10q10k10q10k.net

What changed in Quanta Services's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Quanta Services's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+444 added−427 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in Quanta Services's 2023 10-K

444 paragraphs added · 427 removed · 345 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+8 added−11 removed101 unchanged
Biggest changeGENERAL Recent Acquisitions In January 2023, we acquired three 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; a business that procures parts, assembles kits for sale, manages logistics and installs solar tracking equipment for utility and development customers; and a business that provides solutions to our concrete construction services.
Biggest changeDuring the year ended December 31, 2023, we 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).
We believe executing on these strategies places us in the position to capitalize on opportunities and trends in the industries we serve and expand our operations to select new markets. SEGMENTS We report our results under three reportable segments: Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
We believe executing on these strategies places us in the position to capitalize on opportunities and trends in the industries we serve and expand our operations to select new markets. SEGMENTS We report our results under three reportable segments: Electric Power Infrastructure Solutions (Electric Power), Renewable Energy Infrastructure Solutions (Renewable Energy) and Underground Utility and Infrastructure Solutions (Underground and Infrastructure).
Additionally, recent legislative and regulatory initiatives, including the Rural Digital Opportunity Fund and the Infrastructure Investment and Jobs Act (IIJA), have dedicated billions of dollars of funding to support broadband service to underserved markets. Renewable Energy Infrastructure Solutions Services Our Renewable Energy Infrastructure Solutions segment provides comprehensive infrastructure solutions to customers that are involved in the renewable energy industry.
Additionally, recent legislative and regulatory initiatives, including the Rural Digital Opportunity Fund and the Infrastructure Investment and Jobs Act (IIJA), have dedicated billions of dollars of funding to support broadband service to underserved markets. Renewable Energy Services Our Renewable Energy segment provides comprehensive infrastructure solutions to customers that are involved in the renewable energy industry.
For example, we have developed and administer a succession program with respect to our executive officers and senior operating company personnel, which is reviewed and/or overseen by our Board of Directors.
For example, we have developed and administer a succession program with respect to our executive officers and senior operating company personnel, which is reviewed and/or overseen by our Board of Directors (Board).
Services performed generally include: • design, procurement, new construction, upgrade and repair and maintenance services for electric power transmission and distribution infrastructure, both overhead and underground, and substation facilities, along with other engineering and technical services, including services 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 and to accommodate increased residential and commercial use of electric vehicles (EVs); • emergency restoration services, including the repair of infrastructure damaged by fires and inclement weather; • energized installation, maintenance and upgrade of electric power infrastructure utilizing unique bare hand and hot stick methods and our robotic arm techniques; • installation of “smart grid” technologies on electric power networks; 4 • design and construction services 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); • design, installation, maintenance and repair services related to commercial and industrial wiring; and • aviation services primarily for the utility industry, including the transportation of line workers, the setting of poles and towers, and the stringing of wires.
Services performed generally include: • design, procurement, new construction, upgrade and repair and maintenance services for electric power transmission and distribution infrastructure, both overhead and underground, and substation facilities, along with other engineering and technical services, including services 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 and to accommodate increased residential and commercial use of electric vehicles (EVs); • emergency restoration services, including the repair of infrastructure damaged by fires and inclement weather; • energized installation, maintenance and upgrade of electric power infrastructure utilizing our bare hand and hot stick methods and our robotic arm techniques; 4 • installation of “smart grid” technologies on electric power networks; • design and construction services 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); • design, installation, maintenance and repair services related to commercial and industrial wiring; and • aviation services primarily for the utility industry, including the transportation of line workers, the setting of poles and towers, and the stringing of wires.
Strategic alliance agreements also generally state an intention to work together over a period of time and/or on specific types of projects, and many provide us with preferential bidding procedures. Although we have an integrated marketing and business development strategy, management at each of our operating companies is responsible for developing and maintaining successful long-term relationships with customers.
Strategic alliance agreements also generally state an intention to work together over a period of time and/or on specific types of projects, and many provide us with preferential bidding procedures. Although we have an integrated marketing and business development strategy, management at each of our operating companies is primarily responsible for developing and maintaining successful long-term relationships with customers.
We believe our ability to provide services that cover a broad spectrum of our customers’ needs and requirements is a significant differentiator. Our corporate-level business development and regional management groups support these activities by promoting and marketing our services for existing and prospective large national accounts, as well as projects that are capable of utilizing services from multiple operating companies.
We believe our ability to provide services that cover a broad spectrum of our customers’ needs and requirements is a significant differentiator. Our corporate-level business development and regional management groups support these activities by promoting and marketing our services for existing and prospective large accounts, as well as projects that are capable of utilizing services from multiple operating companies.
We are focused on our ability to attract and retain qualified employees for these important positions, as we rely on them to successfully 12 manage our decentralized operations and grow and expand our business. We have also implemented enterprise-wide talent development and succession planning programs designed to identify and develop future and/or replacement candidates for key positions.
We are focused on our ability to attract and retain qualified employees for these important positions, as we rely on them to successfully manage our decentralized operations and grow and expand our business. We have also implemented enterprise-wide talent development and succession planning programs designed to identify and develop future and/or replacement candidates for key positions.
Training with respect to Quanta’s Code of Conduct and other policies and procedures is conducted as part of our comprehensive ethics and compliance training program. Climate Change-Related Impacts Our management considers climate-related risks and opportunities in connection with its long-term strategic planning and enterprise risk management process, which are overseen by our Board of Directors.
Training with respect to Quanta’s Code of Conduct and other policies and procedures is conducted as part of our comprehensive ethics and compliance training program. Climate Change-Related Impacts Our management considers climate-related risks and opportunities in connection with its long-term strategic planning and enterprise risk management process, which are overseen by our Board.
We also grant stock-based compensation broadly throughout our organization, including to management and key operations personnel at the majority of our operating companies, which we believe is a key component of our compensation programs that helps to align incentives throughout our decentralized organization. We also enter into employment agreements with our executive officers and certain other key personnel.
We also grant stock-based compensation broadly throughout our organization, including to management and key operations personnel at the majority of our operating companies, which we believe is a key component of our compensation programs that helps to align 12 incentives throughout our decentralized organization. We also enter into employment agreements with our executive officers and certain other key personnel.
These collective bargaining agreements have varying terms and expiration dates, and the majority contain provisions that prohibit work stoppages or strikes, even during specified negotiation 11 periods relating to agreement renewals, and provide for binding arbitration dispute resolution in the event of prolonged disagreement.
These collective bargaining agreements have varying terms and expiration dates, and the majority contain provisions that prohibit work stoppages or strikes, even during specified negotiation periods relating to agreement renewals, and provide for binding arbitration dispute resolution in the event of prolonged disagreement.
These reports are available on our website as soon as reasonably practicable after we 14 electronically file them with, or furnish them to, the SEC. We will also make available to any stockholder, without charge, copies of our Annual Report on Form 10-K as filed with the SEC.
These reports are available on our website as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. We will also make available to any stockholder, without charge, copies of our Annual Report on Form 10-K as filed with the SEC.
In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations or be subject to revocation of certain licenses or permits, which could materially and adversely affect our business, results of operations and cash flows.
In addition, we could be held liable for significant penalties and damages under certain environmental laws and regulations or be subject to revocation of certain licenses or permits, which could materially and adversely affect our business, results of 10 operations and cash flows.
Underground Utility and Infrastructure Solutions Services Our Underground Utility and Infrastructure Solutions segment provides comprehensive infrastructure solutions to customers involved in the transportation, distribution, storage, development and processing of natural gas, oil and other products.
Underground and Infrastructure Services Our Underground and Infrastructure segment provides comprehensive infrastructure solutions to customers involved in the transportation, distribution, storage, development and processing of natural gas, oil and other products.
A number of factors that we may not be able to predict or control could result in increased costs for, or delays in delivery of, this equipment, including supply chain and other logistical challenges, as well as global trade relationships and other general market and political conditions that could impact production, delivery or pricing of such equipment (e.g., inflation, recessionary economic conditions).
A number of factors that we may not be able to predict or control could result in increased costs for, or delays in delivery of, this equipment, including supply chain and other logistical challenges, as well as global trade relationships and other general market and political conditions that could impact production, delivery or pricing of such equipment (e.g., inflation, interest rates, recessionary economic conditions).
Our entrepreneurial business model allows multiple operating companies to serve the same or similar customers and to provide a range of services across end user markets. Our operating companies may perform joint projects for customers in multiple industries, deliver multiple types of services under a single customer contract or provide service offerings to various industries.
Our entrepreneurial business model allows multiple operating companies to serve the same or similar customers and to provide a range of services across end user markets and our reportable segments. Our operating companies may perform joint projects for customers in multiple industries, deliver multiple types of services under a single customer contract or provide service offerings to various industries.
Our opportunities associated with energy delivery customers are driven by capital programs for energy delivery and industrial customers, as well as pipeline project activity, which was materially impacted by uncertainties and challenges in the energy market and overall economy during the global pandemic but began to recover in 2022.
Our opportunities associated with energy delivery customers are driven by capital programs for energy delivery and industrial customers, as well as pipeline project activity, which was materially impacted by uncertainties and challenges in the energy market and overall economy during the global pandemic but began to recover in 2022 and continued to recover in 2023.
Craft Skilled Labor. We continue to address the longer-term need for additional labor resources in our markets, as our customers continue to seek additional specialized labor resources to address an aging utility workforce and longer-term labor availability issues, increasing pressure to reduce costs and improve reliability, and increasing duration and complexity of their capital programs.
We continue to address the longer-term need for additional labor resources in our markets, as our customers continue to seek additional specialized labor resources to address an aging utility workforce and longer-term labor availability issues, increasing pressure to reduce costs and improve reliability, and increasing duration and complexity of their capital programs.
Accordingly, we encourage investors, the media and others interested in our company to follow Quanta, and review the information we post, on the social media channels listed on our website in the Investors Relations / Social Media section. This Annual Report, our website and our social media channels contain information provided by other sources that we believe is reliable.
Accordingly, we encourage investors, the media and others interested in our company to follow Quanta, and review the information we post, on the social media channels listed on our website in the Investors / Social Media section. 14 This Annual Report, our website and our social media channels contain information provided by other sources that we believe is reliable.
For further information regarding the effects of competition on our business and trends in market demand affecting our business, see Risks Related to Operating Our Business and Risks Related to Our Industries in Item 1A. Risk Factors of this Annual Report and Results of Operations in Item 7.
For further information regarding the effects of competition on our business and trends in market demand affecting our business, see Risks Related to Operating Our Business and Risks Related to Our Industries in Item 1A. Risk Factors in Part I of this Annual Report and Results of Operations in Item 7.
While we believe demand for our renewable infrastructure services will grow as a result of the IRA, the requirements associated with this legislation are complex, and the timing of the expected growth depends in part on the speed at which our customers determine how to proceed and the speed at which the incentives under the IRA are implemented.
While we believe demand for our renewable infrastructure services will grow as a result of the IRA, the requirements associated with this legislation are complex, and the timing of the expected growth depends in part on the speed at which we and our customers determine how to proceed.
We believe these market dynamics and technological advances provide significant opportunities for us, including increased demand for our renewable energy infrastructure services, as well as our portfolio of electric power infrastructure services. The increasing focus on climate change has also impacted markets within our Underground Utility and Infrastructure Solutions segment.
We believe these market dynamics and technological 13 advances provide significant opportunities for us, including increased demand for our renewable energy infrastructure services, as well as our portfolio of electric power infrastructure services. The increasing focus on climate change has also impacted markets within our Underground and Infrastructure segment.
Our operations are decentralized and labor-intensive, and we rely on craft skilled labor personnel and experienced operators to successfully manage our day-to-day business. We also have an experienced management team, both at the executive level and within our subsidiaries, which we refer to as operating companies.
Our operations are decentralized and labor-intensive, and we rely on craft skilled labor personnel and experienced operators to successfully manage our day-to-day business. We also have an experienced management team, both at the executive and regional levels and within our subsidiaries, which we refer to as operating companies.
Physical risks associated with climate change have also increased hazards associated with certain of our operations, which in turn has increased the potential for liability and increased the costs associated with such operations.
Physical risks associated with changes in climate have also increased hazards associated with certain of our operations, which in turn has increased the potential for liability and increased the costs associated with such operations.
Services performed generally include: • design, engineering, procurement, new construction, upgrade and repair and maintenance services for natural gas systems for gas utility customers; • pipeline protection, integrity testing, rehabilitation and replacement services; • catalyst replacement services, high-pressure and critical-path turnaround services, instrumentation and electrical services, piping, fabrication and storage tank services for the midstream and downstream industrial energy markets; • 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; • trenching, directional boring and mechanized welding services related to the services described above; and • engineering, construction and maintenance services for energy transition and carbon-reduction related projects, such as alternative fuel facilities, carbon capture systems and hydrogen facilities.
Services performed generally include: • design, engineering, procurement, new construction, upgrade and repair and maintenance services for natural gas systems for gas utility customers; • pipeline protection, integrity testing, rehabilitation and replacement services; • catalyst replacement services, high-pressure and critical-path turnaround services, instrumentation and electrical services, piping, fabrication and storage tank services for the midstream and downstream industrial energy markets, as well as specialty cleaning and environmental solutions for the industrial energy and petrochemical markets; • 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; • trenching, directional boring and mechanized welding services related to the services described above; and • engineering, construction and maintenance services for energy transition and carbon-reduction related projects, such as alternative fuel facilities, carbon capture systems and hydrogen facilities.
For example, revenues associated with larger U.S. pipeline projects have declined significantly as the pipeline and related infrastructure development necessary to support U.S. shale formations has largely been completed in the near term and as a result of a more challenging permitting and regulatory environment, whereas revenues associated with larger pipeline projects in Canada increased in 2022.
For example, revenues associated with larger U.S. pipeline projects have declined significantly as the pipeline and related infrastructure development necessary to support U.S. shale formations has largely been completed in the near term and as a result of a more challenging permitting and regulatory environment.
Such estimates are based on management judgment and assumptions and are provided to show perceived trends in our customer types and should be considered directional in nature. 2022 2021 2020 Utility 67 % 74 % 72 % Industrial 9 % 10 % 13 % Energy Delivery 7 % 5 % 6 % Renewable Energy Developers 7 % 2 % 1 % Communications 6 % 5 % 4 % Other 4 % 4 % 4 % Total revenues 100 % 100 % 100 % The customer types set forth in the table above are described in further detail as follows: • Utility - Customers that are electric and gas utility companies; • Industrial - Customers that own and/or operate downstream refinery, chemical and industrial facilities, as well as other commercial or manufacturing facilities; • Energy Delivery - Customers that own and/or operate pipelines for the delivery of hydrocarbons; • Renewable Energy Developers – Customers that develop, own and/or operate renewable energy solutions other than electric and gas utility companies; • Communications - Customers that own and/or operate assets supporting delivery of data, communications and digital services; and • Other - Customers that are not accurately described by the categories set forth above.
Such estimates are based on management judgment and assumptions and are provided to show perceived trends in our customer types and should be considered directional in nature. 2023 2022 2021 Utility 58 % 67 % 74 % Renewable Energy Developers 16 7 2 Industrial 10 9 10 Energy Delivery 8 7 5 Communications 5 6 5 Other 3 4 4 Total revenues 100 % 100 % 100 % The customer types set forth in the table above are described in further detail as follows: • Utility - Customers that are electric and gas utility companies; • Industrial - Customers that own and/or operate downstream refinery, chemical and industrial facilities, as well as other commercial or manufacturing facilities; • Energy Delivery - Customers that own and/or operate pipelines for the delivery of hydrocarbons; • Renewable Energy Developers – Customers that develop, own and/or operate renewable energy solutions other than electric and gas utility companies; • Communications - Customers that own and/or operate assets supporting delivery of data, communications and digital services; and • Other - Customers that are not accurately described by the categories set forth above.
Our strategies include delivering a portfolio of infrastructure solutions to existing and potential customers, developing our technological and training capabilities, remaining committed to the safety of our employees, and maintaining an entrepreneurial culture throughout our organization.
Our strategies include delivering and continuing to expand our portfolio of infrastructure solutions to existing and potential customers, developing our technological and training capabilities, remaining committed to the safety of our employees, and maintaining an entrepreneurial culture throughout our organization.
We also believe that customers in this segment are implementing strategies to reduce carbon emissions produced from their operations, which are providing incremental opportunities for our services, including developing infrastructure for blending hydrogen into natural gas flow and for customers’ carbon capture projects, which could include building or repurposing pipeline infrastructure.
We also believe that customers in this segment are implementing strategies to reduce carbon emissions produced from their operations, which are providing incremental opportunities for our services, including the development of infrastructure for blending hydrogen into natural gas flow and carbon capture projects, which could include building or repurposing pipeline infrastructure.
While the attractiveness of certain acquisition targets may be diminished in the short term by inflationary pressure, increased interest rates and market volatility, we continue to evaluate opportunities that are expected to, among other things, broaden our customer base, expand our geographic area of operations and grow and diversify our portfolio of services.
While the attractiveness of certain acquisition targets may be diminished in the short term by increased interest rates, regulatory conditions and market volatility, we continue to evaluate opportunities that are expected to, among other things, broaden our customer base, expand our geographic area of operations and grow and diversify our portfolio of products and services.
Additionally, approximately 34% of our employees as of December 31, 2022 were covered by collective bargaining agreements, which require the payment of specified wages, the observance of certain workplace rules and the payment of certain amounts to multiemployer pension plans and employee benefit trusts.
Additionally, approximately 32% of our employees as of December 31, 2023 were covered by collective bargaining agreements, which require the payment of specified wages, the observance of certain workplace rules and the payment of certain amounts to multiemployer pension plans and employee benefit trusts.
