Certain of Quanta’s services are generally provided pursuant to master service agreements (MSAs), repair and maintenance contracts and fixed price and non-fixed price construction contracts. These contracts are classified into three categories: unit-price contracts, cost-plus contracts and fixed price contracts.


	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
By contract type:
Fixed price contracts	$	2,296,888	45.5	%	$	1,805,156	42.7	%	4,231,776		44.7	%	$	3,494,791	42.6	%
Unit-price contracts	1,697,629		33.6		1,451,905		34.3		3,195,023		33.7		$	2,809,507	34.3
Cost-plus contracts	1,054,093		20.9		974,942		23.0		2,050,637		21.6		1,893,230		23.1
Total revenues	$	5,048,610	100.0	%	$	4,232,003	100.0	%	$	9,477,436	100.0	%	$	8,197,528	100.0	%


	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
By primary geographic location:
United States	$	4,282,902	84.8	%	$	3,667,337	86.7	%	$	7,949,267	83.9	%	$	6,991,306	85.2	%
Canada	523,258		10.4		439,466		10.4		1,065,618		11.2		990,371		12.1
Australia	156,725		3.1		89,369		2.1		311,402		3.3		144,570		1.8
Others	85,725		1.7		35,831		0.8		151,149		1.6		71,281		0.9
Total revenues	$	5,048,610	100.0	%	$	4,232,003	100.0	%	$	9,477,436	100.0	%	$	8,197,528	100.0	%

Under fixed-price contracts, as well as unit-price contracts with more than an insignificant amount of partially completed units, revenue is recognized as performance obligations are satisfied over time, with the percentage completion generally measured as the percentage of costs incurred to total estimated costs for such performance obligation. Approximately 54.0% and 51.7% of Quanta’s revenues recognized during the three months ended June 30, 2023 and 2022 were associated with this revenue recognition method, and 52.4% and 51.5% of Quanta’s revenues recognized during the six months ended June 30, 2023 and 2022 were associated with this revenue recognition method.

As of June 30, 2023 and December 31, 2022, the aggregate transaction price allocated to unsatisfied or partially satisfied performance obligations was approximately $12.48 billion and $8.80 billion, with 70.7% and 72.1% expected to be recognized in the subsequent twelve months. These amounts represent management’s estimates of the consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work had not yet begun as of such dates. For purposes of calculating remaining performance obligations, Quanta includes all estimated revenues attributable to consolidated joint ventures and variable interest entities, revenues from funded and unfunded portions of government contracts to the extent they are reasonably expected to be realized, and revenues from change orders and claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under MSAs and non-fixed price contracts expected to be completed within one year.

Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety of factors, including unforeseen or changed circumstances not included in Quanta’s cost estimates or covered by its contracts. Some of the factors that can result in positive changes in estimates on projects include successful execution through project risks, reduction of estimated project costs or increases of estimated revenues. Some of the factors that can result in negative changes in estimates include concealed or unknown site conditions; changes to or disputes with customers regarding the scope of services; changes in estimates related to the length of time to complete a performance obligation; changes or delays with respect to permitting and regulatory requirements and materials; changes in the cost of equipment, commodities, materials or skilled labor; unanticipated costs or claims due to delays or failure to perform by customers or third parties; customer failure to provide required materials or equipment; errors in engineering, specifications or designs; project modifications; adverse weather conditions, natural disasters, and other emergencies; and performance and quality issues causing delay (including payment of liquidated damages) or requiring rework or replacement. Any changes in estimates could result in changes to profitability or losses associated with the related performance obligations.

Additionally, changes in cost estimates on certain contracts may result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims. Quanta recognizes amounts associated with change orders and claims as revenue if it is probable that the contract price will be adjusted and the amount of any such adjustment can be reasonably estimated.

As of June 30, 2023 and December 31, 2022, Quanta had recognized revenues of $745.1 million and $549.3 million related to change orders and claims included as contract price adjustments primarily in “Contract assets” in the accompanying consolidated balance sheets. These change orders and claims were in the process of being negotiated in the normal course of business and represent management’s estimates of additional contract revenues that have been earned and are probable of collection.

The largest component of the revenues recognized related to change orders and claims as of June 30, 2023 and of the increase relative to December 31, 2022 is associated with a large renewable transmission project in Canada. During 2021 and 2022, decreased productivity and additional costs arose from delays, administrative requirements and labor issues due to the COVID-19 pandemic, including incremental governmental requirements and worksite restrictions. During the six months ended June 30, 2023, additional costs arose from residual impacts associated with such delays, administrative requirements and labor issues due to the COVID-19 pandemic, including work resequencing and acceleration, access delays, and logistical challenges along with other issues outside of Quanta’s control.

Changes in estimates can result in the recognition of revenue in a current period for performance obligations that were satisfied or partially satisfied in prior periods or the reversal of previously recognized revenue if the currently estimated revenue is less than the previous estimate. The impact of a change in contract estimate is measured as the difference between the revenue or gross profit recognized in the prior period as compared to the revenue or gross profit which would have been recognized had the revised estimate been used as the basis of recognition in the prior period. Changes in estimates can also result in contract losses, which are recognized in full when they are determined to be probable and can be reasonably estimated.

Revenues were positively impacted by 0.7% and 1.5% during the three months ended June 30, 2023 and 2022 as a result of changes in estimates associated with performance obligations on fixed price contracts partially satisfied prior to March 31, 2023 and 2022. Revenues were positively impacted by 0.3% and 1.0% during the six months ended June 30, 2023 and 2022 as a result of changes in estimates associated with performance obligations on fixed price contracts partially satisfied prior to December 31, 2022 and 2021.

