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Debt Obligations
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Debt Obligations DEBT OBLIGATIONS:
Quanta’s long-term debt obligations consisted of the following (in thousands):
 December 31,
 20222021
0.950% Senior Notes due October 2024
$500,000 $500,000 
2.900% Senior Notes due October 2030
1,000,000 1,000,000 
2.350% Senior Notes due January 2032
500,000 500,000 
3.050% Senior Notes due October 2041
500,000 500,000 
Borrowings under senior credit facility786,910 1,199,841 
Borrowings under commercial paper program373,000 — 
Other long-term debt92,907 64,800 
Finance leases3,542 2,546 
Unamortized discount and financing costs(26,432)(29,295)
Total long-term debt obligations3,729,927 3,737,892 
Less — Current maturities of long-term debt37,495 13,418 
Total long-term debt obligations, net of current maturities$3,692,432 $3,724,474 
As of December 31, 2022, principal payments required to be made during the next five years are set forth in the table below. The payments required under finance leases and lease financing transactions are provided in Note 11.
2023$21,028 
2024$539,436 
2025$77,591 
2026$1,029,829 
2027$1,345 
Short-term debt was zero and $15.7 million at December 31, 2022 and 2021.
Senior Notes
On September 23, 2021, Quanta issued $1.50 billion aggregate principal amount of senior notes consisting of: $500.0 million aggregate principal amount of 0.950% senior notes due October 2024 (the 2024 notes); $500.0 million aggregate principal amount of 2.350% senior notes due January 2032 (the 2032 notes); and $500.0 million aggregate principal amount of 3.050% senior notes due October 2041 (the 2041 notes). The cumulative proceeds received from the public offering of the 2024 notes, the 2032 notes and the 2041 notes were $1.48 billion, net of the original issue discount, underwriting discounts and deferred financing costs, which were used, along with drawings under Quanta’s senior credit facility, as amended, to acquire Blattner. On September 22, 2020, Quanta issued $1.00 billion aggregate principal amount of 2.900% senior notes due October 2030 (the 2030 notes, and together with the 2024 notes, the 2032 notes and the 2041 notes, collectively, the Senior Notes) and received proceeds of $986.7 million from the offering, net of the original issue discount, underwriting discounts and deferred financing costs, and used such proceeds, together with cash on hand, to voluntarily prepay the $1.21 billion of term loans then-outstanding under Quanta’s credit agreement for its senior credit facility.
The interest amounts due on Quanta’s senior notes on each payment date are set forth below (dollars in thousands):
Title of the NotesInterest AmountPayment DatesCommencement Date
0.950% Senior Notes due October 2024
$2,375 April 1 and October 1April 1, 2022
2.900% Senior Notes due October 2030
$14,500 April 1 and October 1April 1, 2021
2.350% Senior Notes due January 2032
$5,875 January 15 and July 15July 15, 2022
3.050% Senior Notes due October 2041
$7,625 April 1 and October 1April 1, 2022
In each case as further specified by the terms of the senior notes and the indenture and supplemental indentures governing the senior notes (collectively, the indenture), Quanta may redeem all or a portion of (i) the 2024 notes at a price equal to 100% of the principal amount plus accrued and unpaid interest; (ii) the 2030 notes at any time prior to July 1, 2030 at a price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest, and at any time on or after July 1,
2030 at a price equal to 100% of the principal amount plus accrued and unpaid interest; (iii) the 2032 notes at any time prior to October 15, 2031 at a price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest, and at any time on or after October 15, 2031 at a price equal to 100% of the principal amount plus accrued and unpaid interest; and (iv) the 2041 notes at any time prior to April 1, 2041 at a price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest, and at any time on or after April 1, 2041 at a price equal to 100% of the principal amount plus accrued and unpaid interest.
Upon the occurrence of a Change of Control Triggering Event (as defined in the indenture), unless Quanta has exercised its right to redeem the applicable series of Senior Notes in full by giving irrevocable notice to the trustee, each holder of such Senior Notes will have the right to require Quanta to purchase all or a portion of such holder’s Senior Notes of such series at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest.
