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Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

9. 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 Ended												Nine Months Ended
									September 30,												September 30,
Lease cost			Classification						2023						2022						2023						2022
Finance lease cost:
Amortization of lease assets			Depreciation (1)						$	1,168					$	301					$	3,181					$	1,177
Interest on lease liabilities			Interest and other financing expenses						674						27						1,181						82
Operating lease cost			Cost of services and Selling, general and administrative expenses						23,379						21,957						69,742						71,082
Short-term and variable lease cost (2)			Cost of services and Selling, general and administrative expenses						302,134						250,460						790,080						693,847
Total lease cost									$	327,355					$	272,745					$	864,184					$	766,188

(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.

Related party lease expense was $4.5 million and $4.6 million for the three months ended September 30, 2023 and 2022 and $12.3 million and $12.0 million for the nine months ended September 30, 2023 and 2022.

Future minimum lease payments for operating leases, finance leases and lease financing transactions were as follows (in thousands):

						As of September 30, 2023
						Operating Leases						Finance Leases						Lease Financing Transactions						Total
Remainder of 2023						$	23,541					$	770					$	4,940					$	29,251
2024						82,431						6,902						18,710						108,043
2025						65,559						6,542						16,986						89,087
2026						48,661						6,298						17,530						72,489
2027						32,482						5,768						14,679						52,929
Thereafter						38,454						5,414						32,492						76,360
Total future minimum payments related to operating leases, finance leases and lease financing transactions						291,128						31,694						105,337						428,159
Less imputed interest						(25,343)						(1,605)						—						(26,948)
Total						$	265,785					$	30,089					$	105,337					$	401,211

Future minimum lease payments for short-term leases were $20.3 million as of September 30, 2023.

The weighted average remaining lease terms and discount rates were as follows:

						As of September 30, 2023
Weighted average remaining lease term (in years):
Operating leases						4.34
Finance leases						5.70
Weighted average discount rate:
Operating leases						4.1		%
Finance leases						5.2		%

Quanta has also guaranteed the residual value under certain of its equipment operating leases and real estate finance 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. Historically, the fair value of the assets at the time of lease termination generally has approximated or exceeded the residual value guarantees, and therefore such guarantees are not expected to result in significant payments.

Leases

9. 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 Ended												Nine Months Ended
									September 30,												September 30,
Lease cost			Classification						2023						2022						2023						2022
Finance lease cost:
Amortization of lease assets			Depreciation (1)						$	1,168					$	301					$	3,181					$	1,177
Interest on lease liabilities			Interest and other financing expenses						674						27						1,181						82
Operating lease cost			Cost of services and Selling, general and administrative expenses						23,379						21,957						69,742						71,082
Short-term and variable lease cost (2)			Cost of services and Selling, general and administrative expenses						302,134						250,460						790,080						693,847
Total lease cost									$	327,355					$	272,745					$	864,184					$	766,188

(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.

Related party lease expense was $4.5 million and $4.6 million for the three months ended September 30, 2023 and 2022 and $12.3 million and $12.0 million for the nine months ended September 30, 2023 and 2022.

Future minimum lease payments for operating leases, finance leases and lease financing transactions were as follows (in thousands):

						As of September 30, 2023
						Operating Leases						Finance Leases						Lease Financing Transactions						Total
Remainder of 2023						$	23,541					$	770					$	4,940					$	29,251
2024						82,431						6,902						18,710						108,043
2025						65,559						6,542						16,986						89,087
2026						48,661						6,298						17,530						72,489
2027						32,482						5,768						14,679						52,929
Thereafter						38,454						5,414						32,492						76,360
Total future minimum payments related to operating leases, finance leases and lease financing transactions						291,128						31,694						105,337						428,159
Less imputed interest						(25,343)						(1,605)						—						(26,948)
Total						$	265,785					$	30,089					$	105,337					$	401,211

Future minimum lease payments for short-term leases were $20.3 million as of September 30, 2023.

The weighted average remaining lease terms and discount rates were as follows:

						As of September 30, 2023
Weighted average remaining lease term (in years):
Operating leases						4.34
Finance leases						5.70
Weighted average discount rate:
Operating leases						4.1		%
Finance leases						5.2		%

Quanta has also guaranteed the residual value under certain of its equipment operating leases and real estate finance 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. Historically, the fair value of the assets at the time of lease termination generally has approximated or exceeded the residual value guarantees, and therefore such guarantees are not expected to result in significant payments.

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- References

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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