INVESTOR
PRESENTATION
M a r c h 1 , 2 0 2 4
OUR PEOPLE
POWER MODERN LIFE
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NOTICE TO INVESTORS
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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 statements include any statements reflecting Quanta's expectations, intentions, strategies, assumptions, plans or beliefs about future events or performance or that do not solely relate to historical or current facts. Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict or beyond Quanta's control, and actual results may differ materially from those expected, implied or forecasted by our forward-looking statements due to inaccurate assumptions and known and unknown risk and uncertainties. For additional information concerning some of the risks, uncertainties, assumptions and other factors that could affect our forward- looking statements, please refer to Quanta's Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023 and other documents filed with the Securities and Exchange Commission, which are available on our website (www.quantaservices.com), as well as the risks, uncertainties and assumptions identified in this presentation. Investors and analysts should not place undue reliance on Quanta's forward-looking statements, which are current only as of the date of this presentation. Quanta does not undertake and expressly disclaims any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this presentation or otherwise, and Quanta expressly disclaims any written or oral statements made by any third party regarding the subject matter of this presentation.
Additionally, any financial projections in this presentation are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond Quanta's control. While such projections are necessarily speculative, Quanta believes that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection extends from the date of preparation. The assumptions and estimates underlying such projected results are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections. The inclusion of financial information or projections in this presentation should not be regarded as an indication that Quanta considered or consider the information or projections to be a reliable prediction of future events.
Certain information may be provided in this presentation that includes financial measurements that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP). These non-GAAP financial measures should not be considered as alternatives to GAAP financial measures, such as net income attributable to common stock and cash flow provided by operating activities, and may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. For a reconciliation to the most directly comparable GAAP financial measures, please refer to the accompanying reconciliation tables.
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KEY TAKEAWAYS
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1 | Quanta is a leading specialty infrastructure solutions provider for the utility, |
renewable energy, communications and energy industries |
The combination of our comprehensive power grid and renewable generation
2 capabilities provides a leading infrastructure solutions platform to collaborate with customers to shape North America's energy transition
We typically self-perform +80% of our work, which we believe helps mitigate
3 project risks and ensure efficiency, safety and cost-certainty for our customers
Infrastructure opportunities are significant and sustainable. Quanta has
4 meaningful exposure to highly predictable, largely non-discretionary spend across multiple end-markets
Quanta is levered to favorable long-term megatrends such as utility grid
5 | modernization, system hardening, renewable generation expansion and |
integration, electric vehicles, electrification, technology adoption and |
outsourcing
Our portfolio approach has resulted in a strong historical growth and
6 financial profile with continued opportunity for growth, improved profitability and solid cash flow over a multi-year period
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WHO IS QUANTA SERVICES?
Leading Specialty Infrastructure Solutions Provider
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Growing Total Addressable | |
Market (TAM) driven | |
Recognized market leader in | by megatrends with |
expanding market share | |
the utility, renewable, | |
across all | |
communications and energy | |
three segments | |
infrastructure industries | |
Est. 74% of 2023 | |
revenues from |
Largest and preferred employer of craft skilled labor in the industry. We typically self-perform+80% of our work - helps mitigate risk and provide cost certainty to customers
Industry leading safety and training results and programs
Strong
financial
profile
utilities and | ||
renewable energy | Strong scope and scale | |
developers | ||
with deep customer | ||
Entrepreneurial | ||
relationships. Est. +85% | ||
business model | of 2023 revenues from | |
and culture | repeatable and |
sustainable activity
~14% ~13%
2010 - 2023
Revenue | Adj. EBITDA(1) |
CAGR | CAGR |
~18%
Adj. EPS(1)
CAGR
(1) Refer to appendix for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
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QUANTA IS FOCUSED ON LONG-TERM CORPORATE RESPONSIBILITY AND SUSTAINABILITY
PEOPLE
- Safety drives everything we do - our employees are our #1 asset
- Have incrementally invested +$150mm in training and safety initiatives for our employees
- $1.12 billion in diverse vendor spend in 2022
- 30% of individuals trained at campus career programs at Northwest Lineman College (NLC) during 2022 were ethnically diverse - an increase from 26% in 2019
PLANET
- Facilitating efficient and safe delivery of clean energy and the migration towards a reduced-carbon economy
- We are leading the way in expanding renewable generation capacity in the US
- Quanta has an industry-leadingreputation for environmental stewardship during its projects
- Partnership with General Motors to incorporate a significant number
of Chevrolet Silverado EVs into our fleet
PRINCIPLES
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Board-leveloversight of
ESG-related matters - Experienced and Diverse Board of Directors - 45% gender/ethnic diversity
- Meaningful portion of executive compensation program linked to achieving safety and sustainability goals (including 20% of annual cash inventive and 20% of performance equity incentive)
QUANTA'S SUSTAINABILITY MISSION centers on collaborating with our customers to meet their needs and creating value for stakeholders, while focusing on employee safety and conducting our business in a socially, economically and environmentally responsible manner
Quanta's 2022 Corporate Responsibility Report
https://sustainability.quantaservices.com
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KEY STRATEGIES FOR SUSTAINABLE SUCCESS
Grow Base
Business
+$13B
Estimated increase in base business revenues(1) from 2016-2024E (based on midpoint of 2024E revenues)
Represents ~16% CAGR
Est. to account for 85% of 2024E revenues
Base business growth has increased earnings stability
Scale, innovative solutions and collaborative customer relationships are increasing visibility
Improve
Margins and
Returns
Consolidated
Adjusted
EBITDA
Margin(2)9.8%
7.6%
2016 2024E
Strategic initiatives designed to improve margins and returns across the portfolio
Opportunity for continued improvement of Renewable Energy Infrastructure Solutions segment margins going forward
Focus on North America and Australia growth opportunities
Expand Solutions
Offerings
Acquired domestic manufacturer of power transformers
2023 Acquisition
Acquired leadership position in renewable generation infrastructure solutions
2021 Acquisition
Acquired a leading gas LDC services presence in the New York metro market
2019 Acquisition
Largely organic expansion of U.S. communications services market, supplemented with select acquisitions
Develop Craft Skilled Labor
+$150M incremental investment in training and safety
Including the strategic acquisition of Northwest Lineman College (NLC)
Incremental job training for
+30,000 people at Quanta
facilities in 2023, including employees and industry personnel
~52,500 | +85% |
YE employee | from |
count (2023) | 2016 |
Strategic initiatives with trade associations, unions, universities and military programs, driving labor pool diversity
Disciplined & Value
Creating Capital
Deployment
Working capital to support differentiated self-perform model and growth
~$4.1B
Cash for acquisitions and strategic investments that further our strategic goals from 2019-2023
~$955 mm
Repurchases of PWR stock since 2017 (~$500 million available under stock repurchase authorization as of the end of 4Q23)
Initiated quarterly cash dividend in 1Q19.
