XML 26 R13.htm IDEA: XBRL DOCUMENT
v3.23.3

Acquisitions | 9 Months Ended
--- | ---
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | 5. ACQUISITIONS: The results of operations of acquired businesses have been included in Quanta’s consolidated financial statements since their respective acquisition dates. During the nine months ended September 30, 2023, Quanta acquired four businesses located in the United States including: a business that provides services related to high-voltage transmission lines, overhead and underground distribution, emergency restoration and industrial and commercial wiring and lighting (primarily included in the Electric Power segment); a business that procures parts, assembles kits for sale, manages logistics and installs solar tracking equipment for utility and development customers (primarily included in the Renewable Energy segment); a business that provides concrete construction services (primarily included in the Electric Power and Renewable Energy segments); and a business specializing in power studies, maintenance testing and commissioning primarily for utility and commercial customers (included in the Electric Power segment). The consideration for these transactions consisted of approximately $484.1 million paid or payable in cash (subject to certain adjustments) and 1,062,408 shares of Quanta common stock, which had a fair value of $131.5 million as of the dates of the acquisitions. In July 2022, Quanta acquired a business located in the United States that provides construction contracting services to utilities, specializing in trenching and underground pipeline and electrical conduit installation, primarily included in the Electric Power segment. Additionally, the former owners of certain acquired businesses are eligible to receive potential payments of contingent consideration to the extent the acquired businesses achieve certain financial performance targets over specified post-acquisition periods. Purchase Price Allocation Quanta is finalizing its purchase price allocations related to businesses acquired in 2023, and further adjustments to the purchase price allocations may occur, 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 September 30, 2022 and September 30, 2023 was allocated to acquired assets and assumed liabilities, which resulted in an allocation of $189.8 million to net tangible assets, $115.5 million to identifiable intangible assets and $317.2 million to goodwill. The following table summarizes the estimated fair value of total consideration transferred or estimated to be transferred and the fair value of assets acquired and liabilities assumed as of their respective acquisition dates as of September 30, 2023 for acquisitions completed in the nine months ended September 30, 2023 (in thousands):
|  | Nine Months Ended |  |
|  | September 30, 2023 |  |
Consideration: |  |  |  |  |
Cash paid or payable |  | $ | 484,103 |  |  |  |
Value of Quanta common stock issued |  | 131,521 |  |  |  |
Contingent consideration |  | 6,850 |  |  |  |
Fair value of total consideration transferred or estimated to be transferred |  | $ | 622,474 |  |  |  |
Cash and cash equivalents |  | $ | 14,924 |  |  |  |
Accounts receivable |  | 51,289 |  |  |  |
Contract assets |  | 195 |  |  |  |
Inventories |  | 56,960 |  |  |  |
Prepaid expenses and other current assets |  | 4,417 |  |  |  |
Property and equipment |  | 147,012 |  |  |  |
Operating lease assets |  | 16,264 |  |  |  |
Other assets |  | 4,553 |  |  |  |
Identifiable intangible assets |  | 115,515 |  |  |  |
Accounts payable and accrued liabilities |  | (64,923) |  |  |  |
Contract liabilities |  | (3,071) |  |  |  |
Operating lease liabilities, current |  | (3,080) |  |  |  |
Deferred tax liabilities, net |  | (20,556) |  |  |  |
Operating lease liabilities, non-current |  | (13,790) |  |  |  |
Other long-term liabilities |  | (398) |  |  |  |
Total identifiable net assets |  | 305,311 |  |  |  |
Goodwill |  | 317,163 |  |  |  |
Fair value of net assets acquired |  | $ | 622,474 |  |  |  |
As of September 30, 2023, approximately $261.3 million of goodwill is expected to be deductible for income tax purposes related to acquisitions completed in the nine months ended September 30, 2023. The following table summarizes the estimated fair values of identifiable intangible assets for the acquisitions completed in the nine months ended September 30, 2023 as of the acquisition dates and the related weighted average amortization periods by type (in thousands, except for weighted average amortization periods, which are in years).
