pwr-20240630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024.


or
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
						For the transition period from to .


Commission File Number:			001-13831

Quanta Services, Inc.

(Exact name of registrant as specified in its charter)


Delaware			74-2851603
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2727 North Loop West

Houston, Texas 77008

(Address of principal executive offices, including zip code)

(713) 629-7600

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00001 par value

PWR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 29, 2024, the number of outstanding shares of Common Stock of the registrant was 147,329,779.

QUANTA SERVICES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income (Loss)	7
	Condensed Consolidated Statements of Cash Flows	8
	Condensed Consolidated Statements of Equity	9
	Notes to Condensed Consolidated Financial Statements	11
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	46
ITEM 4.	Controls and Procedures	46

	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	48
ITEM 1A.	Risk Factors	48
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
ITEM 3.	Defaults Upon Senior Securities	49
ITEM 4.	Mine Safety Disclosures	49
ITEM 5.	Other Information	50
ITEM 6.	Exhibits	51
Signature		52

Cautionary Statement About Forward-Looking Statements and Information

This Quarterly Report on Form 10-Q (Quarterly Report) of Quanta Services, Inc. (together with its subsidiaries, Quanta, we, us or our) includes forward-looking statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “may,” “will,” “should,” “could,” “expect,” “believe,” “plan,” “intend” and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:

•Projected revenues, net income, earnings per share, margins, cash flows, liquidity, weighted average shares outstanding, capital expenditures, interest rates and tax rates, as well as other projections of operating results and GAAP (as defined herein) and non-GAAP financial results, including EBITDA (as defined herein), adjusted EBITDA (as defined herein) and backlog;

•Expectations regarding our business or financial outlook;

•Expectations regarding opportunities, technological developments, competitive positioning, future economic and regulatory conditions and other trends in particular markets or industries;

•Expectations regarding our plans and strategies, including with respect to our supply chain solutions and expanded or new services offerings;

•The business plans or financial condition of our customers, including with respect to the transition to a reduced-carbon economy;

•The potential benefits from, and future financial and operational performance of, acquired businesses and our investments, including Cupertino (as defined herein);

•The expected value of contracts or intended contracts with customers, as well as the expected timing, scope, services, term or results of any awarded or expected projects;

•Possible recovery of pending or contemplated insurance claims, change orders and claims asserted against customers or third parties, as well as the collectability of receivables;

•The development of and opportunities with respect to future projects, including renewable energy projects and other projects designed to support the transition to a reduced-carbon economy, electrical grid modernization projects, upgrade and hardening projects, larger transmission and pipeline projects and data center projects;

•Expectations regarding the future availability and price of materials and equipment necessary for the performance of our business;

•The expected impact of global and domestic economic or political conditions on our business, financial condition, results of operations, cash flows, liquidity and demand for our services, including inflation, interest rates, recessionary economic conditions and commodity prices and production volumes;

•The expected impact of changes and potential changes in climate and the physical and transition risks associated with climate change and the transition to a reduced-carbon economy;

•Future capital allocation initiatives, including the amount and timing of, and strategies with respect to, any future acquisitions, investments, cash dividends, repurchases of our equity or debt securities or repayments of other outstanding debt;

•The expected impact of existing or potential legislation or regulation;

•Potential opportunities that may be indicated by bidding activity or similar discussions with customers;

•The future demand for, availability of and costs related to labor resources in the industries we serve;

•The expected recognition and realization of our remaining performance obligations or backlog;

•Expectations regarding the outcome of pending or threatened legal proceedings, as well as the collection of amounts awarded in legal proceedings; and

•Expectations with respect to our ability to reduce our debt and maintain our current credit ratings.

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. These statements can be affected by inaccurate assumptions and by known or unknown risks and uncertainties, including the following:

•Market, industry, economic, financial or political conditions that are outside of our control, including economic, energy, infrastructure and environmental policies and plans that are adopted or proposed by the U.S. federal and state governments or other governments in territories or countries in which we operate, inflation, interest rates,

recessionary economic conditions, deterioration of global or specific trade relationships, and geopolitical conflicts and political unrest;

•Quarterly variations in our operating and financial results, liquidity, financial condition, cash flows, capital requirements, and reinvestment opportunities;

•Trends and growth opportunities in relevant markets, including our ability to obtain future project awards;

•Delays, deferrals, reductions in scope or cancellations of anticipated, pending or existing projects as a result of, among other things, supply chain or production disruptions and other logistical challenges, weather, regulatory or permitting issues, right of way acquisition, environmental processes, project performance issues, claimed force majeure events, protests or other political activity, legal challenges, inflationary pressure, reductions or eliminations in governmental funding or customer capital constraints;

•The effect of commodity prices and commodity production volumes, which have been and may continue to be affected by inflationary pressure, on our operations and growth opportunities and on our customers’ capital programs and demand for our services;

•The successful negotiation, execution, performance and completion of anticipated, pending and existing contracts;

•Events arising from operational hazards, including, among others, wildfires and explosions, that can arise due to the nature of the services we provide and certain of our product solutions, as well as the conditions in which we operate, and can be due to failure of infrastructure on which we have performed services and result in significant liabilities that may be exacerbated in certain geographies and locations;

•Unexpected costs, liabilities, fines or penalties that may arise from legal proceedings, indemnity obligations, reimbursement obligations associated with letters of credit or bonds, multiemployer pension plans or other claims or actions asserted against us, including amounts that are not covered by, or are in excess of the coverage under, our third-party insurance;

•Potential unavailability or cancellation of third-party insurance coverage, as well as the exclusion of coverage for certain losses, potential increases in premiums for coverage deemed beneficial to us, or the unavailability of coverage deemed beneficial to us at reasonable and competitive rates (e.g., coverage for wildfire events);

•Damage to our brands or reputation, as well as potential costs, liabilities, fines or penalties, arising as a result of cybersecurity breaches, environmental and occupational health and safety matters, corporate scandal, failure to successfully perform or negative publicity regarding a high-profile project, involvement in a catastrophic event (e.g., fire, explosion) or other negative incidents;

•Disruptions in, or failure to adequately protect, our information technology systems;

•Our dependence on suppliers, subcontractors, equipment manufacturers and other third parties and the impact of, among other things, inflationary pressure and regulatory, supply chain and logistical challenges on these third parties;

•Estimates and assumptions related to our financial results, remaining performance obligations and backlog;

•Our inability to attract, the potential shortage of, and increased costs with respect to skilled employees, as well as our ability to retain and attract key personnel and qualified employees;

•Our dependence on fixed price contracts and the potential that we incur losses with respect to these contracts;

•Cancellation provisions within our contracts and the risk that contracts expire and are not renewed or are replaced on less favorable terms;

•Our inability or failure to comply with the terms of our contracts, which may result in additional costs, unexcused delays, warranty claims, failure to meet performance guarantees, damages or contract terminations;

