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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021.
or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from          to          .
Commission File Number:001-13831
pwr-20210630_g1.jpg
Quanta Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware74-2851603
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2800 Post Oak Boulevard, Suite 2600
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713629-7600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par valuePWRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer  
Non-accelerated filer
Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 
As of August 3, 2021, the number of outstanding shares of Common Stock of the registrant was 139,152,345.
QUANTA SERVICES, INC. AND SUBSIDIARIES
INDEX
Page




Cautionary Statement About Forward-Looking Statements and Information
This Quarterly Report on Form 10-Q (Quarterly Report) of Quanta Services, Inc. (together with its subsidiaries, Quanta, we, us or our) includes forward-looking statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “may,” “will,” “should,” “could,” “expect,” “believe,” “plan,” “intend” and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:
Projected revenues, net income, earnings per share, margins, cash flows, liquidity, weighted average shares outstanding, capital expenditures and tax rates, as well as other projections of operating or financial results;
Expectations regarding our business or financial outlook;
Expectations regarding opportunities, technological developments, competitive positioning, future economic and regulatory conditions and other trends in particular markets or industries;
Expectations regarding the pandemic associated with the novel coronavirus disease that began in 2019 (COVID-19), including the continued and potential impact of the COVID-19 pandemic and of governmental responses to the pandemic on our business, operations, supply chain, personnel, financial condition, results of operations, cash flows and liquidity;
Expectations regarding our plans and strategies;
The business plans or financial condition of our customers, including with respect to the COVID-19 pandemic and the transition to a carbon-neutral economy;
The potential impact of commodity prices and production volumes on our business, financial condition, results of operations, cash flows and demand for our services;
The potential benefits from, and future financial and operational performance of, acquired businesses and our investments, including our equity interest in LUMA Energy, LLC (LUMA);
Beliefs and assumptions about the collectability of receivables;
The expected value of contracts or intended contracts with customers, as well as the scope, services, term or results of any awarded or expected projects;
The development of and opportunities with respect to future projects, including renewable energy projects and larger electric transmission and pipeline projects;
Future capital allocation initiatives, including the amount and timing of, and strategies with respect to, any future stock repurchases and expectations regarding the declaration, amount and timing of any future cash dividends;
The impact of existing or potential legislation or regulation;
Potential opportunities that may be indicated by bidding activity or similar discussions with customers;
The future demand for and availability of labor resources in the industries we serve;
The expected realization of our remaining performance obligations or backlog;
The expected outcome of pending or threatened legal proceedings; and
Possible recovery of pending or contemplated insurance claims, change orders and claims asserted against customers or third parties.
These forward-looking statements are not guarantees of future performance, involve or rely on a number of risks, uncertainties, and assumptions that are difficult to predict or are beyond our control, and reflect management’s beliefs and assumptions based on information available at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements and that any or all of our forward-looking statements may turn out to be inaccurate or incorrect. These statements can be affected by inaccurate assumptions and by known or unknown risks and uncertainties, including the following:
Market, industry, economic, financial or political conditions that are outside of our control, including economic, energy, infrastructure and environmental policies and plans that are adopted or proposed by the U.S. federal and state governments or other governments in territories or countries in which we operate, weakness in the capital markets and the ongoing and potential impact on financial markets and worldwide economic activity of the COVID-19 pandemic and governmental responses thereto;
Quarterly variations in our operating and financial results, liquidity, financial condition, cash flows, capital requirements, and reinvestment opportunities, including the ongoing and potential impact to our business, operations and supply chains resulting from the COVID-19 pandemic and governmental responses thereto;
1


The severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of business and governmental responses thereto on our operations, personnel and supply chains, and on commercial activity and demand across our business and our customers’ businesses, as well as our inability to predict the extent to which the COVID-19 pandemic will adversely impact our business, financial performance, results of operations, financial position, liquidity, cash flows, the price of our securities and the achievement of our strategic objectives;
Trends and growth opportunities in relevant markets, including our ability to obtain future project awards;
The time and costs required to exit and resolve outstanding matters related to our Latin American operations, as well as the business and political climate in Latin America;
Delays, deferrals, reductions in scope or cancellations of anticipated, pending or existing projects as a result of, among other things, the COVID-19 pandemic, weather, regulatory or permitting issues, environmental processes, project performance issues, claimed force majeure events, protests or other political activity, legal challenges, reductions or eliminations in governmental funding or customer capital constraints;
The effect of commodity prices and commodity production volumes on our operations and growth opportunities and on our customers’ capital programs and demand for our services;
The successful negotiation, execution, performance and completion of anticipated, pending and existing contracts;
Risks associated with operational hazards that arise due to the nature of the services we provide and the conditions in which we operate, including, among others, wildfires and explosions;
Unexpected costs, liabilities, fines or penalties that may arise from legal proceedings, indemnity obligations, reimbursement obligations associated with letters of credit or bonds, multiemployer pension plans (e.g., underfunding of liabilities, termination or withdrawal liability) or other claims or actions asserted against us, including amounts that are not covered by, or are in excess of the coverage under, our third-party insurance;
Potential unavailability or cancellation of third-party insurance coverage, as well as the exclusion of coverage for certain losses, potential increases in premiums for coverage deemed beneficial to us, or the unavailability of coverage deemed beneficial to us at reasonable and competitive rates (e.g., coverage for wildfire events);
Damage to our brands or reputation arising as a result of cyber-security breaches, environmental and occupational health and safety matters, corporate scandal, failure to successfully perform a high-profile project, involvement in a catastrophic event (e.g., fire, explosion) or other negative incidents;
Disruptions in, or failure to adequately protect, our information technology systems;
Our dependence on suppliers, subcontractors, equipment manufacturers and other third parties and the impact of the COVID-19 pandemic on these service providers;
Estimates and assumptions related to our financial results, remaining performance obligations and backlog;
Our ability to attract and the potential shortage of skilled employees, as well as our ability to retain key personnel and qualified employees;
Our dependence on fixed price contracts and the potential that we incur losses with respect to these contracts, including as a result of inaccurate estimates of project costs or inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project;
Adverse weather conditions, natural disasters and other emergencies, including wildfires, pandemics (including the ongoing COVID-19 pandemic), hurricanes, tropical storms, floods, earthquakes and other geological- and weather-related hazards;
Our ability to generate internal growth;
Competition in our business, including our ability to effectively compete for new projects and market share;
The future development of natural resources;
The failure of existing or potential legislative actions and initiatives to result in increased demand for our services;
Fluctuations of prices of certain materials used in our and our customers’ businesses, including as a result of inflation, the imposition of tariffs, governmental regulations affecting the sourcing of certain materials and equipment and other changes in U.S. trade relationships with foreign countries;
2