|  | Nine Months Ended |  |  |
|  | September 30, 2023 |  |  |
|  | Estimated Fair Value |  | Weighted Average Amortization Period in Years |  |  |  |  |
Customer relationships |  | $ | 83,180 |  |  | 4.6 |  |  |  |  |
Backlog |  | 11,564 |  |  | 0.8 |  |  |  |  |
Trade names |  | 13,797 |  |  | 15.0 |  |  |  |  |
Non-compete agreements |  | 6,974 |  |  | 5.0 |  |  |  |  |
Total intangible assets subject to amortization |  | $ | 115,515 |  |  | 5.5 |  |  |  |  |
The significant estimates used by management in determining the fair values of customer relationship intangible assets include future revenues, discount rates and customer attrition rates. The following table includes the discount rates and customer attrition rates used to determine the fair value of customer relationship intangible assets for businesses acquired during the nine months ended September 30, 2023 as of the respective acquisition dates:
|  | Nine Months Ended |  |  |  |
|  | September 30, 2023 |  |  |  |
|  | Range |  | Weighted Average |  |  |  |
Discount rates |  | 15% to 19% |  | 17% |  |  |  |
Customer attrition rates |  | 10% to 30% |  | 18% |  |  |  |
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):
|  | September 30, 2023 |  | December 31, 2022
Accounts payable and accrued expenses |  | $ | — |  |  | $ | 5,000 |
Insurance and other non-current liabilities |  | 151,156 |  |  | 143,517 |
Total contingent consideration liabilities |  | $ | 151,156 |  |  | $ | 148,517 |
The fair value determinations of contingent consideration liabilities incorporate significant inputs not observable in the market, including revenue forecasts, operating margins, discount rates and the probability of achieving certain performance targets during designated post-acquisition periods. The final amount of certain contingent consideration payments could also be subject to Quanta management discretion. Accordingly, the level of inputs used for these fair value measurements is Level 3. Quanta’s outstanding contingent consideration liabilities are subject to a maximum payment amount, and the aggregate maximum payment amount of these liabilities totaled $336.6 million as of September 30, 2023. During the nine months ended September 30, 2023 and 2022, Quanta settled certain contingent consideration liabilities with cash payments of $5.0 million and $1.6 million. Pro Forma Results of Operations The following unaudited supplemental pro forma results of operations for Quanta, which incorporate the acquisitions completed in the nine months ended September 30, 2023 and the year ended December 31, 2022, have been provided for illustrative purposes only and may not 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 (in thousands).
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | September 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Revenues |  | $ | 5,624,274 |  |  | $ | 4,585,187 |  |  | $ | 15,112,066 |  |  | $ | 13,045,546 |
Net income attributable to common stock |  | $ | 272,772 |  |  | $ | 155,177 |  |  | $ | 533,540 |  |  | $ | 328,147 |
The pro forma combined results of operations for the three and nine months ended September 30, 2023 and 2022 were prepared by adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2023 as if such acquisitions had occurred January 1, 2022. The pro forma combined results of operations for the three and nine months ended September 30, 2022 were prepared by further adjusting the historical results of Quanta to include the historical results of the business acquired in 2022 as if such acquisition had occurred January 1, 2021. 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; an increase in amortization expense due to the intangible assets recorded; elimination of inter-company sales; and changes in depreciation expense to adjust acquired property and equipment to the acquisition date fair value and to conform with Quanta’s accounting policies. 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. Results of Operations Revenues of $117.4 million and income before income taxes of $3.5 million, which includes $7.3 million of amortization expense and $1.8 million of acquisition-related costs, related to the acquisitions completed in 2023 are included in Quanta’s condensed consolidated results of operations for the three months ended September 30, 2023. Revenues of $354.0 million and income before income taxes of $0.3 million, which includes $22.3 million of amortization expense and $19.6 million of acquisition-related costs, related to the acquisitions completed in 2023 are included in Quanta’s condensed consolidated results of operations for the nine months ended September 30, 2023. Revenues of $5.1 million and income before income taxes of $0.2 million, which includes $0.7 million of amortization expense and $0.6 million of acquisition-related costs, related to the acquisition completed in 2022 are included in Quanta’s condensed consolidated results of operations for the three and nine months ended September 30, 2022. Acquisition Subsequent to Quarter-End In October 2023, Quanta acquired a business located in the United States. The business is a manufacturer of power transformers for the investor-owned electric utility, renewable energy, municipal power and industrial markets. The aggregate consideration paid or payable for this transaction was approximately $300 million, consisting of a combination of cash and shares of Quanta common stock. The final amount of consideration also remains subject to certain post-closing adjustments, including with respect to net working capital.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration