Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and related notes in Item 8. Financial Statements and Supplementary Data. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. 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 Item 1A. Risk Factors.

Overview

We are a leading provider of specialty contracting services, delivering comprehensive infrastructure solutions for the electric and gas utility, communications, pipeline and energy industries in the United States, Canada, Australia and select other international markets. The performance of our business generally depends on our ability to obtain contracts with customers and to effectively deliver the services provided under those contracts. The services we provide include the design, engineering, new construction, upgrade and repair and maintenance of infrastructure within each of the industries we serve, such as electric power transmission and distribution networks; substation facilities; communications and cable multi-system operator networks; gas utility systems; and pipeline transmission systems and facilities. Our customers include many of the leading companies in the industries we serve, and we endeavor to develop and maintain strategic alliances and preferred service provider status with our customers. Our services are typically provided pursuant to master service agreements, repair and maintenance contracts and fixed price and non-fixed price new construction contracts.

We report our results under two reportable segments: (1) Electric Power Infrastructure Solutions and (2) Underground Utility and Infrastructure Solutions, as further described in Item 1. Business – Reportable Segments. This structure is generally focused on broad end-user markets for our services. Included within the Electric Power Infrastructure Solutions segment are the results related to our communications infrastructure services.

Current Year Financial Results and Significant Operational Trends and Events

Key financial results for the year ended December 31, 2020 included:

• Consolidated revenues decreased 7.5% to $11.20 billion as compared to $12.11 billion for the year ended December 31, 2019;

• Operating income increased 10.2%, or $56.5 million, to $611.4 million as compared to $554.9 million for the year ended December 31, 2019;

• Net income attributable to common stock increased 10.8%, or $43.6 million, to $445.6 million as compared to $402.0 million for the year ended December 31, 2019;

• Diluted earnings per share increased 12.5%, or $0.34, to $3.07 as compared to $2.73 for the year ended December 31, 2019;

• EBITDA (a non-GAAP measure) increased 10%, or $85.8 million, to $922.7 million as compared to $836.9 million for the year ended December 31, 2019, and adjusted EBITDA (a non-GAAP measure) increased 11%, or $108.1 million, to $1.05 billion as compared to $941.8 million for the year ended December 31, 2019;

• Net cash provided by operating activities increased 111.9%, or $589.4 million, to $1.12 billion as compared to $526.6 million for the year ended December 31, 2019;

• Remaining performance obligations decreased 24.8%, or $1.32 billion, to $3.99 billion as of December 31, 2020 as compared to $5.30 billion as of December 31, 2019; and

• Total backlog (a non-GAAP measure) increased 0.8%, or $127.5 million, to $15.13 billion as of December 31, 2020 as compared to $15.00 billion as of December 31, 2019.

For a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, their most comparable GAAP measure, and a reconciliation of backlog to remaining performance obligations, its most comparable GAAP measure, see Non-GAAP Reconciliations below.

During 2020, we were impacted by certain significant operational trends and events as compared to 2019 as described below.

Electric Power Infrastructure Solutions Segment

• Revenues increased by 9.1% to $7.77 billion, as compared to $7.12 billion. Overall, revenues increased as a result of continued favorable dynamics across our core utility market and increased demand for our electric power services, including a $220 million increase in emergency restoration services revenues and a $125 million increase in revenues from our North American communication operations. We also recognized approximately $175 million of incremental revenues from acquired businesses and increased revenues from larger transmission projects in Canada.

• Operating income increased by 39.8% to $826.3 million, as compared to $591.2 million, and operating income as a percentage of revenues increased to 10.6% as compared to 8.3%. Operating income increased primarily due to improved performance across the segment and increased emergency restoration services and Canadian revenues, both of which contributed to improved equipment utilization and fixed cost absorption as compared to the year ended December 31, 2019, which was negatively impacted by elevated levels of unabsorbed costs due to severe weather and other delays on certain larger transmission projects in Canada.

• Operating income was negatively impacted in both periods by our Latin American operations, which have been adversely impacted by the COVID-19 pandemic due to shelter-in-place restrictions and other work disruptions. As a result of these factors, we accelerated various contract terminations and other activities in order to expedite cessation of operations in the region. We substantially completed our exit of this market as of December 31, 2020. During the year ended December 31, 2020, these operations generated an operating loss of $74.0 million. During the year ended December 31, 2019, these operations generated an operating loss of $85.7 million, which included the recognition of a $79.2 million charge associated with a terminated telecommunications project in Peru, composed of a $48.8 million reversal of revenues and a $30.4 million increase in cost of services. See Business Environment below for additional information and discussion related to the exit of our Latin American operations.

Underground Utility and Infrastructure Solutions Segment

• Revenues decreased by 31.3% to $3.43 billion, as compared to $4.99 billion.

• Revenues associated with larger pipeline projects decreased by approximately $830 million as a result of the industry entering the late-stage of the current construction cycle, as well as the next cycle of projects being delayed due to various factors, including among other things, permitting delays and worksite access limitations related to environmental regulations.