Our operations are subject to various federal, state, local and international laws and regulations, including: • licensing, permitting and inspection requirements applicable to contractors and engineers; • regulations relating to worker safety (e.g., Occupational Safety and Health Administration regulations) and environmental protection; • permitting and inspection requirements applicable to construction projects; • wage and hour regulations (e.g., Fair Labor Standards Act) and regulations associated with our collective bargaining agreements and unionized workforce; • regulations relating to sourcing and transportation of equipment and materials, including licensing and permitting requirements; • regulations regarding engagement of suppliers and subcontractors that meet diversity-ownership or disadvantaged-business requirements; • regulations relating to aviation activities; • building and electrical codes; • applicable U.S. and non-U.S. anti-corruption regulations; • immigration regulations applicable to U.S. and cross-border employment; and • special bidding, procurement and other requirements on government projects. 10 We believe that we are in compliance with all material licensing and regulatory requirements that are necessary to conduct our operations.
Our operations are subject to various federal, state, local and international laws and regulations, including: • licensing, permitting and inspection requirements applicable to contractors and engineers; • regulations relating to worker safety (e.g., Occupational Safety and Health Administration regulations) and environmental protection; • permitting and inspection requirements applicable to construction projects; • wage and hour regulations (e.g., Fair Labor Standards Act) and regulations associated with our collective bargaining agreements and unionized workforce; • regulations relating to sourcing and transportation of equipment and materials, including licensing and permitting requirements; • regulations regarding engagement of suppliers and subcontractors that meet diversity-ownership or disadvantaged-business requirements; • regulations relating to aviation activities; • building and electrical codes; • applicable U.S. and non-U.S. anti-corruption regulations; • immigration regulations applicable to U.S. and cross-border employment; and • special bidding, procurement and other requirements on government projects.
We operate primarily in the United States; however, we derived approximately 15.7%, 14.7% and 14.2% of our revenues from foreign operations, primarily in Canada and Australia, during the years ended December 31, 2022, 2021 and 2020. Electric Power Infrastructure Solutions Services Our Electric Power Infrastructure Solutions segment provides comprehensive services for the electric power and communications markets.
We operate primarily in the United States; however, we derived approximately 14.2%, 15.7% and 14.7% of our revenues from foreign operations, primarily in Canada and Australia, during the years ended December 31, 2023, 2022 and 2021. Electric Power Services Our Electric Power segment provides comprehensive services primarily for the electric power and also for the communications markets.
Additionally, with respect to our downstream industrial services, including our high-pressure and 6 critical-path turnaround services, as well as our capabilities with respect to instrumentation and electrical services, piping, fabrication and storage tanks services, and other industrial services, we believe that processing facilities located along the U.S.
Additionally, with respect to our downstream industrial services, including our high-pressure and critical-path turnaround services, as well as our capabilities with respect to instrumentation and electrical services, piping, fabrication and storage tanks services, and other industrial services, we are focused on processing facilities located along the 6 U.S.
The final amount of consideration for these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital. The results of these acquired businesses will be included in our consolidated financial statements beginning on the acquisition dates.
The final amount of consideration for these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital. The results of these acquired businesses have been included in our consolidated financial statements beginning on the respective acquisition dates.
However, an increase in certain of these events, such as hurricanes, tropical storms, wildfires, blizzards and ice storms, also creates opportunities for us to perform a greater amount of emergency restoration services and, as described above, can increase customer spending on modernization, grid hardening and other infrastructure improvements (e.g., fire hardening programs in California and the western United States and storm hardening in coastal regions).
However, an increase in certain of these events, such as hurricanes, tropical storms, wildfires, blizzards and ice storms, also creates opportunities for us to perform a greater amount of emergency restoration services and, as described above, can increase customer spending on modernization, grid hardening and other infrastructure improvements (e.g., fire hardening programs and storm hardening programs).
For example, utilities along the Eastern and Gulf Coasts of the United States are executing storm hardening programs to make their systems more resilient to hurricanes and other severe weather events, and there are significant system resiliency initiatives underway in California and other regions in the western United States that are designed to prevent and manage the impact of wildfires.
For example, utilities throughout the United States are executing storm hardening programs to make their systems more resilient to hurricanes and other severe weather events, and there are significant system resiliency initiatives underway in California and other regions in the United States that are designed to prevent and manage the impact of wildfires.
Risk Factors of this Annual Report. Management and Professional Personnel. Due to our decentralized operating structure, significant decision-making authority resides with our operating company management, and our corporate management and professional and administrative personnel are relied upon to allocate capital and communicate, coordinate and help execute our business strategies.
Risk Factors in Part I of this Annual Report. Management and Professional Personnel. Due to our decentralized operating structure, significant decision-making authority resides with management at our operating companies, and our corporate management and professional and administrative personnel are relied upon to allocate capital and communicate, coordinate and help execute our business strategies.
Any tariffs, duties, taxes, assessments, or other limitations on the availability or sourcing of materials or components for our customers’ projects can also increase costs for customers and create variability of project timing. For example, during 2022, the U.S.
Any tariffs, duties, taxes, assessments, or other limitations on the availability or sourcing of materials or components for our customers’ projects can also increase costs for customers and create variability of project timing.
Utilities are also executing significant initiatives to underground critical infrastructure, including additional underground transmission and distribution initiatives by utilities in California, underground transmission projects in the northeast United States, underground distribution circuits along the U.S. coastlines and underground transmission lines for offshore wind generation projects.
Utilities are also executing significant initiatives to underground critical infrastructure, including additional underground transmission and distribution initiatives by utilities in California, underground transmission projects in the northeast United States and underground distribution circuits along the U.S. coastlines.
Quanta’s Code of Conduct also informs employees and third parties about the resources and confidential reporting mechanisms available to detect, prevent and report unethical and illegal conduct, and our Chief Compliance Officer communicates directly with our Board of Directors about actual and alleged violations of the law or the Code of Conduct.
Quanta’s Code of Conduct also informs employees and third parties (such as suppliers, subcontractors and members of the public) about the resources and confidential reporting mechanisms available to detect, prevent and report unethical and illegal conduct, and our Chief Compliance Officer communicates directly with our Board about actual and alleged violations of the law or the Code of Conduct.
Changes in climate have caused, and are expected to continue to cause, among other things, increasing temperatures, rising sea levels and changes to patterns and intensity of wildfires, hurricanes, floods, droughts, winter storms and other storms and severe weather-related events and natural disasters.
Changes in climate have caused, and are expected to continue to cause, among other things, increasing temperatures, rising sea levels and changes to meteorological and hydrological patterns, as well as impacts to the frequency and intensity of wildfires, hurricanes, floods, droughts, winter storms and other storms and severe weather-related events and natural disasters.
Given the potentially significant liabilities associated with these events, to the extent we are deemed liable for a wildfire event, it could have a material adverse impact on our business.
Given the potentially significant liabilities associated with these events, to the extent we are deemed liable or are otherwise responsible for damages or other amounts associated with a wildfire event, it could have a material adverse impact on our business.
Conversely, we believe that there are also several existing, pending or proposed legislative or regulatory actions that may alleviate certain regulatory and permitting issues and positively impact long-term demand, particularly in connection with electric power infrastructure and renewable energy spending.
Risk Factors in Part I of this Annual Report. Conversely, we believe that there are also several existing, pending or proposed legislative or regulatory actions that may alleviate certain regulatory and permitting issues and positively impact long-term demand, particularly in connection with electric power infrastructure and renewable energy spending.
As of December 31, 2022, we had approximately 40,100 U.S. employees and approximately 7,200 non-U.S. employees, with the majority of our non-U.S. employees based in Canada. Employee Health and Safety Performance of our services requires the use of heavy equipment and exposure to inherently hazardous conditions.
As of December 31, 2023, we had approximately 47,200 U.S. employees and approximately 5,300 non-U.S. employees, with the majority of our non-U.S. employees based in Canada. Employee Health and Safety Performance of our services requires the use of heavy equipment and exposure to inherently hazardous conditions.
Additionally, the SEC has proposed new rules relating to the disclosure of a range of climate-related risks. We are currently assessing this proposed rule but at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the rule.
Additionally, the SEC and the State of California have proposed new rules relating to the disclosure of a range of climate-related risks. We are currently assessing these rules and regulations but at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the rules.
Management ’ s Discussion and Analysis of Financial Condition of this Annual Report.
Management ’ s Discussion and Analysis of Financial Condition in Part II of this Annual Report.
For additional information regarding our insurance and the risks associated with insurance coverage, see Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data and Risks Related to Operating Our Business in Item 1A. Risk Factors of this Annual Report. Website Access and Other Information Our website address is www.quantaservices.com .
For additional information regarding our insurance and the risks associated with insurance coverage, see Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data and Risks Related to Operating Our Business in Item 1A. Risk Factors in Part I of this Annual Report.
Employee Profile As of December 31, 2022, we had approximately 47,300 employees, consisting of approximately 9,000 salaried employees, including, among others, executive officers, professional and administrative staff, project managers and engineers, job superintendents and field personnel, and approximately 38,300 hourly employees, the number of which fluctuates depending upon the number and size of the projects that are ongoing and planned at any particular time.
Employee Profile As of December 31, 2023, we had approximately 52,500 employees, consisting of approximately 10,100 salaried employees, including, among others, executive officers, professional and administrative staff, project managers and engineers, job superintendents and field personnel, and approximately 42,400 hourly employees, the number of which fluctuates depending upon the number and size of the projects that are ongoing and planned at any particular time.
For the year ended December 31, 2022, our largest customer accounted for 9% of our 7 consolidated revenues and our ten largest customers accounted for 36% of our consolidated revenues.
For the year ended December 31, 2023, our largest customer accounted for 6% of our 7 consolidated revenues and our ten largest customers accounted for 31% of our consolidated revenues.
Interested parties may obtain free electronic copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports through our website under the heading Investor Relations / SEC Filings or through the website of the Securities and Exchange Commission (the SEC) at www.sec.gov .
Interested parties may obtain free electronic copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports in the Investors / SEC Filings section of our website or through the website of the SEC at www.sec.gov .
We also expect demand for electricity in North America to continue to grow, including through electrification trends such as electric vehicle (EV) adoption, and believe that certain segments of the North American electric power grid are not adequate to efficiently supply this future demand.
We also expect demand for electricity in North America to continue to grow, including through electrification trends (e.g., EV adoption) and increased demand for data center infrastructure and manufacturing facilities, and believe that certain segments of the North American electric power grid are not adequate to efficiently supply this future demand.
For example, severe drought and high wind speeds in the western United States, Australia and other locations have significantly increased the risk of wildfires, which in turn has exposed us and other contractors to increased risk of liability in connection with our 13 operations in those locations, as these events can be started by failure of electrical power and other infrastructure on which we have performed services.
For example, severe drought and high wind speeds have significantly increased the risk of wildfires throughout our operating locations, which in turn has exposed us and other contractors to increased risk of liability, particularly as these events can be started by electrical power and other infrastructure on which we have performed services.
As of December 31, 2022, the total size of the fleet was approximately 68,000 units.
As of December 31, 2023, the total size of the fleet was approximately 71,000 units.
Representative customers include: l American Electric Power Company, Inc. l Lower Colorado River Authority l ATCO Electric l National Grid plc l Berkshire Hathaway, Inc. l NextEra Energy, Inc. l CenterPoint Energy, Inc. l Pattern Energy l Clearway Renew LLC l PG&E Corporation l Comcast Corporation l Puget Sound Energy, Inc. l Con Edison Development, Inc. l Sempra Energy l Duke Energy Corporation l The Southern Company l Edison International l TC Energy Corporation l Entergy Corporation l Trans Mountain Corporation l Evergy Inc. l Valero Energy Corporation l Exelon Corporation l Verizon Communications Inc. l FirstEnergy Corp. l Wataynikaneyap Power l Invenergy LLC l Xcel Energy Inc.
Representative customers include: l American Electric Power Company, Inc. l Invenergy LLC l ATCO Electric l Lower Colorado River Authority l Berkshire Hathaway, Inc. l National Grid plc l CenterPoint Energy, Inc. l NextEra Energy, Inc. l Comcast Corporation l Orsted US l Con Edison Development, Inc. l Pattern Energy l Duke Energy Corporation l PG&E Corporation l EDF Renewables l Puget Sound Energy, Inc. l Engie IR Holdings LLC l Sempra Energy l Entergy Corporation l The Southern Company l Enterprise Products Partners L.P. l TC Energy Corporation l Exelon Corporation l Trans Mountain Corporation l FirstEnergy Corp. l Valero Energy Corporation l Fortis Inc. l Xcel Energy Inc.
To the extent this rule is finalized as proposed, we or our customers could incur increased costs related to the assessment and disclosure of climate-related risks.
To the extent these rules are finalized, we or our customers could incur increased costs related to the assessment and disclosure of climate-related risks.
Although these companies currently outsource a significant portion of these services, there can be no assurance that they will continue to do so in the future or that they will not acquire additional in-house capabilities.
The in-house service organizations of our existing or prospective customers employ personnel who perform some of the same types of services we provide. Although these companies currently outsource a significant portion of these services, there can be no assurance that they will continue to do so in the future or that they will not acquire additional in-house capabilities.
For further information regarding the effects of regulation on our business, see Risks Related to Operating Our Business and Risks Related Regulation and Compliance in Item 1A. Risk Factors of this Annual Report.
For additional information regarding the risks and opportunities described above, see Risks Related to Operating Our Business in Item 1A. Risk Factors in Part I of this Annual Report.
We are insured for, among other things, employer’s liability, workers’ compensation, auto liability, aviation and general liability claims. Deductibles for the employer’s liability and workers’ compensation programs are $5.0 million per occurrence, and deductibles for the auto liability and general liability programs are $15.0 million per occurrence.
The d eductibles for the employer’s liability and workers’ compensation programs are $5.0 million per occurrence and the deductibles for the general liability and auto liability programs are $25.0 million per occurrence.
We are also subject to, and must comply with, extensive regulations relating to worker health and safety, including the regulations of the Occupational Safety and Health Administration. Employee Recruiting, Development and Training Our success depends on our ability to attract, develop and retain highly qualified employees, including craft skilled labor, engineers, architects, designers, management and professional and administrative employees.
Employee Recruiting, Development and Training Our success depends on our ability to attract, develop and retain highly qualified employees, including craft skilled labor, project management, engineers, architects, designers, management and professional and administrative employees. Craft Skilled Labor.
Services performed generally include: • engineering, procurement, new construction, repowering and repair and maintenance services for renewable generation facilities, such as utility-scale wind, solar and hydropower generation facilities and battery storage facilities; and • engineering and construction services for substations and switchyards, transmission and other electrical infrastructure needed to interconnect and transmit electricity from renewable energy generation and battery storage facilities. 5 Business Environment With respect to these services, we believe the transition to a reduced-carbon economy, which is being driven by consumer and investor preferences, increasing electrification trends and declining levelized costs of renewable energy, will require sizeable long-term investment in renewable generation and related infrastructure, including meaningful repowering and modernization of existing assets.
Business Environment With respect to these services, we believe the transition to a reduced-carbon economy, which is being driven by regulatory requirements, consumer and investor preferences, state and federal policies, increasing electrification trends and 5 declining levelized costs of renewable energy, will require sizeable long-term investment in renewable generation and related infrastructure, including meaningful repowering and modernization of existing assets.
Gulf Coast region should have certain long-term strategic advantages due to their proximity to competitively priced and abundant hydrocarbon resources. Our revenues related to larger pipeline services have fluctuated in recent years.
Gulf Coast region, which we believe should have certain long-term strategic advantages due to their proximity to competitively priced and abundant hydrocarbon resources. Through a recent acquisition, we also provide a variety of cleaning and other specialty environmental solutions to processing and petrochemical facilities throughout the United States. Our revenues related to larger pipeline services have fluctuated in recent years.
These variations are influenced by, among other things, weather, customer spending patterns, bidding seasons, receipt of required regulatory approvals, permits and rights of way, project timing and schedules, and holidays.
Risk Factors in Part I of this Annual Report. Seasonality and Cyclicality Typically, our revenues and results of operations can be subject to seasonal and other variations. These variations are influenced by, among other things, weather, customer spending patterns, bidding seasons, receipt of required regulatory approvals, permits and rights of way, project timing and schedules, and holidays.
The consideration for these transactions consisted of approximately $465.0 million paid in cash on the dates of the acquisitions and approximately 1.0 million shares of Quanta common stock, which had a fair value of $123.5 million as of the dates of the acquisitions.
The consideration for these transactions consisted of approximately $782.4 million paid or payable in cash (subject to certain adjustments) and 1,238,576 shares of Quanta common stock, which had a fair value of $158.9 million as of the applicable acquisition dates.
Despite these fluctuations and cyclicality, we continue to selectively pursue larger pipeline project opportunities to the extent they satisfy our margin and risk profiles.
Although revenues associated with large pipeline projects in Canada increased in 2022 and 2023, as compared to prior years, we anticipate that revenues associated with these projects will continue to fluctuate. Despite these fluctuations and cyclicality, we continue to selectively pursue larger pipeline project opportunities to the extent they satisfy our margin and risk profiles.
The timing and impact of these events is difficult to predict and can vary from period to period. For example, we recognized significantly more emergency restoration services revenues attributable to these events during 2020 and 2021, as compared to 2022.
The timing and impact of these events is difficult to predict and can vary from period to period, and our emergency restoration services attributable to these events have fluctuated significantly in the last several years.
Our contracts with customers may also impose liability on us for environmental issues that arise through the performance of our services. As a result, from time to time, we may incur costs and obligations for correcting environmental noncompliance matters and for remediation at or relating to certain of our properties.
Our contracts with customers may also impose liability on us for environmental issues that arise through the performance of our services.