Cancellation provisions within our contracts and the risk that contracts expire and are not renewed or are replaced on less favorable terms;
Loss of customers with whom we have long-standing or significant relationships;
The potential that our participation in joint ventures or similar structures exposes us to liability or harm to our reputation as a result of acts or omissions by our partners;
Our inability or failure to comply with the terms of our contracts, which may result in additional costs, unexcused delays, warranty claims, failure to meet performance guarantees, damages or contract terminations;
The inability or refusal of our customers or third-party contractors to pay for services, which could be attributable to, among other things, the COVID-19 pandemic or challenged energy markets, and which could result in our inability to collect our outstanding receivables, failure to recover amounts billed to, or avoidance of certain payments received from, customers in bankruptcy or failure to recover on change orders or contract claims;
Budgetary or other constraints that may reduce or eliminate tax incentives or government funding for projects, which may result in project delays or cancellations;
Our inability to successfully complete our remaining performance obligations or realize our backlog;
Technological advancements and market developments that could reduce demand for our services;
Risks associated with operating in international markets, including instability of foreign governments, currency exchange fluctuations, and compliance with unfamiliar foreign legal systems and cultural practices, the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery and anti-corruption laws, and complex U.S. and foreign tax regulations and international treaties;
Our inability to successfully identify, complete, integrate and realize synergies from acquisitions, including the inability to retain key personnel from acquired businesses;
The potential adverse impact of acquisitions and investments, including the potential increase in risks already existing in our operations and poor performance or decline in value of acquired businesses or investments;
The adverse impact of impairments of goodwill, other intangible assets, receivables, long-lived assets or investments;
Difficulties arising from our decentralized management structure;
The impact of the unionized portion of our workforce on our operations, including labor stoppages or interruptions due to strikes or lockouts;
An inability to access sufficient funding to finance desired growth and operations, including our ability to access capital markets on favorable terms, as well as fluctuations in the price and trading volume of our common stock, debt covenant compliance, interest rate fluctuations and other factors affecting our financing and investing activities;
Our ability to obtain bonds, letters of credit and other project security;
Risks related to the implementation of new information technology systems;
New or changed tax laws, treaties or regulations;
Inability to realize deferred tax assets;
Significant fluctuations in foreign currency exchange rates; and
The other risks and uncertainties described elsewhere herein and in Item 1A. Risk Factors of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Annual Report) and as may be detailed from time to time in our other public filings with the U.S. Securities and Exchange Commission (SEC).
All of our forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements or that are otherwise included in this report. Although forward-looking statements reflect our good faith beliefs at the time they are made, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. In addition, we do not undertake and expressly
3


disclaim any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report or otherwise.
4


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
June 30,
2021
December 31, 2020
ASSETS
Current Assets:  
Cash and cash equivalents$212,473 $184,620 
Accounts receivable, net of allowances of $39,713 and $16,546
2,570,457 2,716,083 
Contract assets669,313 453,832 
Inventories62,154 50,472 
Prepaid expenses and other current assets219,538 183,382 
Total current assets3,733,935 3,588,389 
Property and equipment, net of accumulated depreciation of $1,461,570 and $1,372,132
1,606,057 1,560,656 
Operating lease right-of-use assets239,721 256,845 
Other assets, net600,819 435,713 
Other intangible assets, net of accumulated amortization of $562,274 and $517,574
403,931 435,655 
Goodwill2,136,133 2,121,014 
Total assets$8,720,596 $8,398,272 
LIABILITIES AND EQUITY
Current Liabilities:  
Current maturities of long-term debt and short-term debt$11,176 $14,764 
Current portion of operating lease liabilities81,404 85,134 
Accounts payable and accrued expenses1,535,334 1,509,794 
Contract liabilities503,219 528,864 
Total current liabilities2,131,133 2,138,556 
Long-term debt, net of current maturities1,353,542 1,174,294 
Operating lease liabilities, net of current portion166,280 178,822 
Deferred income taxes187,582 166,407 
Insurance and other non-current liabilities392,265 391,221 
Total liabilities4,230,802 4,049,300 
Commitments and Contingencies
Equity:  
Common stock, $0.00001 par value, 600,000,000 shares authorized, 164,880,628 and 162,710,792 shares issued, and 139,197,724 and 138,300,191 shares outstanding
2 2 
Additional paid-in capital2,208,905 2,170,026 
Retained earnings3,454,682 3,264,967 
Accumulated other comprehensive loss(216,563)(232,997)
Treasury stock, 25,682,904 and 24,410,601 common shares
(960,294)(857,817)
Total stockholders’ equity4,486,732 4,344,181 
Non-controlling interests3,062 4,791 
Total equity4,489,794 4,348,972 
Total liabilities and equity$8,720,596 $8,398,272 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
(Unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Revenues$2,999,816 $2,506,231 $5,703,397 $5,270,326 
Cost of services (including depreciation)2,552,105 2,150,967 4,882,796 4,582,866 
Gross profit447,711 355,264 820,601 687,460 
Equity in earnings of integral unconsolidated affiliates7,450 1,045 12,633 1,045 
Selling, general and administrative expenses(270,110)(227,852)(513,462)(458,645)
Amortization of intangible assets(21,291)(17,779)(42,646)(35,687)
Asset impairment charges(2,319) (2,319) 
Change in fair value of contingent consideration liabilities210 2,238 573 (520)
Operating income161,651 112,916 275,380 193,653 
Interest expense(13,109)(8,654)(25,584)(22,660)
Interest income2,909 275 3,026 1,034 
Other income (expense), net8,471 3,247 12,143 (6,580)
Income before income taxes159,922 107,784 264,965 165,447 
Provision for income taxes40,951 32,989 54,675 49,149 
Net income118,971 74,795 210,290 116,298 
Less: Net income attributable to non-controlling interests1,938 849 3,496 3,666 
Net income attributable to common stock$117,033 $73,946 $206,794 $112,632 
Earnings per share attributable to common stock:
Basic$0.83 $0.53 $1.48 $0.79 
Diluted$0.81 $0.52 $1.43 $0.78 
Shares used in computing earnings per share:
Weighted average basic shares outstanding140,276 139,856 140,199 142,154 
Weighted average diluted shares outstanding144,607 143,521 144,523 145,213 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6



QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Net income$118,971 $74,795 $210,290 $116,298 
Other comprehensive income (loss), net of tax provision:
Foreign currency translation adjustment, net of tax of $0, $0, $0 and $0
7,888 34,737 16,420 (48,231)
Other, net of tax of $1, $0, $3 and $0
7  14  
Other comprehensive income (loss)7,895 34,737 16,434 (48,231)
Comprehensive income126,866 109,532 226,724 68,067 
Less: Comprehensive income attributable to non-controlling interests1,938 849 3,496 3,666 
Total comprehensive income attributable to common stock$124,928 $108,683 $223,228 $64,401 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7


QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Cash Flows from Operating Activities:  
Net income$118,971 $74,795 $210,290 $116,298 
Adjustments to reconcile net income to net cash provided by operating activities— 
Depreciation62,757 54,526 124,864 108,936 
Amortization of intangible assets21,291 17,779 42,646 35,687 
Asset impairment charges 2,319  2,319  
Impairment of cost method investment 9,311  9,311 
Change in fair value of contingent consideration liabilities(210)(2,238)(573)520 
Equity in (earnings) losses of unconsolidated affiliates(8,108)4,784 (13,976)7,467 
Amortization of debt discount and issuance costs844 588 1,690 1,177 
Gain on sale of property and equipment(4,872)(1,158)(9,854)(1,972)
Provision for credit losses23,877 1,071 23,920 1,344 
Deferred income tax provision (benefit)14,253 (5,993)16,747 (1,783)
Non-cash stock-based compensation23,923 21,980 42,610 36,892 
Foreign currency gain(1,054)(3,084)(1,630)(3,437)
Payments for contingent consideration liabilities  (590) (590)
Changes in operating assets and liabilities, net of non-cash transactions(65,043)325,708 (124,492)415,178 
Net cash provided by operating activities188,948 497,479 314,561 725,028 
Cash Flows from Investing Activities:  
Capital expenditures(74,898)(48,148)(158,384)(116,257)
Proceeds from sale of property and equipment11,447 7,826 18,670 12,616 
Proceeds from insurance settlements related to property and equipment273  280 198 
Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired(35,334)(1,643)(68,112)(24,437)
Proceeds from disposition of businesses 8,387  10,861 
Investments in unconsolidated affiliates and other(342)(3,068)(114,324)(8,760)
Cash received from investments in unconsolidated affiliates and other entities2,807 32 3,017 32 
Cash paid for intangible assets(324) (324) 
Net cash used in investing activities(96,371)(36,614)(319,177)(125,747)
Cash Flows from Financing Activities:  
Borrowings under credit facility1,055,583 500,727 1,884,079 1,975,179 
Payments under credit facility(1,058,022)(782,987)(1,714,840)(1,954,046)
Payments of other long-term debt(757)(537)(1,614)(983)
Net repayments of short-term debt, net of borrowings (1,620)(4,247)(4,419)
Payments for contingent consideration liabilities (9,410)(263)(10,399)
Distributions to non-controlling interests(4,121)(1,962)(5,250)(3,925)
Payments related to tax withholding for stock-based compensation (36,572)(7,687)(60,493)(23,573)
Payment of dividends(8,415)(7,160)(17,213)(14,544)
Repurchase of common stock(29,449) (48,923)(200,000)
Net cash provided by (used in) financing activities(81,753)(310,636)31,236 (236,710)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash1,276 986 1,287 537 
Net increase in cash, cash equivalents and restricted cash12,100 151,215 27,907 363,108 
Cash, cash equivalents and restricted cash, beginning of period202,615 381,638 186,808 169,745 
Cash, cash equivalents and restricted cash, end of period$214,715 $532,853 $214,715 $532,853 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8


QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
(Unaudited)

Accumulated
AdditionalOtherTotalNon-
Common StockPaid-InRetainedComprehensiveTreasuryStockholders’ControllingTotal
SharesAmountCapitalEarningsIncome (Loss)StockEquityInterestsEquity
Balance, December 31, 2020138,300,191 $2 $2,170,026 $3,264,967 $(232,997)$(857,817)$4,344,181 $4,791 $4,348,972 
Other comprehensive income— — — — 8,539 — 8,539 — 8,539 
Stock-based compensation activity1,368,739 — 13,702 — — (55,101)(41,399)— (41,399)
Common stock repurchases(222,081)— — — — (17,710)(17,710)— (17,710)
Dividends declared ($0.06 per share)
— — — (8,429)— — (8,429)— (8,429)
Distributions to non-controlling interests— — — — — — — (1,129)(1,129)
Net income— — — 89,761 — — 89,761 1,558 91,319 
Balance, March 31, 2021139,446,849 2 2,183,728 3,346,299 (224,458)(930,628)4,374,943 5,220 4,380,163 
Other comprehensive income— — — — 7,895 — 7,895 — 7,895 
Stock-based compensation activity64,600 — 25,177 — — (216)24,961 — 24,961 
Common stock repurchases(313,725)— — — — (29,450)(29,450)— (29,450)
Dividends declared ($0.06 per share)
— — — (8,650)— — (8,650)— (8,650)
Distributions to non-controlling interests— — — — — — — (4,121)(4,121)
Other— — — — — — — 25 25 
Net income— — — 117,033 — — 117,033 1,938 118,971 
Balance, June 30, 2021139,197,724 $2 $2,208,905 $3,454,682 $(216,563)$(960,294)$4,486,732 $3,062 $4,489,794 

The accompanying notes are an integral part of these condensed consolidated financial statements.

9


QUANTA SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
(Unaudited)
Accumulated
ExchangeableAdditionalOtherTotalNon-
Common StockSharesPaid-InRetainedComprehensiveTreasuryStockholders’ControllingTotal
SharesAmountSharesAmountCapitalEarningsIncome (Loss)StockEquityInterestsEquity
Balance, December 31, 2019142,324,318 $2 36,183 $ $2,024,610 $2,854,271 $(241,818)$(586,773)$4,050,292 $3,539 $4,053,831 
Credit loss cumulative effect adjustment— — — — — (3,841)— — (3,841)(3,841)
Other comprehensive loss— — — — — — (82,968)— (82,968)— (82,968)
Acquisitions121,089 — — — 4,329 — — — 4,329 4,329 
Stock-based compensation activity1,124,530 — — — 11,444 — — (19,750)(8,306)— (8,306)
Exchange of exchangeable shares36,183 — (36,183)— — — — — — — — 
Common stock repurchases(5,960,134)— — — — — (200,000)(200,000)— (200,000)
Dividends declared ($0.05 per share)
— — — — — (7,184)— — (7,184)— (7,184)
Distributions to non-controlling interests— — — — — — — — — (1,963)(1,963)
Other— — — — — (516)— — (516)293 (223)
Net income— — — — — 38,686 — — 38,686 2,817 41,503 
Balance, March 31, 2020137,645,986 2   2,040,383 2,881,416 (324,786)(806,523)3,790,492 4,686 3,795,178 
Other comprehensive income— — — — — — 34,737 — 34,737 — 34,737 
Stock-based compensation activity65,826 — — — 22,717 — — (281)22,436 — 22,436 
Dividends declared ($0.05 per share)
— — — — — (7,182)— — (7,182)— (7,182)
Distributions to non-controlling interests— — — — — — — — — (1,962)(1,962)
Net income— — — — — 73,946 — — 73,946 849 74,795 
Balance, June 30, 2020137,711,812 $2  $ $2,063,100 $2,948,180 $(290,049)$(806,804)$3,914,429 $3,573 $3,918,002 

