Quanta Services, Inc. · NYSE:PWR
Quanta Services — Investor Presentation (August 2024)
61 slides from Quanta Services's investor presentation, Aug 19, 2024
Slide 1: Investor Presentation August 19, 2024
I N V E STO R P R E S E N TAT I O N August 19, 2024 OUR PEOPLE POWER MODERN LIFE
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-lookin
Slide 3: Key Takeaways
. . . KEY TAKEAWAYS Quanta is a leading specialty infrastructure solutions provider for the utility, 1 renewable energy, technology, communications and energy industries The combination of our comprehensive power grid and renewable generation 2 capabilities provides a leading infrastructure solution
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
Slide 5: Focused on Long-Term Corporate Responsibility and Sustainability
. . . QUANTA IS FOCUSED ON LONG-TERM CORPORATE RESPONSIBILITY AND SUSTAINABILITY PEOPLE PLANET PRINCIPLES • 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 towa
Slide 6: Key Strategies for Sustainable Success
. . . KEY STRATEGIES FOR SUSTAINABLE SUCCESS Improve Expand Solutions Disciplined & Value Grow Base Develop Craft Margins and Offerings Creating Capital Business Skilled Labor Deployment Returns +$13B Consolidated Acquired a national inside Acquired domestic +$150M incremental Working capital to sup
Slide 7: Strong, Consistent Financial Improvement Driven by Key Objectives
. . . STRONG, CONSISTENT FINANCIAL IMPROVEMENT DRIVEN BY KEY OBJECTIVES Revenue (1) Adjusted EPS (2) (1) $23.80 $bn $8.60 Grow Base Business $7.57 $1.11 Improve 2015 2024E 2015 2024E Margins and Returns Adjusted EBITDA Margin (2) Adjusted EBITDA (2) (1) $mm $2,272 (1) 9.5% Expand 6.9% Solutions $526
Slide 8: How We Are Driving Long-Term, Sustainable Value Creation
. . . HOW WE ARE DRIVING LONG-TERM, SUSTAINABLE VALUE CREATION Key Strategies Improve Expand Solutions Disciplined & Value Grow Base Develop Craft Creating Capital Business Margins and Offerings Skilled Labor Returns Deployment Portfolio Approach ◄ Target Double Digit Adjusted EBITDA ◄ 5% to 8% Orga
Slide 9: High-Quality and Diverse Customer Base with Critical Assets
. . . HIGH-QUALITY AND DIVERSE CUSTOMER BASE WITH CRITICAL ASSETS We Provide Services Across Our Reporting Segments to Many of These Customers SELECT CUSTOMERS – Many of Our Customer Relationships Span Decades LOW CUSTOMER CONCENTRATION Electric Power Largest customer accounted for Renewable Generat
Slide 10: Collaborative and Comprehensive Solutions
. . . COLLABORATIVE AND COMPREHENSIVE SOLUTIONS RANGE OF OUTCOMES INTERMEDIARY/ • Higher total cost to • Greater risk for sub-optimal Customer EXTERNAL COMPANY customer (margin on a project outcome – change TRADITIONAL identifies need for Customer would often choose margin) order disputes and remedi
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 2023 Top 20 Utility Customers Based on 2023 Base Business Revenues(1) Base Business Revenues $10 $7 11% $9 $6 CAGR $8 $7 21% $5
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 • From Fossil • From Biofuels • Biogas (RNG) • Liquid Biofuels Fuels • CO2 • Hydrogen w/ • Hydrogen • Direct Air Transportation CCUS Electrolysis
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 Solar Power System Modern
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 devel
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 Ad
Slide 16: Construction-Led Infrastructure Solutions Through Portfolio Approach
. . . CONSTRUCTION-LED INFRASTRUCTURE SOLUTIONS THROUGH PORTFOLIO APPROACH Revenues - 2024E(1) Electric Power Renewable Energy Underground 46% Infrastructure Solutions 34% Infrastructure Solutions 20% Utility & Infrastructure Solutions Engineering Program Gas Pipeline Downstream Transmission Distrib
Slide 17: Revenue Mix – Strategically Focused, Operationally Diverse
. . . REVENUE MIX – STRATEGICALLY FOCUSED, OPERATIONALLY DIVERSE ~90% of 2023 Revenues Came From Utilities, Renewable Developers, Communications and Industrial Customers, Which Provide Visible and Growing Multi-Year Capital Programs 2023 Consolidated Revenues = $20.9 Billion 2023 Revenues By Segment
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 Revenue BASE BUSINESS: CAGR = 5%-8%(1) • Repeatable, sustainable revenues
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 2023(1) Estimated Revenue by Geography Estimated Revenue by Project Type Estimated Revenue by Contract Type Large Unit Price Cost Plus Project 32% & Other Repair, Replace New 19% United States & U
Slide 20: Electric Power & Communications
. . . ELECTRIC POWER & COMMUNICATIONS 20
Slide 21: Evolving Utility Model Has Driven Spending