• The impact of the COVID-19 pandemic contributed to the decline in revenues and operating income. Specifically, shelter-in-place and worksite access restrictions in major metropolitan areas caused short-term disruptions for our gas utility customers in the first half of 2020, and a lack of demand for refined products during 2020 resulted in project delays and deferrals that negatively impacted our high pressure and critical-path turn around services to the downstream and midstream energy markets.

• Revenues were favorably impacted by approximately $230 million of incremental revenues from acquired businesses.

• Operating income decreased by 48.8% to $170.1 million, as compared to $332.0 million, and operating income as a percentage of revenues decreased to 5.0%, as compared to 6.7%. Operating income and operating income as a percentage of revenues decreased primarily due to the decrease in revenues and the adverse effects of the COVID-19 pandemic and the overall challenged energy market on our operations.

During 2019, our results were also impacted by the recognition of $60.3 million ($43.9 million net of tax) of previously deferred earnings as a result of the completion of a larger transmission project in Canada and the subsequent recognition of a $13.0 million gain ($20.7 million with favorable tax benefits) related to the sale of our interest in such project. The gross amounts related to which are recorded as equity in earnings of unconsolidated affiliates included in “Other income (expense), net” in our consolidated statements of operations.

See COVID-19 Pandemic – Response and Impact, Results of Operations and Liquidity and Capital Resources below for additional information and discussion related to our consolidated and segment results.

Debt Issuance and Amendment and Extension of Senior Credit Facility

On September 22, 2020, we issued $1.00 billion aggregate principal amount of 2.900% Senior Notes due October 1, 2030 (the senior notes) and received proceeds of $986.7 million, net of the original issue discount, underwriting discounts and debt issuance costs. We used the net proceeds, together with cash on hand, to voluntarily prepay $1.21 billion of term loans then-outstanding under our senior credit facility, which had a maturity date in October 2022. Additionally, we entered into an amendment to the credit agreement for our senior credit facility (the credit agreement) that, among other things, increased the aggregate revolving commitments from $2.14 billion to $2.51 billion, extended the maturity date from October 31, 2022 to September 22, 2025, released the liens on the collateral securing our obligations thereunder, released the subsidiary guarantors from their guarantees of such obligations and removed the collateral reinstatement provision that would have applied in the event our corporate credit rating were to fall below an investment grade rating. See Liquidity and Capital Resources – Debt Instruments for additional information on the senior notes issuance and the amendment to our credit agreement.

Recent Acquisitions

We continue to selectively evaluate acquisitions as part of our overall business strategy and acquired seven businesses in the year ended December 31, 2020. These acquired businesses enhanced and expanded, among other things, our services related electric power distribution, transmission and substation maintenance; our directional boring and emergency restoration services capabilities; our engineering and design services for electric utilities, gas utilities and communications services companies; our aviation services for the utility industry; our capabilities with respect to underground conduit services and short- and long-haul fiber optic cable and utilities; our services to provide heavy, civil, industrial and energy related services and construction and maintenance of pipelines and metering stations; and our industrial services business. During the year ended December 31, 2020, revenues were positively impacted by approximately $405 million from acquired businesses.

Puerto Rico Joint Venture

Additionally, during the year ended December 31, 2020, a joint venture in which we own a 50% interest, LUMA Energy, LLC (LUMA), was selected for a 15-year operation and maintenance agreement to operate, maintain and modernize the approximately 18,000-mile electric transmission and distribution system in Puerto Rico. The 15-year operation and maintenance period is scheduled to begin following a transition period that is expected to end in mid-2021. During the transition period, LUMA will complete numerous steps necessary to transition operation and maintenance from the current operator and receives a fixed transition services fee, payable in monthly installments, and is reimbursed for costs and expenses. During the operation and maintenance period, LUMA will continue to be reimbursed for costs and expenses and will receive a fixed annual management fee, with the opportunity to receive additional annual performance-based incentive fees. LUMA will not assume ownership of any electric transmission and distribution system assets and will not be responsible for operation of the power generation assets. LUMA is operationally integral to our operations, and therefore our share of LUMA’s net income or losses is reported within operating income and reflected within the Electric Power Infrastructure Solutions segment.

COVID-19 Pandemic – Response and Impact

During 2020 and the first part of 2021, the COVID-19 pandemic has significantly impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many sectors. We continue to operate substantially all of our activities as a provider of essential services. In response to the pandemic, we have implemented proactive measures to protect the health and safety of our employees, such as the adoption of specialized training initiatives and the utilization of additional protective equipment for our employees operating in the field and additional sanitation measures for our offices, vehicles and equipment, as well as reduced non-essential business travel, applied work-from-home policies where appropriate and developed other human resource guidance to help employees.

During 2020, our results were adversely impacted by the COVID-19 pandemic as a result of disruptions in our operations created by shelter-in-place restrictions in certain service areas, primarily during the first and second quarters of 2020 and in major U.S. metropolitan markets that have been meaningfully impacted by the pandemic. While the significant adverse impacts resulting from these shelter-in-place restrictions subsided in the second half of 2020, the possibility of future restrictions remains. The COVID-19 pandemic has also compounded broader challenges in the energy market that are affecting portions of our Underground Utility and Infrastructure Solutions segment. In particular, demand for our midstream and industrial services operations has declined as customers are reducing and deferring regularly scheduled maintenance and capital projects due to lack of demand for refined products. This dynamic had a materially negative impact on segment results during 2020 and is expected to continue to negatively impact segment results in 2021. We have also experienced permitting and regulatory delays for projects due to the COVID-19 pandemic, and the pandemic has negatively impacted our Latin American operations due to shelter-in-place restrictions and other work disruptions in the region.