•Adverse weather conditions, natural disasters and other emergencies, including wildfires, pandemics, hurricanes, tropical storms, floods, debris flows, earthquakes and other geological- and weather-related hazards, as well as the impact of climate change;

•Our ability to generate internal growth;

•Competition in our business, including our ability to effectively compete for new projects and market share, as well as technological advancements and market developments that could reduce demand for our services;

•The failure of existing or potential legislative actions and initiatives to result in increased demand for our services or budgetary or other constraints that may reduce or eliminate tax incentives or government funding for projects, including renewable energy projects, which may result in project delays or cancellations;

•The unavailability of, or increased prices for, materials, equipment and consumables (such as fuel) used in our and our customers’ businesses, including as a result of inflation; supply chain or production disruptions; governmental regulations on sourcing; the imposition of tariffs, duties, taxes or other assessments; and other changes in U.S. trade relationships with foreign countries;

•Loss of or deterioration of relationships with customers that we have long-standing or significant relationships with;

•The potential that our participation in joint ventures or similar structures exposes us to liability or harm to our reputation as a result of acts or omissions by our partners;

•The inability or refusal of our customers or third-party contractors to pay for services, which could result in our inability to collect our outstanding receivables, failure to recover amounts billed to, or avoidance of certain payments received from, customers in bankruptcy or failure to recover on change orders or contract claims;

•Risks associated with operating in international markets and U.S. territories, including instability of governments, significant currency exchange fluctuations, and compliance with unfamiliar legal and labor systems and cultural practices, the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery and anti-corruption laws, and complex U.S. and foreign tax regulations and international treaties;

•Our inability to successfully identify, complete, integrate and realize synergies from acquisitions, including the inability to retain key personnel from acquired businesses;

•The potential adverse impact of acquisitions and investments, including the potential increase in risks already existing in our operations, poor performance or decline in value of acquired businesses or investments and unexpected costs or liabilities that may arise from acquisitions or investments;

•The adverse impact of impairments of goodwill, other intangible assets, receivables, long-lived assets or investments;

•Difficulties managing our business as it expands and becomes more complex;

•The impact of the unionized portion of our workforce on our operations;

•An inability to access sufficient funding to finance desired growth and operations, including our ability to access capital markets on favorable terms, as well as fluctuations in the price and trading volume of our common stock, debt covenant compliance, interest rate fluctuations, a downgrade in our credit ratings and other factors affecting our financing and investing activities;

•Our ability to obtain bonds, letters of credit and other project security;

•Risks related to the implementation of new information technology systems;

•New or changed tax laws, treaties or regulations or the inability to realize deferred tax assets; and

•The other risks and uncertainties described elsewhere herein, including in Item 1A. Risk Factors in Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report), and as may be detailed from time to time in our other public filings with the U.S. Securities and Exchange Commission (SEC).

All of our forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements or that are otherwise included in this report. Although forward-looking statements reflect our good faith beliefs at the time they are made, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. In addition, we do not undertake and expressly disclaim any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report or otherwise.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	518,140	$	1,290,248
Accounts receivable, net	4,430,757		4,410,829
Contract assets	1,227,543		1,413,057
Inventories	235,102		175,658
Prepaid expenses and other current assets	476,011		387,105

Total current assets	6,887,553		7,676,897
Property and equipment, net	2,463,914		2,336,943
Operating lease right-of-use assets	278,995		249,443
Other assets, net	597,629		565,625
Other intangible assets, net	1,386,987		1,362,412
Goodwill	4,314,072		4,045,905

Total assets	$	15,929,150	$	16,237,225
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt	$	549,260	$	535,202
Current portion of operating lease liabilities	84,632		77,995
Accounts payable and accrued expenses	3,198,967		3,061,242
Contract liabilities	1,483,134		1,538,677

Total current liabilities	5,315,993		5,213,116
Long-term debt, net of current maturities	2,973,520		3,663,504
Operating lease liabilities, net of current portion	210,295		186,996
Deferred income taxes	311,940		254,004
Insurance and other non-current liabilities	536,328		636,250

Total liabilities	9,348,076		9,953,870
Commitments and Contingencies
Equity:
Common stock, $0.00001 par value, 600,000,000 shares authorized, 175,208,097 and 173,949,011 shares issued, and 146,444,031 and 145,508,549 shares outstanding	2		2
Additional paid-in capital	3,136,415		3,002,652
Retained earnings	5,137,587		4,858,066
Accumulated other comprehensive loss	(322,743)		(282,945)
Treasury stock, 28,764,066 and 28,440,462 common shares	(1,383,624)		(1,305,534)
Total stockholders’ equity	6,567,637		6,272,241
Non-controlling interests	13,437		11,114
Total equity	6,581,074		6,283,355
Total liabilities and equity	$	15,929,150	$	16,237,225

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share information)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues	$	5,594,387	$	5,048,610	$	10,626,206	$	9,477,436
Cost of services	4,783,056		4,324,511		9,191,381		8,180,142
Gross profit	811,331		724,099		1,434,825		1,297,294
Equity in earnings of integral unconsolidated affiliates	8,586		9,370		20,920		18,990
Selling, general and administrative expenses	(432,356)		(384,171)		(834,696)		(768,723)
Amortization of intangible assets	(79,214)		(70,025)		(156,725)		(142,428)

Change in fair value of contingent consideration liabilities	(1,117)		—		(1,740)		—
Operating income	307,230		279,273		462,584		405,133
Interest and other financing expenses	(45,321)		(48,189)		(86,393)		(89,882)
Interest income	3,557		1,448		11,580		2,964
Other income, net	1,617		3,419		26,499		11,285
Income before income taxes	267,083		235,951		414,270		329,500
Provision for income taxes	75,199		69,367		96,295		65,946


Net income	191,884		166,584		317,975		263,554
Less: Net income attributable to non-controlling interests	3,725		685		11,456		2,609
Net income attributable to common stock	$	188,159	$	165,899	$	306,519	$	260,945

Earnings per share attributable to common stock:
Basic	$	1.28	$	1.14	$	2.10	$	1.80
Diluted	$	1.26	$	1.12	$	2.05	$	1.75

Shares used in computing earnings per share:
Weighted average basic shares outstanding	146,580		145,422		146,258		144,947
Weighted average diluted shares outstanding	149,788		148,773		149,587		148,717

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	191,884	$	166,584	$	317,975	$	263,554
Other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustment (loss) income	(9,058)		23,917		(39,798)		24,226
Other comprehensive income	—		—		—		791
Other comprehensive (loss) income, net of taxes	(9,058)		23,917		(39,798)		25,017
Comprehensive income	182,826		190,501		278,177		288,571
Less: Comprehensive income attributable to non-controlling interests	3,725		685		11,456		2,609
Comprehensive income attributable to common stock	$	179,101	$	189,816	$	266,721	$	285,962