The indenture contains covenants that, among other things, limit Quanta’s ability to incur liens securing certain indebtedness, to engage in certain sale and leaseback transactions with respect to certain properties and to sell all or substantially all of Quanta’s assets or merge or consolidate with or into other companies. The indenture also contains customary events of default.
The fair value of Quanta’s Senior Notes was $2.00 billion at December 31, 2022, compared to a carrying value of $2.48 billion net of unamortized bond discount, underwriting discounts and deferred financing costs of $23.8 million. The fair value of the Senior Notes is based on the quoted market prices for the same issue, and the senior notes are categorized as Level 1 liabilities.
Senior Credit Facility
The credit agreement for Quanta’s senior credit facility (as amended, the credit agreement) provides for a $750.0 million term loan facility and aggregate revolving commitments of $2.64 billion, with a maturity date of October 8, 2026. Subject to the conditions specified in the credit agreement, Quanta has the option to increase the capacity of the credit facility, in the form of an increase in the revolving commitments, term loans or a combination thereof, from time to time, upon receipt of additional commitments from new or existing lenders by up to an additional (i) $400.0 million plus (ii) additional amounts so long as the Incremental Leverage Ratio Requirement (as defined in the credit agreement) is satisfied at the time of such increase. The Incremental Leverage Ratio Requirement requires, among other things, after giving pro forma effect to such increase and the use of proceeds therefrom, compliance with the credit agreement’s financial covenants as of the most recent fiscal quarter end for which financial statements were required to be delivered. Borrowings under the senior credit facility and the applicable interest rates were as follows (dollars in thousands):
Year Ended December 31,
202220212020
Maximum amount outstanding$1,684,783 $1,463,667 $2,023,326 
Average daily amount outstanding$1,250,493 $591,114 $1,091,091 
Weighted-average interest rate3.0 %1.9 %2.1 %
On August 23, 2022 Quanta entered into an amendment to the credit agreement, which among other things, permits proceeds of revolving loans to be used to provide credit support for Quanta’s commercial paper program, as described further below; established Term Secured Overnight Financing Rate (Term SOFR) (as defined in the credit agreement) as the benchmark rate for the senior credit facility (including both the term loan facility and the revolving credit facility) in replacement of London Interbank Offered Rate (LIBOR) (as defined therein prior to giving effect to the amendment) as further described below, effective as of the date of the amendment; and revised certain other terms and provisions.
The credit agreement contains certain covenants, including, as of the end of any fiscal quarter of Quanta, (i) a maximum Consolidated Leverage Ratio (as defined in the credit agreement) of 3.5 to 1.0 (except that in connection with certain permitted acquisitions in excess of $200.0 million, such ratio is 4.0 to 1.0 for the fiscal quarter in which the acquisition is completed and the four subsequent fiscal quarters) and (ii) a minimum Consolidated Interest Coverage Ratio (as defined in the credit agreement) of 3.0 to 1.0. As of December 31, 2022, Quanta was in compliance with all of the financial covenants under the credit agreement.
The Consolidated Leverage Ratio is the ratio of Quanta’s total funded debt to Consolidated EBITDA (as defined in the credit agreement). For purposes of calculating the Consolidated Leverage Ratio, total funded debt is reduced by available cash and Cash Equivalents (as defined in the credit agreement) in excess of $25.0 million. Consolidated Interest Coverage Ratio is the ratio of (i) Consolidated EBIT (as defined in the credit agreement) for the four fiscal quarters most recently ended to (ii) Consolidated Interest Expense (as defined in the credit agreement) for such period (excluding all interest expense attributable to capitalized loan costs and the amount of fees paid in connection with the issuance of letters of credit on behalf of
Quanta during such period).
The credit agreement also limits certain acquisitions, mergers and consolidations, indebtedness, asset sales and prepayments of indebtedness and, subject to certain exceptions, prohibits liens on Quanta’s assets. These limits include a limit on surety-backed letters of credit issued separate from the senior credit facility, which are not to exceed $300.0 million at any one time outstanding. The credit agreement allows cash payments for dividends and stock repurchases subject to compliance with the following requirements (including after giving effect to the dividend or stock repurchase): (i) no default or event of default under the credit agreement; (ii) continued compliance with the financial covenants in the credit agreement; and (iii) at least $100.0 million of availability under the senior credit facility and/or cash and cash equivalents on hand.
