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Leases | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
Leases | LEASES:Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2022, the majority of Quanta’s leases had remaining lease terms of less than eleven 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 cost | Classification |  | 2022 |  | 2021 |  | 2020
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 1,540 |  |  | $ | 1,097 |  |  | $ | 1,234 |
Interest on lease liabilities | Interest and other financing expenses |  | 108 |  |  | 90 |  |  | 107 |
Operating lease cost | Cost of services and Selling, general and administrative expenses |  | 93,539 |  |  | 104,668 |  |  | 116,672 |
Short-term and variable lease cost (2) | Cost of services and Selling, general and administrative expenses |  | 953,721 |  |  | 716,722 |  |  | 656,649 |
Total lease cost |  |  | $ | 1,048,908 |  |  | $ | 822,577 |  |  | $ | 774,662 |
(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 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 property 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 $14.7 million, $13.9 million and $14.3 million for the years ended December 31, 2022, 2021 and 2020. The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):
|  |  | December 31, |  |
Lease type | Classification |  | 2022 |  | 2021 |  |
Assets: |  |  |  |  |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 229,691 |  |  | $ | 240,605 |  |  |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 3,238 |  |  | 2,415 |  |  |
Lease financing transaction assets (1) | Property and equipment, net of accumulated depreciation |  | 83,591 |  |  | 53,950 |  |  |
Total lease assets |  |  | $ | 316,520 |  |  | $ | 296,970 |  |  |
Liabilities: |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 74,052 |  |  | $ | 78,251 |  |  |
Finance | Current maturities of long-term debt and short-term debt |  | 1,433 |  |  | 1,156 |  |  |
Lease financing transaction liabilities (1) | Current maturities of long-term debt and short-term debt |  | 15,034 |  |  | 9,782 |  |  |
Non-current: |  |  |  |  |  |  |
Operating | Operating lease liabilities, net of current portion |  | 171,512 |  |  | 170,427 |  |  |
Finance | Long-term debt, net of current maturities |  | 2,109 |  |  | 1,390 |  |  |
Lease financing transaction liabilities (1) | Long-term debt, net of current maturities |  | 68,557 |  |  | 44,168 |  |  |
Total lease liabilities |  |  | $ | 332,697 |  |  | $ | 305,174 |  |  |
(1) 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 by a third-party lessor on behalf of Quanta, 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 and a corresponding liability. Future minimum lease payments for operating, finance leases and lease financing transactions were as follows (in thousands):
|  | As of December 31, 2022
|  | Operating Leases |  | Finance Leases |  | Lease Financing Transactions |  | Total
2023 |  | $ | 80,899 |  |  | $ | 1,517 |  |  | $ | 15,034 |  |  | $ | 97,450 |
2024 |  | 61,186 |  |  | 1,002 |  |  | 19,058 |  |  | 81,246 |
2025 |  | 45,363 |  |  | 638 |  |  | 15,331 |  |  | 61,332 |
2026 |  | 33,227 |  |  | 431 |  |  | 13,998 |  |  | 47,656 |
2027 |  | 19,835 |  |  | 40 |  |  | 10,460 |  |  | 30,335 |
Thereafter |  | 24,631 |  |  | — |  |  | 9,710 |  |  | 34,341 |
Total future minimum payments related to operating leases, finance leases and lease financing transactions |  | 265,141 |  |  | 3,628 |  |  | 83,591 |  |  | 352,360 |
Less imputed interest |  | (19,577) |  |  | (86) |  |  | — |  |  | (19,663) |
Total operating lease, finance lease and lease financing transaction liabilities |  | $ | 245,564 |  |  | $ | 3,542 |  |  | $ | 83,591 |  |  | $ | 332,697 |
Future minimum lease payments for short-term leases were $22.3 million as of December 31, 2022. The weighted average remaining lease terms and discount rates were as follows:
|  | As of December 31,
|  | 2022 |  | 2021 |  |
Weighted average remaining lease term (in years): |  |  |  |  |  |
Operating leases |  | 4.39 |  | 4.25 |  |
Finance leases |  | 2.93 |  | 2.57 |  |
Weighted average discount rate: |  |  |  |  |  |
Operating leases |  | 3.5 | % |  | 3.7 | % |  |
Finance leases |  | 3.1 | % |  | 3.3 | % |  |
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. Residual value guarantees approximate fair value and, therefore, generally do not result in significant payments.