Have since
increased by 125%
(1) | Base business is driven by multi-year trends and multi-year spending programs, which generally have minor year-to-year fluctuations outside of larger macroeconomic impacts. Base business includes services | |
performed under contracts with values less than $100 million for Electric Power Solutions and less than $75 million for Underground Utility and Infrastructure Solutions. Base business for the Renewable Energy | 6 | |
Infrastructure Solutions segment includes renewable generation contracts for Blattner and other renewable related projects less than $100 million in contract value. | ||
(2) | Refer to appendix for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure. Based on the midpoint of 2024E adjusted EBITDA as of February 22, 2024. |
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STRONG, CONSISTENT FINANCIAL IMPROVEMENT DRIVEN BY KEY OBJECTIVES
Grow Base
Business
Improve
Margins and
Returns
Expand
Solutions
Offerings
Develop Craft Skilled Labor
Disciplined & Value
Creating Capital
Deployment
Revenue | (1) |
$bn | $22.50 |
$7.57 |
2015 | 2024E |
Adjusted EBITDA (2) | $2,196(1) |
$mm |
$526
20152024E
ROIC (2)
11.3%
4.9%
20152023
Adjusted EPS (2) | (1) |
$8.25 | |
$1.11
20152024E
Adjusted EBITDA Margin (2)
9.8%(1)
6.9%
20152024E
(1) | Based on the midpoint of Quanta's 2024E financial outlook as of February 22, 2024. | 7 |
(2) | Refer to appendix for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure. |
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HOW WE ARE DRIVING LONG-TERM, SUSTAINABLE VALUE CREATION
Key Strategies
Grow Base | Improve | Expand Solutions | Develop Craft | Disciplined & Value | ||
Creating Capital | ||||||
Business | Margins and | Offerings | Skilled Labor | |||
Deployment | ||||||
Returns | ||||||
Portfolio Approach | ||||||
◄ 5% to 8% Organic Revenue CAGR | ◄ Target Double Digit Adjusted EBITDA | ◄ | EPS Growth > Revenue Growth | |||
Margins | ||||||
◄ Double Digit ROIC | ◄ Sustainable Cash Flow Generation | ◄ Strategic Acquisitions | ◄ Return of Capital | |||
Actual Performance Through the Cycle, 2010 - 2023:
• Revs. CAGR of ~14% | • Adj. EBITDA CAGR(1) of ~13% | • Avg. Adj. EBITDA Margin(1) of +9% | • Adj. EPS(1) CAGR of ~18% |
(1) Refer to appendix for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure. | 8 |
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HIGH-QUALITY AND DIVERSE CUSTOMER BASE WITH CRITICAL ASSETS
We Provide Services Across Our Reporting Segments to Most of These Customers
LOW CUSTOMER CONCENTRATION
Largest
customer
accounted for
~6%
of 2023 revenues
Top 10
customers
accounted for
~31%
of 2023 revenues
SELECT CUSTOMERS - Many of Our Customer Relationships Span Decades
Electric Power
Renewable Generation
Communications
Underground Utility &
Infrastructure Solutions
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COLLABORATIVE AND COMPREHENSIVE SOLUTIONS
TRADITIONAL | Customer |
identifies need for | |
APPROACH | an infrastructure |
project |
INTERMEDIARY/ EXTERNAL COMPANY
Customer would often choose engineer-led firm with limited construction expertise to design the project and lead the selection of construction firm
RANGE OF OUTCOMES
• Higher total cost to | • | Greater risk for sub-optimal |
customer (margin on a | project outcome - change | |
margin) | order disputes and remedial | |
• Possible mismatch | work required | |
Customer bears multiple | ||
between work required | • | |
and construction | costs at several stages and | |
capabilities hired | bears greater risk |
QUANTA HAS EVOLVED AND | CONSTRUCTION-LED,AUGMENTED |
WITH FRONT-END SERVICES = | |
ADVANCED THE APPROACH | |
THE QUANTA SOLUTION | |
THE QUANTA SOLUTION
NO INTERMEDIARY
Quanta's comprehensive solutions are construction-led from the outset, supported by front-end solutions, working directly and collaboratively with the customer to provide a complete suite of services
THE DIFFERENCE - VALUE ADDED SOLUTIONS
- We leverage our construction expertise to lead front-end services to properly scope, design and execute projects
- Helps facilitate on-time,on- budget project delivery
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Quanta Services Inc. published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 19:34:03 UTC.