Quanta Services, Inc. · NYSE:PWR
Quanta Services — Investor Presentation (November 2018)
45 slides from Quanta Services's investor presentation, November 2018
Slide 1: Investor Presentation November / December 2018
Investor Presentation November / December, 2018 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 is the leading construction-led infrastructure solutions provider in the markets we serve, with unmatched scope and scale Quanta continues to see opportunities to increase shareholder value through growth in revenues, EBITDA and EPS over a multi-year period We will maintain a st
Slide 4: Leading Construction-Led Infrastructure Solutions Provider
Leading Construction-Led Infrastructure Solutions Provider Who is Quanta Services? Committed to the health and safety of our employees, customers and community #1 2018 Specialty Contractor Recognized market leader in electric power and oil and gas pipeline construction in North America 1 ##1 2018 Ut
Slide 5: Overview – Strategically Focused, Operationally Diverse
Overview – Strategically Focused, Operationally Diverse 2017 Consolidated Revenue = $9.47 Billion* Oil & Gas Infrastructure 41% Electric Power 59% 2018 Est. Revenue = $11 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 Quanta’s Low Customer Concentration Is Unique Versus Peers No single customer accounted for 9% more than 9% of revenues in 2017 Top 10 The ten largest customers accounted for approximately 36% of revenues in 36% 2017 Strong relationships with the maj
Slide 7: Solutions For The Entire Infrastructure Life Cycle
Leading Construction-Led Infrastructure Solutions Provider Solutions For The Entire Infrastructure Life Cycle Design Engineering Project Installation Maintenance Replacement Management Electric Power Asset Management Distribution + Emergency Restoration Energized Services Transmission EPC Solar & Sm
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 Page 8
Slide 9: Strategic Imperative – Deliver Profitable Growth
Strategic Imperative – Deliver Profitable Growth Coupled with Successful Implementation of Other Strategic Imperatives … • Grow the “base business” and For illustrative purposes compliment with larger scale projects • Organic growth and strategic Larger Projects acquisitions Revenues • Pricing disci
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 Est. Self Perform Capability 80% 60% 40% 20% *Bubble Size = Avg. Market Cap *Bubble Size = Avg. Market Cap Smaller Larger 0% Est. Large Project Capab
Slide 12: Differentiated Competitive Position – In the Sweet Spot
Differentiated Competitive Position – In the Sweet Spot • Quanta is construction-led and is uniquely positioned to meet customer needs versus both specialty contractors and traditional engineering and construction companies 100% • Customers understand that skilled labor is critical to project succes
Slide 13: Electric Power Infrastructure Services Segment Overview
Electric Power Infrastructure Services Segment Overview Financial Snapshot For the years ended Dec. 31, ($ in millions) Differentiators $5,600 • Largest T&D solutions provider in $5,303 $4,937 $4,850 North America 10.7% 9.3% • Reputation and Track Record (1) 7.5% 8.3% • Unmatched Solutions Scope and
Slide 14: Power Grid Investment Drivers – Transmission & Distribution
Power Grid Investment Drivers – Transmission & Distribution Market Drivers Restraining Factors • An aging grid that requires repair, upgrade and maintenance • Challenged economic conditions in Canada • Utility spending continues to shift from generation to • Environmental and other regulatory scruti
Slide 15: Power Grid Investment Drivers – Transmission & Distribution
Power Grid Investment Drivers – Transmission & Distribution • Utility spending continues to shift from generation to • Sub-transmission interconnection transmission and distribution • Technology innovations will continue to grow. A focus on • Transmission and distribution spending continues to reach
Slide 16: Northwest Lineman College
Northwest Lineman College Overview • Northwest Lineman College (NLC) is a for profit, nationally accredited and industry leading training program providing safety and certification training to pre-apprentices, apprentices, journey level lineworkers, crew leaders, substation technicians and system op
Slide 17: Oil & Gas Infrastructure Services Segment Overview
Oil & Gas Infrastructure Services Segment Overview Financial Snapshot For the years ended Dec. 31, ($ in millions) Differentiators $3,867 • Largest Pipeline Solutions Provider $2,445 $2,635 $2,801 in North America 8.3% • Reputation & Track Record (1) 5.4% 5.3% 4.8% • Safe Project Execution (2) (3) •
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 2000-2050 (millions of barrels per day) (Millions of barrels per day) 2000-2050 (trillion cubic feet) Source
Slide 19: Oil & Gas Infrastructure Investment Drivers
Oil & Gas Infrastructure Investment Drivers Quanta Is the Largest Pipeline Construction Company in North America • Need for pipeline and related infrastructure driven by the • Quanta is the largest pipeline construction company in North significant increase in North American unconventional natural A
Slide 20: Oil & Gas Infrastructure Investment Drivers
Oil & Gas Infrastructure Investment Drivers Diversified and Expanding Solutions to Capture Midstream and Downstream Industry Spend Natural Gas Distribution & Pipeline Integrity Downstream Industrial Services • U.S. pipeline infrastructure is getting older and much of it was • Substantial installed b
Slide 21: 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 Page 2
Slide 22: Telecom Infrastructure Investment Drivers
