XML 35 R20.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Dec. 31, 2023

LEASES:

Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2023, 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 and lease financing cost	Classification	2023		2022		2021
Finance lease cost:
Amortization of lease assets	Depreciation (1)	$	4,944	$	1,540	$	1,097
Interest on lease liabilities	Interest and other financing expenses	1,463		108		90
Lease financing transactions:(2)
Depreciation	Depreciation (1)	7,698		5,303		3,423
Interest	Interest and other financing expenses	12,992		8,405		5,472
Operating lease cost	Cost of services and Selling, general and administrative expenses	93,133		93,539		104,668
Short-term and variable lease cost (3)	Cost of services and Selling, general and administrative expenses	1,106,454		953,721		716,722
Total lease and lease financing transactions cost		$	1,226,684	$	1,062,616	$	831,472

(1) Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.

(2) 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.

(3) 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 and personal 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 $16.5 million, $14.7 million and $13.9 million for the years ended December 31, 2023, 2022 and 2021.

The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):


		December 31,
Lease type	Classification	2023		2022
Assets:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	249,443	$	229,691
Finance lease assets	Property and equipment, net of accumulated depreciation	35,770		3,238
Lease financing transaction assets	Property and equipment, net of accumulated depreciation	102,955		83,591
Total lease and lease financing assets		$	388,168	$	316,520
Liabilities:
Current:
Operating	Current portion of operating lease liabilities	$	77,995	$	74,052
Finance	Current maturities of long-term debt and short-term debt	7,767		1,433
Lease financing transaction liabilities	Current maturities of long-term debt and short-term debt	7,345		15,034

Non-current:
Operating	Operating lease liabilities, net of current portion	186,996		171,512
Finance	Long-term debt, net of current maturities	31,810		2,109
Lease financing transaction liabilities	Long-term debt, net of current maturities	95,610		68,557
Total lease and lease financing liabilities		$	407,523	$	332,697

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


	As of December 31, 2023
	Operating Leases		Finance Leases		Total
2024	$	87,354	$	8,869	$	96,223
2025	70,047		8,527		78,574
2026	52,359		8,277		60,636
2027	35,844		7,735		43,579
2028	20,782		7,418		28,200
Thereafter	24,856		6,003		30,859
Total future minimum payments related to operating leases, finance leases and lease financing transactions	291,242		46,829		338,071
Less imputed interest	(26,251)		(7,252)		(33,503)
Total	$	264,991	$	39,577	$	304,568

Future minimum lease payments for short-term leases were $21.3 million as of December 31, 2023. As of December 31, 2023, Quanta also had minimum lease payments related to operating lease obligations of $16.6 million for leases that had not yet commenced and that are expected to commence in 2024 and have lease terms of one to ten years. Additionally, as described above, 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. The future payments related to these lease financing transactions totaled $73.5 million and comprise principal and interest payments. The principal payments required to be made during the next five years are included in the debt maturity table in Note 10.

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


	As of December 31,
	2023		2022
Weighted average remaining lease term (in years):
Operating leases	4.34		4.39
Finance leases	5.69		2.93
Weighted average discount rate:
Operating leases	4.3	%	3.5	%
Finance leases	6.3	%	3.1	%

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