Acquisitions (Tables)

9 Months Ended

Sep. 30, 2020

Aggregate Consideration Paid or Payable and Allocation Net Assets

The following table summarizes the aggregate consideration paid or payable as of September 30, 2020 for the acquisitions completed in 2020 and 2019 and presents the allocation of these amounts to net tangible and identifiable intangible assets based on their estimated fair values as of the respective acquisition dates, inclusive of any purchase price adjustments. These allocations require significant use of estimates and are based on information that was available to management at the time these consolidated financial statements were prepared. Quanta uses a variety of information to estimate fair values, including quoted market prices, carrying amounts and valuation techniques such as discounted cash flows. When deemed appropriate, third-party appraisal firms are engaged to assist in fair value determination of fixed assets, intangible assets and certain other assets and liabilities.

Quanta is finalizing its fair value assessments for the acquired assets and assumed liabilities related to businesses acquired subsequent to September 30, 2019, and further adjustments to the purchase price allocations may occur. As of September 30, 2020, the estimated fair values of the net assets acquired were preliminary, with possible updates primarily related to tax estimates. Consideration amounts are also subject to the finalization of closing working capital adjustments. The aggregate consideration paid or payable for businesses acquired between September 30, 2019 and September 30, 2020 was allocated to acquired assets and assumed liabilities, which resulted in an allocation of $106.0 million to net tangible assets, $80.7 million to identifiable intangible assets and $89.1 million to goodwill (in thousands).


	2020		2019
Consideration:
Cash paid or payable	$	220,572	$	395,258
Value of Quanta common stock issued	49,690		1,791
Contingent consideration	2,250		—
Fair value of total consideration transferred or estimated to be transferred	$	272,512	$	397,049

Accounts receivable	$	64,689	$	112,142
Contract assets	7,971		11,869
Other current assets	10,248		14,290
Property and equipment	63,076		60,133
Other assets	11		149
Identifiable intangible assets	77,734		192,786
Contract liabilities	(2,873)		(11,856)
Other current liabilities	(25,986)		(73,698)
Deferred tax liabilities, net	(483)		(12,414)
Other long-term liabilities	—		(5,345)

Total identifiable net assets	194,387		288,056
Goodwill	78,125		112,132
Fair value of net assets acquired	272,512		400,188
Bargain purchase gain	—		(3,139)
Fair value of total consideration transferred or estimated to be transferred	$	272,512	$	397,049

Estimated Fair Values of Identifiable Intangible Assets and Related Weighted Average Amortization

The following table summarizes the estimated fair values of identifiable intangible assets for the acquisitions completed in 2020 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 Fair Value		Weighted Average Amortization Period in Years
Customer relationships	$	63,226	6.6
Backlog	4,022		1.4
Trade names	6,490		15.0
Non-compete agreements	3,996		5.0
Total intangible assets subject to amortization	$	77,734	7.0

Unaudited Supplemental Pro Forma Results of Operations

The following unaudited supplemental pro forma results of operations for Quanta, which incorporates the acquisitions completed in 2020 and 2019, 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,
	2020		2019		2020		2019
Revenues	$	3,034,191	$	3,510,941	$	8,412,036	$	9,580,086
Gross profit	509,532		507,299		1,220,824		1,278,843
Selling, general and administrative expenses	(251,664)		(260,223)		(725,732)		(754,625)
Amortization of intangible assets	(20,526)		(22,765)		(62,793)		(67,044)
Net income	163,687		142,272		279,654		307,513
Net income attributable to common stock	162,900		141,318		275,201		304,897

Earnings per share:
Basic	$	1.16	$	0.96	$	1.93	$	2.08
Diluted	$	1.13	$	0.95	$	1.89	$	2.06