The credit agreement provides for customary events of default and contains cross-default provisions with other debt instruments exceeding $300.0 million in borrowings or availability. If an Event of Default (as defined in the credit agreement) occurs and is continuing, on the terms and subject to the conditions set forth in the credit agreement, the lenders may declare all amounts outstanding and accrued and unpaid interest immediately due and payable, require that Quanta provide cash collateral for all outstanding letter of credit obligations and terminate the commitments under the credit agreement.
Term Loan. As of December 31, 2022, Quanta had $750.0 million outstanding under its term loan facility. The carrying amount of the term loan under Quanta’s senior credit facility approximates fair value due to its variable interest rate.
The term loan requires quarterly principal payments on the first business day of each January, April, July and October, beginning in January 2023, in the amount of $4.7 million per quarter in 2023 and 2024, $9.4 million per quarter in 2025 and $18.8 million per quarter in 2026. The aggregate remaining principal amount outstanding must be paid by the maturity date of the senior credit facility. Quanta may voluntarily prepay the term loan borrowings from time to time, in whole or in part, without premium or penalty.
Beginning August 23, 2022, amounts borrowed under the term loan facility bear interest, at Quanta’s option, at a rate equal to either (a) the Term SOFR (as defined in the credit agreement) plus 1.000% to 1.625%, or (b) the Base Rate (as defined below) plus 0.000% to 0.625%, each as determined based on either Quanta’s Consolidated Leverage Ratio (as described above) or Quanta’s Debt Rating (as defined in the credit agreement), whichever is more favorable to Quanta. The Base Rate equals the highest of (i) the Federal Funds Rate (as defined in the credit agreement) plus 0.5%, (ii) Bank of America N.A.’s prime rate, (iii) the Term SOFR plus 1.00%, and (iv) 1.00% subject to applicable interest rate floors.
Prior to August 23, 2022, amounts borrowed under the term loan facility bore interest, at Quanta’s option, at a rate equal to either (a) the LIBOR Rate (as defined in the credit agreement) plus 1.000% to 1.625%, or (b) the Base Rate (as defined below) plus 0.000% to 0.625%, each as determined based on either Quanta’s Consolidated Leverage Ratio (as described above) or Quanta’s Debt Rating (as described above), whichever was more favorable to Quanta. The Base Rate equaled the highest of (i) the Federal Funds Rate (as described above) plus 0.5%, (ii) Bank of America N.A.’s prime rate and (iii) the LIBOR Rate plus 1.00%.
Revolving Loans. As of December 31, 2022, Quanta had $36.9 million of outstanding revolving loans under the senior credit facility. Of the total outstanding revolving loan borrowings, all $36.9 million were denominated in Canadian dollars. The carrying amounts of the revolving borrowings under Quanta’s senior credit facility approximate fair value, as all revolving borrowings have a short maturity.
As of December 31, 2022, Quanta also had $227.8 million of letters of credit issued under the senior credit facility, of which $128.5 million were denominated in U.S. dollars and $99.3 million were denominated in currencies other than the U.S. dollar, primarily Australian and Canadian dollars. Additionally, available commitments for revolving loans under the senior credit facility must be maintained in order to provide credit support for notes issued under Quanta’s commercial paper program, and therefore such notes effectively reduce the available borrowing capacity under the senior credit facility. As of December 31, 2022, $2.00 billion remained available under the senior credit facility for new revolving loans, letters of credit and support of the commercial paper program in U.S. dollars and certain alternative currencies.
