Quanta Services Acquires Cupertino Electric, Inc., A Premier Electrical Infrastructure Solutions Provider to the Technology and Renewable Energy Industries
- Combination Creates a Comprehensive End-to-End Electrical Infrastructure Solution from Electron Generation to Transmission to Consumption
- Highly Synergistic Low-Voltage Electrical Workforce and Complementary Customer Base Provides a Platform for Growth Across Several Strategic Verticals That Are Driving Load Growth
- Increases Quanta's Exposure to the Technology Industry, a Growing Market of Critical Infrastructure Requiring Comprehensive Power Solutions
- Expected to be Immediately Accretive to Quanta's Growth, Cash Flow Conversion and Earnings Per Share Excluding Expected Synergies
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Estimated Full-Year 2025 Adjusted EBITDA and Adjusted Diluted EPS Contributions of Approximately $175MM - $195MM and
$0.40 -$0.50 , Respectively(1)
CEI's 70-year history includes more than 25 years of experience working with global leaders in the technology and data center industries. CEI performs the design and installation of critical electrical systems and is a premier custom manufacturer of modular electrical systems for large-scale data centers and has installed electrical systems in more than 20 million square feet of data centers. Additionally, CEI is a leading renewable infrastructure solutions provider to the mid-sized utility-scale solar and battery storage market, offering turnkey engineering, procurement, construction and commissioning capabilities. Finally, CEI has a long history of providing comprehensive solutions-based engineering, procurement and construction services of electrical systems for the infrastructure and commercial markets. For the four years ending
CEI's existing management team will remain in place, with
Acquisition of CEI is Consistent with Quanta's Key Strategies for Sustainable Success and Provides Compelling Financial Contributions and Strong Cultural Fit
- Highly-Synergistic Low-Voltage Electrical Workforce – Quanta is uniquely positioned to scale CEI's highly technical low-voltage electric craft-skilled workforce, which provides Quanta a platform with opportunity to accelerate growth across several strategic verticals that are driving electricity demand and the energy transition. CEI can also strengthen Quanta's relationships with technology and industrial customers looking to accelerate complex multi-year infrastructure programs in an operating environment that faces constraints on power and craft-skilled labor capacity.
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A Leading, Data Center Solutions Platform – CEI provides a premier electric platform that significantly increases Quanta's exposure to the large and growing data center market, with industry experts estimating hyperscaler capital expenditures to grow at a double-digit CAGR over the next four years. CEI is an established leader in providing turnkey electrical solutions to global leaders in the technology industry, with an experienced and deep management team and a successful track record of designing and building electrical systems for some of the largest and most complex data centers in
the United States . CEI represents a rare scale opportunity for Quanta in an otherwise fragmented market. - Enhances Quanta's Renewable Energy Solutions Platform – CEI's solar and battery storage capabilities provide Quanta with an established mid-market utility-scale renewables platform with technical expertise that is complementary in scope to Quanta's existing large utility-scale renewables platform.
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Expect Meaningful Financial Contributions Without Synergy Assumptions(1) – Quanta expects CEI to contribute meaningfully to its financial profile in the near and longer term, including revenues, adjusted EBITDA, free cash flow conversion, returns and earnings per share. For the remainder of 2024, Quanta estimates CEI will contribute revenues of
$1.0 billion to$1.1 billion and adjusted EBITDA of$80 million to$90 million . For the full-year of 2025, Quanta estimates CEI will contribute revenues of$2.325 billion to$2.425 billion , adjusted EBITDA of$175 million to$195 million and adjusted diluted earnings per share (EPS) (a non-GAAP measure) of$0.40 to$0.50 . Management notes that these financial expectations are preliminary and, accordingly, has taken a prudent approach to its forecast. - Enhances Revenue and Customer Diversity – Like Quanta, CEI has deep, longstanding, and collaborative customer relationships, which enhance Quanta's existing high-quality customer base. CEI's strong relationships with leading technology companies, renewable developers and infrastructure and commercial customers are expected to drive ongoing and repeat business, diversify Quanta's customer base and provide cross-selling opportunities.
