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Acquisitions | 12 Months Ended
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Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | ACQUISITIONS: Subsequent to December 31, 2024, Quanta acquired a business located in the United States that specializes in civil solutions, including site clearing, earthwork, soil stabilization and infrastructure development (which will be primarily included in the Underground and Infrastructure segment) and a business located in Australia that specializes in electrical engineering and the design and manufacturing of industrial technology solutions including control systems (which will primarily be included in the Electric Power and Underground and Infrastructure segments). The consideration for these transactions consisted of approximately $400.5 million paid or payable in cash on the dates of the acquisitions and 515,822 shares of Quanta common stock, which had a fair value of $161.6 million as of the respective acquisition dates. The final amount of consideration for these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital, tax estimates and other contractually agreed-upon adjustments to consideration. Additionally, pursuant to the terms of the agreements, the former owners of these businesses are eligible to receive potential payments of contingent consideration of up to approximately $109.5 million to the extent the acquired businesses achieve certain financial and operating performance targets over a three-year period. Quanta is in the process of performing procedures to determine the fair value of assets acquired and liabilities assumed related to these acquisitions, including the fair value assessment of contingent consideration, and will include the preliminary purchase price allocations in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. On July 17, 2024, Quanta completed the acquisition of Cupertino Electric, Inc. (CEI), which provides electrical infrastructure solutions, including engineering, procurement, project management, construction and modularization services, to the technology, renewable energy and infrastructure and commercial industries. CEI is located in the United States, and its results have been included in the Electric Power and Renewable Energy segments since the acquisition date. The aggregate consideration for the acquisition was approximately $2.04 billion, which included approximately $1.65 billion paid in cash, including payment for cash held by CEI as of the acquisition date, and 882,926 shares of Quanta common stock, which had a fair value of $216.3 million as of the acquisition date. The cash consideration paid by Quanta, net of cash received from CEI, was $1.24 billion. Additionally, the former equity holders and award holders of CEI are eligible for a potential contingent consideration payment of up to $200.0 million based on achievement of certain financial performance targets during the three-year post-acquisition period beginning in January 2025. To the extent payable, Quanta, at its sole discretion, can pay up to 10% of any such contingent consideration amount in Quanta common stock. As of July 17, 2024, the fair value of the contingent consideration liability was $164.0 million. During the year ended December 31, 2024, Quanta also acquired seven additional businesses located in the United States, including: a business that provides specialty environmental solutions to utility, industrial and petrochemical companies (primarily included in the Underground and Infrastructure segment); a business that specializes in testing, manufacturing and distributing safety equipment and supplies (primarily included in the Electric Power and Renewable Energy segments); a business that specializes in electrical infrastructure services for substations, data centers and governmental entities (primarily included in the Electric Power segment); a business that manufactures transmission and distribution equipment for the electric utility industry (primarily included in the Electric Power and Renewable Energy segments); a business that provides services and equipment related to aerial telecommunications infrastructure and networks (primarily included in the Electric Power segment); a business that provides services related to fiber optic networks (primarily included in the Electric Power segment); and a business that specializes in designing, manufacturing, and distributing liquid-filled power transformers primarily for electrical companies and utilities (primarily included in the Electric Power and Renewable Energy segments). The consideration for these businesses consisted of approximately $540.1 million paid or payable in cash on the acquisition dates and 334,472 shares of Quanta common stock, which had a fair value of $74.8 million as of the acquisition dates. The final amount of consideration for certain of these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital. As of the dates of the respective acquisitions, the fair value of the contingent consideration liabilities related to certain of these acquisitions was $24.3 million. During the year ended December 31, 2023, Quanta acquired five 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); a business specializing in power studies, maintenance testing and commissioning primarily for utility and commercial customers (included in the Electric Power segment); and a business that manufactures power transformers for the electric utility, renewable energy, municipal power and industrial markets (included in the Electric Power and Renewable Energy segments). The consideration for these transactions consisted of approximately $780.8 million paid or payable in cash and 1,238,576 shares of Quanta common stock, which had a fair value of $158.9 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). Consideration for this acquisition included $22.3 million paid in cash. The results of operations of acquired businesses have been included in Quanta’s consolidated financial statements since their respective acquisition dates. 