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 30,
		2024		2023
Cash Flows from Operating Activities:
Net income		$	317,975	$	263,554
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation		172,546		158,258
Amortization of intangible assets		156,725		142,428

Distributions, net of equity in earnings of unconsolidated affiliates		8,355		22,830

Deferred income tax (benefit) loss		(5,366)		3,581
Non-cash stock-based compensation		72,581		62,058
Other non-cash adjustments, net		(6,881)		(6,147)
Changes in assets and liabilities, net of non-cash transactions:
Accounts and notes receivable		(60,736)		(363,481)
Contract assets		160,845		(262,921)
Prepaid expenses and other current assets		(53,498)		(135,849)
Accounts payable and accrued expenses and other non-current liabilities		(57,189)		300,652
Contract liabilities		(52,281)		(13,625)
Other assets and liabilities, net		(23,809)		(5,516)
Net cash provided by operating activities		629,267		165,822
Cash Flows from Investing Activities:
Capital expenditures		(244,595)		(185,597)
Proceeds from sale of and insurance settlements related to property and equipment		55,176		34,963

Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired		(450,798)		(452,252)
Proceeds from the sale or settlement of certain investments		29,239		42,277
Other, net		21,718		(6,758)
Net cash used in investing activities		(589,260)		(567,367)
Cash Flows from Financing Activities:
Borrowings under credit facility and commercial paper program		6,914,679		9,885,534
Payments under credit facility and commercial paper program		(7,621,682)		(9,393,812)
Payments related to tax withholding for share-based compensation		(77,797)		(110,764)
Payments of dividends		(27,006)		(24,499)

Other, net		5,508		(20,165)
Net cash (used in) provided by financing activities		(806,298)		336,294






Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(7,003)		349

Net decrease in cash, cash equivalents and restricted cash		(773,294)		(64,902)
Cash, cash equivalents and restricted cash, beginning of period		1,295,041		433,214
Cash, cash equivalents and restricted cash, end of period		$	521,747	$	368,312

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

(Unaudited)


								Accumulated
				Additional				Other				Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		Treasury		Stockholders’		Controlling		Total
	Shares	Amount		Capital		Earnings		Income (Loss)		Stock		Equity		Interests		Equity
Balance, December 31, 2023	145,508,549	$	2	$	3,002,652	$	4,858,066	$	(282,945)	$	(1,305,534)	$	6,272,241	$	11,114	$	6,283,355
Other comprehensive loss	—	—		—		—		(30,740)		—		(30,740)		—		(30,740)
Acquisitions	250,539	—		51,768		—		—		—		51,768		—		51,768
Stock-based compensation activity	625,122	—		35,822		—		—		(77,351)		(41,529)		—		(41,529)

Dividends declared ($0.09 per share)	—	—		—		(13,477)		—		—		(13,477)		—		(13,477)
Distributions to non-controlling interests	—	—		—		—		—		—		—		(8,199)		(8,199)

Net income	—	—		—		118,360		—		—		118,360		7,731		126,091
Balance, March 31, 2024	146,384,210	$	2	$	3,090,242	$	4,962,949	$	(313,685)	$	(1,382,885)	$	6,356,623	$	10,646	$	6,367,269
Other comprehensive loss	—	—		—		—		(9,058)		—		(9,058)		—		(9,058)
Acquisitions	35,886	—		9,054		—		—		—		9,054		—		9,054
Stock-based compensation activity	23,935	—		37,119		—		—		(739)		36,380		—		36,380

Dividends declared ($0.09 per share)	—	—		—		(13,521)		—		—		(13,521)		—		(13,521)
Distributions to non-controlling interests	—	—		—		—		—		—		—		(934)		(934)

Net income	—	—		—		188,159		—		—		188,159		3,725		191,884
Balance, June 30, 2024	146,444,031	$	2	$	3,136,415	$	5,137,587	$	(322,743)	$	(1,383,624)	$	6,567,637	$	13,437	$	6,581,074

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

(Unaudited)


								Accumulated
				Additional				Other				Total		Non-
	Common Stock			Paid-In		Retained		Comprehensive		Treasury		Stockholders’		Controlling		Total
	Shares	Amount		Capital		Earnings		Income (Loss)		Stock		Equity		Interests		Equity
Balance, December 31, 2022	142,930,598	$	2	$	2,718,988	$	4,163,212	$	(310,677)	$	(1,188,061)	$	5,383,464	$	15,355	$	5,398,819
Other comprehensive income	—	—		—		—		1,100		—		1,100		—		1,100
Acquisitions	1,018,946	—		123,503		—		—		—		123,503		—		123,503
Stock-based compensation activity	1,210,615	—		26,650		—		—		(104,247)		(77,597)		—		(77,597)

Dividends declared ($0.08 per share)	—	—		—		(12,100)		—		—		(12,100)		—		(12,100)
Distributions to non-controlling interests	—	—		—		—		—		—		—		(8,741)		(8,741)
Net income	—	—		—		95,046		—		—		95,046		1,924		96,970
Balance, March 31, 2023	145,160,159	$	2	$	2,869,141	$	4,246,158	$	(309,577)	$	(1,292,308)	$	5,513,416	$	8,538	$	5,521,954
Other comprehensive income	—	—		—		—		23,917		—		23,917		—		23,917
Stock-based compensation activity	36,299	—		34,487		—		—		(4,893)		29,594		—		29,594

Dividends declared ($0.08 per share)	—	—		—		(11,893)		—		—		(11,893)		—		(11,893)
Distributions to non-controlling interests	—	—		—		—		—		—		—		(1,177)		(1,177)

Net income	—	—		—		165,899		—		—		165,899		685		166,584
Balance, June 30, 2023	145,196,458	$	2	$	2,903,628	$	4,400,164	$	(285,660)	$	(1,297,201)	$	5,720,933	$	8,046	$	5,728,979

The accompanying notes are an integral part of these condensed consolidated financial statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES

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TABLE OF CONTENTS


		Page
1.	Business and Organization, Basis of Presentation and Accounting Policies	12
2.	New Accounting Pronouncements	12
3.	Revenue Recognition and Related Balance Sheet Accounts	13
4.	Segment Information	16
5.	Acquisitions	18
6.	Investments in Affiliates and Other Entities	21
7.	Per Share Information	22
8.	Debt Obligations	23
9.	Leases	25
10.	Income Taxes	26
11.	Equity	26
12.	Stock-Based Compensation	27
13.	Employee Benefit Plans	28
14.	Commitments and Contingencies	28
15.	Detail of Certain Accounts	32
16.	Supplemental Cash Flow Information	33

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1. BUSINESS AND ORGANIZATION, BASIS OF PRESENTATION AND ACCOUNTING POLICIES:

Quanta Services, Inc. (together with its subsidiaries, Quanta) is a leading provider of comprehensive infrastructure solutions for the electric and gas utility, renewable energy, technology. communications, pipeline and energy industries in the United States, Canada, Australia and select other international markets. We provide engineering, procurement, construction, upgrade and repair and maintenance services for infrastructure within each of these industries, including electric power transmission and distribution networks; substation facilities; wind and solar generation and transmission and battery storage facilities; communications and cable multi-system operator networks; gas utility systems; pipeline transmission systems and facilities; and downstream industrial facilities.