- Strong Cultural Fit and History of Excellence – Like many of Quanta's other operating companies, CEI was a management- and family-owned business with an entrepreneurial history and has a multi-decade history of successful, profitable growth and leadership stability. Also, like Quanta, CEI has demonstrated a commitment to its employees through comprehensive training and safety programs and by providing a work environment that fosters prosperity and growth.
Transaction Consideration and Financing
The upfront transaction consideration was approximately
Conference Call Information
In conjunction with this announcement, Quanta has scheduled a conference call for this morning,
About
About
(1)
Non-GAAP Financial Measures
The financial measures not prepared in conformity with generally accepted accounting principles in
We have not provided the most directly comparable GAAP financial measures, or a quantitative reconciliation thereto, for the forward-looking guidance for 2024 and 2025 of CEI's estimated adjusted EBITDA, CEI's estimated contribution to Quanta's EBITDA, or CEI's estimated contribution to adjusted diluted earnings per share included in this release in reliance on the "unreasonable efforts" exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. Providing the most directly comparable GAAP financial measures, or a quantitative reconciliation thereto, cannot be done without unreasonable effort due to the inherent uncertainty and difficulty in predicting the timing and amount of certain items, including but not limited to amortization of intangible assets and depreciation, which may be significant and difficult to project with a reasonable degree of accuracy, as the allocation of purchase price to intangible assets and property and equipment has not yet been performed. Because these adjustments are inherently variable and uncertain and depend on various factors that are beyond Quanta's control, we are also unable to predict their probable significance. The variability of these items could have an unpredictable, and potentially significant, impact on our future GAAP financial results.
Cautionary Statements About Forward-Looking Statements and Information
This press release (and any oral statements regarding the subject matter of this press release) 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 statements include, but are not limited to, statements relating to expectations regarding the future financial and operational performance of Quanta or CEI; the projected impact and benefits of CEI on Quanta's operating or financial results, including, among other things, estimated revenues, EBITDA, adjusted EBITDA, margins, cash flow generation and conversion, and earnings per share; expectations regarding Quanta's or CEI's business or financial outlook; expectations regarding Quanta's and CEI's plans, strategies, opportunities and customer relationships; expectations regarding opportunities, technological developments, competitive positioning, future economic and regulatory conditions and other trends in particular markets or industries; the potential strategic benefits and synergies expected from the acquisition of CEI; the business plans or financial condition of Quanta's or CEI's customers; expected realization of remaining performance obligations and backlog; the development of and opportunities with respect to future projects, including renewable and other projects designed to support transition to a reduced-carbon economy and data center projects; Quanta's ability to effectively scale CEI's workforce; potential opportunities that may be indicated by CEI's prior projects performed for customers; trends and growth opportunities in relevant markets, including Quanta's and CEI's ability to obtain future project awards; estimated transaction and integration costs associated with the acquisition of CEI; Quanta's ability to successfully integrate the operations of CEI; and expectations with respect to Quanta's ability to reduce its debt and maintain its current credit rating; as well as other statements reflecting expectations, intentions, assumptions or beliefs about future events and other statements that do not relate strictly to historical or current facts. These forward-looking statements are not guarantees of future performance; rather they involve or rely on a number of risks, uncertainties, and assumptions that are difficult to predict or are beyond our control, and reflect management's beliefs and assumptions based on information available at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements and that any or all of our forward-looking statements may turn out to be inaccurate or incorrect. Forward-looking statements can be affected by inaccurate assumptions and by known or unknown risks and uncertainties including, among others, market, industry, economic, financial or political conditions that are outside of the control of Quanta, including economic, energy, infrastructure and environmental policies and plans that are adopted or proposed by the
Any financial information or projections in this communication 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 and CEI's control. While such information and projections are necessarily speculative, Quanta and CEI believe 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 the 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 communication should not be regarded as an indication that Quanta or CEI, or their respective representatives and advisors, considered or consider the information or projections to be a reliable prediction of future events.
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