $3.04 $3.20 $3.36 Net Income and Adjusted EB
Slide 16: Capital Allocation Priorities
Capital Allocation Priorities Capital Deployment – 1Q16 through 1Q20 ($MMs) Capital Allocation • Working capital and capex required to Working Capital & Capex (net of sales) Working Capital 1,011 Capex 963 support the organic growth of the business remain our first priority and have been the Revenue
Slide 17: Closing Remarks
Closing Remarks • Quanta was built for times like this and we are confident in the resiliency and sustainability of our business model • Expect soft 2Q20 but cautiously optimistic most severe challenges are largely behind us • Remain focused on successful execution of our five key objectives • Focus
Slide 18: Appendix
Appendix • Definitions • Reconciliation Tables • Forward Looking Statement Disclaimers 18
Slide 19: 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 20: 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 21: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA ESTIMATED RANGE ($000s) FY 2020 Low Mid High Net income attributable to common stock (GAAP as reported) $ 325,300 $ 347,850 $ 370,400 Interest expense, net 38,000 36,500 35,000 Provision for income taxes 138,200 149,850 161,500 Amortization of intangible
Slide 22: Reconciliation of Adjusted Diluted Earnings per Share
Reconciliation of Adjusted Diluted Earnings per Share ESTIMATED RANGE ($000s, except per share information) FY 2020 Low Mid High Reconciliation of adjusted net income attributable to common stock: Net income attributable to common stock (GAAP as reported) $ 325,300 $ 347,850 $ 370,400 Adjustments: A
Slide 23: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ESTIMATED RANGE ($000s) 2019 2020 FY 2020 1Q 1Q Low Mid High Net cash provided by operating activities (GAAP as reported) $ (82,750) $ 227,549 $ 650,000 $ 750,000 $ 850,000 Less: Net capital expenditures: Capital expenditures (68,626) (68,109) (250,000) (250,000) (25
Slide 24: Reconciliation of Electric Power Segment excluding Latin America
Reconciliation of Electric Power Segment excluding Latin America 2020 GUIDANCE RANGE ($000s) 2019 Pre-COVID-19 Guidance Current Guidance FY Low High Low High Revenues: Electric Power Infrastructure Services $ 7,121,837 $ 7,620,000 $ 7,840,000 $ 7,520,000 $ 7,740,000 Less: Latin America 63,226 20,000
Slide 25: Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments
(1) Reconciliation of Pipeline & Industrial Segment excluding Asset Impairments 2020 GUIDANCE RANGE ($000s) 2019 Pre-COVID-19 Guidance Current Guidance FY Low High Low High Revenues $ 4,990,316 $ 4,600,000 $ 4,800,000 $ 3,900,000 $ 4,100,000 Operating income $ 332,011 $ 313,000 $ 346,000 $ 175,500 $
Slide 26: 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 27: 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 28: 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 29: 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 29