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Acquisitions | 9 Months Ended
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Sep. 30, 2017
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS: On July 20, 2017, Quanta acquired Stronghold, a specialized services business located in the United States that provides high-pressure and critical-path solutions to the downstream and midstream energy markets. The aggregate consideration paid at closing for this acquisition was $360.0 million in cash and 2,693,680 shares of Quanta common stock, which had a fair value of approximately $81.3 million at the date of acquisition. Additionally, the acquisition includes the potential payment of up to $100.0 million of contingent consideration, payable if the acquired business achieves certain financial targets over a three-year period. Based on the estimated fair value of this contingent consideration, Quanta recorded a $51.1 million liability as of the date of acquisition. The results of the acquired business have generally been included in Quanta’s Oil and Gas Infrastructure Services segment and consolidated financial statements since the date of acquisition. During the nine months ended September 30, 2017, Quanta also completed two other acquisitions, which included a communications infrastructure services contractor and an electrical and communications contractor, both located in the United States. The aggregate consideration for these acquisitions consisted of $11.9 million paid or payable in cash, subject to certain adjustments, and 288,666 shares of Quanta common stock, with a value of $8.3 million as of the respective acquisition dates. The results of the acquired businesses have generally been included in Quanta’s Electric Power Infrastructure Services segment and consolidated financial statements since the respective dates of acquisition. During 2016, Quanta completed five acquisitions. The results of four of the acquired companies are generally included in Quanta’s Electric Power Infrastructure Services segment. These companies included an electrical infrastructure services company located in Australia, a utility contracting company located in Canada, a full service medium- and high-voltage powerline contracting company located in the United States and a communications services company located in Canada. Quanta also acquired a pipeline service contractor located in the United States, the results of which are generally included in Quanta’s Oil and Gas Infrastructure Services segment. The aggregate consideration for these acquisitions consisted of $75.9 million paid or payable in cash, subject to certain adjustments, 70,840 shares of Quanta common stock valued at $1.5 million as of the settlement date of the applicable acquisition, and contingent consideration payments of up to $39.5 million, payable if financial targets are achieved by certain of the acquired businesses. Based on the estimated fair value of this contingent consideration, Quanta recorded a total of $18.7 million in liabilities as of the applicable dates of acquisition. The results of the acquired businesses have been included in Quanta’s consolidated financial statements since the respective dates of acquisition. Quanta is in the process of finalizing its assessments of the fair values of the acquired assets and assumed liabilities related to businesses acquired subsequent to September 30, 2016, and further adjustments to the purchase price allocations may occur. As of September 30, 2017, the estimated fair values of the net assets acquired and the estimated contingent consideration liabilities were preliminary, with possible updates primarily related to certain tax estimates, property and equipment, other intangible assets and the fair value of contingent consideration. The aggregate purchase consideration of the businesses acquired subsequent to September 30, 2016 through September 30, 2017 was preliminarily allocated to acquired assets and assumed liabilities, which resulted in a preliminary allocation of $97.4 million to net tangible assets, $103.8 million to identifiable intangible assets and $311.4 million to goodwill. The following table summarizes the aggregate consideration paid or payable as of September 30, 2017 for the 2017 acquisitions and 2016 acquisitions and presents the allocation of these amounts to the net tangible and identifiable intangible assets based on their estimated fair values as of the respective acquisition dates, inclusive of any purchase price adjustments. This allocation requires a significant use of estimates and is based on information that was available to management at the time these consolidated financial statements were prepared (in thousands).