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), have been condensed or omitted pursuant to those rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Quanta’s Annual Report on Form 10-K for the year ended December 31, 2023. Quanta believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income and cash flows with respect to the interim condensed consolidated financial statements have been included.

The results of Quanta have historically been subject to seasonal fluctuations. The results of operations, comprehensive income and operating cash flows for the interim periods are not necessarily indicative of the results for the entire fiscal year.

2. NEW ACCOUNTING PRONOUNCEMENTS:

Recently Adopted Guidance

In June 2022, the FASB issued an update that clarifies the guidance in FASB ASC 820 (Fair Value Measurement) for equity securities subject to contractual sale restrictions. The update prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. This update is effective for interim and annual periods beginning after December 15, 2023. This guidance will increase the fair market value of the consideration paid in equity securities in a business combination, and therefore it may increase the amount allocated to goodwill. Quanta adopted this update effective January 1, 2024, and it did not have a material impact on Quanta’s consolidated financial statements.

New Accounting Pronouncements and Disclosure Rules Not Yet Adopted

In March 2024, the U.S. Securities and Exchange Commission (SEC) issued its final climate disclosure rule (the Final Rule) that requires public entities to disclose certain material climate-related information in annual reports and registration statements, including disclosure of material impacts as a result of severe weather events and other natural conditions and material Scope 1 and Scope 2 greenhouse gas emissions. The Final Rule requires disclosures to be made prospectively, with information for prior periods required only to the extent the information was disclosed in a prior SEC filing. Certain requirements of the Final Rule are effective for fiscal years beginning on or after January 1, 2025, with phase-in periods for additional requirements. However, on April 4, 2024, the SEC issued a stay pending judicial review of the Final Rule in U.S. federal court. Quanta is currently assessing the effect of the Final Rule.

In December 2023, the FASB issued an update that expands disclosures for tax rate reconciliation tables, primarily by requiring disaggregation of income taxes paid by jurisdiction, as well as greater disaggregation within the rate reconciliation. This update is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025. Early adoption and retrospective application are permitted. Quanta is currently assessing the effect of this update.

In November 2023, the FASB issued an update that, among other things, requires public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, provide an amount for other segment items by reportable segment and provide all segment disclosures required on an annual basis in interim periods. Additionally, the update requires entities to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This update is effective for fiscal years beginning after

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December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and retrospective application is required. Quanta is currently assessing the effect of this update.

3. REVENUE RECOGNITION AND RELATED BALANCE SHEET ACCOUNTS:

Contracts

Quanta’s services are generally provided pursuant to master service agreements (MSAs), repair and maintenance contracts and fixed price and non-fixed price construction contracts. These contracts are classified into three categories: unit-price contracts, cost-plus contracts and fixed price contracts.

The following tables present Quanta’s revenue disaggregated by contract type and by geographic location, as determined by the job location (in thousands):


	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
By contract type:
Fixed price contracts	$	3,092,460	55.3	%	$	2,296,888	45.5	%	$	5,764,775	54.3	%	$	4,231,776	44.7	%
Unit-price contracts	1,633,701		29.2		1,697,629		33.6		3,061,208		28.8		3,195,023		33.7
Cost-plus contracts	868,226		15.5		1,054,093		20.9		1,800,223		16.9		2,050,637		21.6
Total revenues	$	5,594,387	100.0	%	$	5,048,610	100.0	%	$	10,626,206	100.0	%	$	9,477,436	100.0	%


	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
By primary geographic location:
United States	$	5,132,607	91.8	%	$	4,282,902	84.8	%	$	9,702,323	91.3	%	$	7,949,267	83.9	%
Canada	220,085		3.9		523,258		10.4		449,512		4.2		1,065,618		11.2
Australia	161,251		2.9		156,725		3.1		307,280		2.9		311,402		3.3
Others	80,444		1.4		85,725		1.7		167,091		1.6		151,149		1.6
Total revenues	$	5,594,387	100.0	%	$	5,048,610	100.0	%	$	10,626,206	100.0	%	$	9,477,436	100.0	%

Under fixed-price contracts, as well as unit-price contracts with more than an insignificant amount of partially completed units, revenue is recognized as performance obligations are satisfied over time, with the percentage of completion generally measured as the percentage of costs incurred to total estimated costs for such performance obligation. Approximately 58.2% and 54.0% of Quanta’s revenues recognized during the three months ended June 30, 2024 and 2023 were associated with this revenue recognition method, and 58.0% and 52.4% of Quanta’s revenues recognized during the six months ended June 30, 2024 and 2023 were associated with this revenue recognition method.

Performance Obligations

As of June 30, 2024 and December 31, 2023, the aggregate transaction price allocated to unsatisfied or partially satisfied performance obligations was approximately $14.37 billion and $13.89 billion, with 65.8% and 66.9% expected to be recognized in the subsequent twelve months. These amounts represent management’s estimates of the consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work had not yet begun as of such dates. For purposes of calculating remaining performance obligations, Quanta includes all estimated revenues attributable to consolidated joint ventures and variable interest entities, revenues from funded and unfunded portions of government contracts to the extent they are reasonably expected to be realized, and revenues from change orders and claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under MSAs and expected revenues under certain non-fixed price contracts.

Contract Estimates and Changes in Estimates

Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety of factors, including unforeseen or changed circumstances not included in Quanta’s cost estimates or covered by its contracts.

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Some of the factors that can result in positive changes in estimates on projects include successful execution through project risks, reduction of estimated project costs or increases of estimated revenues. Some of the factors that can result in negative changes in estimates include concealed or unknown site conditions; changes to or disputes with customers regarding the scope of services; changes in estimates related to the length of time to complete a performance obligation; changes or delays with respect to permitting and regulatory requirements and materials; changes in the cost of equipment, commodities, materials or skilled labor; unanticipated costs or claims due to delays or failure to perform by customers or third parties; customer failure to provide, or supply chain and logistical challenges related to, required materials or equipment; errors in engineering, specifications or designs; project modifications; adverse weather conditions, natural disasters, and other emergencies; and performance and quality issues causing delay (including payment of liquidated damages) or requiring rework or replacement. Any changes in estimates could result in changes to profitability or losses associated with the related performance obligations.

Additionally, changes in cost estimates on certain contracts may result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims. Quanta recognizes amounts associated with change orders and claims as revenue if it is probable that the contract price will be adjusted and the amount of any such adjustment can be reasonably estimated.

As of June 30, 2024 and December 31, 2023, Quanta had recognized revenues of $662.3 million and $778.9 million related to unapproved change orders and claims included as contract price adjustments primarily in “Contract assets” in the accompanying consolidated balance sheets. These change orders and claims were in the process of being negotiated in the normal course of business and represent management’s estimates of additional contract revenues that have been earned and are probable of collection.