The accompanying notes are an integral part of these condensed consolidated financial statements.











10



QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS AND ORGANIZATION:
Quanta Services, Inc. (together with its subsidiaries, Quanta) is a leading provider of specialty contracting services, delivering comprehensive infrastructure solutions for the electric and gas utility, communications, pipeline and energy industries in the United States, Canada, Australia and select other international markets. Quanta reports its results under two reportable segments: (1) Electric Power Infrastructure Solutions and (2) Underground Utility and Infrastructure Solutions.
Electric Power Infrastructure Solutions Segment
The Electric Power Infrastructure Solutions segment provides comprehensive network solutions to customers in the electric power and other industries. Services performed by the Electric Power Infrastructure Solutions segment generally include the design, new construction, upgrade and repair and maintenance of electric power transmission and distribution infrastructure and substation facilities, along with other engineering and technical services. This includes solutions that support the implementation of upgrades by utilities to modernize and harden the electric power grid in order to ensure its safety and enhance reliability. In addition, this segment provides engineering and construction services for switchyards and transmission infrastructure needed to interconnect renewable energy generation, including solar, wind, hydro power and backup natural gas generation facilities. This segment also provides emergency restoration services, including the repair of infrastructure damaged by fire and inclement weather; the energized installation, maintenance and upgrade of electric power infrastructure utilizing unique bare hand and hot stick methods and Quanta’s proprietary robotic arm techniques; and the installation of “smart grid” technologies on electric power networks. Engineering and construction services related to, among other things, electric vehicle charging infrastructure, micro-grids and battery storage are also performed in this segment. This segment also provides comprehensive design and construction solutions to wireline and wireless communications companies, cable multi-system operators and other customers within the communications industry, including services in connection with 5G wireless deployment; and the design, installation, maintenance and repair of commercial and industrial wiring. This segment also provides aviation services in support of the services described above and includes the majority of the financial results of Quanta’s postsecondary educational institution, which specializes in pre-apprenticeship training, apprenticeship training and specialized utility task training for electric workers, as well as training for the gas distribution and communications industries.
Underground Utility and Infrastructure Solutions Segment
The Underground Utility and Infrastructure Solutions segment provides comprehensive infrastructure solutions, including design, engineering, new construction, upgrade and repair and maintenance services, to customers involved in the transportation, distribution, storage and processing of natural gas, oil and other products. Services include the upgrade, new construction and repair and maintenance of natural gas systems for gas utility customers, as well as pipeline protection, integrity testing, rehabilitation and replacement. Quanta also provides catalyst replacement services, high-pressure and critical-path turnaround services, instrumentation and electrical services, piping, fabrication and storage tank services to the midstream and downstream industrial energy markets. This segment also provides engineering and construction services for pipeline systems, storage systems and compressor and pump stations and the fabrication of pipeline support systems and related structures and facilities, as well as trenching, directional boring and mechanized welding services related to the services described above and in connection with our electric power infrastructure services. To a lesser extent, this segment includes construction services for the offshore energy market and services in connection with the design, installation and maintenance of fueling systems and water and sewer infrastructure.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The condensed consolidated financial statements of Quanta include the accounts of Quanta Services, Inc. and its wholly-owned subsidiaries, which are also referred to as its operating units. The condensed consolidated financial statements also include the accounts of certain of Quanta’s investments in joint ventures, which are either consolidated or proportionately consolidated. Investments in affiliated entities in which Quanta does not have a controlling financial interest, but over which Quanta has significant influence, usually because Quanta holds a voting interest of between 20% and 50% in the affiliated
11

QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
entity, are accounted for using the equity method. Unless the context requires otherwise, references to Quanta include Quanta Services, Inc. and its consolidated subsidiaries.
Interim Condensed Consolidated Financial Information
These unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), have been condensed or omitted pursuant to those rules and regulations. Quanta believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations and comprehensive income for the interim periods are not necessarily indicative of the results for the entire fiscal year. The results of Quanta have historically been subject to significant seasonal fluctuations.
Quanta recommends that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto of Quanta and its consolidated subsidiaries, which contain additional information about Quanta’s policies and are included in Quanta’s 2020 Annual Report.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses recognized during the periods presented. Quanta reviews all significant estimates affecting its consolidated financial statements on a recurring basis and records the effect of any necessary adjustments prior to their publication. Judgments and estimates are based on Quanta’s beliefs and assumptions derived from information available at the time such judgments and estimates are made. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. Estimates are primarily used in Quanta’s assessment of revenue recognition for construction contracts, including contractual change orders and claims; allowance for credit losses; valuation of inventory; useful lives of assets; fair value assumptions in analyzing goodwill, other intangibles and long-lived asset impairments; equity and other investments; purchase price allocations; acquisition-related contingent consideration liabilities; multiemployer pension plan withdrawal liabilities; contingent liabilities associated with, among other things, legal proceedings and claims, parent guarantees and indemnity obligations; estimated insurance claim recoveries; stock-based compensation; operating results of reportable segments; provision for income taxes; and uncertain tax positions.
Revenue Recognition
Quanta’s services may be provided pursuant to master service agreements (MSAs), repair and maintenance contracts and fixed price and non-fixed price construction contracts. These contracts are classified into three categories based on the methods by which transaction prices are determined and revenue is recognized: unit-price contracts, cost-plus contracts and fixed price contracts. Transaction prices for unit-price contracts are determined on a per unit basis, transaction prices for cost-plus contracts are determined by applying a profit margin to costs incurred on the contracts and transaction prices for fixed price contracts are determined on a lump-sum basis.
Performance Obligations
At June 30, 2021 and December 31, 2020, the aggregate transaction price allocated to unsatisfied or partially satisfied performance obligations was approximately $4.43 billion and $3.99 billion, of which 76.9% and 71.2% were expected to be recognized in the subsequent twelve months. These amounts represent management’s estimates of the consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work had not yet begun as of such dates. For purposes of calculating remaining performance obligations, Quanta includes all estimated revenues attributable to consolidated joint ventures and variable interest entities, revenues from funded and unfunded portions of government contracts to the extent they are reasonably expected to be realized and revenues from change orders and claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under MSAs and non-fixed price contracts expected to be completed within one year.
Contract Estimates
Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
of factors, including unforeseen or changed circumstances not included in Quanta’s cost estimates or covered by its contracts. Some of the factors that can result in positive changes in estimates on projects include successful execution through project risks, reduction of estimated project costs or increases of estimated revenues. Some of the factors that can result in negative changes in estimates include concealed or unknown site conditions; changes to or disputes with customers regarding the scope of services; changes in estimates related to the length of time to complete a performance obligation; changes or delays with respect to permitting and regulatory requirements; changes in the cost or availability of equipment, commodities, materials or skilled labor; unanticipated costs or claims due to delays or failure to perform by customers or third parties; customer failure to provide required materials or equipment; errors in engineering, specifications or designs; project modifications; adverse weather conditions, natural disasters, and other emergencies (including the ongoing COVID-19 pandemic); and performance and quality issues causing delay (including payment of liquidated damages) or requiring rework or replacement. Any changes in estimates may result in changes to profitability or losses associated with the related performance obligations.