Telecom Infrastructure Investment Drivers Geographic Diversity Provides Exposure to Multiple Market 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 bo
Slide 23: Telecom Infrastructure Services Overview
Telecom Infrastructure Services Overview Comprehensive Infrastructure Solutions Offered On A Turnkey, Discrete Service or EPC Basis Quanta’s Capabilities United States Canada Latin America Wireless Wireline Wireless Wireline Wireless Wireline Engineering / Design Fiber Builds Wireless Deployment Mak
Slide 24: 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 25: 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 26: 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 engin
Slide 27: Infrastructure Solutions Drivers
Infrastructure Solutions Drivers A Combination of Drivers are Occurring that Create Demand and Opportunity for Our Infrastructure Solutions • Significant capital needs to fund substantial infrastructure needs • Utilization of concessions, public, private partnerships (P3) and private infrastructure
Slide 28: Complete Solutions
Fully Integrated Solutions Based Provider Provides A Solutions Based Tool for Quanta to Partner with Customers, Enhance Relationships and Create New Customer and Project Opportunities Partnerships Structuring EPC Capital Partner with: • Negotiate commercial • Engineering, design, • Determine capital
Slide 29: Financial Overview
N > 4 Financial Overview Page 29
Slide 30: Recent Financial Performance & 2018 Expectations
Recent Financial Performance & 2018 Expectations Strong Revenue and Earnings Per Share Recovery Revenue EBITDA & Adjusted EBITDA (1) GAAP Diluted EPS (1) Adjusted Diluted EPS (1) ($ in millions) (2) * $2.75 (2) $11,000 (2) $891 $2.30 (2) $826 $2.00 $9,466 $778 $707 $1.97 $7,747 $7,572 $7,651 $1.85 $
Slide 31: Recent Financial Performance & 2018 Expectations
Recent Financial Performance & 2018 Expectations For the Years Ended December 31 Electric Power Oil & Gas Infrastructure ($ in millions) Guidance Commentary (7) ($ in millions) Guidance Commentary (7) Est. $4.6 - $4.65 Billion f f Est. $6.35 - $6.40 Billion $3,867 $5,600 $5,303 Est. operating income
Slide 32: Growing Backlog Expected to Remain Strong
Growing Backlog Expected to Remain Strong Positive Industry Trends & Competitive Positioning Provide Opportunity for Backlog Growth 12-Month Backlog (1) Total Backlog (1) ($ in millions) ($ in millions) $12,215 $7,484 $11,178 $6,446 $9,750 $5,853 $9,236 $9,387 $5,220 $5,209 12/31/14 12/31/15 12/31/1
Slide 33: Strong Balance Sheet to Support Growth Strategies
Strong Balance Sheet to Support Growth Strategies ($ in millions) 12/31/2014 12/31/2015 12/31/2016 12/31/2017 9/30/2018 Cash and Equivalents $ 191 $ 129 $ 112 $ 138 114 Other Debt 12 15 10 4 23 Credit Facility 69 467 351 668 953 Total Debt 81 482 361 672 976 Total Equity 4,526 3,088 3,343 3,796 3,82
Slide 34: Historical Cash Flow Generation
Historical Cash Flow Generation $629 Working Capital Demand Influence On Cash Flow from $390 Cash Flow Generation $372 Continuing Operations $262 For the Years Ending December 31, ($ in millions) Scenario A Scenario B Scenario C Revenue change from 2014 2015 2016 2017 the prior year … $445 Results i
Slide 35: Acquired Approx. $2.1 Billion / 38% of Quanta Common Stock
Acquired Approx. $2.1 Billion / 38% of Quanta Common Stock Reflects Confidence and Commitment to Generating Stockholder Value Completed - $500 Million Share Repurchase Authorization (2015) Earnings Power Improvement • Acquired approximately 17.4 million shares for total cost of $500 $3,000.000 225 m
Slide 36: Opportunistic & Disciplined Capital Allocation
Opportunistic & Disciplined Capital Allocation Financial Strength Allows for Flexible and Strategic Capital Allocation – A Competitive Advantage Capital Deployment Preference 2014 – 2017 Sources & Uses of Cash* (Amounts in millions) • Working Capital • Capital Expenditures $3,523 • Acquisitions $3,1
Slide 37: Strong Foundation For Growth & Improved Profitability
Strong Foundation For Growth & Improved Profitability Safety & Operational Excellence Multi-Year Growth Opportunities Innovative, Industry Leading Solutions Scale & Scope Financial Strength Page 37
Slide 38: 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 Page 38
Slide 39: Reconciliation of Adjusted Net Income from Continuing Operations
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) As of Nov. 1, 2018 Estimated Guidance Range 2014 2015 2016 2017 2018 2018 Reconciliation of adjusted net income from
Slide 40: Reconciliation of EBITDA and Adjusted EBITDA
Reconciliation of EBITDA and Adjusted EBITDA For the Years Ended December 31, (in thousands, except per share information) (Unaudited) As of Nov. 1, 2018 Estimated Guidance Range 2014 2015 2016 2017 2018 2018 Net income attributable to common stock (as defined by GAAP) $ 269,224 $ 120,286 $ 198,725
Slide 41: 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 Backlog to Remaining Performance Obligations
Reconciliation of Backlog to Remaining Performance Obligations Sept. 30, 2018 12-Month Total Electric Power Infrastructure Services Remaining performance obligations $ 2,099.1 $ 3,074.1 Estimated orders under MSAs and short-term, non- fixed price contracts 2,129.0 4,842.7 Backlog 4,228.1 7,916.8 Oil
Slide 43: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 2014 2015 2016 2017 Net Cash Provided by Operating Activities of Continuing Operations 261,439 627,762 390,749 371,891 Less: Net Capital Expenditures: Additions of Property and Equipment (247,216) (209,968) (212,555) (244,651) Proceeds from Sale of Property and Equip
Slide 44: 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 45: 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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