The largest component of the revenues recognized related to unapproved change orders and claims as of June 30, 2024 and December 31, 2023 is associated with a large renewable transmission project in Canada. During 2021 and 2022, decreased productivity and additional costs arose from delays, administrative requirements and labor issues due to the COVID-19 pandemic, including incremental governmental requirements and worksite restrictions. During 2023, additional costs arose from residual impacts associated with the aforementioned items, as well as work resequencing and acceleration, access delays, and logistical challenges and other issues outside of Quanta’s control. As of March 31, 2024, the project was substantially completed.

Changes in estimates can result in the recognition of revenue in a current period for performance obligations that were satisfied or partially satisfied in prior periods or the reversal of previously recognized revenue if the currently estimated revenue is less than the previous estimate. The impact of a change in contract estimate is measured as the difference between the revenue or gross profit recognized in the prior period as compared to the revenue or gross profit which would have been recognized had the revised estimate been used as the basis of recognition in the prior period. Changes in estimates can also result in contract losses, which are recognized in full when they are determined to be probable and can be reasonably estimated.

Revenues were positively impacted by 0.4% and 0.7% during the three months ended June 30, 2024 and 2023 as a result of changes in estimates associated with performance obligations on fixed price contracts partially satisfied prior to March 31, 2024 and 2023. Revenues were positively impacted by 0.2% and 0.3% during the six months ended June 30, 2024 and 2023 as a result of changes in estimates associated with performance obligations on fixed price contracts partially satisfied prior to December 31, 2023 and 2022.

Operating results for the three months ended June 30, 2024 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of March 31, 2024.

Operating results for the six months ended June 30, 2024 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of December 31, 2023. However, gross profit was negatively impacted by $24.6 million as a result of increased costs related to a large solar facility project in the United States, and by $22.0 million as a result of decreased productivity associated with a large solar facility project in the United States.

Operating results for the three months ended June 30, 2023 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of March 31, 2023. There were no material changes in estimates on any individual project.

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Operating results for the six months ended June 30, 2023 were impacted by less than 5.0% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of December 31, 2022. However, Quanta’s large renewable transmission project in Canada was negatively impacted by $20.7 million due to changes to estimated project costs during this period, as mentioned above.

Contract Assets and Liabilities

Contract assets and liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Contract assets	$	1,227,543	$	1,413,057
Contract liabilities	$	1,483,134	$	1,538,677

Contract assets and liabilities fluctuate period to period based on various factors, including, among others, changes in the number and size of projects in progress at period end; variability in billing and payment terms, such as up-front or advance billings, interim or milestone billings, or deferred billings; and recognized unapproved change orders and contract claims. The decrease in contract assets from December 31, 2023 to June 30, 2024 was primarily due to the completion of certain large projects and the corresponding billing of amounts previously recorded as contract assets, while the decrease in contract liabilities was primarily due to higher production on a large renewable transmission project and the associated recognition of revenue on amounts that were previously recorded as contract liabilities.

During the six months ended June 30, 2024 and 2023, Quanta recognized revenue of approximately $1.24 billion and $897.8 million related to contract liabilities outstanding as of the end of each respective prior year.

Accounts Receivable, Allowance for Credit Losses and Concentrations of Credit Risk

Quanta determines its allowance for credit losses based on an estimate of expected credit losses for financial instruments, primarily accounts receivable and contract assets. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Expected credit losses are estimated by evaluating trends with respect to Quanta’s historical write-off experience and applying historical loss ratios to pools of financial assets with similar risk characteristics. Quanta has determined that it has two risk pools for the purpose of calculating its historical credit loss experience.

Quanta’s historical loss ratio and its determination of risk pools, which are used to calculate expected credit losses, may be adjusted for changes in customer credit concentrations within its portfolio of financial assets, changes in customers’ ability to pay, and other considerations, such as economic and market changes, changes to regulatory or technological environments affecting customers and the consistency between current and forecasted economic conditions and the historical economic conditions used to derive historical loss ratios. At the end of each quarter, management reassesses these and other relevant factors, including the impact of uncertainty and challenges in the overall economy and in Quanta’s industries and markets, (e.g., inflationary pressure, supply chain and other logistical challenges and increased interest rates).

Additional allowance for credit losses is established for financial asset balances with specific customers where collectability has been determined to be improbable based on customer specific facts and circumstances. Quanta considers accounts receivable delinquent after 30 days but, absent certain specific considerations, generally does not consider such amounts delinquent in its credit loss analysis unless the accounts receivable are at least 120 days outstanding. In addition, management monitors the credit quality of its receivables by, among other things, obtaining credit ratings for significant customers, assessing economic and market conditions and evaluating material changes to a customer’s business, cash flows and financial condition. Should anticipated recoveries relating to receivables fail to materialize, including anticipated recoveries relating to bankruptcies or other workout situations, Quanta could experience reduced cash flows and losses in excess of current allowances provided.

Accounts receivable are written-off against the allowance for credit losses if they are deemed uncollectible.

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Activity in Quanta’s allowance for credit losses consisted of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Balance at beginning of period	$	13,955	$	16,530	$	13,962	$	15,644
Increase in provision for credit losses	191		2,889		462		5,247
Write-offs charged against the allowance net of recoveries of amounts previously written off	(417)		(5,511)		(695)		(6,983)
Balance at end of period	$	13,729	$	13,908	$	13,729	$	13,908

The above activity relates to the largest risk pool Quanta utilizes for assessing credit loss. The second risk pool represents approximately 15% of Quanta’s consolidated financial instruments as of June 30, 2024 and did not have any allowance for credit loss or experience any credit loss during the periods presented. Quanta’s customers generally have high credit ratings. In addition, the customers in the second risk pool typically pre-approve invoices and often receive project financing.

Provision for credit losses is included in “Selling, general and administrative expenses” in the consolidated statements of operations.

Quanta is subject to concentrations of credit risk related primarily to its receivable position for services Quanta has performed for customers. Quanta grants credit under normal payment terms, generally without collateral. As of December 31, 2023, one customer within the Renewable Energy Infrastructure Solutions segment associated with the large renewable transmission project in Canada described above represented 10% of Quanta’s consolidated receivable position, which includes amounts related to contracts assets. No customer represented 10% or more of Quanta’s consolidated revenues for the three or six months ended June 30, 2024 or 2023, and no customer represented 10% or more of Quanta’s consolidated receivable position as of June 30, 2024.

Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on Quanta’s experience in recent years, the majority of these retainage balances are expected to be collected within one year. Retainage balances with expected settlement dates within one year of June 30, 2024 and December 31, 2023 were $646.0 million and $610.0 million, which are included in “Accounts receivable.” Retainage balances with expected settlement dates beyond one year were $103.0 million and $78.7 million as of June 30, 2024 and December 31, 2023 and are included in “Other assets, net.”

