Quanta Services, Inc. · NYSE:PWR
Quanta Services — Investor Presentation (November 2017)
44 slides from Quanta Services's investor presentation, November 2017
Slide 1: Investor Presentation
Investor Presentation November / December, 2017 NYSE: PWR
Slide 2: Forward Looking Statement Disclaimer
Forward Looking Statement Disclaimer 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 for
Slide 3: Key Takeaways
Key Takeaways Quanta continues to see opportunities to increase shareholder value through growth in revenues and EPS over a multi-year period Quanta is the leading integrated infrastructure solutions provider in the markets we serve, with unmatched scope and scale There is opportunity for a renewed
Slide 4: Leading Integrated Infrastructure Solutions Provider
Leading Integrated Infrastructure Solutions Provider Who is Quanta Services? Committed to the health and safety of our employees, customers and community #1 2017 Specialty Recognized market leader in electric power and oil and gas pipeline Contractor construction in North America #1 2017 Utility Ent
Slide 5: Overview – Strategically Focused, Operationally Diverse
Overview – Strategically Focused, Operationally Diverse 2016 Consolidated Revenue = $7.65 Billion* Oil & Gas Infrastructure 37% Electric Power 63% 2017 Est. Revenue = $9.3 Billion ** Estimated Revenue by Geography Estimated Revenue by Contract Type Estimated Revenue by Project Type Canada Unit Price
Slide 6: Overview - Diverse and High Quality Customer Base
Overview - Diverse and High Quality Customer Base No single customer accounted for 4% more than 4% of revenues in 2016 The ten largest customers accounted Top 10 for approximately 32% of revenues in 32% 2016 Strong relationships with the majority of U.S. investor owned utilities and Canadian utiliti
Slide 7: Leading Integrated Infrastructure Solutions Provider
Leading Integrated Infrastructure Solutions Provider Design Engineering Project Installation Maintenance Replacement Management Electric Power Asset Management Distribution + Emergency Restoration Energized Services Transmission EPC Solar & Smart Grid Engineering Substation Renewables Oil & Gas Comp
Slide 8: Strategic Imperatives
Strategic Imperatives Focus On Safety Maintain High Strengthen and Continue to Excellence Performance Grow Our Core Innovate Culture Organic Growth Strategic Acquisitions Profitable Growth
Slide 9: Strategic Imperatives: Deliver Profitable Growth
Strategic Imperatives: Deliver Profitable Growth Coupled with successful implementation of other strategic For illustrative purposes imperatives … • Grow the base business and compliment with larger scale projects Larger Projects • Organic growth and strategic Revenues acquisitions • Pricing discipl
Slide 10: Strategic Acquisitions Criteria and Rationale
Strategic Acquisitions Criteria and Rationale • Acquisitions have and will continue to play a strategic role in differentiating Quanta in the marketplace and positioning the company for profitable long-term growth • Seek well respected, entrepreneurial leadership with extensive history of operationa
Slide 11: Differentiated Competitive Position – In the Sweet Spot
Differentiated Competitive Position – In the Sweet Spot Quanta vs. Specialty Contractors Quanta vs. Traditional E&Cs 100% Est. Self Perform Capability 80% 60% 40% 20% *Bubble Size = Avg. Market Cap *Bubble Size = Avg. Market Cap Smaller Larger 0% Est. Large Project Capability • Quanta is the largest
Slide 12: Differentiated Competitive Position – In the Sweet Spot
Differentiated Competitive Position – In the Sweet Spot • Quanta is uniquely positioned to meet customer needs versus both specialty contractors and traditional engineering and construction companies 100% • Customers understand that skilled labor is Est. Self Perform Capability critical to project s
Slide 13: Electric Power Infrastructure Services Segment Overview
Electric Power Infrastructure Services Segment Overview Service Offering Financial Snapshot • Transmission For the years ended Dec. 31, ($ in millions) • Distribution $5,303 • Substation $4,542 $4,937 $4,850 • Engineering • Energized Services 11.5% 10.7% • Emergency Restoration (1) 7.5% 8.3% • Smart
Slide 14: Power Grid Investment Drivers - Transmission
Power Grid Investment Drivers - Transmission Market Drivers Restraining Factors • An aging grid that requires repair, upgrade and maintenance • Challenged economic conditions in Canada • Favorable transmission regulation: Energy Policy Act of ‘05, • Environmental and other regulatory scrutiny, right
Slide 15: Power Grid Investment Drivers - Transmission
Power Grid Investment Drivers - Transmission Market Trends • Transmission spending continues to reach all time highs, and forecasts point towards sustained robust spending as large transmission projects are expected to move forward • North American transmission spending estimated to average approx.
