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Leases
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases LEASES:Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2021, the majority of Quanta’s leases had remaining lease terms less than 9.5 years. Certain leases include options to extend
their terms in increments of up to five years and/or options to terminate. The components of lease costs in the accompanying consolidated statements of operations are as follows (in thousands):
 Year Ended December 31,
Lease costClassification202120202019
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$1,097 $1,234 $1,393 
Interest on lease liabilitiesInterest and other financing expenses90 107 64 
Operating lease costCost of services and Selling, general and administrative expenses104,668 116,672 121,767 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses716,722 656,649 837,244 
Total lease cost $822,577 $774,662 $960,468 
(1)     Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.
(2) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Variable lease cost is insignificant.
Quanta has entered into arrangements with certain related parties to lease certain real property and facilities. Typically, the parties are employees of Quanta who are also the former owners of businesses acquired by Quanta, and the real properties and facilities continue to be utilized by Quanta subsequent to the acquisitions. Quanta utilizes third party market valuations to evaluate rental rates for these properties and facilities, and the lease agreements generally have remaining lease terms of up to ten years, subject to renewal options. Related party lease expense was $13.9 million, $14.3 million and $16.7 million for the years ended December 31, 2021, 2020 and 2019.
The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):
December 31,
Lease typeClassification20212020
Assets:
Operating lease right-of-use assetsOperating lease right-of-use assets$240,605 $256,845 
Finance lease assetsProperty and equipment, net of accumulated depreciation2,415 2,370 
Total lease assets $243,020 $259,215 
Liabilities:
Current:
OperatingCurrent portion of operating lease liabilities$78,251 $85,134 
FinanceCurrent maturities of long-term debt and short-term debt1,156 846 
Non-current:
OperatingOperating lease liabilities, net of current portion170,427 178,822 
FinanceLong-term debt, net of current maturities1,390 1,382 
Total lease liabilities $251,224 $266,184 
Certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. When rental purchase options are exercised and a substantive benefit is deemed to be transferred to a third-party lessor, the transaction is deemed to be a financing transaction for accounting purposes. This results in the recognition of an asset equal to the purchase price being recorded in “Property, plant and equipment, net of accumulated depreciation,” and the recognition of a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of December 31, 2021 and 2020, the assets recorded, net of accumulated depreciation, totaled $53.9 million and $45.7 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of December 31, 2021
 Operating LeasesFinance LeasesTotal
2022$85,427 $1,185 $86,612 
202363,890 907 64,797 
202444,113 423 44,536 
202530,638 137 30,775 
202620,602 — 20,602 
Thereafter23,866 — 23,866 
Total future minimum operating and finance lease payments268,536 2,652 271,188 
Less imputed interest(19,858)(106)(19,964)
Total lease liabilities $248,678 $2,546 $251,224 
Future minimum lease payments for short-term leases, which are not recorded in the consolidated balance sheets due to Quanta’s accounting policy election, were $14.0 million as of December 31, 2021. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future rental amounts.
The weighted average remaining lease terms and discount rates were as follows:
 As of December 31,
20212020
Weighted average remaining lease term (in years):
Operating leases4.254.28
Finance leases2.573.06
Weighted average discount rate:
Operating leases3.7 %4.2 %
Finance leases3.3 %4.1 %
Quanta has also guaranteed the residual value under certain of its equipment operating leases, agreeing to pay any difference between this residual value and the fair market value of the underlying asset at the date of lease termination. As of December 31, 2021, the maximum guaranteed residual value of this equipment was $891.8 million. While Quanta believes that no significant payments will be made as a result of these residual value guarantees, there can be no assurance that significant payments will not be required in the future.
Leases LEASES:Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2021, the majority of Quanta’s leases had remaining lease terms less than 9.5 years. Certain leases include options to extend
their terms in increments of up to five years and/or options to terminate. The components of lease costs in the accompanying consolidated statements of operations are as follows (in thousands):
 Year Ended December 31,
Lease costClassification202120202019
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$1,097 $1,234 $1,393 
Interest on lease liabilitiesInterest and other financing expenses90 107 64 
Operating lease costCost of services and Selling, general and administrative expenses104,668 116,672 121,767 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses716,722 656,649 837,244 
Total lease cost $822,577 $774,662 $960,468 
(1)     Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.
(2) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Variable lease cost is insignificant.
Quanta has entered into arrangements with certain related parties to lease certain real property and facilities. Typically, the parties are employees of Quanta who are also the former owners of businesses acquired by Quanta, and the real properties and facilities continue to be utilized by Quanta subsequent to the acquisitions. Quanta utilizes third party market valuations to evaluate rental rates for these properties and facilities, and the lease agreements generally have remaining lease terms of up to ten years, subject to renewal options. Related party lease expense was $13.9 million, $14.3 million and $16.7 million for the years ended December 31, 2021, 2020 and 2019.
The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):
December 31,
Lease typeClassification20212020
Assets:
Operating lease right-of-use assetsOperating lease right-of-use assets$240,605 $256,845 
Finance lease assetsProperty and equipment, net of accumulated depreciation2,415 2,370 
Total lease assets $243,020 $259,215 
Liabilities:
Current:
OperatingCurrent portion of operating lease liabilities$78,251 $85,134 
FinanceCurrent maturities of long-term debt and short-term debt1,156 846 
Non-current:
OperatingOperating lease liabilities, net of current portion170,427 178,822 
FinanceLong-term debt, net of current maturities1,390 1,382 
Total lease liabilities $251,224 $266,184 
Certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. When rental purchase options are exercised and a substantive benefit is deemed to be transferred to a third-party lessor, the transaction is deemed to be a financing transaction for accounting purposes. This results in the recognition of an asset equal to the purchase price being recorded in “Property, plant and equipment, net of accumulated depreciation,” and the recognition of a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of December 31, 2021 and 2020, the assets recorded, net of accumulated depreciation, totaled $53.9 million and $45.7 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of December 31, 2021
 Operating LeasesFinance LeasesTotal
2022$85,427 $1,185 $86,612 
202363,890 907 64,797 
202444,113 423 44,536 
202530,638 137 30,775 
202620,602 — 20,602 
Thereafter23,866 — 23,866 
Total future minimum operating and finance lease payments268,536 2,652 271,188 
Less imputed interest(19,858)(106)(19,964)
Total lease liabilities $248,678 $2,546 $251,224 
Future minimum lease payments for short-term leases, which are not recorded in the consolidated balance sheets due to Quanta’s accounting policy election, were $14.0 million as of December 31, 2021. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future rental amounts.
The weighted average remaining lease terms and discount rates were as follows:
 As of December 31,
20212020
Weighted average remaining lease term (in years):
Operating leases4.254.28
Finance leases2.573.06
Weighted average discount rate:
Operating leases3.7 %4.2 %
Finance leases3.3 %4.1 %
Quanta has also guaranteed the residual value under certain of its equipment operating leases, agreeing to pay any difference between this residual value and the fair market value of the underlying asset at the date of lease termination. As of December 31, 2021, the maximum guaranteed residual value of this equipment was $891.8 million. While Quanta believes that no significant payments will be made as a result of these residual value guarantees, there can be no assurance that significant payments will not be required in the future.