Quanta recognizes unbilled receivables for non-fixed price contracts within “Accounts receivable” in certain circumstances, such as when revenues have been earned and recorded but the amount cannot be billed under the terms of the contract until a later date or when amounts arise from routine lags in billing. These balances do not include revenues recognized for work performed under fixed-price contracts and unit-price contracts with more than an insignificant amount of partially completed units, as these amounts are recorded as “Contract assets.” As of June 30, 2024 and December 31, 2023, unbilled receivables included in “Accounts receivable” were $827.1 million and $743.6 million. Quanta also recognizes unearned revenues for non-fixed price contracts when cash is received prior to recognizing revenues for the related performance obligation. Unearned revenues, which are included in “Accounts payable and accrued expenses,” were $70.5 million and $58.6 million as of June 30, 2024 and December 31, 2023.

4. SEGMENT INFORMATION:

Quanta reports its results under three reportable segments described below:

•Electric Power Infrastructure Solutions (Electric Power). Quanta’s Electric Power segment provides comprehensive infrastructure solutions to customers in the electric power, technology and communications markets.

•Renewable Energy Infrastructure Solutions (Renewable Energy). Quanta’s Renewable Energy segment provides comprehensive infrastructure solutions to customers that are involved in the renewable energy industry.

•Underground Utility and Infrastructure Solutions (Underground and Infrastructure). Quanta’s Underground and Infrastructure segment provides comprehensive infrastructure solutions to customers involved in the transportation, distribution, storage, development and processing of natural gas, oil and other products.

Corporate and Non-allocated Costs include corporate facility costs; non-allocated corporate salaries, benefits and

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incentive compensation; acquisition and integration costs; non-cash stock-based compensation; amortization related to intangible assets; asset impairment related to goodwill and intangible assets; and change in fair value of contingent consideration liabilities.

Quanta’s segment results are derived from the types of services provided across its operating companies in each of its end user markets. Quanta’s entrepreneurial business model allows multiple operating companies to serve the same or similar customers and to provide a range of services across end user markets. Reportable segment information, including revenues and operating income by type of work, is gathered from each operating company. Classification of operating company revenues by type of work for segment reporting purposes can require judgment on the part of management.

In addition, integrated operations and common administrative support for Quanta’s operating companies require that allocations be made to determine segment profitability, including allocations of certain corporate shared and indirect operating costs as well as general and administrative costs.

The following table sets forth segment revenues and segment operating income (loss) for the three and six months ended June 30, 2024 and 2023. Operating margin is calculated by dividing operating income (loss) by revenues. The following table shows dollars in thousands:


	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Revenues:
Electric Power	$	2,452,488	43.8	%	$	2,415,254	47.9	%	$	4,779,448	44.9	%	$	4,751,291	50.1	%
Renewable Energy	2,034,392		36.4		1,389,368		27.5		3,618,556		34.1		2,397,668		25.3
Underground and Infrastructure	1,107,507		19.8		1,243,988		24.6		2,228,202		21.0		2,328,477		24.6
Consolidated revenues	$	5,594,387	100.0	%	$	5,048,610	100.0	%	$	10,626,206	100.0	%	$	9,477,436	100.0	%
Operating income (loss):
Electric Power (1)	$	263,860	10.8	%	$	244,017	10.1	%	$	491,885	10.3	%	$	459,166	9.7	%
Renewable Energy	162,721		8.0	%	110,487		8.0	%	237,567		6.6	%	146,143		6.1	%
Underground and Infrastructure	81,593		7.4	%	107,207		8.6	%	128,481		5.8	%	168,780		7.2	%
Corporate and Non-Allocated Costs (2)	(200,944)		(3.6)	%	(182,438)		(3.6)	%	(395,349)		(3.7)	%	(368,956)		(3.9)	%
Consolidated operating income	$	307,230	5.5	%	$	279,273	5.5	%	$	462,584	4.4	%	$	405,133	4.3	%

(1) Includes equity in earnings of integral unconsolidated affiliates of $8.6 million and $9.4 million for the three months ended June 30, 2024 and 2023 and $20.9 million and $19.0 million for the six months ended June 30, 2024 and 2023, primarily related to Quanta’s equity interest in LUMA Energy, LLC (LUMA).

(2) Includes amortization expense of $79.2 million and $70.0 million and non-cash stock-based compensation of $37.3 million and $34.6 million for the three months ended June 30, 2024 and 2023. Includes amortization expense of $156.7 million and $142.4 million and non-cash stock-based compensation of $72.6 million and $62.1 million for the six months ended June 30, 2024 and 2023.

Depreciation Expense

Separate measures of Quanta’s assets and cash flows by reportable segment, including capital expenditures, are not produced or utilized by management to evaluate segment performance. Certain of Quanta’s fixed assets are used on an

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interchangeable basis across its reportable segments. The following table sets forth depreciation expense by segment for the three and six months ended June 30, 2024 and 2023. The table shows dollars in thousands:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Depreciation:
Electric Power	$	40,208	$	41,357	$	80,655	$	83,442
Renewable Energy	19,884		10,681		37,679		21,539
Underground and Infrastructure	17,744		19,135		42,730		39,635
Corporate and Non-Allocated Costs	5,815		8,703		11,482		13,642
Consolidated depreciation	$	83,651	$	79,876	$	172,546	$	158,258

5. ACQUISITIONS:

The results of operations of acquired businesses have been included in Quanta’s consolidated financial statements since their respective acquisition dates.

On July 17, 2024, Quanta completed the acquisition of Cupertino Electric, Inc. (Cupertino), which provides electrical infrastructure solutions, including engineering, procurement, project management, construction and modularization services, to the technology, renewable energy and infrastructure and commercial industries. Cupertino is located in the United States, and its results will be included in the Electric Power and Renewable Energy segments. The consideration, excluding cash acquired and subject to certain adjustments, was approximately $1.5 billion, which included cash and shares of Quanta common stock (valued at $216.3 million as of the acquisition date). Additionally, the former equity holders and award holders of Cupertino are eligible for a potential contingent consideration payment of up to $200.0 million to the extent certain financial performance targets are achieved by Cupertino during a three-year post-acquisition period beginning in January 2025. The final amount of consideration for the acquisition remains subject to certain post-closing adjustments, including with respect to net working capital (inclusive of cash) and certain assumed liabilities. Additionally, Quanta is in the process of performing procedures to determine the consideration and fair value of assets acquired and liabilities assumed related to the acquisition of Cupertino, including the fair value assessment of contingent consideration, and will include the preliminary purchase price allocation in its Quarterly Report on Form 10-Q for the period ending September 30, 2024.

