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Acquisitions | 6 Months Ended
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Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | 6. ACQUISITIONS: The results of operations of acquired businesses have been included in Quanta’s consolidated financial statements since the respective acquisition dates. Quanta did not acquire any businesses during the six months ended June 30, 2022. On October 13, 2021, Quanta completed the acquisition of Blattner, a large and leading utility-scale renewable energy infrastructure solutions provider that is located in and primarily operates in North America. Blattner provides comprehensive solutions to customers in the renewable energy industry, which generally include front-end engineering, procurement, project management and construction services for wind, solar and energy storage projects. Consideration for this acquisition included $2.43 billion paid or payable in cash, which includes the final post-closing adjustments, and 3,326,955 shares of Quanta common stock, which had a fair value of $345.4 million as of the date of the acquisition. Additionally, the former owners of Blattner are eligible to receive potential payment of up to $300.0 million of contingent consideration, payable to the extent the acquired business achieves certain financial performance targets each fiscal year over a three-year period that began in January 2022. Based on the estimated fair value of the contingent consideration, Quanta recorded a $125.6 million liability as of the date of the acquisition. As of June 30, 2022, the fair value of the contingent consideration liability was $140.3 million, including accretion of $2.8 million and $7.0 million recorded in the three and six months ended June 30, 2022. The contingent consideration is earned based on performance during each year of the three-year performance period ending on December 31, 2024, and amounts earned are payable in cash after the end of the applicable performance year. Quanta may defer payment of earned contingent consideration amounts, at its sole discretion, until after the end of the entire three-year performance period; however, any deferred amounts will accrue interest at five percent per annum until paid. Blattner’s results have been included in Quanta’s consolidated financial statements in the Renewable Energy Infrastructure Solutions segment since the acquisition date. During the year ended December 31, 2021, Quanta also acquired the following businesses: three businesses located in the United States that provide electric power construction and related services; a communications services business located in the United States that performs data center connection services; a business located in the United States that designs, develops and holds a certification for the manufacture of personal protective breathing equipment and related monitoring devices primarily used in the refining and petrochemical industries, including in connection with catalyst services; a business that provides turnaround and catalyst change-out services to the refining and petrochemical industries primarily in the United States and Canada; a business located in Canada that provides front-end land services for infrastructure development projects in Canada and the United States; a business located in the United States that primarily provides horizontal directional drilling services; and a communications services business located in the United States. The aggregate consideration for these acquisitions was $328.0 million paid or payable in cash (subject to certain adjustments) and 187,093 shares of Quanta common stock, which had an aggregate fair value of $16.9 million as of the applicable acquisition dates. The results of the manufacturing business and the turnaround and catalyst change-out business are generally included in the Underground Utility and Infrastructure Solutions segment and the results of the remaining businesses are generally included in the Electric Power Infrastructure Solutions segment. Purchase Price Allocation Quanta is finalizing its fair value assessments for the acquired assets and assumed liabilities related to businesses acquired subsequent to June 30, 2021, and further adjustments to the purchase price allocations may occur. As of June 30, 2022, the estimated fair values of the net assets acquired were preliminary, with possible updates primarily related to tax estimates and the finalization of closing working capital adjustments. The aggregate consideration paid or payable for businesses acquired between June 30, 2021 and June 30, 2022 was allocated to acquired assets and assumed liabilities, which resulted in an allocation of $243.2 million to net tangible assets, $1.52 billion to identifiable intangible assets and $1.46 billion to goodwill. Goodwill represents the amount by which the purchase price for an acquired business exceeds the net fair value of the assets acquired and liabilities assumed. Goodwill included in the Renewable Energy Infrastructure Solutions Segment increased by $64.9 million during the six months ended June 30, 2022 as a result of certain post-closing consideration adjustments associated with Quanta’s acquisition of Blattner. The acquisitions completed in the year ended December 31, 2021 strategically expanded Quanta’s domestic renewable energy infrastructure solutions, domestic and international electric power infrastructure solutions, domestic communications service offerings, and domestic and international underground utility and infrastructure solutions, which Quanta believes contributes to the recognition of the goodwill. Approximately $1.49 billion of goodwill is expected to be deductible for income tax purposes related to acquisitions completed in the year ended December 31, 2021. Contingent Consideration As described above, certain business acquisitions have contingent consideration liabilities associated with the transactions. The aggregate fair value of these outstanding contingent consideration liabilities and their classification in the accompanying consolidated balance sheets is as follows (in thousands):
|  | June 30, 2022 |  | December 31, 2021
Accounts payable and accrued expenses |  | $ | 4,949 |  |  | $ | 2,591 |
Insurance and other non-current liabilities |  | 142,524 |  |  | 140,482 |
Total contingent consideration liabilities |  | $ | 147,473 |  |  | $ | 143,073 |
Quanta’s aggregate contingent consideration liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, accretion in present value and changes in the estimated fair value of amounts owed based on the performance of acquired businesses in post-acquisition periods. These changes are reflected in “Change in fair value of contingent consideration liabilities” in the accompanying consolidated statements of operations. The majority of Quanta’s outstanding contingent consideration liabilities are subject to a maximum payment amount, and the aggregate maximum payment amount of these liabilities totaled $312.0 million as of June 30, 2022. Pro Forma Results of Operations The following unaudited supplemental pro forma results of operations for Quanta, which incorporate the acquisitions completed in 2021, 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 |  |  | Six Months Ended
|  |  | June 30, |  |  | June 30,
|  |  |  | 2021 |  |  |  | 2021
Revenues |  |  |  | $ | 3,862,768 |  |  |  |  | $ | 7,180,383 |
Gross profit |  |  |  | $ | 606,039 |  |  |  |  | $ | 1,105,600 |
Selling, general and administrative expenses |  |  |  | $ | (334,034) |  |  |  |  | $ | (639,909) |
Amortization of intangible assets |  |  |  | $ | (66,931) |  |  |  |  | $ | (134,506) |
Net income |  |  |  | $ | 145,806 |  |  |  |  | $ | 240,999 |
Net income attributable to common stock |  |  |  | $ | 143,868 |  |  |  |  | $ | 237,503 |
Earnings per share attributable to common stock: |  |  |  |  |  |  |  |
Basic |  |  |  | $ | 1.00 |  |  |  |  | $ | 1.65 |
Diluted |  |  |  | $ | 0.97 |  |  |  |  | $ | 1.60 |
The pro forma combined results of operations for the three and six months ended June 30, 2021 were prepared by adjusting the historical results of Quanta to include the historical results of the acquisitions completed in 2021 as if they occurred January 1, 2020. These pro forma combined historical results were adjusted for the following: a reduction of interest and other financing expenses as a result of the repayment of outstanding indebtedness of the acquired businesses; an increase in interest and other financing expenses as a result of the cash consideration paid and debt incurred by Quanta for the purpose of financing the acquisition of Blattner; an increase in amortization expense due to the intangible assets recorded; elimination of inter-company sales; changes in depreciation expense 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; reclassifications to conform the acquired businesses’ presentation to Quanta’s accounting policies; and elimination of certain transaction costs incurred by Blattner and directly related to the acquisition of the business by Quanta. The pro forma combined results of operations do not include any adjustments to eliminate the impact of acquisition-related costs incurred by Quanta 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 $1.2 million and income before income taxes of $0.3 million, which included $0.2 million acquisition-related costs, related to the acquisitions completed in 2021 are included in Quanta’s condensed consolidated results of operations for the three months ended June 30, 2021. Revenues of $1.2 million and income before income taxes of $0.1 million, which included $0.4 million of acquisition-related costs, related to the acquisitions completed in 2021 are included in Quanta’s condensed consolidated results of operations for the six months ended June 30, 2021. In July 2022, Quanta acquired a business located in the United States that provides construction contracting services and specializes in trenching and underground pipe and electrical conduit installation. Beginning on the acquisition date, the results of the acquired business will generally be included in the Electrical Power Infrastructure Solutions segment.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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