We are focused on maintaining a strong balance sheet to help us navigate the challenges presented by the COVID-19 pandemic. As of December 31, 2020, we had $184.6 million of cash and cash equivalents and $2.01 billion of availability under

our senior credit facility. We generated $1.12 billion and $526.6 million in cash flow from operations in the years ended December 31, 2020 and 2019. We continue to manage our costs through, among other things, reductions in discretionary spending, reductions in workforce at operations experiencing challenges, hiring and compensation increase deferrals, and deferrals of non-essential capital expenditures. Capital expenditures for 2020 were $260.1 million, which was $39.9 million less than our original estimate at the beginning of 2020. We plan to continue to maintain capital discipline and monitor rapidly changing market dynamics and adjust our costs and financing strategies accordingly, and we expect capital expenditures for 2021 to be approximately $325 million.

As a result of the currently challenged energy market and recent oil price volatility, as well as the exacerbating effect of the COVID-19 pandemic, we assessed the expected negative impacts related to goodwill, intangible assets, long-lived assets, and investments as of the end of each quarter during 2020, including at December 31, 2020. We recognized $18.0 million of impairments related to investments during the first and second quarters of 2020, as described further in Results of Operations below, and concluded that the impact of these effects was not likely to result in any other impairments of such assets at this time. As described further in Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, we also performed our annual goodwill impairment test during the fourth quarter of 2020. We concluded that, although the fair value of certain reporting units within the Underground Utility and Infrastructure Solutions Division did not exceed their book value by 10% or more, no goodwill impairments had occurred as of December 31, 2020. We are continuing to monitor the actual and forecasted financial results of our reporting units, and the potential future impacts are uncertain and may change based on numerous factors.

During 2020, the U.S. federal government also enacted the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which provides for various tax relief and tax incentive measures. These measures are not expected to have a material impact on our results of operations. However, pursuant to the CARES Act , we deferred the payment of $108.9 million of the employer portion of payroll taxes during the year ended December 31, 2020, 50% of which are due by December 31, 2021 and the remainder of which are due by December 31, 2022.

The broader and longer-term implications of the COVID-19 pandemic on our results of operations and overall financial performance and position remain highly uncertain and variable, and we expect continued operational challenges in 2021 for portions of our operations as we continue to operate during this unprecedented and unpredictable health and economic environment. The future impact that the pandemic, or any resulting market disruption and volatility, will have on our business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the ongoing spread of COVID-19 and the duration and severity of the pandemic; the development, availability and administration of effective treatments and vaccines; the actions taken by governmental authorities, customers, suppliers and other third parties and the consequences of those actions; our workforce availability in light of potential increased spread of COVID-19; and the timing and extent to which normal economic and operating conditions resume and continue. For additional discussion regarding risks associated with the COVID-19 pandemic, see Item 1A. Risk Factors of this Annual Report.

Business Environment

Despite the challenges presented by the COVID-19 pandemic, we believe there are long-term growth opportunities across our industries, and we continue to have a positive long-term outlook. Although not without risks and challenges, including those discussed in Overview and Cautionary Statement About Forward-Looking Statements and Information above and Item 1A. Risk Factors of this Annual Report, we believe, with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to capitalize on opportunities and trends in our industries.

Electric Power Infrastructure Solutions Segment. Utilities are investing significant capital in their electric power delivery systems, particularly transmission, substation and distribution infrastructure, through multi-year, multi-billion dollar grid modernization and reliability programs, which have provided, and are expected to continue to provide, demand for our services. Utilities are accommodating a changing fuel generation mix that is moving toward more sustainable sources such as renewables and natural gas and replacing aging infrastructure to support long-term economic growth. In order to reliably and efficiently deliver power, and in response to federal reliability standards, utilities are also integrating smart grid technologies into distribution systems in order to improve grid management and create efficiencies, and in preparation for emerging technologies such as electric vehicles. A number of utilities have and continue to implement system upgrades or hardening programs in response to recurring severe weather events, such as hurricanes and wildfires, and in particular there are significant system resiliency initiatives in California and other regions in the western U.S. underway that are designed to prevent and manage the impact of wildfires. These resiliency initiatives provide additional opportunities for our services; however, they also increase our potential exposure to significant liabilities attributable to those events.

While the COVID-19 pandemic has resulted in an overall decline in electricity usage in the near term, primarily related to commercial and industrial users, we expect demand for electricity in North America to grow over the long term and believe that certain segments of the North American electric power grid are not adequate to efficiently serve the power needs of the future. Furthermore, to the extent that electrification trends increase, including electric vehicle (EV) adoption, demand for electricity

could be greater than currently anticipated. As demand for power increases, we also expect an increase in new power generation facilities powered by renewable energy sources (e.g. solar and wind) and certain traditional energy sources (e.g., natural gas). To the extent this dynamic continues, we expect continued demand for new or expanded transmission and substation infrastructure to transport power and interconnect new generation facilities and the modification and reengineering of existing infrastructure as existing coal and nuclear generation facilities are retired or shut down.

