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Leases
 3 Months Ended
Mar. 31, 2022
Leases [Abstract]  
Leases LEASES:
Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. The components of lease costs in the accompanying condensed consolidated statements of operations are as follows (in thousands):
Three Months Ended
 March 31,
Lease costClassification20222021
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$440 $244 
Interest on lease liabilitiesInterest and other financing expenses27 27 
Operating lease costCost of services and Selling, general and administrative expenses24,877 27,776 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses219,299 157,899 
Total lease cost $244,643 $185,946 
(1)    Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying condensed 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 10 years, subject to renewal options. Related party lease expense was $3.6 million and $4.8 million for the three months ended March 31, 2022 and 2021.
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 these 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, which results in the recognition of an asset equal to the purchase price in “Property, plant and equipment, net of accumulated depreciation,” and a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of March 31, 2022 and December 31, 2021, the assets recorded related to these financing transactions, net of accumulated depreciation, totaled $76.2 million and $53.9 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of March 31, 2022
 Operating LeasesFinance LeasesTotal
Remainder of 2022$65,288 $1,056 $66,344 
202368,263 1,165 69,428 
202447,616 682 48,298 
202534,187 363 34,550 
202623,408 235 23,643 
Thereafter28,401 7 28,408 
Total future minimum operating and finance lease payments267,163 3,508 270,671 
Less imputed interest(19,833)(167)(20,000)
Total lease liabilities $247,330 $3,341 $250,671 
Future minimum lease payments for short-term leases, which are not recorded in the condensed consolidated balance sheets due to Quanta’s accounting policy election, were $16.5 million as of March 31, 2022. 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 March 31, 2022
Weighted average remaining lease term (in years):
Operating leases4.31
Finance leases3.11
Weighted average discount rate:
Operating leases3.6 %
Finance leases3.2 %
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 March 31, 2022, the maximum guaranteed residual value of this equipment was $951.1 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.
As of March 31, 2022, Quanta entered into a real estate lease, that has not yet commenced, but for which Quanta expects to exercise a purchase option in 2022 in the amount of $53.7 million.
Leases LEASES:
Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. The components of lease costs in the accompanying condensed consolidated statements of operations are as follows (in thousands):
Three Months Ended
 March 31,
Lease costClassification20222021
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$440 $244 
Interest on lease liabilitiesInterest and other financing expenses27 27 
Operating lease costCost of services and Selling, general and administrative expenses24,877 27,776 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses219,299 157,899 
Total lease cost $244,643 $185,946 
(1)    Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying condensed 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 10 years, subject to renewal options. Related party lease expense was $3.6 million and $4.8 million for the three months ended March 31, 2022 and 2021.
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 these 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, which results in the recognition of an asset equal to the purchase price in “Property, plant and equipment, net of accumulated depreciation,” and a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of March 31, 2022 and December 31, 2021, the assets recorded related to these financing transactions, net of accumulated depreciation, totaled $76.2 million and $53.9 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of March 31, 2022
 Operating LeasesFinance LeasesTotal
Remainder of 2022$65,288 $1,056 $66,344 
202368,263 1,165 69,428 
202447,616 682 48,298 
202534,187 363 34,550 
202623,408 235 23,643 
Thereafter28,401 7 28,408 
Total future minimum operating and finance lease payments267,163 3,508 270,671 
Less imputed interest(19,833)(167)(20,000)
Total lease liabilities $247,330 $3,341 $250,671 
Future minimum lease payments for short-term leases, which are not recorded in the condensed consolidated balance sheets due to Quanta’s accounting policy election, were $16.5 million as of March 31, 2022. 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 March 31, 2022
Weighted average remaining lease term (in years):
Operating leases4.31
Finance leases3.11
Weighted average discount rate:
Operating leases3.6 %
Finance leases3.2 %
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 March 31, 2022, the maximum guaranteed residual value of this equipment was $951.1 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.
As of March 31, 2022, Quanta entered into a real estate lease, that has not yet commenced, but for which Quanta expects to exercise a purchase option in 2022 in the amount of $53.7 million.