Leases | LEASES:Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2022, the majority of Quanta’s leases had remaining lease terms of less than eleven 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 cost | Classification |  | 2022 |  | 2021 |  | 2020
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 1,540 |  |  | $ | 1,097 |  |  | $ | 1,234 |
Interest on lease liabilities | Interest and other financing expenses |  | 108 |  |  | 90 |  |  | 107 |
Operating lease cost | Cost of services and Selling, general and administrative expenses |  | 93,539 |  |  | 104,668 |  |  | 116,672 |
Short-term and variable lease cost (2) | Cost of services and Selling, general and administrative expenses |  | 953,721 |  |  | 716,722 |  |  | 656,649 |
Total lease cost |  |  | $ | 1,048,908 |  |  | $ | 822,577 |  |  | $ | 774,662 |
(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 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 property 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 $14.7 million, $13.9 million and $14.3 million for the years ended December 31, 2022, 2021 and 2020. The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):
|  |  | December 31, |  |
Lease type | Classification |  | 2022 |  | 2021 |  |
Assets: |  |  |  |  |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 229,691 |  |  | $ | 240,605 |  |  |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 3,238 |  |  | 2,415 |  |  |
Lease financing transaction assets (1) | Property and equipment, net of accumulated depreciation |  | 83,591 |  |  | 53,950 |  |  |
Total lease assets |  |  | $ | 316,520 |  |  | $ | 296,970 |  |  |
Liabilities: |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 74,052 |  |  | $ | 78,251 |  |  |
Finance | Current maturities of long-term debt and short-term debt |  | 1,433 |  |  | 1,156 |  |  |
Lease financing transaction liabilities (1) | Current maturities of long-term debt and short-term debt |  | 15,034 |  |  | 9,782 |  |  |
Non-current: |  |  |  |  |  |  |
Operating | Operating lease liabilities, net of current portion |  | 171,512 |  |  | 170,427 |  |  |
Finance | Long-term debt, net of current maturities |  | 2,109 |  |  | 1,390 |  |  |
Lease financing transaction liabilities (1) | Long-term debt, net of current maturities |  | 68,557 |  |  | 44,168 |  |  |
Total lease liabilities |  |  | $ | 332,697 |  |  | $ | 305,174 |  |  |
(1) 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 by a third-party lessor on behalf of Quanta, 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 and a corresponding liability. Future minimum lease payments for operating, finance leases and lease financing transactions were as follows (in thousands):
|  | As of December 31, 2022
|  | Operating Leases |  | Finance Leases |  | Lease Financing Transactions |  | Total
2023 |  | $ | 80,899 |  |  | $ | 1,517 |  |  | $ | 15,034 |  |  | $ | 97,450 |
2024 |  | 61,186 |  |  | 1,002 |  |  | 19,058 |  |  | 81,246 |
2025 |  | 45,363 |  |  | 638 |  |  | 15,331 |  |  | 61,332 |
2026 |  | 33,227 |  |  | 431 |  |  | 13,998 |  |  | 47,656 |
2027 |  | 19,835 |  |  | 40 |  |  | 10,460 |  |  | 30,335 |
Thereafter |  | 24,631 |  |  | — |  |  | 9,710 |  |  | 34,341 |
Total future minimum payments related to operating leases, finance leases and lease financing transactions |  | 265,141 |  |  | 3,628 |  |  | 83,591 |  |  | 352,360 |
Less imputed interest |  | (19,577) |  |  | (86) |  |  | — |  |  | (19,663) |
Total operating lease, finance lease and lease financing transaction liabilities |  | $ | 245,564 |  |  | $ | 3,542 |  |  | $ | 83,591 |  |  | $ | 332,697 |
Future minimum lease payments for short-term leases were $22.3 million as of December 31, 2022. The weighted average remaining lease terms and discount rates were as follows:
|  | As of December 31,
|  | 2022 |  | 2021 |  |
Weighted average remaining lease term (in years): |  |  |  |  |  |
Operating leases |  | 4.39 |  | 4.25 |  |
Finance leases |  | 2.93 |  | 2.57 |  |
Weighted average discount rate: |  |  |  |  |  |
Operating leases |  | 3.5 | % |  | 3.7 | % |  |
Finance leases |  | 3.1 | % |  | 3.3 | % |  |
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. Residual value guarantees approximate fair value and, therefore, generally do not result in significant payments.

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