With respect to our communications service offerings, consumer and commercial demand for communication and data-intensive, high-bandwidth wireline and wireless services and applications is driving significant investment in infrastructure and the deployment of new technologies. In particular, communications providers in North America are in the early stages of developing new fifth generation wireless services (5G), which are intended to facilitate bandwidth-intensive services at high speeds for consumers and a wide range of commercial applications. Additionally, the Federal Communications Commission has enacted a program to deploy more than $20 billion in federal funds to bring high speed fixed broadband service to underserved rural homes and small businesses through the Rural Digital Opportunity Fund. As a result of these industry trends, we believe there will be meaningful demand for our engineering and construction services in that market. We have strategically focused our communications services on the North American market, and during 2019 and 2020 we have substantially completed the exit of our Latin American communications operations. While we have incurred costs related to exiting these operations, we anticipate this decision will result in improved profitability of our overall services offerings.

Underground Utility and Infrastructure Solutions Segment. For several years we have focused on increasing our underground utility and infrastructure solutions related to specialty services and industries that we believe are driven by regulated utility spending, regulation, replacement and rehabilitation of aging infrastructure and safety and environmental initiatives, which we believe provide a greater level of business sustainability and predictability. These service offerings include gas utility services, pipeline integrity services and downstream industrial services, all of which we have expanded through organic growth, geographic expansion initiatives and select acquisitions. This strategy is also intended to mitigate the seasonality and cyclicality of our larger pipeline project activities, which we are not strategically investing in but continue to pursue to the extent they satisfy our margin and risk profiles and support the needs of our customers.

As discussed in COVID-19 Pandemic - Response and Impact, though we experienced short-term disruptions in 2020 due to the impact of the COVID-19 pandemic in certain metropolitan markets, we believe demand for our gas utility distribution services will increase as a result of customer desire to upgrade and replace aging infrastructure, lower natural gas prices, and increasing regulatory requirements. In particular, natural gas utilities have implemented multi-decade modernization programs to replace aging cast iron, bare steel, gas and plastic system infrastructure with modern materials for safety, reliability and environmental purposes.

We believe there are also growth opportunities for our pipeline integrity, rehabilitation and replacement services, as regulatory measures have increased the frequency or stringency of pipeline integrity testing requirements. Regulatory requirements continue to mandate or require our customers to test, inspect, repair, maintain and replace pipeline infrastructure to ensure that it operates safely, reliably and in an environmentally conscious manner. Further, permitting challenges associated with construction of new pipelines can make existing pipeline infrastructure more valuable, motivating owners to extend the useful life of existing pipeline assets through integrity initiatives. Due to these dynamics, we expect demand to continue to grow for our pipeline integrity services.

The COVID-19 pandemic and challenging overall energy market conditions have resulted in an overall decline in global demand for refined products during 2020 and thus far in 2021, which has negatively impacted our critical path services and related specialty services to refinery and chemical processing facilities that are primarily along the Gulf Coast of the United States and in other select markets in North America. While demand for our critical path catalyst services has remained solid, in the second half of 2020 customers began reducing onsite activity for our other services and have deferred maintenance and certain turnaround projects to late 2021 and 2022. We believe there are significant long-term opportunities for our 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, and that processing facilities located along the U.S. Gulf Coast region should have certain long-term strategic advantages due to their proximity to affordable hydrocarbon resources. However, these processing facilities can also be negatively impacted for short-term periods due to severe weather events, such as hurricanes, tropical storms and floods.

The broader oil and gas industry is highly cyclical and subject to price volatility, such as the current low commodity price environment, which can impact demand for our services. For example, certain of our end markets where the price of oil is influential, such as Australia, the Canadian Oil Sands and certain oil-driven U.S. shale formations, have been materially impacted by the current challenged energy market. Furthermore, we have entered the late-stage of the current construction cycle of larger pipeline projects, as well as the next cycle of projects are being delayed due to various factors including, among other things, permitting delays and worksite access limitations related to environmental regulations. For example, during 2020 an approximately 600-mile natural gas pipeline under construction in the eastern United States, for which we had been contracted

to construct a portion of, was terminated due to, among other things, continued regulatory delay and risk. As such, our revenues related to larger pipeline projects have declined significantly over the last few years, including by approximately $830 million from 2019 to 2020.

Due to its abundant supply and current low price, we believe natural gas will remain a fuel of choice for both primary power generation and backup power generation for renewable-driven power plants in North America. The favorable characteristics of natural gas also position North America as a leading competitor in the global LNG export market, which has the potential to continue to grow over the coming years as approved and proposed LNG export facilities are developed. In certain areas, the existing pipeline system infrastructure is insufficient to support these expected future developments, which could provide additional opportunities for our services.

