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Leases

6 Months Ended

Jun. 30, 2024

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												Six Months Ended
									June 30,												June 30,
Lease cost			Classification						2024						2023						2024						2023
Finance lease cost:
Amortization of lease assets			Depreciation (1)						$	2,825					$	1,102					$	5,794					$	2,013
Interest on lease liabilities			Interest and other financing expenses						688						299						1,410						507
Lease financing transactions: (2)
Depreciation			Depreciation (1)						2,503						1,633						4,595						3,885
Interest			Interest and other financing expenses						4,294						2,559						7,792						6,858
Operating lease cost			Cost of services and Selling, general and administrative expenses						26,036						23,140						51,570						46,363
Short-term and variable lease cost (3)			Cost of services and Selling, general and administrative expenses						284,766						249,868						572,101						487,946
Total lease cost									$	321,112					$	278,601					$	643,262					$	547,572

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

Related party lease expense was $4.8 million and $3.9 million for the three months ended June 30, 2024 and 2023 and $9.5 million and $7.8 million for the six months ended June 30, 2024 and 2023.

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

						As of June 30, 2024
						Operating Leases						Finance Leases						Total
Remainder of 2024						$	50,328					$	4,862					$	55,190
2025						87,853						9,238						97,091
2026						68,936						8,761						77,697
2027						50,038						7,715						57,753
2028						31,754						7,113						38,867
Thereafter						39,509						5,845						45,354
Total future minimum payments related to operating leases and finance leases						328,418						43,534						371,952
Less imputed interest						(33,491)						(3,391)						(36,882)
Total						$	294,927					$	40,143					$	335,070

Future minimum lease payments for short-term leases were $22.4 million as of June 30, 2024. As of June 30, 2024, Quanta also had minimum lease payments related to operating lease obligations of $17.3 million for leases that had not yet commenced as of such date, 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 $104.2 million and comprise principal and interest payments.

The weighted average remaining lease terms (other than for short-term leases) and discount rates were as follows:

						As of June 30, 2024
Weighted average remaining lease term (in years):
Operating leases						4.42
Finance leases						5.06
Weighted average discount rate:
Operating leases						4.7		%
Finance leases						6.4		%

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												Six Months Ended
									June 30,												June 30,
Lease cost			Classification						2024						2023						2024						2023
Finance lease cost:
Amortization of lease assets			Depreciation (1)						$	2,825					$	1,102					$	5,794					$	2,013
Interest on lease liabilities			Interest and other financing expenses						688						299						1,410						507
Lease financing transactions: (2)
Depreciation			Depreciation (1)						2,503						1,633						4,595						3,885
Interest			Interest and other financing expenses						4,294						2,559						7,792						6,858
Operating lease cost			Cost of services and Selling, general and administrative expenses						26,036						23,140						51,570						46,363
Short-term and variable lease cost (3)			Cost of services and Selling, general and administrative expenses						284,766						249,868						572,101						487,946
Total lease cost									$	321,112					$	278,601					$	643,262					$	547,572

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

Related party lease expense was $4.8 million and $3.9 million for the three months ended June 30, 2024 and 2023 and $9.5 million and $7.8 million for the six months ended June 30, 2024 and 2023.

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

						As of June 30, 2024
						Operating Leases						Finance Leases						Total
Remainder of 2024						$	50,328					$	4,862					$	55,190
2025						87,853						9,238						97,091
2026						68,936						8,761						77,697
2027						50,038						7,715						57,753
2028						31,754						7,113						38,867
Thereafter						39,509						5,845						45,354
Total future minimum payments related to operating leases and finance leases						328,418						43,534						371,952
Less imputed interest						(33,491)						(3,391)						(36,882)
Total						$	294,927					$	40,143					$	335,070

Future minimum lease payments for short-term leases were $22.4 million as of June 30, 2024. As of June 30, 2024, Quanta also had minimum lease payments related to operating lease obligations of $17.3 million for leases that had not yet commenced as of such date, 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 $104.2 million and comprise principal and interest payments.

The weighted average remaining lease terms (other than for short-term leases) and discount rates were as follows:

						As of June 30, 2024
Weighted average remaining lease term (in years):
Operating leases						4.42
Finance leases						5.06
Weighted average discount rate:
Operating leases						4.7		%
Finance leases						6.4		%

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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- 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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X

- 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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