For additional information regarding the risks and opportunities described above, see Risks Related to Operating Our Business in Item 1A. Risk Factors of this Annual Report. Risk Management and Insurance We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits.
Risk Management and Insurance We maintain insurance coverage from third-party insurers as part of our overall risk management strategy and because some of our contracts require us to maintain specific insurance coverage limits. We are insured for, among other things, employer’s liability, workers’ compensation, auto liability, aviation and general liability claims.
For further information regarding the risks associated with availability of equipment and materials, see Risks Related to Operating Our Business in Item 1A. Risk Factors of this Annual Report. Seasonality and Cyclicality Typically, our revenues and results of operations can be subject to seasonal and other variations.
As we continue to expand our EPC services, customers are increasingly requesting that we be responsible for procuring materials, and this trend is expected to continue to increase. For further information regarding certain risks associated with sources and availability of project materials and components, see Regulation below and Risks Related to Operating Our Business in Item 1A.
Removed
For additional information about LUMA and our other unconsolidated integral affiliates, refer to Note 8 of the Notes to consolidated financial statements in Item 8. Financial Statements and Supplementary Data .
Added
Services performed generally include: • engineering, procurement, new construction, repowering and repair and maintenance services for renewable generation facilities, such as utility-scale wind, solar and hydropower generation facilities and battery storage facilities; and • engineering and construction services for substations and switchyards, transmission and other electrical infrastructure needed to interconnect and transmit electricity from renewable energy generation and battery storage facilities.
Removed
The results of the business that designs, supplies and installs solar tracking technology and installs and assembles solar panel systems will be primarily included in the Renewable Energy Infrastructure Solutions segment and the results of the other two businesses will be primarily included in the Electric Power Infrastructure Solutions segment.
Added
GENERAL Recent Acquisitions In January 2024, we acquired two businesses located in the United States including: a business that provides specialty environmental solutions to industrial companies (which will be primarily included in the Underground and Infrastructure segment) and a business that specializes in testing, manufacturing and distributing safety equipment and supplies (which will be primarily included in the Electric Power and Renewable Energy segments).
Removed
We also face competition from the in-house service organizations of our existing or prospective customers, which employ personnel who perform some of the same types of services we provide.
Added
The consideration for these transactions consisted of approximately $379.9 million paid or payable in cash and 221,700 shares of Quanta common stock issued in consideration for one of the acquired businesses, which had a fair value of $44.9 million as of the applicable acquisition date, plus the potential payment of certain contingent consideration.
Removed
We continue to expand our EPC services, and consequently our responsibility for procuring materials is expected to increase.
Added
We believe that we are in compliance with all material licensing and regulatory requirements that are necessary to conduct our operations.
Removed
As a result, we monitor supply chain and other logistical challenges impacting our industries with respect to these materials, and a number of factors that we and our customers may not be able to predict or control could result in increased costs for, or delays in delivery or lack of availability of, these materials, including, among other things, the continued impact of supply chain and other logistical challenges, inflationary pressure, changes in global trade relationships (e.g., tariffs, sourcing restrictions) and other general market and political conditions (e.g., rising interest rates).
Added
As a result, from time to time, we incur, and expect to continue to incur, costs and obligations to remain in compliance with applicable environmental laws and regulations, to correct environmental noncompliance matters and for remediation at or relating to certain of our properties.
Removed
Increased costs and delays can impact project construction schedules and the performance of our services.

… 8 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

141 edited+32 added−30 removed229 unchanged
Biggest changeRisks Related to Operating Our Business • Our operating results may vary significantly from quarter to quarter. • A variety of issues could affect the timing or profitability of our projects, and could result in, among other things, project termination or payment of liquidated damages. • Our business is subject to operational hazards (e.g., wildfires, explosions) that can result in significant liabilities, and we may not be insured against all potential liabilities. • Unavailability or cancellation of third-party insurance would increase our risk exposure and disrupt our operations, and our estimates of losses under our insurance programs could prove inaccurate. • Our business and operating results are subject to physical risks associated with climate change. • Our business is labor-intensive, and we may be unable to attract and retain qualified employees or we may incur significant costs if we are unable to efficiently manage our workforce. • A loss of business from certain significant customers could have a material effect on our business. • We may fail to adequately recover on contract change orders or claims against customers. • Changes in estimates related to revenues and costs under customer contracts could result in a reduction or elimination of revenues or profits and the recognition of losses. • We are subject to lawsuits, claims and other legal proceedings, as well as project surety claims. • We may be unsuccessful in generating internal growth. • Many of our contracts may be canceled or suspended on short notice or may not be renewed or replaced. • The nature of our business exposes us to warranty, engineering and other related claims. • We can incur liabilities or suffer negative financial or reputational impacts due to health and safety matters. • Disruptions or failure to adequately protect our information technology systems could materially affect our business or result in harm to our reputation. • A deterioration of our reputation or brands could have an adverse impact on our business. • Our financial results are based on estimates and assumptions that may differ from actual results. • Our inability to successfully execute our acquisition strategy may adversely impact our growth. • Our decentralized management infrastructure could negatively impact our business. • The loss of, or our inability to attract, key personnel could disrupt our business. 15 • Our investments, including our joint ventures, expose us to risks and may result in conflicts of interest. • We are subject us to credit and investment risk with respect to our customers and projects. • Risks associated with operating in international markets and U.S. territories could harm our business and prospects. • Our business is subject to the availability of suppliers, subcontractors and equipment manufacturers. • A lack of availability or an increase in the price of fuel, materials or equipment could adversely affect our business or our customers. • Increasing scrutiny and expectations with respect to corporate sustainability practices may impose additional costs on us or expose us to reputational or other risks.
Biggest changeRisks Related to Operating Our Business • Our operating results may vary significantly from quarter to quarter. • A variety of issues could affect the timing or profitability of our projects, and could result in, among other things, project termination or payment of liquidated damages. • Our business is subject to operational hazards (e.g., wildfires, explosions) that can result in significant liabilities, and we may not be insured against all potential liabilities. • Unavailability or cancellation of third-party insurance would increase our risk exposure and disrupt our operations, and our estimates of losses under our insurance programs could prove inaccurate. • Our business and operating results are subject to physical risks associated with climate change. • Our business is labor-intensive, and we may be unable to attract and retain qualified employees or we may incur significant costs if we are unable to efficiently manage our workforce. • A loss of business from certain significant customers could have a material effect on our business. • Changes in estimates related to revenues and costs under customer contracts could result in a reduction or elimination of revenues or profits and the recognition of losses. • We may fail to adequately recover on contract change orders or claims against customers. • We are subject to lawsuits, claims and other legal proceedings, as well as project surety claims. • We may be unsuccessful in generating internal growth. • Many of our contracts may be canceled or suspended on short notice or may not be renewed or replaced. • The nature of our business exposes us to warranty, engineering and other related claims. • We can incur liabilities or suffer negative financial or reputational impacts due to health and safety matters. • Disruptions or failure to adequately protect our information technology systems could materially affect our business or result in harm to our reputation. • A deterioration of our reputation or brands could have an adverse impact on our business. • Our financial results are based on estimates and assumptions that may differ from actual results. • Our inability to successfully execute our acquisition strategy may adversely impact our growth. • Our management structure could be inadequate to support our business as it expands and becomes more complex. • The loss of, or our inability to attract, key personnel could disrupt our business. • Our investments, including our joint ventures, expose us to risks and may result in conflicts of interest. • We are subject to credit and investment risk with respect to our customers and projects. • Risks associated with operating in international markets and U.S. territories could harm our business and prospects. • Our business is subject to the availability of suppliers, subcontractors and equipment manufacturers. • A lack of availability or an increase in the price of fuel, materials or equipment could adversely affect our business or our customers. • Increasing scrutiny and expectations with respect to corporate sustainability practices may impose additional costs on us or expose us to reputational or other risks. 15 Risks Related to Our Industries • Negative macroeconomic conditions and industry-specific economic and market conditions can adversely impact our business. • Our revenues and profitability can be negatively impacted if customers encounter financial difficulties or disputes arise with our customers. • Our business is highly competitive and competitive pressures could negatively impact our business. • Technological advancements and other market conditions could negatively affect our business.
Inability to successfully generate internal growth may adversely affect our financial condition, results of operations and cash flows. Many of our contracts may be canceled or suspended on short notice or may not be renewed upon completion or expiration, and we may be unsuccessful in replacing our contracts, which could adversely affect our business.
Our inability to successfully generate internal growth may adversely affect our financial condition, results of operations and cash flows. Many of our contracts may be canceled or suspended on short notice or may not be renewed upon completion or expiration, and we may be unsuccessful in replacing our contracts, which could adversely affect our business.
For example, during 2022, we recorded a $91.5 million impairment in connection with our investment in Starry Group Holdings, Inc. (Starry).
For example, during 2022, we recorded a $91.5 million impairment in connection with our investment in Starry Group Holdings, Inc.
Our or our customers’ failure to successfully navigate these requirements could negatively impact our ability to take advantage of the opportunities under such legislation, result in additional unintended costs associated with any projects completed under such legislation or result in liabilities or governmental penalties for noncompliance. Our unionized workforce and related obligations may adversely affect our operations.
Our or our customers’ failure to successfully navigate these requirements could negatively impact our, or our customers’, ability to take advantage of the opportunities under such legislation, result in additional unintended costs associated with any projects completed under such legislation or result in liabilities or governmental penalties for noncompliance. Our unionized workforce and related obligations may adversely affect our operations.
This could require us to incur substantial costs, subject us to increased liability for our climate-related disclosures, and influence our climate and business strategy in ways other than we might prefer. Additionally, involvement with government contracts could require a significant amount of costs to be incurred before any revenues are realized.
This could require us to incur substantial costs, subject us to increased liability for our climate-related and other disclosures, and influence our climate and business strategy in ways other than we might prefer. Additionally, involvement with government contracts could require a significant amount of costs to be incurred before any revenues are realized.
The following provisions of our charter documents, as currently in effect, and Delaware law could discourage potential proposals to acquire us, delay or prevent a change in control of us or limit the price that investors may be willing to pay in the future for shares of our common stock: • our certificate of incorporation permits our Board of Directors to issue “blank check” preferred stock and to adopt amendments to our bylaws; • our bylaws contain restrictions regarding the right of stockholders to nominate directors and to submit proposals to be considered at stockholder meetings; • our certificate of incorporation and bylaws restrict the right of stockholders to call a special meeting of stockholders and to act by written consent; and • we are subject to provisions of Delaware law which restrict us from engaging in any of a broad range of business transactions with an “interested stockholder” for a period of three years following the date such stockholder became classified as an interested stockholder.
The following provisions of our charter documents, as currently in effect, and Delaware law could discourage potential proposals to acquire us, delay or prevent a change in control of us or limit the price that investors may be willing to pay in the future for shares of our common stock: • our certificate of incorporation permits our Board to issue “blank check” preferred stock and to adopt amendments to our bylaws; • our bylaws contain restrictions regarding the right of stockholders to nominate directors and to submit proposals to be considered at stockholder meetings; • our certificate of incorporation and bylaws restrict the right of stockholders to call a special meeting of stockholders and to act by written consent; and • we are subject to provisions of Delaware law which restrict us from engaging in any of a broad range of business transactions with an “interested stockholder” for a period of three years following the date such stockholder became classified as an interested stockholder.
Furthermore, if we seek additional debt or equity financings, we cannot be certain they will be available to us on acceptable terms or at all, as 34 banks are often restrictive in their lending practices, and our ability to access capital markets for financing could be limited by, among other things, our existing capital structure, our credit ratings, the state of the economy, the health of our industries, and the liquidity of the capital markets.
Furthermore, if we seek additional debt or equity financings, we cannot be certain they will be available to us on acceptable terms or at all, as banks are often restrictive in their lending practices, and our ability to access capital markets for financing could be limited by, among other things, our existing capital structure, our credit ratings, the state of the economy, the health of our industries, and the liquidity of the capital markets.
Additionally, if the proposed FTC rulemaking regarding non-compete covenants discussed above is finalized, Quanta would be required to individually rescind any post-termination non-compete clauses in its employment and other service agreements with key management, other employees and individual independent contractors, which would increase the risk that key individuals, upon departure from Quanta, would compete with us despite any severance or other consideration paid or owed to any such individual.
Additionally, if the proposed FTC rulemaking regarding non-compete covenants discussed above is finalized, Quanta could be required to individually rescind any post-termination non-compete clauses in its employment and other service agreements with key management, other employees and individual independent contractors, which would increase the risk that key individuals, upon departure from Quanta, would compete with us despite any severance or other consideration paid or owed to any such individual.
Additionally, changing competitive pressures present difficulties in matching workforce size with available contract awards. As a result of the factors described above, the competitive environment we operate in can have a material adverse effect on our business, financial condition, results of operations and cash flows. Technological advancements and other market developments could negatively affect our business.
Additionally, changing competitive pressures present difficulties in matching 30 workforce size with available contract awards. As a result of the factors described above, the competitive environment we operate in can have a material adverse effect on our business, financial condition, results of operations and cash flows. Technological advancements and other market developments could negatively affect our business.
The pool of skilled workers in certain of our industries has also been reduced, and may be further reduced, due primarily to an aging utility workforce and longer-term labor availability issues, including with respect to experienced program managers and qualified journeyman linemen available for our Electric Power Infrastructure Solutions segment and experienced supervisors and foremen for our Underground Utility and Infrastructure Solutions segment.
The pool of skilled workers in certain of our industries has also been reduced, and may be further reduced, due primarily to an aging utility workforce and longer-term labor availability issues, including with respect to experienced program managers and qualified journeyman linemen available for our Electric Power segment and experienced supervisors and foremen for our Underground and Infrastructure segment.
As a result, Quanta’s level of insurance coverage for wildfire events has decreased in recent years, and the current level of coverage may not be sufficient to cover potential losses in connection with these events. Furthermore, our third-party insurers could also decide to further reduce or exclude coverage for wildfires or other events in connection with 19 future insurance renewals.
As a result, Quanta’s level of insurance coverage for wildfire events has decreased in recent years, and the current level of coverage may not be sufficient to cover potential losses in connection with these events. Furthermore, our third-party insurers could also decide to further reduce or exclude coverage for wildfires or other events in connection with future insurance renewals.
Because our services in certain instances can be integral to the 21 operation and performance of our customers’ infrastructure, we have been and may become subject to lawsuits or claims for any failure of the systems that we work on or damages caused by accidents and events related to such systems, even if our services are not the cause of such failures and damages.
Because our services in certain instances can be integral to the operation and performance of our customers’ infrastructure, we have been and may become subject to lawsuits or claims for any failure of the systems that we work on or damages caused by accidents and events related to such systems, even if our services are not the cause of such failures and damages.
For example, the interaction between the IRA and the IIJA could lead to additional complex requirements associated with, among other things, union labor or prevailing wages, domestic material production obligations, and affirmative action programs, which we and our customers must comply with in order to secure government funding for 31 projects completed thereunder.
For example, the interaction between the IRA and the IIJA could lead to additional complex requirements associated with, among other things, union labor or prevailing wages, domestic material production obligations, and affirmative action programs, which we and our customers must comply with in order to secure government funding for projects completed thereunder.
For fixed price contracts and certain unit-price contracts, we recognize revenue as performance obligations are satisfied over time and earnings or losses recognized on individual contracts are based on estimates of contract revenues, costs and profitability, as discussed in further detail in Note 4 of the Notes to Consolidated Financial Statements included in Item 8.
For fixed price contracts and certain unit-price contracts, we recognize revenue as performance obligations are satisfied over time and earnings or losses recognized on individual contracts are based on estimates of contract revenues, costs and profitability, as discussed in further detail in Note 4 of the Notes to Consolidated Financial Statements in Item 8.
Additionally, to the extent we are required to transition our fleet to alternative sources of power, including EVs, and the availability of such vehicles is limited or fluctuates, we may be unable to efficiently plan for such transition, which could result in, among other things, the retirement of certain vehicles prior to the end of their useful life.
Additionally, to the extent we are required to 28 transition our fleet to alternative sources of power, including EVs, and the availability of such vehicles is limited or fluctuates, we may be unable to efficiently plan for such transition, which could result in, among other things, the retirement of certain vehicles prior to the end of their useful life.
We are regularly under audit by tax authorities, and our tax estimates and tax positions could be materially affected by many factors, including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, our global mix 32 of earnings, our ability to realize deferred tax assets and changes in uncertain tax positions.
We are regularly under audit by tax authorities, and our tax estimates and tax positions could be materially affected by many factors, including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, our global mix of earnings, our ability to realize deferred tax assets and changes in uncertain tax positions.
Furthermore, our wholly-owned captive insurance company is a registered insurance company with the Texas Department of Insurance, and therefore is subject to various rules and regulations and required to meet certain capital requirements, which can result in additional use of our resources. We also collect and retain information about our customers, stockholders, vendors and employees.
Furthermore, our wholly-owned captive insurance company is a registered insurance company with the Texas Department of Insurance, and therefore is subject to various rules and regulations and required to meet certain capital requirements, which can result in additional use of our resources. 33 We also collect and retain information about our customers, stockholders, vendors and employees.
Increased labor costs can also impact our customers’ decision-making with respect to viability or timing of certain projects, 20 which could result in project delays or cancellations and in turn have a material adverse effect on our business, financial condition, results of operations or cash flows.
Increased labor costs can also impact our customers’ decision-making with respect to viability or timing of certain projects, which could result in project delays or cancellations and in turn have a material adverse effect on our business, financial condition, results of operations or cash flows.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations on our existing indebtedness. Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our indebtedness.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations on our existing indebtedness. 35 Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our indebtedness.
These bonds provide a guarantee that we will perform under the terms of a contract and pay our subcontractors and vendors. If we fail to perform, the customer may demand that the surety make payments or provide services under the bond, and we must reimburse the surety for any expenses or outlays it incurs.
These bonds provide a guarantee that we will perform under the terms of a contract and pay our subcontractors and vendors. If we fail to perform, the customer may demand that the surety make payments or provide services under the bond, 21 and we must reimburse the surety for any expenses or outlays it incurs.
Additionally, the purpose of our joint ventures is typically to combine skills and resources to allow for the bidding and performance of particular projects, and the success on these projects can be adversely affected by the performance of our joint venture partners, over whom we may have little or no control.
Additionally, the purpose of our joint ventures is typically to combine skills and resources to allow for the bidding and performance of particular projects, and the success of these projects can be adversely affected by the performance of our joint venture partners, over whom we may have little or no control.
Further, if our partners experience cost overruns or project performance issues that we are unable to adequately address, the customer may terminate the project, which could result in legal liability to us, harm our reputation and reduce our profit or increase our loss on a project.
Further, if our partners experience cost overruns or project performance issues that we are unable to adequately 26 address, the customer may terminate the project, which could result in legal liability to us, harm our reputation and reduce our profit or increase our loss on a project.
These laws, as well as other new or changing 33 legislative, regulatory or contractual requirements concerning data privacy and protection, could require us to expend significant additional compliance costs, and any failure to comply with such requirements can result in significant liability or harm to our reputation.
These laws, as well as other new or changing legislative, regulatory or contractual requirements concerning data privacy and protection, could require us to expend significant additional compliance costs, and any failure to comply with such requirements can result in significant liability or harm to our reputation.
These contracts often involve complex pricing, scope of services and other bid preparation components that require challenging estimates and assumptions on the part of our personnel, which increases the risk that costs incurred on such projects can vary, sometimes substantially, from our original estimates.
The contracts for these projects often involve complex pricing, scope of services and other bid preparation components that require challenging estimates and assumptions on the part of our personnel, which increases the risk that costs incurred on such projects can vary, sometimes substantially, from our original estimates.
Additionally, we operate a significant number of helicopters in the performance of our services, including the transportation of line workers, the setting of poles, the stringing of wires and wildfire control and prevention, among other activities, including in locations that have a higher risk of wildfires and in densely populated areas.
Additionally, we operate a significant number of helicopters in the performance of our services, including the transportation of line workers, the setting of poles, the stringing of wires and wildfire control and prevention, among other activities, including in 18 locations that have a higher risk of wildfires and in densely populated areas.
Additionally, because the techniques used to obtain unauthorized access or sabotage information technology systems change frequently and are generally not identifiable until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Additionally, because the techniques used to obtain 23 unauthorized access or sabotage information technology systems change frequently and are generally not identifiable until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Changes in immigration or work authorization laws may increase our obligations for compliance and oversight, which could subject us to additional costs and potential liability and make our hiring and employee transfer processes more cumbersome, or reduce the availability of potential employees.
Changes in immigration or work authorization laws may increase our obligations for compliance and oversight, which could subject us to additional costs and 34 potential liability and make our hiring and employee transfer processes more cumbersome, or reduce the availability of potential employees.
In certain circumstances, we also allow our customers to defer payment until certain project milestones have been met or until a project is substantially completed, and customers typically withhold some portion of 26 amounts due to us as retainage until a project is complete.
In certain circumstances, we also allow our customers to defer payment until certain project milestones have been met or until a project is substantially completed, and customers typically withhold some portion of amounts due to us as retainage until a project is complete.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. 35 Our variable rate indebtedness subjects us to interest rate risk.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. Our variable rate indebtedness subjects us to interest rate risk.
We cannot predict the effect that future issuances of our common stock or other equity-related securities would have on the market price of our common stock. 36 There can be no assurance that we will declare or pay future dividends on our common stock.
We cannot predict the effect that future issuances of our common stock or other equity-related securities would have on the market price of our common stock. There can be no assurance that we will declare or pay future dividends on our common stock.
These regulations are complex and subject to change both in substance and interpretation and often regulations across various industries can differ or conflict, all of which can negatively impact our or our customers’ ability to efficiently operate.
These regulations are complex and subject to change both in substance and interpretation and often regulations across various industries and jurisdictions can differ or conflict, all of which can negatively impact our or our customers’ ability to efficiently operate.
The declaration, amount and timing of future dividends are subject to capital availability and determinations by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance with all respective laws and applicable agreements.
The declaration, amount and timing of future dividends are subject to capital availability and determinations by our Board that cash dividends are in the best interest of our stockholders and are in compliance with all respective laws and applicable agreements.
As a result, the loss of key personnel, as well as our inability to attract, develop and retain 25 qualified employees that can succeed these key personnel, could negatively impact our ability to manage our business.
As a result, the loss of key personnel, as well as our inability to attract, develop and retain qualified employees that can succeed these key personnel, could negatively impact our ability to manage our business.
Our quarterly results have been and may in the future be materially and/or adversely affected by, among other things: • the timing and volume of work we perform and our performance with respect to ongoing projects and services, including as a result of fluctuations in the amount of work customers assign to us under our agreements, including MSAs, delays and reductions in scope of projects, and project and agreement terminations, expirations or cancellations; • increases in project costs that result from, among other things, natural disasters and emergencies, adverse weather conditions or events, legal challenges, permitting, regulatory or environmental processes, or inaccurate project cost estimates; 16 • variations in the size, scope, costs and margins of ongoing projects, as well as the mix of our customers, contracts and business; • fluctuations in economic, political, financial, industry and market conditions on a regional, national or global basis, including as a result of, among other things, inflationary pressure that impacts our costs associated with labor, equipment and materials; increased interest rates; default or threat of default by the U.S. federal government with respect to its debt obligations; U.S. government shutdowns; natural disasters and other emergencies (e.g., wildfires, weather-related events, pandemics); deterioration of global or specific trade relationships; or geopolitical conflicts and political unrest; • pricing pressures as a result of competition; • changes in the budgetary spending patterns or strategic plans of customers or governmental entities; • supply chain and other logistical difficulties, as well as sourcing restrictions on materials necessary for the services we provide; • liabilities and costs incurred in our operations that are not covered by, or that are in excess of, our third-party insurance or indemnification rights, including significant liabilities that arise from the inherently hazardous conditions of our operations (e.g., explosions, fires) and the operations of our subcontractors, and which could be exacerbated by the geographies in which we operate; • disputes with customers or delays and payment risk relating to billing and payment under our contracts and change orders, including customers affected by the volatility of commodity prices or production or that have filed for bankruptcy protection; • the resolution of, or unexpected or increased costs associated with, pending or threatened legal proceedings, indemnity obligations, multiemployer pension plan obligations (e.g., withdrawal liability) or other claims; • restructuring, severance and other costs associated with, among other things, winding down certain operations and exiting markets; • estimates and assumptions in determining our financial results, remaining performance obligations and backlog, including the timing and significance of impairments of long-lived assets, equity or other investments, receivables, goodwill or other intangible assets; • significant fluctuations in foreign currency rates; • the recognition of tax impacts related to changes in tax laws or uncertain tax positions; and • the timing and magnitude of costs we incur to support our operations or growth internally or through acquisitions.
Our quarterly results have been and may in the future be materially and/or adversely affected by, among other things: • the timing and volume of work we perform and our performance with respect to ongoing projects and services, including as a result of fluctuations in the amount of work customers assign to us under our agreements (e.g., MSAs), delays and reductions in scope of projects, and project and agreement terminations, expirations or cancellations; • increases in project costs that result from, among other things, natural disasters and emergencies, adverse weather conditions or events, legal challenges, permitting, regulatory or environmental processes, or inaccurate project cost estimates; • variations in the size, scope, costs and operating income margins of ongoing projects, as well as the mix of our customers, contracts and business; • fluctuations in economic, political, financial, industry and market conditions on a regional, national or global basis, including as a result of, among other things, inflationary pressure that impacts our costs associated with labor, equipment and materials; increased interest rates; default or threat of default by the U.S. federal government with respect to its debt obligations; U.S. government shutdowns; natural disasters and other emergencies (e.g., wildfires, weather-related events, pandemics); deterioration of global or specific trade relationships; or geopolitical conflicts and political unrest; 16 • pricing pressures as a result of competition; • changes in the budgetary spending patterns or strategic plans of customers or governmental entities; • supply chain and other logistical difficulties, as well as sourcing restrictions on materials necessary for the services we provide; • liabilities and costs incurred in our operations that are not covered by, or that are in excess of, our third-party insurance or indemnification rights, including significant liabilities that arise from the inherently hazardous conditions of our operations (e.g., explosions, fires) and the operations of our subcontractors, and which could be exacerbated by the geographies in which we operate; • disputes with customers or delays and payment risk relating to billing and payment under our contracts and change orders, including as a result of customers that encounter financial difficulties, are insolvent or have filed for bankruptcy protection; • the resolution of, or unexpected or increased costs associated with, pending or threatened legal proceedings, indemnity obligations, multiemployer pension plan obligations (e.g., withdrawal liability) or other claims; • restructuring, severance and other costs associated with, among other things, winding down certain operations and exiting markets; • estimates and assumptions in determining our financial results, remaining performance obligations and backlog, including the timing and significance of impairments of long-lived assets, equity or other investments, receivables, goodwill or other intangible assets; • significant fluctuations in foreign currency rates; • the recognition of tax impacts related to changes in tax laws or uncertain tax positions; and • the timing and magnitude of costs we incur to support our operations or growth internally or through acquisitions.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters. In addition, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many sustainability matters. In addition, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to sustainability matters.
We depend on the continued efforts of our executive officers, senior corporate management and management of our operating companies, which includes leadership and key personnel of the businesses we acquire.
We depend on the continued efforts of our executive officers, senior corporate management, regional leadership and management of our operating companies, which includes leadership and key personnel of the businesses we acquire.
Since future changes to federal and state tax legislation and regulations are unknown, we cannot predict the ultimate impact such changes may have on our business. In addition, significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
Since future changes to tax legislation and regulations are unknown, we cannot predict the ultimate impact such changes may have on our business. In addition, significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or potentially design supply chains to avoid certain regions altogether. Failure to comply with such regulations can result in fines, reputational damage, denial of import for materials for our projects, or otherwise adversely impact our business.
Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or potentially design supply chains to avoid certain regions altogether. Failure to comply with such regulations can result in fines, contractual penalties, reputational damage, denial of import for materials for our projects, or otherwise adversely impact our business.
Consolidation, competition, capital constraints or negative economic conditions in the electric power, energy or communications industries can also result in reduced spending by, or the loss of, one or more of our customers. Services within our Underground Utility and Infrastructure Solutions segment are exposed to risks associated with the oil and gas industry.
Consolidation, competition, capital constraints or negative economic conditions in the electric power, energy or communications industries can also result in reduced spending by, or the loss of, one or more of our customers. Services within our Underground and Infrastructure segment are exposed to risks associated with the oil and gas industry.
For additional information on our contributions to, and the funding status of, these plans, see Note 15 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report. We could be adversely affected by our failure to comply with the laws applicable to our foreign activities.
For additional information on our contributions to, and the funding status of, these plans, see Note 15 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report. We could be adversely affected by our failure to comply with the laws applicable to our foreign activities.
For example, as discussed in further detail in Legal Proceedings within Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report, the termination of a telecommunications project in Peru resulted in a $79.2 million charge to earnings in the second quarter of 2019.
For example, as discussed in further detail in Legal Proceedings within Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report, the termination of a telecommunications project in Peru resulted in a $79.2 million charge to earnings in the second quarter of 2019.
While we have programs and initiatives in place related to our ESG practices, investors may decide to reallocate capital or to not commit capital as a result of their assessment of our practices. In addition, our customers may require that we implement certain additional ESG procedures or standards in order to continue to do business with us.
While we have programs and initiatives in place related to our sustainability practices, investors may decide to reallocate capital or to not commit capital as a result of their assessment of our practices. In addition, our customers may require that we implement certain additional procedures or standards in order to continue to do business with us.
In addition, organizations that provide ratings information to investors on ESG matters may assign unfavorable ratings to Quanta or our industries, which may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price and our costs of capital.
In addition, organizations that provide ratings information to investors on sustainability matters may assign unfavorable ratings to Quanta or our industries, which may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price and our costs of capital.
Additionally, a transition to a decentralized electric power grid, which relies on more dispersed and smaller-scale renewable energy sources, could reduce the need for large infrastructure projects and significant maintenance and rehabilitation programs, thereby reducing demand for, or profitability of, our services.
For example, a transition to a decentralized electric power grid, which relies on more dispersed and smaller-scale renewable energy sources, could reduce the need for large infrastructure projects and significant maintenance and rehabilitation programs, thereby reducing demand for, or profitability of, our services.
With respect to certain services within our Renewable Energy Infrastructure Solutions segment, current and potential legislative or regulatory initiatives may not be implemented or extended or result in incremental increased demand for our services, including legislation or regulation that mandates percentages of power to be generated from renewable sources, requires utilities to meet reliability standards, provides for existing or new production tax credits for renewable energy developers, or encourages installation of new electric power transmission and renewable energy generation facilities.
With respect to certain services within our Renewable Energy segment, current and potential legislative or regulatory initiatives may not be implemented or extended or result in incremental increased demand for our services, including legislation or regulation that mandates percentages of power to be generated from renewable sources, requires utilities to meet reliability 31 standards, provides for existing or new production tax credits for renewable energy developers, or encourages installation of new electric power transmission and renewable energy generation facilities.
Financial Statements and Supplementary Data of this Annual Report. Changes in contract estimates are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made, and contract losses are recognized in full when losses are determined to be probable and can be reasonably estimated.
Financial Statements and Supplementary Data in Part II of this Annual Report. Changes in contract estimates are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made, and contract losses are recognized in full when losses are determined to be probable and can be reasonably estimated.
Expectations and requirements of our investors, customers and other third parties evolve rapidly and are largely out 28 of our control, and our ESG-based initiatives and disclosures in response to such expectations and requirements may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain services, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.
Expectations and requirements of our investors, customers and other third parties evolve rapidly and are largely out of our control, and our initiatives and disclosures in response to such expectations and requirements may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain services, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.
To the extent that we are unable to manage our growth effectively or are unable to attract and retain additional qualified management, we may not be able to expand our operations or execute our business plan. The loss of, or our inability to attract, key personnel could disrupt our business.
To the extent that we are unable to manage our growth effectively or are unable to attract and retain additional qualified management, we may not be able to continue to expand our operations or execute our business plan. 25 The loss of, or our inability to attract, key personnel could disrupt our business.
For example, the Biden Administration recently proposed revisions to the Federal Acquisition Regulation which, if adopted, would require major federal suppliers to monitor and disclose certain climate-related information and, for certain suppliers, to adopt climate-related targets subject to the methodology of the Science Based Targets Initiative.
For example, the Biden Administration has proposed revisions to the Federal Acquisition Regulation which, if adopted, would require major federal suppliers to monitor and disclose certain climate-related information and, for certain suppliers, to adopt climate-related targets subject to the methodology of the Science Based Targets Initiative.
For additional information on the terms of our senior credit facility, senior notes and commercial paper facility, please read Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report.
For additional information on the terms of our senior credit facility, senior notes and commercial paper facility, please read Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report.
Financial Statements and Supplementary Data of this Annual Report, two of Quanta’s operating companies have received tenders of defense and demands for preservation of documents. Additionally, certain of these wildfire events remain under investigation and additional claims or legal proceedings involving Quanta and its operating companies related to these events may be brought in the future.
Financial Statements and Supplementary Data in Part II of this Annual Report, two Quanta operating companies have received tenders of defense and demands for preservation of documents. Additionally, certain of these wildfire events remain under investigation and additional claims or legal proceedings involving Quanta and its operating companies related to these events may be brought in the future.
Our business strategy includes expanding our presence in the industries we serve through strategic acquisitions of companies that complement or enhance our business. The number of acquisition targets that meet our criteria may be limited.
Our business strategy includes expanding our presence in the industries we serve and adjacent industries through strategic acquisitions of companies that complement or enhance our business. The number of acquisition targets that meet our criteria may be limited.
A reduction in cash flow or the lack of availability of debt or equity financing for our customers could result in a reduction in our customers’ spending for our services and also impact the ability of our customers to pay amounts owed to us, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
A reduction in cash flow or the lack of availability of debt or equity financing for our customers on favorable terms could result in a reduction in our customers’ spending for our services 29 and also impact the ability of our customers to pay amounts owed to us, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Certain of our operations within our Underground Utility and Infrastructure Solutions 29 segment could also experience reputational risks, such as how our values and practices regarding a low carbon transition are viewed by external and internal stakeholders, which could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Certain of our operations within our Underground and Infrastructure segment could also experience reputational risks, such as how our values and practices regarding a low carbon transition are viewed by external and internal stakeholders, which could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Moreover, while we may create and publish voluntary disclosures regarding sustainability matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and estimates and assumptions that may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Our internal control over financial reporting was effective as of December 31, 2022; however, there can be no assurance that our internal control over financial reporting will be determined to be effective in future years.
Our internal control over financial reporting was effective as of December 31, 2023; however, there can be no assurance that our internal control over financial reporting will be determined to be effective in future years.
The loss of, or reduction in business from, certain significant customers could have a material adverse effect on our business. A few customers have in the past and may in the future account for a significant portion of our revenues. For example, our ten largest customers accounted for 36% of our consolidated revenues for the year ended December 31, 2022.
The loss of, or reduction in business from, certain significant customers could have a material adverse effect on our business. A few customers have in the past and may in the future account for a significant portion of our revenues. For example, our ten largest customers accounted for 31% of our consolidated revenues for the year ended December 31, 2023.