| 2017 |  | 2016
| Stronghold |  | Other Acquisitions |  | All Acquisitions
Consideration: |  |  |  |  |
Cash paid or payable | $ | 360,009 |  |  | $ | 11,904 |  |  | $ | 75,941 |
Value of Quanta common stock issued | 81,337 |  |  | 8,267 |  |  | 1,508 |
Contingent consideration | 51,084 |  |  | — |  |  | 18,683 |
Fair value of total consideration transferred or estimated to be transferred | $ | 492,430 |  |  | $ | 20,171 |  |  | $ | 96,132 |
Accounts receivable | $ | 77,478 |  |  | $ | 7,157 |  |  | $ | 14,414 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 22,496 |  |  | 193 |  |  | 1,237 |
Other current assets | 20,914 |  |  | 170 |  |  | 8,582 |
Property and equipment | 51,258 |  |  | 1,480 |  |  | 44,863 |
Other assets | 1,513 |  |  | 12 |  |  | 2,553 |
Identifiable intangible assets | 95,700 |  |  | 8,091 |  |  | 11,467 |
Current liabilities | (82,418 | ) |  | (2,798 | ) |  | (12,097 | )
Deferred tax liabilities, net | — |  |  | — |  |  | (13,484 | )
Other long-term liabilities | (48 | ) |  | — |  |  | (5,326 | )
Total identifiable net assets | 186,893 |  |  | 14,305 |  |  | 52,209 |
Goodwill | 305,537 |  |  | 5,866 |  |  | 43,923 |
| $ | 492,430 |  |  | $ | 20,171 |  |  | $ | 96,132 |
Goodwill represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed. The 2017 and 2016 acquisitions strategically expanded Quanta’s Canadian, Australian and domestic electric power, oil and gas and communications service offerings, which Quanta believes contributes to the recognition of the goodwill. In connection with the 2017 acquisitions, as of the acquisition dates, goodwill of $5.9 million was recorded for the acquired businesses that were included within Quanta’s Electric Power Infrastructure Services Division, and goodwill of $305.5 million was recorded for Stronghold, which is included within Quanta’s Oil and Gas Infrastructure Services Division. In connection with the 2016 acquisitions, as of the acquisition dates and inclusive of purchase price adjustments, goodwill of $23.6 million was recorded for the acquired businesses included within Quanta’s Electric Power Infrastructure Services Division and goodwill of $20.3 million was recorded for the acquired business included within Quanta’s Oil and Gas Infrastructure Services Division. Goodwill of $311.4 million and $2.0 million related to the 2017 acquisitions and 2016 acquisitions is expected to be deductible for income tax purposes. The following table summarizes the estimated fair values of identifiable intangible assets for the 2017 acquisitions 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).
| Estimated |  | Weighted Average
| Fair Value at |  | Amortization Period in Years
| Acquisition Dates |  | at Acquisition Dates
Customer relationships | $ | 76,213 |  |  | 6.8
Backlog | 333 |  |  | 2.0
Trade names | 18,815 |  |  | 15.0
Non-compete agreements | 8,430 |  |  | 5.0
Total intangible assets subject to amortization acquired in 2017 acquisitions | $ | 103,791 |  |  | 8.1
The unaudited supplemental pro forma results of operations have been provided for illustrative purposes only and do not purport to 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. Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors (in thousands, except per share amounts):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Revenues | $ | 2,631,137 |  |  | $ | 2,174,123 |  |  | $ | 7,234,193 |  |  | $ | 5,970,857 |
Gross profit | $ | 355,830 |  |  | $ | 331,409 |  |  | $ | 978,446 |  |  | $ | 796,989 |
Selling, general and administrative expenses | $ | 205,025 |  |  | $ | 184,014 |  |  | $ | 614,819 |  |  | $ | 541,328 |
Amortization of intangible assets | $ | 10,022 |  |  | $ | 11,576 |  |  | $ | 29,926 |  |  | $ | 34,696 |
Net income from continuing operations | $ | 89,839 |  |  | $ | 75,866 |  |  | $ | 205,344 |  |  | $ | 118,853 |
Net income from continuing operations attributable to common stock | $ | 89,303 |  |  | $ | 75,456 |  |  | $ | 204,112 |  |  | $ | 117,913 |
Earnings per share from continuing operations: |  |  |  |  |  |  |
Basic | $ | 0.56 |  |  | $ | 0.48 |  |  | $ | 1.29 |  |  | $ | 0.73 |
Diluted | $ | 0.56 |  |  | $ | 0.48 |  |  | $ | 1.28 |  |  | $ | 0.73 |
The pro forma combined results of operations for the three and nine months ended September 30, 2017 and 2016 were prepared by adjusting the historical results of Quanta to include the historical results of the 2017 acquisitions as if they occurred January 1, 2016 and the historical results of the 2016 acquisitions as if they occurred January 1, 2015. These pro forma combined historical results were adjusted for the following: a reduction of interest expense as a result of the repayment of outstanding indebtedness of the acquired businesses; a reduction of interest income or an increase in interest expense as a result of the cash consideration paid net of cash received; an increase in amortization expense due to the incremental intangible assets recorded; changes in depreciation expense within cost of services to adjust acquired property and equipment to the acquisition date fair value and to conform with Quanta’s accounting policies; an increase in the number of outstanding shares of Quanta common stock; and reclassifications to conform the acquired companies’ presentation to Quanta’s accounting policies. The pro forma results of operations do not include any adjustments to eliminate the impact of acquisition-related costs or any cost savings or other synergies that resulted or may result from the acquisitions. As noted above, the pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future. Revenues of approximately $87.2 million and a loss from continuing operations before income taxes of approximately $6.4 million, which included $3.2 million of acquisition-related costs, were included in Quanta’s consolidated results of operations for the three months ended September 30, 2017 related to the 2017 acquisitions. Revenues of approximately $89.4 million and a loss from continuing operations before income taxes of approximately $8.2 million, which included $5.4 million of acquisition-related costs, were included in Quanta’s consolidated results of operations for the nine months ended September 30, 2017 related to the 2017 acquisitions.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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