Regulatory Challenges and Opportunities. The regulatory environment creates both challenges and opportunities for our business, and in recent years electric power and underground utility infrastructure margins have been impacted by regulatory and permitting delays in certain periods, particularly with respect to larger electric transmission and larger pipeline projects. Regulatory and environmental permitting processes continue to create uncertainty for projects and negatively impact customer spending, and delays have increased as the COVID-19 pandemic has impacted regulatory agency operations. For example, during 2020 a federal district court ruling vacated the U.S. Army Corps of Engineers Clean Water Act Section 404 Nationwide Permit 12, which has impacted certain projects and could result in increased costs and project interruptions or delays if we or our customers are forced to seek individual permits from the U.S. Army Corps of Engineers.

However, 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. For example, regulatory changes affecting siting and right-of-way processes could potentially accelerate construction for transmission projects, and state and federal reliability standards are creating incentives for system investment and maintenance. We also consider renewable energy, including solar and wind generation facilities, to be an ongoing opportunity for our engineering, project management and installation services; however, the economic feasibility of some of these projects remains subject to the continued availability of tax incentive programs.

Labor Resource Availability. In addition to the health and safety measures we are taking to ensure labor resource availability during the COVID-19 pandemic, we continue to address the longer-term need for additional labor resources in our markets. 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 believe these trends will continue, possibly to the point where demand for labor resources will outpace supply. Furthermore, the cyclical nature of the natural gas and oil industry can create shortages of qualified labor in those markets during periods of high demand. Our ability to capitalize on available opportunities is limited by our ability to employ, train and retain the necessary skilled personnel, and we are taking proactive steps to develop our workforce, including through strategic relationships with universities, the military and unions and the expansion and development of our training facility and postsecondary educational institution. Although we believe these initiatives will help address workforce needs, meeting our customers’ demand for labor resources could remain challenging.

Acquisitions and Investments. We believe potential acquisition and investment opportunities exist in our industries and adjacent industries, primarily due to the highly fragmented and evolving nature of those industries and inability of many companies to expand due to capital or liquidity constraints. 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.

Significant Factors Impacting Results

Our revenues, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Cautionary Statement About Forward-Looking Statements and Information above and Item 1A. 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.

Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing

costs. These seasonal impacts are typical for our U.S. operations, but seasonality for our international operations may differ. For example, revenues in Canada are typically higher in the first quarter because projects are often accelerated in order to complete work while the ground is frozen and prior to the break up, or seasonal thaw, as productivity is adversely affected by wet ground conditions during warmer months. Additionally, as referenced above in COVID-19 Pandemic – Response and Impact, portions of our operations experienced significant challenges during the second quarter of 2020 as a result of the COVID-19 pandemic, which impacted typical seasonality, and we believe that the ongoing impact of the pandemic could impact our typical seasonality in 2021.

Weather, natural disasters and emergencies. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events, natural disasters or other emergencies, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, pandemics (including the ongoing COVID-19 pandemic) and earthquakes. 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. See COVID-19 Pandemic – Response and Impact above for further discussion regarding the current and expected impact of the COVID-19 pandemic. However, in some cases, severe weather events can 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. We perform the majority of our services under existing contracts, such as master service agreements (MSAs) and/or strategic alliances, pursuant to which our customers assign work to us over the term of the agreement. Typically under our MSAs and similar agreements, our customers are not committed to specific volumes of our services. Therefore, our volume of business can be positively or negatively affected by fluctuations in demand for our services, which may vary by geographic region. For example, to the extent our customers accelerate grid modernization or hardening programs or face deadlines to meet regulatory requirements for rehabilitation, reliability or efficiency, our volume of work could increase under existing agreements. Also, as described above in COVID 19 Pandemic – Response and Impact, we have experienced reductions in demand for certain of our services as a result of disruptions due to shelter-in-place and worksite access restrictions and delays in regulatory agency operations due to the COVID-19 pandemic, as well as the decline in commodity prices and decreased demand for refined products. Examples of other 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; economic and political conditions on a regional, national or global scale, including interest rates, governmental regulations affecting the sourcing of certain materials and equipment, and other changes in U.S. and global trade relationships; and project deferrals and cancellations.

Revenue mix and impact on margins. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and services provide higher-margin opportunities. Larger or more complex projects with higher voltage capacities; larger-diameter throughput capacities; increased engineering, design or construction complexities; more difficult terrain or geographical requirements; or longer distance requirements typically yield opportunities for higher margins than our recurring services described above, as we assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes. However, larger projects are subject to additional risk of regulatory delay and cyclicality. For example, our revenues with respect to larger electric transmission and pipeline projects have declined significantly in recent years, and a significant number of larger projects have been delayed or cancelled during that same period. Project schedules also fluctuate, particularly in connection with larger, more complex or longer-term projects, which can affect the amount of work performed in a given period. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and competitors at times may more aggressively pursue available work. A greater percentage of smaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a larger number of smaller projects versus continuous production on fewer larger projects. As a result, at times we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward.

Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the volume or type of work performed, the pricing structure under the project contract or job productivity. 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; and the performance of third parties. Moreover, we currently generate, and expect to continue generating, 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. Under these contracts, we assume risks related to project estimates and execution, and project revenues can vary, sometimes substantially, from our original projections due to a variety of factors, including the additional complexity, timing uncertainty or extended bidding, regulatory and

permitting processes associated with these projects. These variations can result in a reduction in expected profit or the incurrence of losses on a project, and as discussed in further detail in Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplemental Data of this Annual Report, we have experienced significant project losses in connection with fixed price contracts that have impacted our results.

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 margins. In recent years, we have subcontracted approximately 15% to 20% of our work to other service providers. 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. Margins may be lower on projects where we furnish a significant amount of materials, including projects where we provide engineering, procurement and construction (EPC) services, as our markup on materials is generally lower than our markup on labor costs. Furthermore, fluctuations in the price or availability of materials and equipment we or our customers procure, including as a result of changes in U.S. or global trade relationships, governmental regulations affecting the sourcing of certain materials and equipment or other economic or political conditions, may impact our margins or cause delays. In a given period, an increase in the percentage of work with higher materials procurement requirements may decrease our overall margins.

Foreign currency risk. Our financial performance is reported on a U.S. dollar-denominated basis but is partially subject to fluctuations in foreign currency exchange rates. Fluctuations in exchange rates relative to the U.S. dollar, primarily Canadian and Australian dollars, can materially impact margins and comparisons of our results of operations between periods.

Results of Operations

The results of acquired businesses have been included in the following results of operations beginning on their respective acquisition dates. A discussion of results of operations changes between the years ended December 31, 2019 and 2018 is included in Item 7. 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, 2019, which was filed with the SEC on February 28, 2020. 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):

Consolidated Results

						Year Ended December 31,																								Change
						2020												2019												$						%
Revenues						$	11,202,672					100.0		%				$	12,112,153					100.0		%				$	(909,481)					(7.5)		%
Cost of services (including depreciation)						9,541,825						85.2						10,511,901						86.8						(970,076)						(9.2)		%
Gross profit						1,660,847						14.8						1,600,252						13.2						60,595						3.8		%
Equity in earnings of integral unconsolidated affiliates						11,303						0.1						—						—						11,303						*
Selling, general and administrative expenses						(975,074)						(8.7)						(955,991)						(7.9)						(19,083)						2.0		%
Amortization of intangible assets						(76,704)						(0.6)						(62,091)						(0.5)						(14,613)						23.5		%
Asset impairment charges						(8,282)						(0.1)						(13,892)						(0.1)						5,610						(40.4)		%
Change in fair value of contingent consideration liabilities						(719)						—						(13,404)						(0.1)						12,685						(94.6)		%
Operating income						611,371						5.5						554,874						4.6						56,497						10.2		%
Interest expense						(45,013)						(0.4)						(66,890)						(0.6)						21,877						(32.7)		%
Interest income						2,449						—						927						—						1,522						164.2		%
Other income (expense), net						2,539						—						83,376						0.7						(80,837)						(97.0)		%
Income before income taxes						571,346						5.1						572,287						4.7						(941)						(0.2)		%
Provision for income taxes						119,387						1.1						165,472						1.3						(46,085)						(27.9)		%
Net income						451,959						4.0						406,815						3.4						45,144						11.1		%
Less: Net income attributable to non-controlling interests						6,363						—						4,771						0.1						1,592						33.4		%
Net income attributable to common stock						$	445,596					4.0		%				$	402,044					3.3		%				$	43,552					10.8		%

• The percentage change is not meaningful.

Revenues. Revenues decreased primarily due to a reduction in services related to larger pipeline transmission projects and the challenged energy market conditions, exacerbated by the impact of the COVID-19 pandemic, which resulted in a $1.56 billion decrease in revenues from our Underground Utility and Infrastructure Solutions segment. This decrease was partially offset by a $651.5 million increase in revenues from our Electric Power Infrastructure Solutions segment due to strong demand for our electric power services, including an increase in emergency restoration services revenues. See Segment Results below for additional information and discussion related to segment revenues.

Gross profit. The increase in gross profit was primarily due to increased earnings from electric power infrastructure solutions, partially offset by lower earnings from underground utility and infrastructure solutions primarily due to the decrease in revenues. See Segment Results below for additional information and discussion related to segment results.

Equity in earnings of integral unconsolidated affiliates. The amount for the year ended December 31, 2020 primarily relates to the commencement of transition services under the agreement awarded to LUMA in June 2020 for the operation and maintenance of the electric transmission and distribution system in Puerto Rico.

Selling, general and administrative expenses. Contributing to the increase was a $30.9 million increase in expenses associated with acquired businesses and a $39.3 million increase in compensation expenses. The increase in compensation expense was largely associated with increased non-cash stock-based compensation expense, including a $14.0 million correction of prior period amounts related to the valuation of and accounting for certain performance-based equity awards that were awarded during the years 2017 to 2019. Included in the correction was $7.2 million of non-cash stock-based compensation related to 2019. Also contributing to the increase in non-cash stock-based compensation in 2020 was higher achievement under performance-based awards, as well as an increase in the amount of equity-based awards due to acquisitions and business growth. Partially offsetting these increases were decreases in certain expenses related to our cost containment measures in the current operating environment, including a $22.1 million decrease in travel and related expenses. Also partially offsetting the increases were a $17.2 million decrease in costs associated with legal and other contracted services and a $7.6 million decrease in provision for credit losses. Selling, general and administrative expenses as a percentage of revenues increased to 8.7% for the year ended December 31, 2020 from 7.9% for the year ended December 31, 2019, primarily due to the decrease in revenues described above.