Slide 16: Power Grid Investment Drivers - Distribution
Power Grid Investment Drivers - Distribution Market Drivers • Renewed focus on reliability versus costs • Significant portion of the grid is approaching the end or is beyond its useful life • More stringent reliability standards will require repairing lines and Est. North American Distribution CapEx
Slide 17: Oil & Gas Infrastructure Services Segment Overview
Oil & Gas Infrastructure Services Segment Overview Service Offering Financial Snapshot • Larger midstream gathering pipeline For the years ended Dec. 31, ($ in millions) • Mainline Pipeline $2,801 • Compression, Metering and Pumping $2,635 $2,445 Stations $1,870 • Natural Gas Distribution 8.3% • Pip
Slide 18: Oil & Gas Infrastructure Investment Drivers
Oil & Gas Infrastructure Investment Drivers Shale Gas & Tight Oil Plays Drive U.S. Tight Oil Drives U.S. Oil Production Canadian Oil Sands & Conventional Oil Production Natural Gas Production 2000-2040 (millions of barrels per day) (Millions of barrels per day) 2000-2040 (trillion cubic feet) Source
Slide 19: Oil & Gas Infrastructure Investment Drivers
Oil & Gas Infrastructure Investment Drivers • Need for pipeline and related infrastructure driven by the • Quanta is the largest pipeline construction company in significant increase in North American unconventional North America natural gas and oil production – not commodity prices • This positions
Slide 20: Oil & Gas Infrastructure Investment Drivers
Oil & Gas Infrastructure Investment Drivers Natural Gas Distribution & Pipeline Integrity Significant Inventory Remains for Replacement • U.S. pipeline infrastructure is getting older • PHMSA estimates more than 470K miles (37%) of U.S. gas distribution mains and 171K miles (57%) of gas transmission
Slide 21: Stronghold Acquisition Overview
Stronghold Acquisition Overview Stronghold is a leading specialized services company providing high pressure and critical path solutions to the downstream and midstream energy markets Company Profile Strategic Rationale • Provides catalyst handling, turnaround and other • Facilitates capture of a gr
Slide 22: Telecom Infrastructure Services Overview
Telecom Infrastructure Services Overview Goal To be an industry leading and true EPC contractor, providing comprehensive communications infrastructure solutions to customers in the United States, Canada and select markets in Latin America Markets Served Diverse Existing & Target Customer Base
Slide 23: Telecom Infrastructure Investment Drivers
Telecom Infrastructure Investment Drivers United States Canada Latin America • Telco gigabit fiber to the home • Backbone and last mile fiber • Significantly behind North deployment programs (behind relative to the U.S.) America in both wireline and wireless connectivity • Cable MSOs deploying DOCSI
Slide 24: Telecom Infrastructure Services Overview
Telecom Infrastructure Services Overview Quanta’s Capabilities United States Canada Latin America Wireless Wireline Wireless Wireline Wireless Wireline Engineering / Design Fiber Builds Wireless Deployment Make Ready Services Civil Construction Material Management EPC = In Development = Current Serv
Slide 25: Telecom Infrastructure Services – Growth Strategy
Telecom Infrastructure Services – Growth Strategy Primarily organic growth and greenfield expansion STRATEGY • Proven greenfield expansion model in Latin America – U.S. should be less difficult Leverage existing U.S. field operations people, equipment and property STRATEGY • Select strategic acquisi
Slide 26: Engineer, Procure, Construct (EPC) Is A Differentiator
Engineer, Procure, Construct (EPC) Is A Differentiator • Quanta has a long history in the EPC business and is increasingly performing select projects on an EPC basis • Customers’ capital programs are at historic levels and growing. Projects are getting larger and more complex • Evolution of regulato
Slide 27: What is Infrastructure Solutions?