During the six months ended June 30, 2024, Quanta acquired five businesses located in the United States, including: a business that provides specialty environmental solutions to industrial and petrochemical companies (primarily included in the Underground and Infrastructure segment); a business that specializes in testing, manufacturing and distributing safety equipment and supplies (primarily included in the Electric Power and Renewable Energy segments); a business that specializes in electrical infrastructure services for substations, data centers and governmental entities (primarily included in the Electric Power segment), a business that manufactures transmission and distribution equipment for the electric utility industry (primarily included in the Electric Power and Renewable Energy segments) and a business that provides services and equipment related to aerial telecommunications infrastructure and networks (primarily included in the Electric Power segment). The consideration for these businesses acquired during the six months ended June 30, 2024 consisted of approximately $463.9 million paid or payable in cash on the acquisition dates and 286,425 shares of Quanta common stock, which had a fair value of $60.8 million as of the acquisition dates. The final amount of consideration for these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital.

During the year ended December 31, 2023, Quanta acquired five businesses located in the United States, including: a business that provides services related to high-voltage transmission lines, overhead and underground distribution, emergency restoration and industrial and commercial wiring and lighting (primarily included in the Electric Power segment); a business that procures parts, assembles kits for sale, manages logistics and installs solar tracking equipment for utility and development customers (primarily included in the Renewable Energy segment); a business that provides concrete construction services (primarily included in the Electric Power and Renewable Energy segments); a business specializing in power studies, maintenance testing and commissioning primarily for utility and commercial customers (included in the Electric Power segment) and a business that manufactures power transformers for the electric utility, renewable energy, municipal power and industrial markets (included in the Electric Power and Renewable Energy segments). The consideration for these transactions

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consisted of approximately $777.3 million paid or payable in cash (subject to certain adjustments) and 1,238,576 shares of Quanta common stock, which had a fair value of $158.9 million as of the dates of the acquisitions.

Additionally, the former owners of certain acquired businesses are eligible to receive potential payments of contingent consideration to the extent the acquired businesses achieve certain financial performance targets over specified post-acquisition periods.

Purchase Price Allocation

Quanta is finalizing its purchase price allocations related to certain businesses acquired subsequent to June 30, 2023, and further adjustments to the purchase price allocations may occur, with possible updates primarily related to intangible asset values, property and equipment values, certain contingent liabilities, tax estimates, and the finalization of closing working capital adjustments. The aggregate consideration paid or payable for businesses acquired between June 30, 2023 and June 30, 2024 was allocated to acquired assets and assumed liabilities, which resulted in an allocation of $183.0 million to net tangible assets, $265.5 million to identifiable intangible assets and $434.6 million to goodwill.

The following table summarizes the estimated fair value of total consideration transferred or estimated to be transferred and the fair value of assets acquired and liabilities assumed as of their respective acquisition dates as of June 30, 2024 for acquisitions completed in the six months ended June 30, 2024 (in thousands):



	June 30, 2024
Consideration:
Cash paid or payable	$	463,884
Value of Quanta common stock issued	60,821
Contingent consideration	15,463
Fair value of total consideration transferred or estimated to be transferred	$	540,168

Cash and cash equivalents	$	9,176
Accounts receivable	57,954
Contract assets	162
Inventories	38,731
Prepaid expenses and other current assets	12,499
Property and equipment	64,914
Operating lease right-of-use assets	24,935
Other assets	573
Identifiable intangible assets	179,977
Current maturities of long-term debt	(4,431)
Current portion of operating lease liabilities	(4,796)
Accounts payable and accrued liabilities	(61,140)
Contract liabilities	(390)
Long-term debt, net of current maturities	(4,436)
Operating lease liabilities, net of current portion	(20,140)
Deferred income taxes	(48,869)


Total identifiable net assets	244,719
Goodwill	295,449
Fair value of net assets acquired	$	540,168

As of June 30, 2024, approximately $15.2 million of goodwill is expected to be deductible for income tax purposes related to acquisitions completed in the six months ended June 30, 2024.

QUANTA SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes the estimated fair values of identifiable intangible assets for the acquisitions completed in the six months ended June 30, 2024 as of the acquisition dates and the related weighted average amortization periods by type (in thousands, except for weighted average amortization periods, which are in years).


	Six Months Ended
	June 30, 2024
	Estimated Fair Value		Weighted Average Amortization Period in Years
Customer relationships	$	152,256	7.2
Backlog	4,995		1.5
Trade names	18,066		15.0
Non-compete agreements	2,384		5.0
Patented rights, developed technology, process certifications and other	2,276		15.0
Total intangible assets subject to amortization	$	179,977	7.9

The significant estimates used by management in determining the fair values of customer relationship intangible assets include future revenues, margins, discount rates and customer attrition rates. The following table includes the discount rates and customer attrition rates used to determine the fair value of customer relationship intangible assets for businesses acquired during the six months ended June 30, 2024 as of the respective acquisition dates:

Six Months Ended

June 30, 2024

Range

Weighted Average

Discount rates

15% to 24%

16%

Customer attrition rates

10% to 23%

13%

Contingent Consideration

As described above, certain business acquisitions have contingent consideration liabilities associated with the transactions. The aggregate fair value of outstanding contingent consideration liabilities for acquisitions completed prior to June 30, 2024 and their classification in the accompanying consolidated balance sheets is as follows (in thousands):


	June 30, 2024		December 31, 2023
Accounts payable and accrued expenses	$	152,630	$	—
Insurance and other non-current liabilities	16,618		157,073
Total contingent consideration liabilities	$	169,248	$	157,073

Quanta’s aggregate contingent consideration liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, accretion in present value, changes in estimated fair value, the performance of acquired businesses in post-acquisition periods, and in certain cases, management discretion. These changes are reflected in “Change in fair value of contingent consideration liabilities” in the accompanying consolidated statements of operations.

The fair value determinations for contingent consideration liabilities incorporate significant inputs not observable in the market, including revenue forecasts, operating margins, discount rates and the probability of acquired businesses achieving certain performance targets during designated post-acquisition periods. Accordingly, the level of inputs used for these fair value measurements is Level 3.

All of Quanta’s outstanding contingent consideration liabilities are subject to a maximum payment amount, and the aggregate maximum payment amount of these liabilities for acquisitions completed prior to June 30, 2024 totaled $365.6 million as of June 30, 2024. During the six months ended June 30, 2023, Quanta settled certain contingent consideration liabilities with cash payments of $5.0 million.

QUANTA SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Pro Forma Results of Operations

The following unaudited supplemental pro forma results of operations for Quanta, which incorporate the acquisitions completed in the six months ended June 30, 2024 and the year ended December 31, 2023, have been provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future (in thousands).