. . . EVOLVING UTILITY MODEL HAS DRIVEN SPENDING Utility Industry is a Large, Attractive and Visible Addressable Market Advanced Integrated Utility Model U.S. Investor-Owned Transmission Distribution Generation Pipelines Electric Company CapEx $168 B(2) +$142 B(2) $31 5% 5% Gas Distribution Renewabl
Slide 22: Significant Grid Modernization and Hardening
. . . SIGNIFICANT GRID MODERNIZATION AND HARDENING Widespread Need for Grid Modernization and Hardening – Maintenance, Upgrade, Repair and Replacement Representative Utility - Projected Transmission Circuit Miles Replaced/Upgraded and Total Projected Investment ($ in millions) (1) Age • From 2022 -
Slide 23: Electric Load Growth Is Accelerating
. . . ELECTRIC LOAD GROWTH IS ACCELERATING Load Growth Forecasts Nearly Doubled in 2023, Increasing the Need for Electric Grid Investment • Load growth forecasts from grid operators and utilities are being upwardly revised, marking an end to a two-decade period of tepid electricity demand growth in
Slide 24: Electrification and Electric Vehicles
. . . ELECTRIFICATION AND ELECTRIC VEHICLES Movement Towards A Reduced-Carbon Economy Will Require Significant Power Grid Investment Electrification Adoption Rates(1) • Over the coming decades, developed economies are expected to increasingly utilize electricity to meet carbon reduction/neutrality g
Slide 25: 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 tr
Slide 26: Communications Infrastructure Services
. . . COMMUNICATIONS INFRASTRUCTURE SERVICES Compelling and Complementary Growth Opportunity Leading Communications Infrastructure Solutions Provider Multi-Year Drivers / Opportunities • Increased communications revenues +10% year over year to +$900M in 2023, while improving operating income margins
Slide 27: Enabling Technology
. . . 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 tec
Slide 28: Renewable Energy Infrastructure Solutions
. . . RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS 28
Slide 29: Differentiated Renewable Energy Solutions
. . . DIFFERENTIATED RENEWABLE ENERGY SOLUTIONS Market Leading Position and Extensive Track Record Across Renewable Technologies and Transmission • Strong alignment to energy transition trends within the wind, solar, energy storage and high voltage transmission interconnect markets, which are expect
Slide 30: Renewable Energy Infrastructure Solutions
. . . RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS Significant Upgrading of Transmission and Grid Infrastructure Required to Support Renewable Energy Growth U.S. Solar and Wind Electricity Generation The C Three Group Forecasted Utility Scale Renewables Est. Incremental Transmission Requirements Annual
Slide 31: Inflation Reduction Act Impact on Renewable Investment
. . . RENEWABLE ENERGY INFRASTRUCTURE SOLUTIONS Inflation Reduction Act (IRA) - Additive to 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 b
Slide 32: Cupertino Electric, Inc.
. . . CUPERTINO ELECTRIC, INC. For additional information regarding Quanta’s acquisition of CEI, see Quanta’s Investor Relations website https://investors.quantaservices.com/company-information/presentations 32
Slide 33: Strategic Rationale
. . . STRATEGIC RATIONALE Premier Electrical Solutions Provider to Industries Driving Load Growth and the Energy Transition Combination creates comprehensive end-to-end electrical infrastructure solution from electron 1 generation to transmission to consumption • CEI provides a leading nationwide el
Slide 34: Cupertino Electric Overview
. . . CUPERTINO ELECTRIC OVERVIEW Focused On Attractive Growth Markets Levered to Technology, Energy Transition and Infrastructure Technology Renewable Energy Infrastructure & Commercial Segment ~45% of ’24E Revenues ~40% of ’24E Revenues ~15% of ’24E Revenues Data Center Modular Solar Battery Stora
Slide 35: Technology Infrastructure Solutions
. . . TECHNOLOGY INFRASTRUCTURE SOLUTIONS The Combination of CEI and Quanta Provide Critical Path Data Center Electrical Solutions Representative Mission Critical Facility Project Scope Performed by CEI: ✓ CEI broadens Quanta’s core craft-skill led technical capabilities with its leading inside elec
Slide 36: Complementary Infrastructure Solutions
. . . COMPLEMENTARY INFRASTRUCTURE SOLUTIONS Comprehensive End-to-End Electrical Infrastructure Solution from Electron Generation to Transmission to Consumption Generation Transmission Consumption Utility Utility Utility Scale Front Scale Scale Battery End Transmission Energized Inside Testing & Sol
Slide 37: CEI Historical and Estimated Financial Summary
. . . CEI HISTORICAL AND ESTIMATED FINANCIAL SUMMARY Strong Growth, Profitability, and Backlog Remaining Performance Obligations Revenues Adjusted EBITDA(1) 9% / Total Backlog(2) 10% $mm $mm $mm CAGR CAGR $1,900 $175 - $195 $155 - $175 $2,325 - $2,425 $2,100 - $2,200 $156 $1,961 $1,300 2023 2024E 20