What is Infrastructure Solutions? Infrastructure Solutions represent strategic partnerships with customers and capital partners. Encompasses: • Public private partnerships (P3) • Concessions • Build, Own, Operate or Transfer (BOOT) • Build to Suit (BTS) arrangements These solutions are a growth engi
Slide 28: Infrastructure Solutions Drivers
Infrastructure Solutions Drivers • Significant capital needs to fund the substantial infrastructure needs • Utilization of concessions, public, private partnerships (P3) and private infrastructure Market Structure & Projects partnerships to fund and attract high-quality entities for complex projects
Slide 29: Complete Solutions
Fully Integrated Solutions Based Provider Partnerships Structuring Quanta is uniquely positioned to provide complete Partner with: • Customers • Negotiate commercial agreements solutions based services to customers, including • Equity Capital * We partner with, not + • Analyze market drivers & risks
Slide 30: Financial Overview
Financial Overview
Slide 31: Recent Financial Performance & 2017 Expectations
Recent Financial Performance & 2017 Expectations Revenue GAAP Diluted EPS (1) Adjusted Diluted EPS (1) ($ in millions) * (2) (3) $1.95 (2) $1.73 (2) $1.85 $9,300 $1.63 $7,747 $7,572 $7,651 $1.56 $1.40 (6) $1.51 $6,412 $1.22 (4) $1.26 $1.11 (5) $0.62 2013 2014 2015 2016 2017 Est. 2013 2014 2015 2016
Slide 32: Recent Financial Performance & 2017 Expectations
Recent Financial Performance & 2017 Expectations For the Years Ended December 31 Electric Power Oil & Gas Infrastructure Guidance Commentary ($ in millions) ($ in millions) Guidance Commentary Est. revenue growth $5,303 $2,801 f potentially exceeding 35% vs. $4,937 Est. revenue growth $2,635 2016 $4
Slide 33: Backlog Is Expected To Remain Strong
Backlog Is Expected To Remain Strong 12-Month Backlog Total Backlog ($ in millions) ($ in millions) $10,546 $6,191 $9,387 $9,750 $5,853 $9,236 $5,220 $5,209 $8,237 $4,904 12/31/13 12/31/14 12/31/15 12/31/16 9/30/2017 12/31/13 12/31/14 12/31/15 12/31/16 9/30/2017 Electric Power Oil & Gas Infrastructu
Slide 34: Strong Balance Sheet to Support Growth Strategies
Strong Balance Sheet to Support Growth Strategies ($ in millions) 12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 Cash and Equivalents $ 489 $ 191 $ 129 $ 112 $ 92 Other Debt 2 12 15 10 5 Credit Facility -- 69 467 351 758 Total Debt 2 81 482 361 763 Total Equity 4,241 4,526 3,088 3,343 3,730 T
Slide 35: Historical Cash Flow Generation
Historical Cash Flow Generation Cash Flow from Continuing Operations Free Cash Flow from Continuing Operations* For the Years Ending December 31, For the Years Ending December 31, ($ in millions) ($ in millions) $618 $434 $371 $381 $191 $248 $163 $15 2013 2014 2015 2016 2013 2014 2015 2016 *Net cash
Slide 36: Committed to Generating Shareholder Value
Committed to Generating Shareholder Value Acquired $1.7 Billion of Quanta Common Stock Executed on $1.25 Billion Share Repurchase Authorization Earnings Power Improvement • Aug. 2015 – Announced a new $1.25 billion share repurchase authorization through Feb. 28, 2017 $3,000.000 225 • Completed a $75
Slide 37: Opportunistic & Disciplined Capital Allocation
Opportunistic & Disciplined Capital Allocation 2013 – 2016 Sources & Uses of Cash* Capital Deployment Preference (Amounts in millions) • Working Capital $3,382 • Capital Expenditures 2% $54 Investments • Acquisitions • Investments $3,099 21% $728 Acquisitions, Net • Return of Capital Investment Sale
Slide 38: Foundation For Growth & Improved Profitability
Foundation For Growth & Improved Profitability Operational & Safety Excellence Multi-Year Growth Opportunities Innovative, Industry Leading Solutions Scale & Scope Financial Strength
Slide 39: 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
Slide 40: Reconciliation of Adjusted Net Income from Continuing Operations Attributable to Common Stock
Reconciliation of Adjusted Net Income from Continuing Operations Attributable to Common Stock For the Years Ended December 31, (in thousands, except per share information) (Unaudited) Estimated Guidance Range 2013 2014 2015 2016 2017 2017 Reconciliation of adjusted net income from continuing operati
Slide 41: Reconciliation of Electric Power and Oil & Gas Segments Operating Income, As Adjusted
Reconciliation of Electric Power and Oil & Gas Infrastructure Services Segments Operating Income, As Adjusted Oil & Gas Amounts in millions, except percentages Electric Power Infrastructure 12/31/2014 12/31/2015 12/31/2016 12/31/2014 Revenues $ 5,302.7 $ 4,937.3 $ 4,850.5 $ 2,444.6 Operating Income
Slide 42: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 2013 2014 2015 2016 Net Cash Provided by Operating Activities of Continuing Operations 370,558 247,742 618,183 381,176 Less: Net Capital Expenditures: Additions of Property and Equipment (221,946) (247,216) (209,968) (212,555) Proceeds from Sale of Property and Equip
Slide 43: Forward Looking Statement Disclaimer
Forward Looking Statement Disclaimer This presentation (and oral statements regarding the subject matter of this presentation) includes “forward-looking statements” intended to qualify for the "safe harbor" from liability established by the Private Securities Litigation Reform Act of 1995. These sta
Slide 44: Forward Looking Statement Disclaimer
Forward Looking Statement Disclaimer • Our ability to attract or the potential shortage of skilled labor; • Our ability to successfully identify, complete, integrate and realize synergies from acquisitions; • Our dependence on fixed price contracts and the potential to incur losses with respect to t
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