For example, customers in certain states and Canada, in order to receive certain funding or for other reasons, may expect or compel us to engage a specified percentage of suppliers or subcontractors that meet diversity-ownership requirements, which can further limit our pool of available suppliers and subcontractors and limit our ability to secure contracts, maintain our services or grow in those areas.
For example, customers in certain U.S. states and Canada, in order to receive certain funding or for other reasons, may expect or compel us to engage a specified percentage of services from suppliers or subcontractors that meet diversity-ownership requirements, which can further limit our pool of available suppliers 27 and subcontractors and limit our ability to secure contracts, maintain our services or grow in those areas.
Many of our projects involve challenging engineering, permitting, procurement and construction phases that occur over extended time periods, sometimes several years, and we have encountered and may in the future encounter project delays, additional costs or project performance issues as a result of, among other things: • inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project, which can result in increased costs, through rework, replacement or otherwise, or the payment of liquidated damages to the customer or contract termination; • failure to accurately estimate project costs or accurately establish the scope of our services; • failure to make judgments in accordance with applicable professional standards (e.g., engineering standards); • unforeseen circumstances or project modifications not included in our cost estimates or covered by our contract for which we cannot obtain adequate compensation, including concealed or unknown environmental, geological or geographical site conditions and technical problems such as design or engineering issues; • changes in laws or permitting and regulatory requirements during the course of our work; • delays in the delivery or management of design or engineering information, equipment or materials; 17 • our or a customer’s failure to manage a project, including the inability to timely obtain permits or rights of way or meet other permitting, regulatory or environmental requirements or conditions; • schedule changes; • natural disasters or emergencies, including wildfires and earthquakes, as well as significant weather events (e.g., hurricanes, tropical storms, tornadoes, floods, droughts, blizzards and extreme temperatures) and adverse or unseasonable weather conditions (e.g., prolonged rainfall or snowfall, early thaw in Canada and the northern United States); • difficult terrain and site conditions where delivery of materials and availability of labor are impacted or where there is exposure to harsh and hazardous conditions; • protests and other public activism, legal challenges or other political activity or opposition to a project; • other factors such as terrorism, military action, public health crises (e.g., the pandemic associated with the novel coronavirus that began in 2019 (COVID-19)) and delays attributable to U.S. government shutdowns or any related under-staffing of government departments or agencies; • changes in the cost, availability or quality of equipment, commodities, materials, consumables or labor; and • delay or failure to perform by suppliers, subcontractors or other third parties, or our failure to coordinate performance of such parties, as approximately 20% of our work is subcontracted to other service providers.
Many of our projects involve challenging design, engineering, financing, permitting, right of way acquisition, procurement and construction phases that occur over extended time periods, sometimes several years, and we have encountered and may in the future encounter project delays, additional costs or project performance issues as a result of, among other things: • inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project, which can result in increased costs, through rework, replacement or otherwise, or the payment of liquidated damages to the customer or contract termination; • failure to accurately estimate project costs or accurately establish the scope of our services; • failure to make judgments in accordance with applicable professional standards (e.g., engineering standards); • unforeseen circumstances or project modifications not included in our cost estimates or covered by our contract for which we cannot obtain adequate compensation, including concealed or unknown environmental, geological or geographical site conditions or technical problems such as design or engineering issues; • changes in laws or permitting and regulatory requirements during the course of our work; • delays in the delivery or management of design or engineering information, equipment or materials; • our or a customer’s failure to manage a project, including the inability to timely obtain land, permits or rights of way or meet other permitting, regulatory or environmental requirements or conditions; • changes to project or customer schedules; • natural disasters or emergencies, including wildfires and earthquakes, as well as significant weather events (e.g., hurricanes, tropical storms, tornadoes, floods, droughts, blizzards and extreme temperatures) and adverse or unseasonable weather conditions (e.g., prolonged rainfall or snowfall, early thaw in Canada and the northern United States); 17 • difficult terrain and site conditions where delivery of materials and availability of labor are impacted or where there is exposure to harsh and hazardous conditions; • protests and other public activism, legal challenges or other political activity or opposition to a project; • other factors such as terrorism, geopolitical conflicts, public health crises (e.g. pandemics) and delays attributable to U.S. government shutdowns or any related under-staffing of government departments or agencies; • changes in the cost, availability or quality of equipment, commodities, materials, consumables or labor; and • delay or failure to perform by suppliers, subcontractors or other third parties, or our failure to coordinate performance of such parties, as approximately 20% of our work is subcontracted to other service providers.
Risks Related to Regulation and Compliance • Regulatory requirements applicable to our business and potential changes related to those requirements may adversely affect our business. • Our unionized workforce and related obligations may adversely affect our operations. • We could be adversely affected by failure to comply with laws applicable to our foreign activities. • Changes in tax laws could adversely affect our financial results. • Our failure to comply with environmental laws and regulations could result in significant liabilities and costs. • Certain specific regulatory requirements are applicable to us and certain of our subsidiaries, which could materially impact our business. • Governmental opportunities could subject us to increased regulation and costs and may pose additional risks relating to funding and compliance. • Immigration laws, including inability to verify employment and restrictions on movement, could adversely impact our business.
Risks Related to Regulation and Compliance • Regulatory requirements applicable to our business and potential changes related to those requirements may adversely affect our business. • Our unionized workforce and related obligations may adversely affect our operations. • We could be adversely affected by failure to comply with laws applicable to our foreign activities. • Our failure to comply with environmental laws and regulations could result in significant liabilities and costs. • Certain specific regulatory requirements are applicable to us and certain of our subsidiaries, which could materially impact our business. • Changes in tax laws could adversely affect our financial results. • Opportunities for government contracts or projects could subject us to increased regulation and costs and may pose additional risks relating to funding and compliance. • Immigration laws, including inability to verify employment and restrictions on movement, could adversely impact our business.
Pursuant to certain contracts, including fixed price and EPC contracts where we have assumed responsibility for procuring materials for a project, we are exposed to availability issues and price increases for materials that are utilized in connection with our operations, including, among other things, copper, steel and aluminum and specialized project components (e.g., transformers, solar panels).
Pursuant to certain contracts, including fixed price and EPC contracts where we have assumed responsibility for procuring materials for a project, we are exposed to availability issues and price increases for materials that are utilized in connection with our operations, including, among other things, copper, steel, aluminum, specialized project components (e.g., transformers, solar panels) and raw materials utilized for certain of our product solutions.
Our ability to integrate and realize benefits can be negatively impacted by, among other things: 24 • failure of an acquired business to achieve the results we expect; • diversion of our management’s attention from operational and other matters or other potential disruptions to our existing business; • difficulties incorporating the operations and personnel, or inability to retain key personnel, of an acquired business; • the complexities and difficulties associated with a decentralized management structure; • additional financial reporting and accounting challenges associated with an acquired business; • unanticipated events or liabilities associated with the operations of an acquired business; • loss of business due to customer overlap or other factors; and • risks and liabilities arising from the prior operations of an acquired business, such as performance, operational, safety, cybersecurity, environmental, workforce or other compliance or tax issues, some of which we may not have discovered or accurately estimated during our due diligence and may not be covered by indemnification obligations or insurance.
Our ability to integrate and realize benefits can be negatively impacted by, among other things: • failure of an acquired business to achieve the results we expect; • diversion of our management’s attention from operational and other matters or other potential disruptions to our existing business; • difficulties incorporating the operations and personnel, or inability to retain key personnel, of an acquired business; • the complexities and difficulties associated with managing our business as it grows; • additional financial reporting and accounting challenges associated with an acquired business; • unanticipated events or liabilities associated with the operations of an acquired business; • loss of business due to customer overlap or other factors; and • risks and liabilities arising from the prior operations of an acquired business, such as performance, operational, safety, cybersecurity, environmental, workforce or other compliance or tax issues, some of which we may not have discovered or accurately estimated during our due diligence and may not be covered by indemnification obligations or insurance.
Although we typically enter into employment agreements with our executive officers and other key employees for initial terms of one to three years and subsequent renewal options, we cannot be certain that any individual will continue in such capacity for any particular period of time.
Although we typically enter into employment agreements with our executive officers and other key employees for initial terms of one year and subsequent renewal options, we cannot be certain that any individual will continue in such capacity for any particular period of time.
Furthermore, future restrictions imposed on oil and gas production activities, including as a result of concerns about the impact of climate change, could have a material adverse effect on the oil and gas industry as a whole.
For example, future restrictions imposed on oil and gas production activities, including as a result of concerns about the impact of climate change, could have a material adverse effect on the oil and gas industry as a whole.
Potential liabilities include, among other things, claims associated with personal injury, including severe injury or loss of life, and destruction of or significant damage to property and equipment as well as harm to the environment, and other claims discussed above and can lead to suspension of operations, adverse effects to our safety record and reputation and/or material liabilities and legal costs.
Potential liabilities include, among other things, claims associated with personal injury, including severe injury or loss of life, and destruction of or significant damage to property and equipment (with respect to both our customers and other third parties), as well as harm to the environment, and other claims discussed above and can lead to suspension of operations, adverse effects to our safety record and reputation and/or material liabilities and legal costs.
As of December 31, 2022, the total amount of our outstanding performance bonds was estimated to be approximately $4.5 billion. To the extent reimbursements are required, the amounts could be material and could adversely affect our consolidated business, financial condition, results of operations or cash flows. We may be unsuccessful at generating internal growth, which could adversely affect our business.
As of December 31, 2023, the total amount of our outstanding performance bonds was estimated to be approximately $7.7 billion. To the extent reimbursements are required, the amounts could be material and could adversely affect our consolidated business, financial condition, results of operations or cash flows. We may be unsuccessful at generating internal growth, which could adversely affect our business.
If our subcontractors fail to perform their contractual obligations, fail to meet the expected completion dates or quality or safety standards or fail to comply with applicable laws, we may be required to incur additional costs or 27 provide additional services to mitigate such shortcomings.
If our subcontractors fail to perform their contractual obligations, fail to meet the expected completion dates or quality or safety standards or fail to comply with applicable laws, such shortcomings may subject us to claims or we may be required to incur additional costs or provide additional services to mitigate such shortcomings.
Changes in climate have caused, and are expected to continue to cause, among other things, increasing mean annual temperatures, rising sea levels and changes to patterns and the frequency and intensity of wildfires, hurricanes, floods, droughts, other storms and severe weather-related events and natural disasters.
Changes in climate have caused, and are expected to continue to cause, among other things, increasing mean annual temperatures, rising sea levels and changes to meteorological and hydrological patterns, as well as impacts to the frequency and 19 intensity of wildfires, hurricanes, floods, droughts, other storms and severe weather-related events and natural disasters.
For example, catastrophic natural disasters can negatively impact projects we are working on, our office locations, portions of our equipment, or the locations and service regions of our customers.
For example, catastrophic natural disasters can negatively impact projects we are working on, our facilities and other physical locations, portions of our equipment, or the locations and service regions of our customers.
Increasing scrutiny and changing expectations from various stakeholders with respect to corporate sustainability practices may impose additional costs on us or expose us to reputational or other risks. Investors and other stakeholders have focused increasingly on the environmental, social and governance (ESG) practices of companies, including practices with respect to human capital resources, emissions and environmental impact and political spending.
Increasing scrutiny and changing expectations from various stakeholders with respect to corporate sustainability practices may impose additional costs on us or expose us to reputational or other risks. Investors, customers and other stakeholders have focused increasingly on sustainability practices of companies, including, among other things, practices with respect to human capital resources, emissions and environmental impact and political spending.
Borrowings under our senior credit facility and commercial paper facility are at variable rates of interest and expose us to interest rate risk. Interest rates have increased significantly during 2022 and the beginning of 2023, and further increases are expected.
Borrowings under our senior credit facility and commercial paper facility are at variable rates of interest and expose us to interest rate risk. Interest rates have increased significantly during 2022 and 2023, and further increases may occur.
For example, as discussed above, severe drought and high wind speeds in the western United States, Australia and other locations have significantly increased the risk of wildfires, which in turn has exposed us and other contractors to increased risk of liability in connection with our operations in those locations, as these events can be started by failure of electrical power and other infrastructure on which we have performed services.
For example, as discussed above, severe drought and high wind speeds have significantly increased the risk of wildfires throughout the areas where we operate, which in turn has exposed us and other contractors to increased risk of liability in connection with our operations in those locations, as these events can be started by electrical power and other infrastructure on which we have performed services.
As of December 31, 2022, approximately 34% of our employees were covered by collective bargaining agreements and the number of our employees covered by collective bargaining agreements could increase in the future for a variety of reasons, including acquisitions, unionization of a non-union operating company, project requirements and changes in law.
As of December 31, 2023, approximately 32% of our employees were covered by collective bargaining agreements and the number of our employees covered by collective bargaining agreements could increase in the future for a variety of reasons, including acquisitions, unionization of a non-union operating company, project requirements (e.g. project labor agreements) and changes in law.
The success of our acquisition strategy also depends on our ability to successfully integrate the operations of the acquired businesses with our existing operations and realize the anticipated benefits from the acquired businesses, such as the expansion of our existing operations, elimination of redundant costs and capitalizing on cross-selling opportunities.
The success of our acquisition strategy also depends on our ability to successfully integrate the operations of the acquired businesses with our existing operations and realize the anticipated benefits from the acquired businesses, such as the expansion of our existing operations, expansion into new, complementary or adjacent business lines, elimination of redundant costs and capitalizing on cross-selling opportunities.
For example, as of December 31, 2022, the amount recognized related to unapproved change orders and claims was $549.3 million, which is discussed further in Note 4 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report.
For example, as of December 31, 2023, the amount recognized related to unapproved change orders and claims was $778.9 million, which is discussed further in Note 4 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report.
We expect to issue additional equity securities in the future in connection with these and other practices. Our Restated Certificate of Incorporation provides that we may issue up to 600,000,000 shares of common stock, of which 142,930,598 shares were outstanding as of December 31, 2022.
We expect to issue additional equity securities in the future in connection with these and other practices. Our Restated Certificate of Incorporation provides that we may issue up to 600,000,000 shares of common stock, of which 145,508,549 shares were outstanding as of December 31, 2023.
Increased and changing regulatory requirements applicable to us and our customers have resulted in, among other things, project delays and decreased demand for our services in the past, and may do so in the future, which can adversely affect our business, financial condition, results of operations and cash flows. For example, supply chain and logistical challenges resulting from the U.S.
Increased and changing regulatory requirements applicable to us and our customers have resulted in, among other things, project delays and decreased demand for our services in the past, and may do so in the future, which can adversely affect our business, financial condition, results of operations and cash flows.
Changes in economic conditions, including those resulting from wars and other conflicts, civil unrest, public health crises, such as the COVID-19 pandemic, acts of terrorism, or volatility in global markets, may adversely affect demand for our services and our customers’ ability to pay for our services.
Changes in economic conditions, including those resulting from wars and other geopolitical conflicts, civil unrest, public health crises, pandemics, acts of terrorism, or volatility in global markets, may adversely affect demand for our services and our customers’ ability to pay for our services.
Prices and availability could be materially impacted by, among other things, supply chain and other logistical challenges, global trade relationships (e.g., tariffs, duties, taxes, assessments, sourcing restrictions) and other general market and geopolitical conditions (e.g., inflation, market volatility, increased interest rates).
Prices and availability could be materially impacted by, among other things, supply chain and other logistical challenges (including inability of manufacturers to meet demand), global trade relationships (e.g., tariffs, duties, taxes, assessments, sourcing restrictions) and other general market and geopolitical conditions (e.g., inflation, market volatility, increased interest rates and geopolitical conflicts).
Additionally, the Federal Trade Commission has proposed rulemaking to, among other things, prohibit and make unenforceable any post-termination non-compete arrangement that restricts an employee or individual independent contractor, unless such arrangement was entered into in connection with an acquisition and meets certain conditions.
Additionally, the FTC has proposed new rules to, among other things, prohibit and make unenforceable any post-employment non-compete arrangement that restricts an employee or individual independent contractor, unless such arrangement was entered into in connection with an acquisition and meets certain conditions.

… 123 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed2 unchanged
Biggest changeAs of December 31, 2022, we owned 86 of our facilities and certain real property and leased the remainder. Included in the owned facilities is real property and associated office buildings and facilities located in Houston, Texas that we purchased during 2021 and utilize as our corporate headquarters.
Biggest changeIncluded in the owned facilities is real property and associated office buildings and facilities located in Houston, Texas that we utilize as our corporate headquarters and real property and associated manufacturing facilities located in Canonsburg, Pennsylvania, and Raeford, North Carolina, associated with our business that specializes in manufacturing power transformers and related electrical components.
These facilities are utilized for operations in all of our reportable segments and include offices, equipment yards, warehouses, storage, maintenance shops and training and educational facilities, including the training and educational facilities located at the Quanta Advanced Training Center in La Grange, Texas, and the campuses of Northwest Lineman College, our postsecondary educational institution, which are located in California, Florida, Idaho and Texas.
These facilities are utilized for operations in all of our reportable segments and include offices, equipment yards, warehouses, storage, maintenance shops, manufacturing facilities and training and educational facilities, including the training and educational facilities located at the Quanta Advanced Training Center in La Grange, Texas, and the campuses of Northwest Lineman College, our postsecondary educational institution, which are located in California, Florida, Idaho and Texas.
Equipment We operate a fleet of owned and leased trucks and trailers, as well as support vehicles and specialty construction equipment, such as bucket trucks, digger derricks, sidebooms, dozers, backhoes, excavators, trenchers, generators, boring machines, cranes, robotic arms, wire pullers, tensioners and helicopters.