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 Purchase price allocations require significant use of estimates and are based on information that was available to management at the time these consolidated financial statements were prepared. Quanta uses a variety of information to estimate fair values, including quoted market prices, carrying amounts and valuation techniques such as discounted cash flows. When deemed appropriate, third-party appraisal firms are engaged to assist in fair value determination of fixed assets, intangible assets and certain other assets and liabilities. Quanta is finalizing its purchase price allocations related to certain businesses acquired in 2024 and further adjustments to the purchase price allocations may occur, with possible updates primarily related to intangible asset values, property and equipment values, certain contingent liabilities, tax estimates, and the finalization of closing working capital adjustments and other contractually agreed-upon adjustments to consideration. 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 December 31, 2024 for acquisitions completed in the year ended December 31, 2024 and 2023 (in thousands):
|  | Year Ended December 31,
|  | 2024 |  | 2023
|  | CEI |  | All Others |  |
Consideration: |  |  |  |  |  |
Cash paid or payable |  | $ | 1,654,967 |  |  | $ | 540,064 |  |  | $ | 780,773 |
Value of Quanta common stock issued |  | 216,264 |  |  | 74,797 |  |  | 158,922 |
Contingent consideration |  | 163,999 |  |  | 24,266 |  |  | — |
Fair value of total consideration transferred or estimated to be transferred |  | $ | 2,035,230 |  |  | $ | 639,127 |  |  | $ | 939,695 |
Cash and cash equivalents |  | $ | 414,705 |  |  | $ | 31,403 |  |  | $ | 123,891 |
Accounts receivable |  | 339,254 |  |  | 73,390 |  |  | 92,817 |
Contract assets |  | 92,160 |  |  | 8,995 |  |  | 17,200 |
Inventories |  | — |  |  | 46,345 |  |  | 74,872 |
Prepaid expenses and other current assets |  | 23,233 |  |  | 12,455 |  |  | 5,830 |
Property and equipment |  | 32,207 |  |  | 92,214 |  |  | 200,738 |
Operating lease right-of-use assets |  | 28,906 |  |  | 25,429 |  |  | 16,264 |
Other assets |  | 35,713 |  |  | 617 |  |  | 4,553 |
Other intangible assets |  | 669,000 |  |  | 211,042 |  |  | 192,915 |
Current portion of operating lease liabilities |  | (10,665) |  |  | (4,907) |  |  | (3,080) |
Accounts payable and accrued expenses |  | (315,435) |  |  | (75,800) |  |  | (88,227) |
Contract liabilities |  | (222,538) |  |  | (28,434) |  |  | (102,752) |
Operating lease liabilities, net of current portion |  | (19,449) |  |  | (20,522) |  |  | (13,790) |
Deferred income taxes |  | (9,385) |  |  | (48,646) |  |  | (21,489) |
Insurance and other non-current liabilities |  | (10,300) |  |  | (9,744) |  |  | (2,682) |
Total identifiable net assets |  | 1,047,406 |  |  | 313,837 |  |  | 497,060 |
Goodwill |  | 987,824 |  |  | 325,290 |  |  | 442,635 |
Fair value of net assets acquired |  | $ | 2,035,230 |  |  | $ | 639,127 |  |  | $ | 939,695 |
Goodwill represents the amount by which the purchase price for an acquired business exceeds the net fair value of the assets acquired and liabilities assumed. The acquisitions completed during the year ended December 31, 2024, 2023 and 2022 contributed to the recognition of goodwill by strategically expanding Quanta’s domestic renewable energy infrastructure solutions, electric power infrastructure solutions and communications service offerings, including electrical systems for data center, commercial and industrial facilities and the manufacturing of power transformers as well as by expanding Quanta’s domestic underground utility and infrastructure solutions. Goodwill increased by $58.5 million during the year ended December 31, 2024 as a result of certain post-closing adjustments associated with Quanta’s acquisition of CEI. As of December 31, 2024, approximately $42.4 million, $380.6 million, and $12.6 million of goodwill is expected to be deductible for income tax purposes related to acquisitions completed in 2024, 2023 and 2022. Quanta’s intangible assets subject to amortization include customer relationships, backlog, trade names, non-compete agreements, and patented rights and other. The following table summarizes the estimated fair values of identifiable intangible assets for the acquisitions completed in 2024 and 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).
|  | Year Ended December 31,
|  | 2024 |  | 2023
|  | CEI |  | All Others |  |  |  |
|  | Estimated Fair Value |  | Amortization Period in Years |  | Estimated Fair Value |  | Weighted Average Amortization Period in Years |  | Estimated Fair Value |  | Weighted Average Amortization Period in Years
Customer relationships |  | $ | 404,000 |  |  | 8.0 |  | $ | 163,355 |  |  | 7.1 |  | $ | 109,680 |  |  | 5.0
Backlog |  | 90,000 |  |  | 3.0 |  | 21,425 |  |  | 2.8 |  | 53,764 |  |  | 2.0
Trade names |  | 175,000 |  |  | 15.0 |  | 20,542 |  |  | 14.9 |  | 22,497 |  |  | 15.0
Non-compete agreements |  | — |  |  | N/A |  | 3,444 |  |  | 5.0 |  | 6,974 |  |  | 5.0
Patented rights, developed technology, process certifications and other |  | — |  |  | N/A |  | 2,276 |  |  | 15.0 |  | — |  |  | N/A
Total intangible assets subject to amortization |  | $ | 669,000 |  |  | 9.2 |  | $ | 211,042 |  |  | 7.4 |  | $ | 192,915 |  |  | 5.3
The fair value of customer relationships is estimated as of the date a business is acquired based on the value-in-use concept utilizing the income approach, specifically the multi-period excess earnings method. This method discounts to present value the projected cash flows attributable to the customer relationships, with consideration given to customer contract renewals and estimated customer attrition rates. The significant assumptions used by management in determining the fair values of customer relationships intangible assets include future revenues, margins, 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 relationships intangible assets for businesses acquired during the year ended December 31, 2024 and 2023 as of the respective acquisition dates:
|  | Year Ended December 31,
|  | 2024 |  |  | 2023
|  | Range |  | Weighted Average |  |  | Range |  | Weighted Average