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues	$	5,599,509	$	5,175,310	$	10,645,621	$	9,730,835
Net income attributable to common stock	$	187,445	$	158,580	$	303,259	$	244,682

The pro forma combined results of operations for the three and six months ended June 30, 2024 and 2023 were prepared by adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2024 as if such acquisitions had occurred January 1, 2023. The pro forma combined results of operations for the three and six months ended June 30, 2023 were prepared by further adjusting the historical results of Quanta to include the historical results of the business acquired in 2023 as if such acquisition had occurred January 1, 2022. These pro forma combined historical results were adjusted for the following: a reduction of interest and other financing expenses as a result of the repayment of outstanding indebtedness of the acquired businesses; an increase in interest and other financing expenses as a result of the cash consideration paid; an increase in amortization expense due to the intangible assets recorded; elimination of inter-company sales; and changes in depreciation expense to adjust acquired property and equipment to the acquisition date fair value and to conform with Quanta’s accounting policies. The pro forma combined results of operations do not include any adjustments to eliminate the impact of acquisition-related costs incurred by Quanta or any cost savings or other synergies that resulted or may result from the acquisitions.

Impact on Consolidated Results of Operations Related to Acquisitions

Included in Quanta’s condensed consolidated results of operations for the three months ended June 30, 2024 were revenues of $76.6 million and a loss before income taxes of $4.7 million, which included $7.0 million of amortization expense and $4.3 million of acquisition-related costs, related to the acquisitions completed in 2024. Included in Quanta’s condensed consolidated results of operations for the six months ended June 30, 2024 were revenues of $144.3 million and a loss before income taxes of $13.8 million, which includes $11.8 million of amortization expense and $10.2 million of acquisition-related costs, related to the acquisitions completed in 2024. Included in Quanta’s condensed consolidated results of operations for the three months ended June 30, 2023 were revenues of $143.1 million and income before income taxes of $12.9 million, which included $6.4 million of amortization expense and no acquisition-related costs, related to the acquisitions completed in 2023. Included in Quanta’s condensed consolidated results of operations for the six months ended June 30, 2023 were revenues of $236.6 million and a loss before income taxes of $3.2 million, which includes $15.0 million of amortization expense and $17.8 million of acquisition-related costs, related to the acquisitions completed in 2023.

6. INVESTMENTS IN AFFILIATES AND OTHER ENTITIES:

Equity Investments

The following table presents Quanta’s equity investments by type (in thousands):


	June 30, 2024		December 31, 2023
Equity method investments - integral unconsolidated affiliates	$	94,008	$	96,124
Equity method investments - non-integral unconsolidated affiliates	8,956		28,105
Non-marketable equity securities	58,634		53,868
Total equity investments	$	161,598	$	178,097

Equity Method Investments

During the six months ended June 30, 2024, Quanta sold a non-integral equity method investment and recognized a $12.6 million gain, $5.0 million of which was attributable to non-controlling interests. Also during the six months ended June 30, 2024, Quanta received $35.4 million in cash related to the sale of this investment, $5.0 million of which was

QUANTA SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

distributed to non-controlling interests.

During the three months ended December 31, 2022, Quanta entered into an agreement to sell a non-integral equity method investment. The transaction was subject to certain customary closing conditions that were satisfied in early 2023. As a result, a $25.9 million gain was recognized in the fourth quarter of 2022, $10.4 million of which was attributable to non-controlling interests. During the six months ended June 30, 2023, Quanta received $58.5 million in cash related to the sale of this investment, $9.8 million of which was distributed to non-controlling interests.

As of June 30, 2024 and December 31, 2023, Quanta had receivables of $56.7 million and $96.4 million from its integral unconsolidated affiliates and payables of $18.9 million and $24.5 million to its integral unconsolidated affiliates. Quanta recognized revenues of $57.7 million and $50.2 million during the three months ended June 30, 2024 and 2023 and $116.7 million and $98.5 million during the six months ended June 30, 2024 and 2023 from services provided to its integral unconsolidated affiliates, primarily related to services provided to LUMA at cost. In addition, during the three months ended June 30, 2024 and 2023, Quanta recognized costs of services of $100.3 million and $21.2 million for services provided to Quanta by other integral unconsolidated affiliates. During the six months ended June 30, 2024 and 2023, Quanta recognized costs of services of $189.2 million and $33.2 million for services provided by other integral affiliates.

Total equity in earnings from integral unconsolidated affiliates was $8.6 million and $9.4 million for the three months ended June 30, 2024 and 2023 and $20.9 million and $19.0 million for the six months ended June 30, 2024 and 2023. Total equity in losses from non-integral unconsolidated affiliates was $0.5 million for the three months ended June 30, 2024 and total equity in earnings from non-integral affiliates was $0.5 million for the three months ended June 30, 2023. Total equity in earnings from non-integral affiliates was $3.1 million and $2.1 million for the six months ended June 30, 2024 and 2023. As of June 30, 2024, Quanta had $43.5 million of undistributed earnings related to unconsolidated affiliates.

The difference between Quanta’s carrying value and the underlying equity in the net assets of its equity investments is assigned to the assets and liabilities of the investment, giving rise to a basis difference, which was $28.6 million and $31.4 million as of June 30, 2024 and December 31, 2023. The amortization of the basis difference included in “Equity in earnings of integral unconsolidated affiliates” in the accompanying condensed consolidated statements of operations was $1.3 million and $1.5 million for the three months ended June 30, 2024 and 2023 and $2.7 million and $3.3 million for the six months ended June 30, 2024 and 2023.

7. PER SHARE INFORMATION:

The amounts used to compute basic and diluted earnings per share attributable to common stock consisted of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Amounts attributable to common stock:
Net income attributable to common stock	$	188,159	$	165,899	$	306,519	$	260,945

Weighted average shares:
Weighted average shares outstanding for basic earnings per share attributable to common stock	146,580		145,422		146,258		144,947
Effect of dilutive unvested non-participating stock-based awards	3,208		3,351		3,329		3,770
Weighted average shares outstanding for diluted earnings per share attributable to common stock	149,788		148,773		149,587		148,717

QUANTA SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

8. DEBT OBLIGATIONS:

Quanta’s long-term debt obligations consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
0.950% Senior Notes due October 2024	$	500,000	$	500,000
2.900% Senior Notes due October 2030	1,000,000		1,000,000
2.350% Senior Notes due January 2032	500,000		500,000
3.050% Senior Notes due October 2041	500,000		500,000
Borrowings under senior credit facility (including Term Loan)	858,613		867,137
Borrowings under commercial paper program	—		705,900
Lease financing transactions	138,147		102,955
Other long-term debt	5,861		6,279
Finance leases	40,143		39,577
Unamortized discount and financing costs	(19,984)		(23,142)
Total long-term debt obligations	3,522,780		4,198,706
Less — Current maturities of long-term debt	549,260		535,202
Total long-term debt obligations, net of current maturities	$	2,973,520	$	3,663,504

Senior Notes

The interest amounts due on Quanta’s senior notes on each payment date are set forth below (dollars in thousands):

Title of the Notes

Interest Amount

Payment Dates

Commencement Date

0.950% Senior Notes due October 2024

2,375

April 1 and October 1

April 1, 2022

2.900% Senior Notes due October 2030

14,500

April 1 and October 1