Slide 38: Underground Utility & Infrastructure Solutions
. . . UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS 38
Slide 39: Underground Utility & Infrastructure Solutions
. . . UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Well Positioned and Actively Pursuing Energy Industry Carbon-Reduction Opportunities System Modernization Gas Utilities and the Traditional Energy Methane Emission Reduction GAS Industry are in the Early Stages of Hydrogen Blending UTILITIES Adopt
Slide 40: Strategic Focus on Base Business
. . . UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Strategic Focus on Base Business Strategy Has Increased Focus Services Expectations Consistency 2024E Underground Utility & Pipeline Downstream Infrastructure Solutions Gas LDC(1) Integrity Industrial Services • Created a diverse portfolio of Segm
Slide 41: Strategic Focus on Base Business
. . . UNDERGROUND UTILITY & INFRASTRUCTURE SOLUTIONS Strategic Focus on Base Business Gas LDC Services Pipeline Integrity Services Industrial Services • As of 2022, the U.S. natural gas distribution • There are ~634,000 miles of hazardous liquids, • Plant spending and upgrades have similar system co
Slide 42: Balance Sheet, Cash Flow and Capital Deployment
. . . BALANCE SHEET, CASH FLOW AND CAPITAL DEPLOYMENT 42
Slide 43: Balance Sheet Strength Provides Flexibility
. . . BALANCE SHEET STRENGTH PROVIDES FLEXIBILITY Strong Financial Foundation (June 30, 2024) Net Debt / ($ in millions) 12/31/2021 12/31/2022 12/31/2023 6/30/2024 Adj. EBITDA(2) Cash and Equivalents $229 $429 $1,290 $518 ~1.8X Other Debt 54 70 126 164 0.95% Sr. Notes due Oct. 2024 500 500 500 500 •
Slide 44: 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, 35% 90% • Quanta’s cash flow generation is typically counter to revenue 30% Guidance 80% growth, primarily due to working capital demands and to a lesser 25% Midpoint(3) ex
Slide 45: Debt Maturities and Capital Structure
. . . DEBT MATURITIES AND CAPITAL STRUCTURE Investment Grade With Attractive Capital Structure Debt Maturities(1)(2) • Well positioned balance sheet with long-term capital Amounts shown in millions structure at attractive interest rates 2.90% Senior Notes • Cash flow should provide the means to effi
Slide 46: Flexible and Strategic Capital Allocation
. . . FLEXIBLE AND STRATEGIC CAPITAL ALLOCATION Opportunistic and Disciplined Approach 2019 – 2023 Sources & Uses of Cash (Amounts in millions) Capital Deployment Preference $7,886 $6,675 • Working Capital Organic Growth • Capital Expenditures 2.0% $134 Investments 2.6% $175 Dividends • Acquisitions
Slide 47: 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
Slide 48: 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 ro
Slide 49: Our Sustainability Strategy
Through our leading role in building the energy transition, our vision is to leave a measurable, sustainable legacy on OUR SUSTAINABILITY STRATEGY people and our planet with a steadfast focus on our customers, employees, and communities. 49
Slide 50: 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 51: 2022 Environmental Highlights
Our approach to environmental stewardship is twofold — we aim to minimize the environmental impacts of our activities and 2022 ENVIRONMENTAL HIGHLIGHTS work in partnership with others to contribute to a resilient environment. Our projects and operations are designed to have minimal impact on the env
Slide 52: Connect With Quanta Services
. . . Connect With Quanta Services Social Media Channels @QuantaIR @Quanta_Services Quanta Services, Inc. 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 Sean Eastman www.quantaservices.com Dire
Slide 53: Appendix: Reconciliation Tables and Cautionary Statement
. . . APPENDIX RECONCILIATION TABLES AND CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION 53
Slide 54: Reconciliation of Adjusted Net Income to Adjusted Diluted EPS
. . . RECONCILIATION OF ADJUSTED NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON STOCK TO ADJUSTED DILUTED EPS 54
Slide 55: Reconciliation of EBITDA and Adjusted EBITDA
. . . RECONCILIATION OF EBITDA AND ADJUSTED EBITDA 55
Slide 56: Reconciliation of Free Cash Flow
. . . RECONCILIATION OF FREE CASH FLOW 56
Slide 57: Reconciliation of Return on Invested Capital
. . . RECONCILIATION OF RETURN ON INVESTED CAPITAL 57
Slide 58: Reconciliation of CEI EBITDA and Adjusted EBITDA
. . . RECONCILIATION OF CEI EBITDA AND ADJUSTED EBITDA 5Page 8 58
Slide 59: 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 Lit
Slide 60: 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 r
Slide 61: 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
Quanta Services — Investor Presentation (August 2024) on 6ix