Discount rates |  | 15% to 24% |  | 15% |  |  | 14% to 19% |  | 17%
Customer attrition rates |  | 10% to 25% |  | 11% |  |  | 10% to 30% |  | 19%
The fair value of backlog is estimated as of the acquisition date based upon the contractual nature of the backlog using the multi-period excess earnings method, which discounts to present value the projected cash flows attributable to the backlog. The fair value of trade names is estimated using the income approach, specifically the relief-from-royalty method, which is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty for use of the trade name. The significant assumptions used by management in determining the fair values of trade name intangible assets include future revenues, royalty rates, and discount rates. The value of a non-compete agreement is estimated based on the difference between the present value of the prospective cash flows with the agreement in place and the present value of the prospective cash flows without the agreement in place. The level of inputs used for these identifiable intangible asset fair value measurements is Level 3. Contingent Consideration As described above, certain business acquisitions have contingent consideration liabilities associated with the transactions. The aggregate fair value of outstanding contingent consideration liabilities for acquisitions completed prior to December 31, 2024 and their classification in the accompanying consolidated balance sheets is as follows (in thousands):
|  | December 31, 2024 |  | December 31, 2023
Accounts payable and accrued expenses |  | $ | 152,030 |  |  | $ | — |
Insurance and other non-current liabilities |  | 192,954 |  |  | 157,073 |
Total contingent consideration liabilities |  | $ | 344,984 |  |  | $ | 157,073 |
The estimated fair values of these contingent consideration liabilities are measured on a recurring basis using a probability-weighted discounted cash flow method, which considers significant inputs not observable in the market and are Level 3 inputs. The significant estimates used by management in determining fair value consist of projections of future financial results in relation to specific performance criteria specified in the contingent consideration agreements. These forecast projections include inputs such as revenues, operating margins and management’s probability assessment with respect to the likelihood of acquired businesses achieving those performance criteria during designated post-acquisition periods. Appropriate discount rates are also applied to determine the present value of the future expected payments. Quanta’s aggregate contingent consideration liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, accretion in present value, changes in estimated fair value, the performance of acquired businesses in post-acquisition periods, the incremental impact on Quanta’s performance attributable to an acquired business and in certain cases, management discretion. These changes are reflected in “Change in fair value of contingent consideration liabilities” in the accompanying consolidated statements of operations. All of Quanta’s outstanding contingent consideration liabilities are subject to a maximum payment amount, and the aggregate maximum payment amount of these liabilities for acquisitions completed prior to December 31, 2024 totaled $580.2 million as of December 31, 2024. During the year ended December 31, 2024, Quanta made no cash payments to settle contingent consideration liabilities. During the years ended December 31, 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 2024, 2023 and 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).
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Revenues |  | $ | 24,867,769 |  |  | $ | 23,403,024 |  |  | $ | 17,702,495 |
Net income attributable to common stock (1) |  | $ | 527,522 |  |  | $ | 638,973 |  |  | $ | 486,342 |
(1) The pro forma combined results of operations for the years ended December 31, 2024 include one-time acquisition-related expenses of $453.8 million ($335.8 million net of tax) for pre-acquisition transaction costs incurred by CEI, primarily related to the vesting and increase in value of stock appreciation rights as a result of the acquisition. The pro forma combined results of operations for the years ended December 31, 2024 and 2023 were prepared by adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2024 as if such acquisitions had occurred January 1, 2023. The pro forma combined results of operations for the year ended December 31, 2023 and 2022 were prepared by further adjusting the historical results of Quanta to include the historical results of the business acquired in 2023 as if such acquisition had occurred January 1, 2022. The pro forma combined results of operations for the year ended December 31, 2022 were prepared by further adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2022 as if such acquisitions 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 debt incurred by Quanta for the purpose of financing the acquisition of CEI and cash consideration paid for all acquired businesses; 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 acquired businesses or any cost savings or other synergies that resulted or may result from the acquisitions. Impact on Consolidated Results of Operations Related to Acquisitions Included in Quanta’s consolidated results of operations for the year ended December 31, 2024 were revenues of $1.60 billion and income before income taxes of $17.7 million, which included $98.9 million of amortization expense related to the acquisitions completed in 2024. Included in Quanta’s consolidated results of operations for the year ended December 31, 2023 were revenues of $475.2 million and income before income taxes of $15.9 million, which included $34.7 million of amortization expense related to the acquisitions completed in 2023. Included in Quanta’s consolidated results of operations for the year ended December 31, 2022 were revenues of $15.5 million and income before income taxes of $2.5 million, which included $1.4 million of amortization expense related to the acquisition completed in 2022.

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