Operating results for the three months ended June 30, 2023 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of March 31, 2023. There were no material changes in estimates on any individual project.

Operating results for the six months ended June 30, 2023 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of December 31, 2022. However, Quanta’s large renewable transmission project in Canada was negatively impacted by $20.7 million due to changes to estimated project costs during this period, as mentioned above.

Operating results for the three months ended June 30, 2022 were favorably impacted by $62.3 million, or 10.0%, of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress as of March 31, 2022. The overall favorable impact resulted from net positive changes in estimates across a large number of projects, primarily as a result of favorable performance and successful mitigation of risks and contingencies as the projects progressed to completion. Partially offsetting the aggregate net favorable impact to gross profit was a negative change in estimate of $13.0 million for the three months ended June 30, 2022, associated with the large renewable transmission project in Canada, described above.

Operating results for the six months ended June 30, 2022 were favorably impacted by $72.7 million, or 6.2% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress at December 31, 2021. The overall favorable impact resulted from net positive changes in estimates across a large number of projects, primarily as a result of favorable performance and successful mitigation of risks and contingencies as the projects progressed to completion. Partially offsetting the aggregate net favorable impact to gross profit was a negative change in estimate of $23.7 million for the six months ended June 30, 2022, associated with the large renewable transmission project in Canada, described above.

Contract assets and liabilities fluctuate period to period based on various factors, including, among others, changes in the number and size of projects in progress at period end; variability in billing and payment terms, such as up-front or advance billings, interim or milestone billings, or deferred billings; and unapproved change orders and contract claims recognized as revenues. The increase in contract assets from December 31, 2022 to June 30, 2023 was primarily due to additional unapproved change orders and claims related to the large renewable transmission project in Canada described above, as well as progress on other projects on which the timing of billings lagged behind the completion of work.

Quanta determines its allowance for credit losses based on an estimate of expected credit losses for financial instruments, primarily accounts receivable and contract assets. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Expected credit losses are estimated by evaluating trends in historical write-off experience and applying historical loss ratios to pools of financial assets with similar risk characteristics.

Quanta’s historical loss ratio and its determination of its risk pools, which are used to calculate expected credit losses, may be adjusted for changes in customer credit concentrations within its portfolio of financial assets, its customers’ ability to pay, and other considerations, such as economic and market changes, changes to regulatory or technological environments affecting customers and the consistency between current and forecasted economic conditions and historical economic conditions used to derive historical loss ratios. At the end of each quarter, management reassesses these and other relevant factors, including the impact of uncertainty and challenges in the overall economy and in Quanta’s industries and markets, which currently include inflationary pressure, supply chain and other logistical challenges and increased interest rates.

accounts receivable delinquent after 30 days but, absent certain specific considerations, generally does not consider such amounts delinquent in its credit loss analysis unless the accounts receivable are at least 120 days outstanding. In addition, management monitors the credit quality of its receivables by, among other things, obtaining credit ratings for significant customers, assessing economic and market conditions and evaluating material changes to a customer’s business, cash flows and financial condition. Should anticipated recoveries relating to receivables fail to materialize, including anticipated recoveries relating to bankruptcies or other workout situations, Quanta could experience reduced cash flows and losses in excess of current allowances provided.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Balance at beginning of period	$	16,530	$	49,916	$	15,644	$	49,749
Increase in provision for credit losses	2,889		(428)		5,247		(295)
Write-offs charged against the allowance net of recoveries of amounts previously written off	(5,511)		219		(6,983)		253
Balance at end of period	$	13,908	$	49,707	$	13,908	$	49,707

Quanta is subject to concentrations of credit risk related primarily to its receivable position with customers, which includes amounts related to billed and unbilled accounts receivable and contract assets for services Quanta has performed for customers. Quanta grants credit under normal payment terms, generally without collateral. One customer within the Renewable Energy Infrastructure Solutions segment associated with the large renewable transmission project in Canada described above represented 15% and 13% of Quanta’s consolidated receivable position as of June 30, 2023 and December 31, 2022. No customer represented 10% or more of Quanta’s consolidated revenues for the three or six months ended June 30, 2023 or 2022.

Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on Quanta’s experience in recent years, the majority of these retainage balances are expected to be collected within one year. Retainage balances with expected settlement dates within one year of June 30, 2023 and December 31, 2022 were $483.9 million and $397.6 million, which are included in “Accounts receivable.” Retainage balances with expected settlement dates beyond one year were $147.8 million and $136.2 million as of June 30, 2023 and December 31, 2022 and are included in “Other assets, net.”

Quanta recognizes unbilled receivables for non-fixed price contracts within “Accounts receivable” in certain circumstances, such as when revenues have been earned and recorded but the amount cannot be billed under the terms of the contract until a later date or when amounts arise from routine lags in billing. These balances do not include revenues recognized for work performed under fixed-price contracts and unit-price contracts with more than an insignificant amount of partially completed units, as these amounts are recorded as “Contract assets.” As of June 30, 2023 and December 31, 2022, unbilled receivables included in “Accounts receivable” were $929.4 million and $823.9 million. The increase in unbilled receivables was primarily due to significant increases in work and certain delays in billing related to certain large customers. Quanta also recognizes unearned revenues for non-fixed price contracts when cash is received prior to recognizing revenues for the related performance obligation. Unearned revenues, which are included in “Accounts payable and accrued expenses,” were $61.6 million and $59.6 million as of June 30, 2023 and December 31, 2022.