Beginning August 23, 2022, amounts borrowed in U.S. dollars under the revolving credit facility bear interest, at Quanta’s option, at a rate equal to either (a) the Term SOFR plus 1.125% to 1.750%, or (b) the Base Rate plus 0.125% to 0.750%, each as determined based on either Quanta’s Consolidated Leverage Ratio or its Debt Rating, whichever is more favorable to Quanta. Revolving loans borrowed in any currency other than U.S. dollars bear interest at a rate equal to the Alternative Currency Daily Rate or the Alternative Currency Term Rate (each as defined in the credit agreement), as applicable, plus 1.125% to 1.750%, as determined based on either Quanta’s Consolidated Leverage Ratio or Quanta’s Debt Rating, whichever is more favorable to Quanta. Additionally, standby or commercial letters of credit issued under the credit agreement are subject to a letter of credit fee of 1.125% to 1.750%; Performance Letters of Credit (as defined in the credit agreement) issued under the credit agreement in support of certain contractual obligations are subject to a letter of credit fee of 0.675% to 1.125%; and Quanta is subject to a commitment fee of 0.100% to 0.275% on any unused availability under the revolving credit facility, in each case as determined
based on either the Quanta’s Consolidated Leverage Ratio or its Debt Rating, whichever is more favorable to Quanta.
Between October 8, 2021 and August 23, 2022, the interest rates were the same as above except that the benchmark rate utilized was LIBOR Rate rather than Term SOFR.
Prior to October 8, 2021, revolving loans borrowed in U.S. dollars bore interest, at Quanta’s option, at a rate equal to either (i) the Eurocurrency Rate (as defined in the credit agreement) plus 1.125% to 2.000%, as determined based on Quanta’s Consolidated Leverage Ratio, or (ii) the prior base rate (as described below) plus 0.125% to 1.000%, as determined based on Quanta’s Consolidated Leverage Ratio. Revolving loans borrowed in any currency other than U.S. dollars bore interest at a rate equal to the Eurocurrency Rate plus 1.125% to 2.000%, as determined based on Quanta’s Consolidated Leverage Ratio. Additionally, standby or commercial letters of credit issued under the credit agreement were subject to a letter of credit fee of 1.125% to 2.000%, based on Quanta’s Consolidated Leverage Ratio, and Performance Letters of Credit (as described above) issued under the credit agreement in support of certain contractual obligations were subject to a letter of credit fee of 0.675% to 1.150%, based on Quanta’s Consolidated Leverage Ratio. The prior calculation for base rate equaled the highest of (i) the Federal Funds Rate (as defined in the credit agreement) plus 0.5%, (ii) the prime rate publicly announced by Bank of America, N.A. and (iii) the Eurocurrency Rate plus 1.00%. Quanta was also subject to a commitment fee of 0.275% to 0.425% from September 22, 2020 through October 7, 2021, based on its Consolidated Leverage Ratio, on any unused availability under the senior credit facility. Prior to the amendment on September 22, 2020, Quanta was subject to a commitment fee of 0.200% to 0.400%.
Deferred Financing Costs. As of December 31, 2022 and 2021, capitalized deferred financing costs, net of accumulated amortization, related to Quanta’s revolving loans under its senior credit facility and commercial paper program were $8.3 million and $10.1 million and are included in “Other assets, net” in the accompanying consolidated balance sheets. Amortization of deferred financing costs for all debt instruments included in interest expense was $12.7 million, $8.4 million and $5.1 million for the years ended December 31, 2022, 2021 and 2020.
Commercial Paper Program
On August 23, 2022, Quanta entered into a commercial paper program that allows Quanta to issue unsecured commercial paper notes in an amount up to a maximum aggregate face amount of $1 billion outstanding at any time. The notes are sold under customary market terms in the U.S. commercial paper market at a discount from par or at par and bear interest at rates determined at the time of issuance. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. Quanta began issuing notes under this program on September 2, 2022 and had $373.0 million of outstanding notes as of December 31, 2022, with a weighted average interest rate of 5.2%. The commercial paper notes were outstanding from September 2, 2022 through December 31, 2022. During such period, Quanta had maximum borrowings outstanding of $707.3 million, weighted average borrowings outstanding of $462.4 million, a weighted average interest rate of 4.5%, and a weighted average maturity of 15 days. The carrying amounts of the notes issued under Quanta’s commercial paper program approximate fair value, as all notes currently have a short maturity.
Additional Letters of Credit
As of December 31, 2022 Quanta had $189.9 million of surety-backed letters of credit issued outside of its senior credit facility, which were denominated in U.S. dollars.