Amortization of intangible assets. The increase was primarily due to increased amortization of intangible assets associated with recently acquired businesses, partially offset by reduced amortization expense from previously acquired intangible assets, as certain of those assets became fully amortized.

Asset impairment charges. Management reviews long-lived assets for potential impairment whenever events or changes in circumstance indicate the carrying amount may not be realizable, which may arise in connection with regular evaluations as to whether business operations have the ability to contribute long-term strategic value. As part of such evaluations during the fourth quarter of 2020, we recognized $8.3 million of asset impairment charges, $7.0 million of which related to our Latin American operations and $1.3 million of which related to the planned sale of certain equipment. During the fourth quarter of 2019, we recognized $13.9 million of asset impairments primarily related to the winding down and exit of certain oil-influenced operations and assets, the replacement of an internally-developed software application and the planned sale of certain foreign operations and assets.

Change in fair value of contingent consideration liabilities. The overall changes were primarily due to changes in performance in post-acquisition periods by certain acquired businesses and the effect of present value accretion on fair value calculations. Further changes in fair value are expected to be recorded periodically until contingent consideration liabilities are settled. See Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for more information.

Interest expense. Interest expense decreased primarily due to a lower weighted average interest rate associated with our senior credit facility.

Other income (expense), net. The net other income for the year ended December 31, 2020 was primarily related to the receipt of an $8.9 million favorable legal settlement, the favorable impact of $5.2 million related to foreign currency transactions and a $2.3 million dividend related to an investment in a water and gas pipeline infrastructure contractor located in Australia. Other income was partially offset by a $9.3 million impairment associated with our investment in the same water and gas pipeline infrastructure contractor and $8.7 million of impairments associated with two non-integral equity investments that have been negatively impacted by the recent decline in demand for refined petroleum products. The net other income for the year ended December 31, 2019 was primarily due to the recognition of earnings previously deferred in 2018 and 2017 on a large electric transmission project in Canada that was substantially completed and placed into commercial operation during the three months ended March 31, 2019. As a result of the project completion, we recognized $60.3 million of earnings that were deferred in prior periods. Additionally, during the three months ended December 31, 2019, we recognized a gain of $13.0 million related to the sale of our equity interest in the limited partnership that owned the project.

Provision for income taxes. The effective tax rates for the years ended December 31, 2020 and 2019 were 20.9% and 28.9%. The effective tax rate for the year ended December 31, 2020 was favorably impacted by a $45.1 million reduction in our deferred tax asset valuation allowance related to foreign tax credits and $8.2 million of tax benefits related to a decrease in reserves for uncertain tax positions, which resulted from the expiration of certain federal and state statutes of limitations periods. The effective tax rates for the years ended December 31, 2020 and 2019 include the impact of taxable losses of $60.8 million and $86.2 million associated with our Latin American operations, for which no income tax benefit was recognized. The effective tax rate for 2019 was also impacted by $7.8 million of favorable tax benefits associated with the sale of our interest in the limited partnership referenced above and $10.7 million of tax benefits related to decreases in reserves for uncertain tax positions, which primarily resulted from the expiration of certain federal and state statutes of limitations periods and the settlement of tax audits. Absent these items, the effective tax rates for December 31, 2020 and 2019 would have been 27.3% and 27.9%. We expect our effective tax rate to be approximately 26.5% to 27.0% for 2021.

Other comprehensive income (loss), net of taxes. Other comprehensive income (loss) results from translation of the balance sheets of our foreign operating units, which are primarily located in Canada and Australia and have functional currencies other than the U.S. dollar, and therefore are affected by the strengthening or weakening of the U.S. dollar against such currencies. The gain in the year ended December 31, 2020 was impacted primarily by the weakening of the U.S. dollar against both the Australian and Canadian dollars as of December 31, 2020 when compared to December 31, 2019. The gain in the year ended December 31, 2019 was impacted primarily by the weakening of the U.S. dollar against the Canadian dollar as of December 31, 2019 when compared to December 31, 2018.

Segment Results

Reportable segment information, including revenues and operating income by type of work, is gathered from each operating unit for the purpose of evaluating segment performance. Classification of our operating unit revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Our operating units 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. For example, we perform joint trenching projects to install distribution lines for electric power and natural gas customers. Our integrated operations and common administrative support for operating units require that certain allocations be made to determine segment profitability, including allocations of shared and indirect costs (e.g., facility costs), indirect operating expenses (e.g., depreciation), and general and administrative costs. Certain corporate costs are not allocated, including payroll and benefits, employee travel expenses, facility costs, professional fees, acquisition costs, non-cash stock-based compensation, amortization related to intangible assets, asset impairment related to goodwill and intangible assets and change in fair value of contingent consideration liabilities.

The following table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated, as well as the dollar and percentage change from the prior period. Operating margins are calculated by dividing operating income by revenues. Management utilizes operating margins as a measure of profitability, which can be helpful for monitoring how effectively we are performing under our contracts. Management also believes operating margins are a useful metric for investors to utilize in evaluating our performance. The following table shows dollars in thousands.