Equipment We operate a fleet of owned and leased trucks and trailers, as well as support vehicles and specialty construction equipment, such as bucket trucks, digger derricks, sidebooms, dozers, backhoes, excavators, trenchers, generators, boring machines, cranes, robotic arms, wire pullers, tensioners, helicopters and other aircraft.
As of December 31, 2022, the total size of our owned and leased fleet was approximately 68,000 units. Most of our fleet is serviced by our own mechanics who work at various maintenance sites and facilities. We believe that our equipment is generally well maintained and is suitable and adequate for our present operations.
As of December 31, 2023, the total size of our owned and leased fleet was approximately 71,000 units. Most of our fleet is serviced by our own mechanics who work at various maintenance sites and facilities. We believe that our equipment is generally well maintained and is suitable and adequate for our present operations. 38
Added
As of December 31, 2023, we owned 88 of our facilities and certain real property and leased the remainder.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+2 added−0 removed2 unchanged
Biggest changeSee Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report , which is incorporated by reference in this Item 3, for additional information regarding litigation, claims and other legal proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 38 PART II
Biggest changeSee Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report , which is incorporated by reference in this Item 3, for additional information regarding litigation, claims and other legal proceedings.
These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, negligence or gross negligence and/or property damage, environmental liabilities, wage and hour claims and other employment-related damages, punitive damages, consequential damages, civil penalties or other losses, or injunctive or declaratory relief, as 37 well as interest and attorneys’ fees associated with such claims.
These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, negligence or gross negligence and/or property damage, environmental liabilities, wage and hour claims and other employment-related damages, punitive damages, consequential damages, civil penalties or other losses, or injunctive or declaratory relief, as well as interest and attorneys’ fees associated with such claims.
Added
Environmental Matters Item 103 of Regulation S-K requires disclosure of certain environmental matters in which a governmental authority is a party to the proceedings and when such proceedings involve the potential for monetary sanctions that management reasonably believes will exceed a specified threshold. Pursuant to SEC regulations, we use a threshold of $1.0 million for such proceedings. ITEM 4.
Added
Mine Safety Disclosures Not applicable. 39 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+4 added−2 removed3 unchanged
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Quanta Services, Inc., the S&P 500, the S&P MidCap 400 and the Peer Group December 31, 2017 2018 2019 2020 2021 2022 Quanta Services, Inc. $ 100.00 $ 77.06 $ 104.68 $ 186.07 $ 296.77 $ 369.87 S&P 500 $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.89 S&P MidCap 400 $ 100.00 $ 88.92 $ 112.21 $ 127.54 $ 159.12 $ 138.34 Peer Group $ 100.00 $ 74.17 $ 102.51 $ 117.75 $ 164.02 $ 167.44 ITEM 6.
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Quanta Services, Inc., the S&P 500, the S&P MidCap 400, the S&P 500 Industrials and the Peer Group December 31, 2018 2019 2020 2021 2022 2023 Quanta Services, Inc. $ 100.00 $ 135.84 $ 241.44 $ 385.10 $ 479.95 $ 728.11 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P MidCap 400 $ 100.00 $ 126.20 $ 143.44 $ 178.95 $ 155.58 $ 181.15 S&P 500 Industrials $ 100.00 $ 129.37 $ 143.68 $ 174.02 $ 164.49 $ 194.31 Peer Group $ 100.00 $ 138.21 $ 158.75 $ 221.13 $ 225.74 $ 257.51 ITEM 6.
The declaration, payment and amount of future cash dividends will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition, results of operations, cash flows from operations, current and anticipated capital requirements and expansion plans, income tax laws then in effect and the requirements of Delaware law.
The declaration, payment and amount of future cash dividends will be at the discretion of our Board after taking into account various factors, including our financial condition, results of operations, cash flows from operations, current and anticipated capital requirements and expansion plans, income tax laws then in effect and the requirements of Delaware law.
The program does not obligate us to acquire any specific amount of common stock and may be modified or terminated by our Board of Directors at any time at its sole discretion and without notice.
The program does not obligate us to acquire any specific amount of common stock and may be modified or terminated by our Board at any time at its sole discretion and without notice.
This number does not include stockholders for whom shares of our common stock are held in “nominee” or “street name.” See Note 13 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report for additional discussion of our equity securities.
This number does not include stockholders for whom shares of our common stock are held in “nominee” or “street name.” See Note 13 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report for additional discussion of our equity securities.
The returns of each company in the peer group are weighted based on the market capitalization of that company at the 40 beginning of the measurement period. The stock price performance reflected in the following graph is not necessarily indicative of future stock price performance.
The returns of each company in the peer group are weighted based on the market capitalization of that company at the 41 beginning of the measurement period. The stock price performance reflected in the following graph is not necessarily indicative of future stock price performance.
(2) Includes shares purchased from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock unit and performance stock unit awards or the settlement of previously vested but deferred restricted stock unit and performance stock unit awards. 39 Dividends We have declared a quarterly dividend during each quarter beginning in the fourth quarter of 2018, and we currently expect that comparable cash dividends will continue to be paid for the foreseeable future.
(2) Includes shares withheld from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock unit and performance stock unit awards or the settlement of previously vested but deferred restricted stock unit and performance stock unit awards. 40 Dividends We have declared a quarterly dividend during each quarter beginning in the fourth quarter of 2018, and we currently expect that comparable cash dividends will continue to be paid for the foreseeable future.
Repurchases under this program can be made in open market and privately negotiated transactions, at our discretion, based on market and business conditions, applicable contractual and legal requirements and other factors.
Repurchases can be made in open market and privately negotiated transactions, at our discretion, based on market and business conditions, applicable contractual and legal requirements and other factors.
In addition, as discussed in Note 10 in Item 8. Financial Statements and Supplementary Data of this Annual Report, the credit agreement for our senior credit facility restricts the payment of cash dividends unless certain conditions are met.
In addition, as discussed in Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report, the credit agreement for our senior credit facility restricts the payment of cash dividends unless certain conditions are met.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol “PWR.” On February 21, 2023, there were approximately 430 holders of record of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol “PWR.” On February 19, 2024, there were approximately 408 holders of record of our common stock.
The following graph compares, for the period from December 31, 2017 to December 31, 2022, the cumulative stockholder return on our common stock with the cumulative total return of the S&P 500 Index (the S&P 500), the S&P MidCap 400 Index (the S&P Mid-Cap 400) and a peer group selected by our management that includes public companies within our industries.
The following graph compares, for the period from December 31, 2018 to December 31, 2023, the cumulative stockholder return on our common stock with the cumulative total return of the S&P 500 Index (the S&P 500), the S&P 500 Industrials Index (the S&P 500 Industrials), the S&P MidCap 400 Index (the S&P MidCap 400) and a peer group selected by our management that includes public companies within our industries.
The graph below assumes an investment of $100 (with reinvestment of all dividends) in our common stock, the S&P 500, the S&P MidCap 400 and the peer group on December 31, 2017 and tracks their relative performance through December 31, 2022.
The graph below assumes an investment of $100 (with reinvestment of all dividends) in our common stock, the S&P 500, the S&P 500 Industrials and the peer group on December 31, 2018 and tracks their relative performance through December 31, 2023.
For additional information about these acquisitions, see Note 6 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report . Issuer Purchases of Equity Securities During the Fourth Quarter of 2022 The following table contains information about our purchases of equity securities during the three months ended December 31, 2022.
For additional information about these acquisitions, see Note 6 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report .
Unregistered Sales of Securities In January 2023, we completed three acquisitions in which a portion of the consideration consisted of the unregistered issuance of shares of our common stock. The aggregate consideration paid at closing in these acquisitions included 1,018,952 shares of our common stock, valued at $123.5 million as of the acquisition dates.
Unregistered Sales of Securities In October 2023, we completed an acquisition in which a portion of the consideration consisted of the unregistered issuance of shares of our common stock. The aggregate consideration for this acquisition included 176,168 shares of our common stock, valued at $27.4 million as of the acquisition date.
Removed
Period Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs (1) October 1 - 31, 2022 Open Market Stock Repurchases (1) 79,444 $ 131.56 79,444 $ 346,024,544 Tax Withholding (2) 8,073 $ 129.81 — November 1 - 30, 2022 Open Market Stock Repurchases (1) 6,875 $ 138.39 6,875 $ 345,073,142 Tax Withholding (2) 18,438 $ 141.91 — December 1 - 31, 2022 Open Market Stock Repurchases (1) — $ — — $ 345,073,142 Tax Withholding (2) 4,697 $ 148.10 — As of December 31, 2022 117,527 86,319 $ 345,073,142 _______________ (1) Includes shares repurchased as of the trade date of such repurchases.
Added
In January 2024, we completed two acquisitions, and a portion of the consideration of one of these acquisitions consisted of the unregistered issuance of shares of our common stock. The aggregate consideration for this acquisition included 221,700 shares of our common stock, valued at $44.9 million as of the acquisition date.
Removed
On August 6, 2020, we issued a press release announcing that our Board of Directors approved a stock repurchase program that authorizes us to purchase, from time to time through June 30, 2023, up to $500 million of our outstanding common stock.
Added
Issuer Purchases of Equity Securities During the Fourth Quarter of 2023 The following table contains information about our purchases of equity securities during the three months ended December 31, 2023.
Added
Period Total Number of Shares Purchased (1) (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs (1) October 1 - 31, 2023 Open Market Stock Repurchases (1) — $ — — $ 500,000,000 Tax Withholding (2) 9,478 $ 186.41 — November 1 - 30, 2023 Open Market Stock Repurchases (1) 2,229 $ 156.98 2,229 $ 499,650,097 Tax Withholding (2) 19,906 $ 166.73 — December 1 - 31, 2023 Open Market Stock Repurchases (1) — $ — — $ 499,650,097 Tax Withholding (2) 6,537 $ 199.49 — As of December 31, 2023 38,150 2,229 $ 499,650,097 _______________ (1) On May 24, 2023, we issued a press release announcing that our Board approved a stock repurchase program, effective July 1, 2023, that authorizes us to purchase, from time to time through June 30, 2026, up to $500 million of our outstanding common stock.
Added
Additionally we determined that the S&P 500 Industrials should be included as it is better aligned with our market capitalization and reflects more of our industry peers than the S&P MidCap 400, and the S&P MidCap 400 will be excluded from the graph in future years.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. Selected Financial Data 41 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 55 ITEM 8. Financial Statements and Supplementary Data 57 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 114 ITEM 9A. Controls and Procedures 114 ITEM 9B.
Biggest changeITEM 6. Selected Financial Data 42 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 56 ITEM 8. Financial Statements and Supplementary Data 58 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 112 ITEM 9A. Controls and Procedures 112 ITEM 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

105 edited+51 added−38 removed45 unchanged
Biggest changeSources and Uses of Cash, Cash Equivalents and Restricted Cash During the Years Ended December 31, 2022 and 2021 In summary, our cash flows for each period were as follows (in thousands): Year Ended December 31, 2022 2021 Net cash provided by operating activities $ 1,130,312 $ 582,390 Net cash used in investing activities (617,191) (2,898,613) Net cash (used in) provided by financing activities (311,071) 2,360,877 Operating Activities Net cash provided by operating activities of $1.13 billion and $582.4 million in 2022 and 2021 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital: “Accounts and notes receivable,” “Contract assets,” “Accounts payable and accrued expenses,” and “Contract liabilities.” Certain payments negatively impacted net cash provided by operating activities in both the years ended December 31, 2022 and 2021, including $45.4 million and $72.3 million related to certain change of control liabilities owed to employees of Blattner and payable in connection with our acquisition of Blattner; $11.0 million and $37.4 million of cash payments for other acquisition and integration costs; and $54.4 million in each period for payments associated with deferred employer payroll taxes, which were due during the year ended December 31, 2020 but deferred pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Biggest changeCertain payments negatively impacted net cash provided by operating activities in the year ended 2022, including $45.4 million related to change of control liabilities owed to employees of Blattner and payable in connection with our acquisition of Blattner; and $54.4 million for payments associated with deferred employer payroll taxes, which were due during the year ended December 31, 2020 but deferred pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
With respect to our Renewable Energy Infrastructure Solutions segment, the transition to a reduced-carbon economy is continuing to drive demand for renewable generation and related infrastructure (e.g., high-voltage electric transmission and substation infrastructure), as well as interconnection services necessary to connect and transmit renewable-generated electricity to existing electric power delivery systems.
With respect to our Renewable Energy Infrastructure Solutions (Renewable Energy) segment, the transition to a reduced-carbon economy is continuing to drive demand for renewable generation and related infrastructure (e.g., high-voltage electric transmission and substation infrastructure), as well as interconnection services necessary to connect and transmit renewable-generated electricity to existing electric power delivery systems.
Liquidity and Capital Resources Management monitors financial markets and national and global economic conditions for factors that may affect our liquidity and capital resources.
Management monitors financial markets and national and global economic conditions for factors that may affect our liquidity and capital resources.
DSO is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets less contract liabilities, divided by average revenues per day during the quarter.
DSO is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets less contract liabilities, and divided by average revenues per day during the quarter.
Examples of items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital spending and their access to capital; acceleration of any projects or programs by customers (e.g., modernization or hardening programs); economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships; and project deferrals and cancellations.
Examples of items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital spending and their access to and cost of capital; acceleration of any projects or programs by customers (e.g., modernization or hardening programs); economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships; and project deferrals and cancellations.
Additionally, subject to the conditions specified in the credit agreement for our senior credit facility, we have the option to increase the capacity of our senior credit facility, in the form of an increase in the revolving commitments, term loans or a combination thereof, from time to time, upon receipt of additional commitments from new or existing lenders by up to an additional (i) $400.0 million plus (ii) additional amounts so long as the Incremental Leverage Ratio Requirement (as defined in the credit 52 agreement) is satisfied at the time of such increase.
Additionally, subject to the conditions specified in the credit agreement for our senior credit facility, we have the option to increase the capacity of our senior credit facility, in the form of an increase in the revolving commitments, term loans or a combination thereof, from time to time, upon receipt of additional commitments from new or existing lenders by up to an additional (i) $400.0 million plus (ii) additional amounts so long as the Incremental Leverage Ratio Requirement (as defined in the credit agreement) is satisfied at the time of such increase.
Our capital deployment priorities that require the use of cash include: (i) working capital to fund ongoing operating needs, (ii) capital expenditures to meet anticipated demand for our services, (iii) acquisitions and investments 51 to facilitate the long-term growth and sustainability of our business, and (iv) return of capital to stockholders, including through the payment of dividends and repurchases of our outstanding common stock.
Our capital deployment priorities that require the use of cash include: (i) working capital to fund ongoing operating needs, (ii) capital expenditures to meet anticipated demand for our services, (iii) acquisitions and investments to facilitate the long-term growth and sustainability of our business, and (iv) return of capital to stockholders, including through the payment of dividends and repurchases of our outstanding common stock.
Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. There can be no assurance that actual results will not differ from those estimates. 54 Management has reviewed its development and selection of critical accounting estimates with the audit committee of our Board of Directors.
Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. There can be no assurance that actual results will not differ from those estimates. Management has reviewed its development and selection of critical accounting estimates with the audit committee of our Board of Directors.
Because EBITDA and adjusted EBITDA, as defined, exclude some, but not all, items that affect net income attributable to common stock, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Because EBITDA and adjusted EBITDA, as defined, exclude some, but not all, items that affect net income attributable to common stock, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income 48 attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included below.
Days sales outstanding (DSO) represents the average number of days it takes revenues to be converted into cash, which management believes is an important metric for assessing liquidity. A decrease in DSO has a favorable impact on cash flow from operating activities, while an increase in DSO has a negative impact on cash flow from operating activities.
Days sales outstanding (DSO) represents the average number of days it takes revenues to be converted into cash, which management believes is an important metric for assessing liquidity. A decrease in DSO has a favorable impact on cash flow 53 from operating activities, while an increase in DSO has a negative impact on cash flow from operating activities.
Moreover, we currently generate a significant portion of our revenues under fixed price contracts, and fixed price contracts are more common in connection with our larger and more complex projects that typically involve greater performance risk.
Moreover, we currently generate a significant portion of our revenues under fixed price contracts, and fixed price contracts are more common in connection with our larger and more 44 complex projects that typically involve greater performance risk.
Financial Statements and Supplementary Data of this Annual Report; and • obligations relating to our joint ventures, lawsuits and other legal proceedings, uncollectible accounts receivable, insurance liabilities, obligations relating to letters of credit, bonds and parent guarantees, obligations relating to employment agreements, indemnities and assumed liabilities, and residual value guarantees, which are described further in Notes 4, 10, 11 and 16 of the Notes to Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data in Part II of this Annual Report; and • obligations relating to our joint ventures, lawsuits and other legal proceedings, uncollectible accounts receivable, insurance liabilities, obligations relating to letters of credit, bonds and parent guarantees, obligations relating to employment agreements, indemnities and assumed liabilities, and residual value guarantees, which are described further in Notes 4, 10, 11 and 16 of the Notes to Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data of this Annual Report; • collective bargaining agreements and multiemployer pension plan liabilities, as well as liabilities related to our deferred compensation and other employee benefit plans, which are described further in Notes 15 and 16 of the Notes to Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data in Part II of this Annual Report; • collective bargaining agreements and multiemployer pension plan liabilities, as well as liabilities related to our deferred compensation and other employee benefit plans, which are described further in Notes 15 and 16 of the Notes to Consolidated Financial Statements in Item 8.
Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in Cautionary Statement About Forward-Looking Statements and Information above and in Item 1A. Risk Factors of this Annual Report.
Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in Cautionary Statement About Forward-Looking Statements and Information above and in Item 1A. Risk Factors in Part I of this Annual Report.
Investing Activities Net cash used in investing activities in 2022 included $427.6 million of capital expenditures; $195.1 million related to acquisitions, primarily related to a net working capital adjustment in connection with our acquisition of Blattner; and $78.1 million of cash paid primarily for equity method investments and non-marketable securities.
