SEGMENT INFORMATION:

Quanta presents its operations under two reportable segments: (1) Electric Power Infrastructure Services and (2) Oil and Gas Infrastructure Services. This structure is generally based on the broad end-user markets for Quanta’s services. See Note 1 for additional information regarding Quanta’s reportable segments.

Quanta’s segment results are derived from the types of services provided across its operating units in each of the end user markets described above. Quanta’s entrepreneurial business model allows each of its operating units to serve the same or similar customers and to provide a range of services across end user markets. Quanta’s operating units are organized into one of two internal divisions, namely, the Electric Power Infrastructure Services Division and the Oil and Gas Infrastructure Services Division. These internal divisions are closely aligned with the reportable segments and are based on their operating units’ predominant type of work.

Reportable segment information, including revenues and operating income by type of work, is gathered from each operating unit for the purpose of evaluating segment performance in support of Quanta’s market strategies. These classifications of Quanta’s operating unit revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Quanta’s operating units may perform joint projects for customers in multiple industries, deliver multiple types of services under a single customer contract or provide service across industries. For example, Quanta performs joint trenching projects to install distribution lines for electric power and natural gas customers.

In addition, Quanta’s integrated operations and common administrative support at each of its operating units require that certain allocations be made to determine segment profitability, including allocations of shared and indirect costs, such as facility costs, indirect operating expenses including depreciation, and general and administrative costs. Corporate costs, such as payroll and benefits, employee travel expenses, facility costs, professional fees, acquisition costs and amortization related to intangible assets are not allocated.

Summarized financial information for Quanta’s reportable segments is presented in the following table (in thousands):



	Three Months Ended
	March 31,
	2018			2017
Revenues:
Electric Power Infrastructure Services	$	1,568,507		$	1,219,502
Oil and Gas Infrastructure Services	849,069			958,668
Consolidated	$	2,417,576		$	2,178,170
Operating income (loss):
Electric Power Infrastructure Services	$	140,895		$	99,672
Oil and Gas Infrastructure Services	10,057			38,817
Corporate and non-allocated costs	(75,731		)	(63,415		)
Consolidated	$	75,221		$	75,074
Depreciation:
Electric Power Infrastructure Services	$	24,270		$	22,086
Oil and Gas Infrastructure Services	20,695			17,364
Corporate and non-allocated costs	3,754			3,243
Consolidated	$	48,719		$	42,693

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. Quanta’s fixed assets, which are held at the operating unit level, include operating machinery, equipment and vehicles, as well as office equipment, buildings and leasehold improvements, and are used on an interchangeable basis across its reportable segments. As such, for reporting purposes, total depreciation expense is allocated each quarter among Quanta’s reportable segments based on the ratio of each reportable segment’s revenue contribution to consolidated revenues.

Foreign Operations

During the three months ended March 31, 2018 and 2017, Quanta derived $705.1 million and $655.5 million of its revenues from foreign operations. Of Quanta’s foreign revenues, 76% and 83% were earned in Canada during the three months ended March 31, 2018 and 2017. In addition, Quanta held property and equipment of $320.1 million and $330.4 million in foreign countries, primarily Canada, as of March 31, 2018 and December 31, 2017.