XML 30 R20.htm IDEA: XBRL DOCUMENT v3.22.2
Leases
 6 Months Ended
Jun. 30, 2022
Leases [Abstract]  
Leases
11. 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 EndedSix Months Ended
 June 30,June 30,
Lease costClassification2022202120222021
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$436 $230 $876 $474 
Interest on lease liabilitiesInterest and other financing expenses28 23 55 50 
Operating lease costCost of services and Selling, general and administrative expenses24,248 26,947 49,125 54,723 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses224,088 160,342 443,387 318,241 
Total lease cost $248,800 $187,542 $493,443 $373,488 
(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.
During the three months ended June 30, 2022, Quanta recognized a $2.8 million asset impairment charge primarily related to the expected discontinued use of the right-of-use asset associated with its existing corporate headquarters in connection with a planned move to a new headquarters by the end of 2022. This amount is reported as “Asset impairment charges” in the accompanying condensed consolidated statements of operations.
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 $3.8 million and $3.2 million for the three months ended June 30, 2022 and 2021 and $7.4 million and $8.0 million for the six months ended June 30, 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 June 30, 2022 and December 31, 2021, the assets recorded related to these financing transactions, net of accumulated depreciation, totaled $78.6 million and $53.9 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of June 30, 2022
 Operating LeasesFinance LeasesTotal
Remainder of 2022$43,232 $740 $43,972 
202372,121 1,267 73,388 
202450,936 745 51,681 
202536,345 396 36,741 
202625,139 263 25,402 
Thereafter29,051 22 29,073 
Total future minimum operating and finance lease payments256,824 3,433 260,257 
Less imputed interest(18,403)(2)(18,405)
Total lease liabilities $238,421 $3,431 $241,852 
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 $14.6 million as of June 30, 2022. Rental expense associated primarily with certain month-to-month equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future amounts associated with such rentals.
The weighted average remaining lease terms and discount rates were as follows:
 As of June 30, 2022
Weighted average remaining lease term (in years):
Operating leases4.21
Finance leases2.94
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 the residual value and the fair market value of the underlying asset at the date of lease termination. As of June 30, 2022, the maximum guaranteed residual value of this equipment was $945.8 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.
During the three months ended March 31, 2022, Quanta entered into a real estate lease that has not yet commenced. The lease agreement also contains a purchase option in the amount of $53.7 million that can be exercised during 2022.
Leases
11. 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 EndedSix Months Ended
 June 30,June 30,
Lease costClassification2022202120222021
Finance lease cost:
Amortization of lease assets
Depreciation (1)
$436 $230 $876 $474 
Interest on lease liabilitiesInterest and other financing expenses28 23 55 50 
Operating lease costCost of services and Selling, general and administrative expenses24,248 26,947 49,125 54,723 
Short-term and variable lease cost (2)
Cost of services and Selling, general and administrative expenses224,088 160,342 443,387 318,241 
Total lease cost $248,800 $187,542 $493,443 $373,488 
(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.
During the three months ended June 30, 2022, Quanta recognized a $2.8 million asset impairment charge primarily related to the expected discontinued use of the right-of-use asset associated with its existing corporate headquarters in connection with a planned move to a new headquarters by the end of 2022. This amount is reported as “Asset impairment charges” in the accompanying condensed consolidated statements of operations.
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 $3.8 million and $3.2 million for the three months ended June 30, 2022 and 2021 and $7.4 million and $8.0 million for the six months ended June 30, 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 June 30, 2022 and December 31, 2021, the assets recorded related to these financing transactions, net of accumulated depreciation, totaled $78.6 million and $53.9 million.
Future minimum lease payments for operating and finance leases were as follows (in thousands):
 As of June 30, 2022
 Operating LeasesFinance LeasesTotal
Remainder of 2022$43,232 $740 $43,972 
202372,121 1,267 73,388 
202450,936 745 51,681 
202536,345 396 36,741 
202625,139 263 25,402 
Thereafter29,051 22 29,073 
Total future minimum operating and finance lease payments256,824 3,433 260,257 
Less imputed interest(18,403)(2)(18,405)
Total lease liabilities $238,421 $3,431 $241,852 
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 $14.6 million as of June 30, 2022. Rental expense associated primarily with certain month-to-month equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future amounts associated with such rentals.
The weighted average remaining lease terms and discount rates were as follows:
 As of June 30, 2022
Weighted average remaining lease term (in years):
Operating leases4.21
Finance leases2.94
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 the residual value and the fair market value of the underlying asset at the date of lease termination. As of June 30, 2022, the maximum guaranteed residual value of this equipment was $945.8 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.
During the three months ended March 31, 2022, Quanta entered into a real estate lease that has not yet commenced. The lease agreement also contains a purchase option in the amount of $53.7 million that can be exercised during 2022.