Net cash used in investing activities in 2022 included $427.6 million of capital expenditures; $195.1 million related to acquisitions, primarily associated with a net working capital adjustment in connection with our acquisition of Blattner; and $78.1 million of cash paid primarily for equity method and non-marketable securities.
With respect to our Electric Power Infrastructure Services segment, utilities are continuing to invest significant capital in their electric power delivery systems through multi-year grid modernization and reliability programs, as well as with respect to system upgrades and hardening programs in response to recurring severe weather events.
With respect to our Electric Power Infrastructure Solutions (Electric Power) segment, utilities are continuing to invest significant capital in their electric power delivery systems through multi-year grid modernization and reliability programs, as well as system upgrades and hardening programs in response to recurring severe weather events.
In addition, many of our MSAs are subject to renewal, and these potential renewals are considered in determining estimated backlog.
In addition, many of our MSAs are subject to renewal, and these potential renewals are 49 considered in determining estimated backlog.
With respect to our Underground Utility and Infrastructure Solutions segment, in 2022 we continued to experience strong demand for our services focused on utility spending, in particular our gas distribution services to natural gas utilities that are implementing modernization programs, and our downstream industrial services, as these customers continued to move forward with certain maintenance and capital spending that was deferred during the course of the COVID-19 pandemic.
With respect to our Underground Utility and Infrastructure Solutions (Underground and Infrastructure) segment, during 2022 and 2023 we experienced strong demand for our services focused on utility spending, in particular our gas distribution services to natural gas utilities that are implementing modernization programs, and our downstream industrial services, as these customers continued to move forward with certain maintenance and capital spending that was deferred during the course of the COVID-19 pandemic.
We have various contingent obligations that could require the use of cash or impact the collection of cash in future periods; however, we are unable to accurately predict the timing and estimate the amount of such contingent obligations as of December 31, 2022.
We have various contingent obligations that could require the use of cash or impact the collection of cash in future periods; however, we are unable to accurately predict the timing and estimate the amount of such contingent obligations as of December 31, 2023.
Significant Sources of Cash We anticipate that our future cash flows from operating activities, cash and cash equivalents on hand, existing borrowing capacity under our senior credit facility and commercial paper program and ability to access capital markets for additional capital will provide sufficient funds to enable us to meet our cash requirements described above for the next twelve months and over the longer term.
Significant Sources of Cash We anticipate that our future cash flows from operating activities, cash and cash equivalents on hand, existing borrowing capacity under our senior credit facility and ability to access capital markets for additional capital will provide sufficient funds to enable us to meet our cash requirements described above for the next twelve months and over the longer term.
The discussion summarizing the significant factors which affected the results of operations and financial condition for the year ended December 31, 2021, including the changes in results of operations between the years ended December 31, 2021 and 2020, can be found in Part II, Item 7.
The discussion summarizing the significant factors which affected the results of operations and financial condition for the year ended December 31, 2022, including the changes in results of operations between the years ended December 31, 2022 and 2021, can be found in Part II, Item 7.
Financial Statements and Supplementary Data of this Annual Report; • undistributed earnings of foreign subsidiaries and unrecognized tax benefits, which are described further in Note 12 of the Notes to Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data in Part II of this Annual Report; • undistributed earnings of foreign subsidiaries and unrecognized tax benefits, which are described further in Note 12 of the Notes to Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data of this Annual Report. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances.
Financial Statements and Supplementary Data in Part II of this Annual Report. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances.
Further information with respect to our debt obligations is set forth in Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report .
Further information with respect to our debt obligations is set forth in Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report .
These variations can result in a reduction in expected profit, 43 the incurrence of losses on a project or the issuance of change orders and/or assertion of contract claims against customers. See Revenue Recognition - Contract Estimates and Changes in Estimates in Note 4 of the Notes to Consolidated Financial Statements in Item 8.
These variations can result in a reduction in expected profit, the incurrence of losses on a project or the issuance of change orders and/or assertion of contract claims against customers. See Contract Estimates and Changes in Estimates in Note 4 of the Notes to Consolidated Financial Statements in Item 8.
Demand for services . We perform the majority of our services under existing contracts, including MSAs and similar agreements pursuant to which our customers are not committed to specific volumes of our services.
We perform the majority of our services under existing contracts, including MSAs and similar agreements pursuant to which our customers are not committed to specific volumes of our services.
As a result, estimates for remaining performance obligations and backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies (including the COVID-19 pandemic) and adverse weather conditions; and final acceptance of change orders by customers.
As a result, estimates for remaining performance obligations and backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies and adverse weather conditions; and final acceptance of change orders by customers.
As to certain of the items below, (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition and integration costs vary from period to period depending on the level of our acquisition activity; (iii) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to us; (iv) unrealized mark-to-market adjustments on our investment in a publicly traded company vary from period to period based on fluctuations in the market price of such company’s common stock; (v) gains and losses on the sale of investments vary from period to period depending on activity; (vi) asset impairment charges vary from period to period depending on economic and other factors; and (vii) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in 48 post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations.
As to certain of the items below, (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition and integration costs vary from period to period depending on the level and complexity of our acquisition activity; (iii) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of such affiliates, the operations of which are not operationally integral to us; (iv) mark-to-market adjustments on investments vary from period to period based on fluctuations in the market price of such company’s common stock; (v) gains and losses on the sale of investments vary from period to period depending on activity; (vi) asset impairment charges vary from period to period depending on economic and other factors; and (vii) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations.
As discussed above, cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by working capital needs.
As discussed above, cash flow provided by operating activities is primarily influenced by demand for our services and operating margins but is also influenced by working capital needs.
Additionally, our productivity and performance on a project can vary period to period based on a number of factors, including unexpected project difficulties or site conditions (including in connection with difficult geographic characteristics); project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; the performance of third parties; and the impact of the COVID-19 pandemic.
Additionally, our productivity and performance on a project can vary period to period based on a number of factors, including unexpected project difficulties or site conditions (including in connection with difficult geographic characteristics); project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, public activism, other political activity or legal challenges related to a project; and the performance of third parties.
Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for our services. We expect capital expenditures for property and equipment purchases for the year ended December 31, 2023 to be approximately $400 million.
Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for our services. We expect capital expenditures for property and equipment purchases for the year ended December 31, 2024 to be approximately $450 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022. Overview Overall, our 2022 results reflect increased demand for our services, as revenue and operating income increased in all our segments as compared to 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023. Overview Our 2023 results reflect increased demand for our services, as revenue and operating income increased in all of our segments as compared to 2022.
Risk Factors of this Annual Report, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below. 42 Seasonality.
Risk Factors in Part I of this Annual Report, and those factors have 43 caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below. Seasonality.
(2) Amounts represent undiscounted operating and finance lease obligations as of December 31, 2022. The corresponding amounts recorded on our December 31, 2022 consolidated balance sheet represent the present value of these amounts. (3) Amounts represent undiscounted operating lease obligations that have not commenced as of December 31, 2022.
(2) Amounts represent undiscounted operating and finance lease obligations as of December 31, 2023. The corresponding amounts recorded on our December 31, 2023 consolidated balance sheet represent the present value of these amounts. (3) Amounts represent undiscounted operating lease obligations that had not commenced as of December 31, 2023.
Accordingly, changes within working capital in accounts receivable, contract assets and contract liabilities are normally related and are typically affected on a collective basis by changes in revenue due to the timing and volume of work performed and variability in the timing of customer billings and payments.
Accordingly, changes within working capital in accounts receivable, contract assets and contract liabilities are normally related and are typically affected on a collective basis by changes in revenue due to the timing and volume of work performed and variability in the timing of customer billings and payments, as well as change orders and claims.
With respect to this variable rate debt, assuming the principal amount outstanding and interest rate in effect as of December 31, 2022 remained the same, the annual cash interest expense would be approximately $65.0 million, payable until October 8, 2026, the maturity date of our senior credit facility.
With respect to this variable rate debt, assuming the principal amount outstanding and interest rate in effect as of December 31, 2023 remained the same, the annual cash interest expense would be approximately $100.2 million, payable until October 8, 2026, the maturity date of our senior credit facility.
Our methodology for determining backlog may not be comparable to the methodologies used by other companies. 49 As of December 31, 2022 and 2021, MSAs accounted for 52% and 55% of our estimated 12-month backlog and 65% and 67% of our total backlog.
Our methodology for determining backlog may not be comparable to the methodologies used by other companies. As of December 31, 2023 and 2022, MSAs accounted for 45% and 52% of our estimated 12-month backlog and 55% and 65% of our total backlog.
Partially offsetting these negative impacts in 2022 was the receipt of $100.5 million pursuant to coverage under an insurance policy following a legal proceeding, as further described in Legal Proceedings - Peru Project Dispute in Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report.
Partially offsetting these items was the receipt of $100.5 million pursuant to coverage under an insurance policy related to an outcome in a legal proceeding, as further described in Legal Proceedings - Peru Project Dispute in Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report.
Financing Activities Net cash used in financing activities in the year ended December 31, 2022 included $127.8 million common stock repurchases; $82.6 million payments to satisfy tax withholding obligations associated with stock-based compensation; $41.1 million of dividends; $23.4 million of net repayments under our senior credit facility and commercial paper program; $15.7 million of net repayments of short-term debt; and $9.7 million of distributions to non-controlling interests.
Net cash used in financing activities in the year ended December 31, 2022 included $127.8 million of common stock repurchases, $82.6 million of payments to satisfy tax withholding obligations associated with stock-based compensation; $41.1 million of dividends; and $23.4 million of net payments under our senior credit facility and commercial paper program.
Furthermore, as described further in Item 1. Business, fluctuations in the price or availability of materials, equipment and consumables that we or our customers utilize could impact costs to complete projects.
Furthermore, fluctuations in the price or availability of materials, equipment and consumables that we or our customers utilize could impact costs to complete projects.
Financial Statements and Supplementary Data in Part II of the 2022 Annual Report. Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease operating margins.
Financial Statements and Supplementary Data in Part II of this Annual Report. Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease operating margins. In recent years, we have subcontracted approximately 20% of our work to other service providers.
Partially offsetting these items were $62.1 million of proceeds from the sale of property and equipment and $20.6 million of cash received from sale of investments.
Partially offsetting these items were $64.1 million of proceeds from the sale of, and insurance settlements related to, property and equipment and $20.6 million of cash received from the sale of investments.
We expect to continue to utilize cash for similar financing activities in the future, including repayments under our senior credit facility and commercial paper program, payment of cash dividends and repurchases of our common stock and/or debt securities.
We expect to continue to utilize cash for similar financing activities in the future, including repayments of our outstanding debt, payment of cash dividends and repurchases of our common stock and/or debt securities.
(5) Amounts represent capital committed for the expansion of our vehicle fleet. Although we have committed to the purchase of these vehicles/equipment at the time of their delivery, we expect that these orders will be assigned to third-party leasing companies and made available to us under certain of our master equipment lease agreements. Contingent Obligations .
Although we have committed to the purchase of these vehicles/equipment, at the time of their delivery, we expect that the majority of these orders will be assigned to third-party leasing companies and made available to us under certain of our master equipment lease agreements.
Results of Operations Consolidated Results The following table sets forth selected statements of operations data, such data as a percentage of revenues for the years indicated, as well as the dollar and percentage change from the prior year (dollars in thousands). The results of acquired businesses have been included in the following results of operations since their respective acquisition dates.
Results of Operations Consolidated Results The following table sets forth selected statements of operations data, such data as a percentage of revenues for the years indicated, as well as the dollar and percentage change from the prior year (dollars in thousands).
Financial Statements and Supplementary Data of this Annual Report.
Financial Statements and Supplementary Data in Part II of this Annual Report .
Financial Statements and Supplementary Data of this Annual Report .
Financial Statements and Supplementary Data in Part II of this Annual Report.
DSO at December 31, 2022 was 75 days, which was lower than DSO of 80 days at December 31, 2021 and our five-year historical average DSO of 82 days.
DSO at December 31, 2023 was 68 days, which was lower than DSO of 75 days at December 31, 2022 and our five-year historical average DSO of 84 days.
(3) The amount for the year ended December 31, 2022 is a gain as a result of the sale of a non-integral equity method investment further described in Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report, and a non-marketable equity security interest in a technology company.
(3) The amount for the year ended December 31, 2022 is a gain as a result of the sale of a non-integral equity method investment further described in Note 8 of the Notes to Consolidated Financial Statements in Item 8.
Cost of services. Costs of services primarily includes wages, benefits, subcontractor costs, materials, equipment, and other direct and indirect costs, including related depreciation. The increase in cost of services generally correlates to the increase in revenues. Equity in earnings of integral unconsolidated affiliates . The increase was primarily driven by our LUMA joint venture.
Costs of services primarily includes wages, benefits, subcontractor costs, materials, equipment, and other direct and indirect costs, including related depreciation. The increase in cost of services generally correlates to the increase in revenues. Equity in earnings of integral unconsolidated affiliat es.
Margins may be lower on projects where we furnish a significant amount of materials, as our markup on materials is generally lower than our markup on labor costs, and in a given period an increase in the percentage of work with greater materials procurement requirements may decrease our overall margins, including in some cases our assuming price risk.
While we attempt to structure our agreements with customers and suppliers to account for the impact of increased materials procurement requirements or fluctuations in the cost of materials we procure, our margins may be lower on projects where we furnish a significant amount of materials, as our markup on materials is generally lower than our markup on labor costs, and in a given period an increase in the percentage of work with greater materials procurement requirements may decrease our overall margins, including in some cases our assuming price risk.
Partially offsetting these increases was a $23.6 million decrease in expense related to deferred compensation liabilities. The fair market value changes in deferred compensation liabilities were largely offset by changes in the fair value of corporate-owned life insurance (COLI) assets associated with the deferred compensation plan, which are included in “Other (expense) income, net” as discussed below.
The fair market value changes in deferred compensation liabilities were largely offset by changes in the fair value of corporate-owned life insurance (COLI) assets associated with the deferred compensation plan, which are included in “Other income (expense), net” as discussed below.
Financial Statements and Supplementary Data of this Annual Report . Capital Allocation .
Financial Statements and Supplementary Data in Part II of this Annual Report . 51 Capital Allocation .
Management believes that the exclusion of these items from net income attributable to common stock enables Quanta and its investors to more effectively evaluate our operations period over period and to identify operating trends that might not be apparent when including the excluded items.
Management believes that the exclusion of these items from net income attributable to common stock enables us and our investors to more effectively evaluate our operations period over period and to identify operating trends that might not be apparent due to, among other reasons, the variable nature of these items period over period.
These increases were partially offset by foreign exchange impacts of approximately $62 million. Operating Income. The increase in operating income and operating margin for the year ended December 31, 2022 was primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption.
These increases were partially offset by approximately $55 million as a result of unfavorable foreign currency exchange rates. Operating Income. Operating income and operating margin increased for the year ended December 31, 2023 primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption.
Our accounting policies are primarily described in Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report and should be read in conjunction with the accounting policies identified below that we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Financial Statements and Supplementary Data in Part II of this Annual Report and should be read in conjunction with the accounting policies identified below that we believe affect our more significant estimates used in the preparation of our consolidated financial statements.
Significant Factors Impacting Results Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Item 1. Business and Item 1A.
For additional information regarding our overall business environment, see Overview in Part I, Item 1. Business of this Annual Report. Significant Factors Impacting Results Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Item 1. Business and Item 1A.
Operating income for the renewable segment also included $11.7 million of asset impairment charges related to a software implementation project at an acquired company, which commenced prior to our acquisition and was discontinued in the fourth quarter of 2022.
The asset impairment charges during the year ended December 31, 2022 were primarily associated with an $11.7 million charge related to a software implementation project at an acquired company, which commenced prior to our acquisition and was discontinued in the fourth quarter of 2022. Operating income.
Integrated operations and common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs, as well as general and administrative costs.
For example, we perform joint trenching projects to install distribution lines for electric power and natural gas customers. Integrated operations and common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs, as well as general and administrative costs.
Year Ended December 31, 2022 2021 Net income attributable to common stock (GAAP as reported) $ 491,189 $ 485,956 Interest and other financing expenses 124,363 68,899 Interest income (2,606) (3,194) Provision for income taxes 192,243 130,918 Depreciation expense 290,647 255,529 Amortization of intangible assets 353,973 165,366 Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates 14,274 9,728 EBITDA 1,464,083 1,113,202 Non-cash stock-based compensation 105,600 88,259 Acquisition and integration costs (1) 47,431 47,368 Equity in earnings of non-integral unconsolidated affiliates (20,333) (2,121) Unrealized loss from mark-to-market adjustment on investment (2) 91,500 — Gains on sales of investments (3) (22,222) — Asset impairment charges (4) 14,457 5,743 Change in fair value of contingent consideration liabilities 4,422 6,734 Adjusted EBITDA $ 1,684,938 $ 1,259,185 (1) The amounts for the years ended December 31, 2022 and 2021 include, among other things, $35.9 million and $10.0 million of expenses that are associated with change of control payments as a result of the acquisition of Blattner.
Year Ended December 31, 2023 2022 Net income attributable to common stock (GAAP as reported) $ 744,689 $ 491,189 Interest and other financing expenses 186,913 124,363 Interest income (10,830) (2,606) Provision for income taxes 219,267 192,243 Depreciation expense 324,786 290,647 Amortization of intangible assets 289,014 353,973 Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates 19,936 14,274 EBITDA 1,773,775 1,464,083 Non-cash stock-based compensation 126,762 105,600 Acquisition and integration costs (1) 42,837 47,431 Equity in earnings of non-integral unconsolidated affiliates (1,263) (20,333) Loss from mark-to-market adjustment on investment (2) — 91,500 Gains on sales of investments (3) (1,496) (22,222) Asset impairment charges (4) — 14,457 Change in fair value of contingent consideration liabilities 6,568 4,422 Adjusted EBITDA $ 1,947,183 $ 1,684,938 (1) The amount for the year ended December 31, 2022 includes $35.9 million of expenses that are associated with change of control payments as a result of the acquisition of Blattner.