Changes in estimated revenues, costs and profit are recognized on a cumulative catch-up basis and recorded in the period they are determined to be probable and can be reasonably estimated. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations that were satisfied or partially satisfied in prior periods or the reversal of previously recognized revenue if the currently estimated revenue is less than the previous estimate. The impact of a change in contract estimate is measured as the difference between the revenue or gross profit recognized in the prior period as compared to the revenue or gross profit which would have been recognized had the revised estimate been used as the basis of recognition in the prior period. Changes in estimates can also result in contract losses, which are recognized in full when they are determined to be probable and can be reasonably estimated.
Operating results for the three months ended June 30, 2021 were favorably impacted by 12.8% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress at March 31, 2021. The net favorable impact resulted from net positive changes in estimates across a large number of projects, primarily as a result of favorable performance and successful mitigation of risks and contingencies as the projects progressed to completion.
Operating results for the six months ended June 30, 2021 were favorably impacted by 10.8% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress at December 31, 2020. The net favorable impact resulted from net positive changes in estimates across a large number of projects, primarily as a result of favorable performance and successful mitigation of risks and contingencies as the projects progressed to completion. Partially offsetting the net favorable impact to gross profit for the six months ended June 30, 2021 was a negative change in estimate of $14.8 million in the three months ended March 31, 2021 associated with a communications project in the United States that arose from challenges with subcontractor performance and site conditions. This project had a total contract value of $109.4 million and was approximately 51% complete as of June 30, 2021.
Operating results for the three and six months ended June 30, 2020 were impacted by less than 5% of gross profit as a result of aggregate changes in contract estimates related to projects that were in progress at the beginning of such periods. Operating results for the six months ended June 30, 2020 included a negative change in contract estimate of $14.1 million related to delays associated with subcontractor performance and severe weather impacts on a larger pipeline transmission project in Canada, which had a contract value of $115.6 million and was complete as of June 30, 2021. This negative impact was more than offset by other positive changes in estimates on other projects.
Changes in cost estimates on certain contracts may also result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims. As of June 30, 2021 and December 31, 2020, Quanta had recognized revenues of $181.4 million and $141.2 million related to change orders and claims included as contract price adjustments that were in the process of being negotiated in the normal course of business. The largest component of the revenues recognized is associated with change orders and claims arising from delays on an electric transmission project in Canada, the most significant of which occurred in the first quarter of 2021 due to governmental requirements related to the COVID-19 pandemic. Compliance with on-site protocols caused challenging scheduling and site conditions, which resulted in delays and negatively impacted productivity. Quanta believes that the contract for this project entitles it to recover certain amounts associated with these delays. The aggregate amounts related to change orders and claims, which are included in “Contract assets” in the accompanying condensed consolidated balance sheets, represent management’s estimates of additional contract revenues that have been earned and are probable of collection. However, Quanta’s estimates could change, and the amount ultimately realized could be significantly higher or lower than the estimated amount.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Revenues by Category
The following tables present Quanta’s revenue disaggregated by geographic location, as determined by the job location, and contract type (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
By primary geographic location:
United States$2,570,798 85.7 %$2,207,876 88.1 %$4,776,914 83.7 %$4,475,962 85.0 %
Canada327,159 10.9 %212,820 8.5 %741,005 13.0 %597,045 11.3 %
Australia62,808 2.1 %56,077 2.2 %117,915 2.1 %107,127 2.0 %
Others39,051 1.3 %29,458 1.2 %67,563 1.2 %90,192 1.7 %
Total revenues$2,999,816 100.0 %$2,506,231 100.0 %$5,703,397 100.0 %$5,270,326 100.0 %

Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
By contract type:
Unit-price contracts$1,217,724 40.6 %$918,416 36.6 %$2,194,286 38.5 %$1,893,067