(2) Further information with respect to our cash and cash equivalents is set forth in Note 17 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report .
(2) Further information with respect to our cash and cash equivalents is set forth below and in Note 17 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report . This amount includes $256.5 million in jurisdictions outside of the U.S., principally in Canada and Australia.
We consider our investment policies related to cash and cash equivalents to be conservative, as we maintain a diverse portfolio of what we believe to be high-quality cash and cash equivalent investments with short-term maturities.
There are currently no legal or economic restrictions that would materially impede our ability to repatriate such cash. We consider our investment policies related to cash and cash equivalents to be conservative, as we maintain a diverse 52 portfolio of what we believe to be high-quality cash and cash equivalent investments with short-term maturities.
Despite these positive longer-term trends, certain of our customers experienced supply chain challenges during 2022 that resulted in delays and shortages of, and increased costs for, materials necessary for certain projects, particularly sourcing restrictions related to solar panels necessary for the utility scale solar industry.
Despite these positive longer-term trends, during 2022 and into 2023, the timing of certain projects within this segment were negatively impacted by supply chain challenges that resulted in delays and shortages of, and increased costs for, materials necessary for certain projects, particularly sourcing restrictions related to solar panels necessary for the utility-scale solar industry and delays in availability of power transformers impacting the electric power and renewable energy industries.
Net income attributable to non-controlling interests. The increase in net income attributable to non-controlling interests is primarily related to the $10.4 million gain on sale of the investment in a non-integral equity unconsolidated affiliate. See Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report. Comprehensive income.
The decrease in net income attributable to non-controlling interests is primarily related to the $10.4 million gain on sale of the investment in a non-integral equity unconsolidated affiliate recorded during the year ended December 31, 2022 as further described in Note 8 of the Notes to Consolidated Financial Statements in Item 8.
Revenues increased due to a $1.95 billion increase in revenues from our Renewable Energy Infrastructure Solutions segment, a $1.32 billion increase in revenues from our Electric Power Infrastructure Solutions segment, and a $824.4 million increase in revenues from our Underground Utility and Infrastructure Solutions segment. See Segment Results below for additional information and discussion related to segment revenues.
Revenues. Revenues increased due to a $2.39 billion increase in revenues from our Renewable Energy segment, a $756.6 million increase in revenues from our Electric Power segment, and a $659.9 million increase in revenues from our Underground and Infrastructure segment. See Segment Results below for additional information and discussion related to segment revenues. 45 Cost of services.
In recent years, we have subcontracted approximately 20% of our work to other service providers. Our customers are usually responsible for supplying the materials for their projects. However, under some contracts, including contracts for projects where we provide EPC services, we agree to procure all or part of the required materials.
Our customers are usually responsible for supplying the materials for their projects. However, under some contracts, we agree to procure all or part of the required materials.
Our available commitments under our senior credit facility and cash and cash equivalents as of December 31, 2022 were as follows (in thousands): December 31, 2022 Total capacity available for revolving loans, credit support for commercial paper program and letters of credit $ 2,640,000 Less: Borrowings of revolving loans 36,910 Commercial paper program notes outstanding (1) 373,000 Letters of credit outstanding 227,836 Available commitments for revolving loans, credit support for commercial paper program and letters of credit 2,002,254 Plus: Cash and cash equivalents (2) 428,505 Total available commitments under senior credit facility and cash and cash equivalents $ 2,430,759 (1) Represents unsecured notes issued under our commercial paper program, which allows for the issuance of notes up to a maximum aggregate face amount of $1.0 billion outstanding at any time.
Our available commitments under our senior credit facility and cash and cash equivalents as of December 31, 2023 were as follows (in thousands): December 31, 2023 Total capacity available for revolving loans, credit support for commercial paper program and letters of credit $ 2,640,000 Less: Borrowings of revolving loans 135,887 Commercial paper program notes outstanding (1) 705,900 Letters of credit outstanding 274,206 Available commitments for revolving loans, credit support for commercial paper program and letters of credit 1,524,007 Plus: Cash and cash equivalents (2) 1,290,248 Total available commitments under senior credit facility and cash and cash equivalents $ 2,814,255 (1) Amount represents unsecured notes issued under our commercial paper program, which has a maximum aggregate amount of $1.50 billion of notes outstanding at any time.
For a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure, see Non-GAAP Financial Measures below. Interest and other financing expenses. Approximately two-thirds of the increase resulted from higher debt outstanding during 2022 as compared to 2021.
See Non-GAAP Financial Measures below for a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure.
The $66.8 million increase in foreign currency translation loss in the year ended December 31, 2022 primarily resulted from the strengthening of the U.S. dollar against both the Canadian and Australian dollars as of December 31, 2022 when compared to December 31, 2021. 46 Segment Results We report our results under three reportable segments: Electric Power Infrastructure Solutions, Renewable Energy Infrastructure Solutions and Underground Utility and Infrastructure Solutions.
Foreign currency translation loss in the year ended December 31, 2022 primarily resulted from the strengthening of the U.S. dollar against both the Australian and Canadian dollars as of December 31, 2022 when compared to December 31, 2021. EBITDA and adjusted EBITDA .
These conditions and events can negatively impact our financial results due to, among other things, the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities. However, severe weather events can also increase our emergency restoration services, which typically yield higher margins due in part to higher equipment utilization and absorption of fixed costs.
However, severe weather events can also increase our emergency restoration services, which typically yield higher margins due in part to higher equipment utilization and absorption of fixed costs. Demand for services .
The increase was primarily due to $11.7 million of asset impairment charges related to a software implementation project at an acquired company, which commenced prior to our acquisition and was discontinued in the fourth quarter of 2022. Change in fair value of contingent consideration liabilities.
Operating income and margin for the year ended December 31, 2022 benefited from the favorable acceleration of a transmission project and was negatively impacted by $11.7 million of asset impairment charges related to a software implementation project at an acquired company, which commenced prior to our acquisition and was discontinued in the fourth quarter of 2022.
The net other expense for the year ended December 31, 2022 was primarily the result of an unrealized loss of $91.5 million resulting from the remeasurement of the fair value of our investment in a publicly traded broadband technology provider, Starry Group Holdings, Inc. (Starry), based on the market price of Starry’s common stock as of December 31, 2022.
Other income (expense), net . The net other expense for the year ended December 31, 2022 includes a loss of $91.5 million that resulted from the remeasurement of the fair value of our investment in Starry Group Holdings, Inc.
The following table reconciles total remaining performance obligations to our backlog (a non-GAAP financial measure) by reportable segment, along with estimates of amounts expected to be realized within 12 months (in thousands): December 31, 2022 December 31, 2021 12 Month Total 12 Month Total Electric Power Infrastructure Solutions Remaining performance obligations $ 2,124,820 $ 3,033,472 $ 2,002,862 $ 2,769,106 Estimated orders under MSAs and short-term, non-fixed price contracts 5,415,427 10,049,435 4,492,038 9,447,765 Backlog $ 7,540,247 $ 13,082,907 $ 6,494,900 $ 12,216,871 Renewable Energy Infrastructure Solutions Remaining performance obligations $ 3,183,568 $ 4,638,115 $ 2,178,846 $ 2,428,408 Estimated orders under MSAs and short-term, non-fixed price contracts 57,555 84,094 65,618 120,237 Backlog $ 3,241,123 $ 4,722,209 $ 2,244,464 $ 2,548,645 Underground Utility and Infrastructure Solutions Remaining performance obligations $ 1,038,543 $ 1,129,837 $ 637,843 $ 697,881 Estimated orders under MSAs and short-term, non-fixed price contracts 1,973,982 5,158,814 1,934,826 3,810,829 Backlog $ 3,012,525 $ 6,288,651 $ 2,572,669 $ 4,508,710 Total Remaining performance obligations $ 6,346,931 $ 8,801,424 $ 4,819,551 $ 5,895,395 Estimated orders under MSAs and short-term, non-fixed price contracts 7,446,964 15,292,343 6,492,482 13,378,831 Backlog $ 13,793,895 $ 24,093,767 $ 11,312,033 $ 19,274,226 The increase in remaining performance obligations from December 31, 2021 to December 31, 2022 was attributable to multiple new project awards, while the increase in backlog was attributable to these new awards and extensions and increases in expected volumes under MSAs.
The following table reconciles total remaining performance obligations to our backlog (a non-GAAP financial measure) by reportable segment, along with estimates of amounts expected to be realized within 12 months (in thousands): December 31, 2023 December 31, 2022 12 Month Total 12 Month Total Electric Power Remaining performance obligations $ 2,762,608 $ 4,505,830 $ 2,124,820 $ 3,033,472 Estimated orders under MSAs and short-term, non-fixed price contracts 5,597,732 10,995,198 5,415,427 10,049,435 Backlog $ 8,360,340 $ 15,501,028 $ 7,540,247 $ 13,082,907 Renewable Energy Remaining performance obligations $ 5,512,159 $ 8,005,368 $ 3,183,568 $ 4,638,115 Estimated orders under MSAs and short-term, non-fixed price contracts 118,770 119,634 57,555 84,094 Backlog $ 5,630,929 $ 8,125,002 $ 3,241,123 $ 4,722,209 Underground and Infrastructure Remaining performance obligations $ 1,017,227 $ 1,383,057 $ 1,038,543 $ 1,129,837 Estimated orders under MSAs and short-term, non-fixed price contracts 2,222,451 5,099,332 1,973,982 5,158,814 Backlog $ 3,239,678 $ 6,482,389 $ 3,012,525 $ 6,288,651 Total Remaining performance obligations $ 9,291,994 $ 13,894,255 $ 6,346,931 $ 8,801,424 Estimated orders under MSAs and short-term, non-fixed price contracts 7,938,953 16,214,164 7,446,964 15,292,343 Backlog $ 17,230,947 $ 30,108,419 $ 13,793,895 $ 24,093,767 The increases in remaining performance obligations and backlog from December 31, 2022 to December 31, 2023 were primarily attributable to multiple new project awards.
This increase was partially offset by approximately $145 million in lower emergency restoration services revenues and foreign exchange impacts of approximately $23 million. Operating Income. Operating income increased for the year ended December 31, 2022 primarily due to the increase in revenues explained above.
The increase in revenues for the year ended December 31, 2023 was primarily due to increased spending by our utility customers and approximately $270 million in revenues attributable to acquired businesses. These increases were partially offset by approximately $60 million in lower emergency restoration services revenues. Operating Income.
In January of 2023, we completed the acquisition of three businesses in which a portion of the consideration consisted of $465.0 million in cash funded with a combination of cash and cash equivalents and borrowings from our commercial paper program. For additional information regarding these acquisitions, refer to Note 6 of the Notes to Consolidated Financial Statements in Item 8.
During 2023, we completed the acquisition of five businesses in which a portion of the consideration, net of cash acquired, consisted of $651.6 million in cash funded with a combination of cash and cash equivalents and borrowings from our commercial paper program.
Financial Statements and Supplementary Data of this Annual Report).
Financial Statements and Supplementary Data in Part II of this Annual Report. Comprehensive income. See Statements of Comprehensive Income in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report.
Financial Statements and Supplementary Data of this Annual Report) . Insurance - The estimation of liabilities and related recoveries (also refer to Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report).
For additional information regarding these acquisitions, refer to Note 6 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report.
(2) The amount for the year ended December 31, 2022 is an unrealized loss from a decrease in fair value of our investment in Starry, as further described in Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report.
(2) The amount for the year ended December 31, 2022 is a loss from a decrease in fair value of our investment in Starry.
These items were partially offset by $49.2 million of proceeds from the sale of property and equipment and $29.1 million of cash received primarily from sale of investments.
Partially offsetting these items were $69.3 million of proceeds from the sale of, and insurance settlements related to, property and equipment and $42.3 million of cash received from the sale of investments.
Increased revenues and operating income across all our segments during 2022 generated $1.1 billion of cash provided by operating activities, a 94.1% increase relative to 2021, which allowed us to execute our business plan, repurchase $128 million of common stock and pay $41 million of dividends.
During 2023, increased revenues and operating income across all our segments contributed to $1.58 billion of net cash provided by operating activities, a 39.4% increase relative to 2022, which allowed us to execute our business plan, including the strategic acquisition of several businesses, for which we utilized $651.6 million of cash, net of cash acquired, and the payment of $47.8 million in dividends associated with our common stock.

… 114 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed2 unchanged
Biggest changeThe fair value of Quanta’s senior notes was $2.00 billion at December 31, 2022. We estimate that a 10% change in the market price would cause a change in fair value of $199.7 million.
Biggest changeThe fair value of Quanta’s senior notes was $2.15 billion at December 31, 2023. A 10% change in the market price would cause a change in fair value of $214.5 million. As of December 31, 2023, our variable-rate debt consisted of $867.1 million outstanding under our senior credit facility and $705.9 million outstanding under our commercial paper program.
We are exposed to interest rate risk with respect to our fixed-rate and variable-rate debt. Fluctuations in interest rates impact the fair value of fixed-rate debt and expose us to the risk that we may need to refinance debt at higher rates at each instrument ’s respective maturity date. Fluctuations in interest rates impact interest expense from our variable-rate debt.
Fluctuations in interest rates impact the fair value of fixed-rate debt and expose us to the risk that we may need to refinance debt at higher rates at each instrument ’s respective maturity date. Fluctuations in interest rates impact interest expense from our variable-rate debt.
Based on these borrowings outstanding as of December 31, 2022, we estimate that a 50 basis point increase or decrease in interest rates would impact interest expense by approximately $5.8 million. For additional information about our debt obligations, refer to Note 10 of the Notes to consolidated financial statements in Item 8. Financial Statements and Supplementary Data .
Based on these borrowings outstanding as of December 31, 2023, we estimate that a 50 basis point increase or decrease in interest rates would impact annual interest expense by approximately $7.9 million. For additional information about our debt obligations, refer to Note 10 of the Notes to Consolidated Financial Statements in Item 8.
Some of our consolidated entities enter into transactions that are not denominated in their functional currency. This results in exposure to foreign currency risk for financial instruments, including, but not limited to, third-party and intercompany receivables and payables and intercompany loans.
Translation adjustments are deferred in accumulated other comprehensive income. Some of our consolidated entities enter into transactions that are not denominated in their functional currency. This results in exposure to foreign currency risk for financial instruments, including, but not limited to, third-party and intercompany receivables and payables and intercompany loans.
At December 31, 2022, 69% of our debt portfolio, on a gross basis, incurred interest at a fixed-rate and the remaining 31% of the portfolio incurred interest at a variable-rate. 55 As of December 31, 2022, our fixed-rate debt was $2.57 billion , which consisted primarily of our s enior notes outstanding.
At December 31, 2023, 63% of our debt portfolio, on a gross basis, incurred interest at a fixed-rate and the remaining 37% of the portfolio incurred interest at a variable-rate. As of December 31, 2023, our fixed-rate debt was $2.63 billion , which consisted primarily of our s enior notes outstanding.
For a discussion about our concentration of credit risk; cash and cash equivalents; and investments in COLI assets, refer to Notes 6, 15, 16 and 17 of the Notes to consolidated financial statements in Item 8. Financial Statements and Supplementary Data for additional information. Interest Rate Risk .
For a discussion about our concentration of credit risk; cash and cash equivalents; and investments in COLI assets, refer to Notes 4, 15, 16 and 17 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of this Annual Report for additional information. 57
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Our primary exposure to market risk relates to unfavorable changes with respect to interest rates and currency exchange rates.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Our primary exposure to market risk relates to unfavorable changes with respect to interest rates and currency exchange rates. Interest Rate Risk . We are exposed to interest rate risk with respect to our fixed-rate and variable-rate debt.
Foreign Currency Risk. We perform our services in some foreign countries, primarily Canada and Australia, and as a result, are exposed to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar. Our foreign entities typically use the local currency as their functional currency. Translation adjustments are deferred in accumulated other comprehensive income.
Financial Statements and Supplementary Data in Part II of this Annual Report. 56 Foreign Currency Risk. We perform our services in some foreign countries, primarily Canada and Australia, and as a result, are exposed to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar. Our foreign entities typically use the local currency as their functional currency.
The weighted average interest rate on our borrowings under our senior credit facility for the year ended December 31, 2022 was 3.0%, and the weighted average interest rate on borrowings under our commercial paper program, which we entered into during the second half of 2022, was 4.5%.
The weighted average interest rate on our borrowings under our senior credit facility for the year ended December 31, 2023 was 6.6%, and the weighted average interest rate on borrowings under our commercial paper program was 5.8%.
Historically, we have not had significant exposure to foreign currency risk. Other (expense) income, net, in the consolidated statements of income in Item 8. Financial Statements and Supplementary Data reflects net foreign currency gains of $0.7 million and $5.1 million in the years ended December 31, 2022 and 2021 . 56
Historically, we have not had significant exposure to foreign currency risk. Other income (expense), net, in the consolidated statements of income in Item 8.
Removed
As of December 31, 2022, our variable-rate debt consisted of $786.9 million outstanding under our senior credit facility and $373.0 million outstanding under our commercial paper program.
Added
Financial Statements and Supplementary Data in Part II of this Annual Report reflects net foreign currency losses of $2.6 million in the year ended December 31, 2023 and net foreign currency gains of $0.7 million in the year ended December 31, 2022. Other Risks.

Other PWR 10-K year-over-year comparisons