						Year Ended December 31,																								Change
						2020												2019												$						%
Revenues:
Electric Power Infrastructure Solutions excluding Latin America						$	7,765,742					69.3		%				$	7,058,611					58.3		%				$	707,131					10.0		%
Latin America						7,601						0.1						63,226						0.5						(55,625)						(88.0)		%
Electric Power Infrastructure Solutions						7,773,343						69.4						7,121,837						58.8						651,506						9.1		%
Underground Utility and Infrastructure Solutions						3,429,329						30.6						4,990,316						41.2						(1,560,987)						(31.3)		%
Consolidated revenues						$	11,202,672					100.0		%				$	12,112,153					100.0		%				$	(909,481)					(7.5)		%
Operating income (loss):
Electric Power Infrastructure Solutions excluding Latin America						$	889,010					11.4		%				$	676,926					9.6		%				$	212,084					31.3		%
Latin America						(73,988)						*						(85,749)						*						11,761						*
Equity in earnings of integral unconsolidated affiliates						11,303						N/A						—						N/A						11,303						*
Electric Power Infrastructure Solutions						826,325						10.6		%				591,177						8.3		%				235,148						39.8		%
Underground Utility and Infrastructure Solutions						170,074						5.0		%				332,011						6.7		%				(161,937)						(48.8)		%
Corporate and non-allocated costs						(385,028)						N/A						(368,314)						N/A						(16,714)						4.5		%
Consolidated operating income						$	611,371					5.5		%				$	554,874					4.6		%				$	56,497					10.2		%

• The percentage change is not meaningful.

Electric Power Infrastructure Solutions Segment Results

Overall, revenues increased as a result of continued favorable dynamics across our core utility market and increased demand for our electric power services, including a $220 million increase in emergency restoration services revenues and a $125 million increase in revenues from our North American communication operations. We also recognized approximately $175 million of incremental revenues attributable to acquired businesses and increased revenues on larger transmission projects in Canada. These increases were partially offset by decreased revenues associated fire hardening programs in the western United States as compared to the year ended December 31, 2019.

We have substantially completed the exit of our Latin American operations as of December 31, 2020. These operations have been adversely impacted by the COVID-19 pandemic due to shelter-in-place restrictions and other work disruptions that resulted in our acceleration of various contract terminations and other activities during 2020 in order to expedite cessation of operations in the region. As a result of these factors, during the year ended December 31, 2020, our Latin American operations generated an operating loss of $74.0 million, including $7.0 million of asset impairment charges and $2.7 million of regulatory required severance payments. During the year ended December 31, 2019, our Latin American operations generated an operating loss of $85.7 million, which included a $79.2 million charge associated with the termination of a telecommunications project in Peru, composed of a $48.8 million reversal of revenues and a $30.4 million increase in cost of services. The charge included a reduction of previously recognized earnings on the project, a reserve against a portion of the project costs incurred through the project termination date, a reserve against a portion of alleged liquidated damages and recognition of estimated costs to complete the project turnover and close out the project. See Legal Proceedings in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplemental Data of this Annual Report for additional information regarding this project.

Operating income and operating income as a percentage of revenues were positively impacted during the year ended December 31, 2020 by increased revenues from larger transmission projects in Canada and emergency restoration services revenues, both of which contributed to improved equipment utilization and fixed cost absorption. The year ended December 31, 2019 was negatively impacted by severe weather and other delays on certain larger transmission projects in Canada that resulted in elevated levels of unabsorbed costs. Partially offsetting these increases between periods was a reduction in fire

hardening services in the western United States during the year ended December 31, 2020. The equity in earnings of integral unconsolidated affiliates primarily relates to the commencement of transition services under the operation and maintenance agreement awarded to LUMA in June 2020.

Underground Utility and Infrastructure Solutions Segment Results

During the year ended December 31, 2020, reduced revenues associated with larger pipeline projects of approximately $830 million significantly contributed to the overall decrease in segment revenues. Revenues associated with larger pipeline projects declined as a result of the industry entering the late-stage of the current construction cycle as well as the next cycle of projects being delayed due to various factors, including among other things, permitting delays and worksite access limitations related to environmental regulations. Revenues also declined due to lower demand for our services in end-markets where the price of oil is influential. Lastly, the COVID-19 pandemic resulted in reduced capital spending and deferred regularly scheduled maintenance by our midstream and industrial customers, and shelter-in-place and worksite access restrictions in major metropolitan areas caused short-term disruptions for our gas distribution customers. These decreases were partially offset by approximately $230 million in incremental revenues from acquired businesses during 2020.

The decreases in operating income and operating income as a percentage of revenues were primarily due to the reduction of revenues, including revenues related to larger pipeline projects, which generally yield higher margins. Performance on contracts, including on larger pipeline projects, can vary based on several factors. For example, during the year ended December 31, 2020, adverse weather conditions across our Canadian larger pipeline projects negatively impacted operating income. However, the negative impact on these projects was offset by favorable factors on certain larger pipeline projects in the United States, including a contract termination that resulted in the recognition of previously deferred suspension and milestone payments.

Also contributing to the decrease in segment operating income were adverse impacts related to the COVID-19 pandemic and the overall challenged energy market, including lower revenues associated with industrial services, which negatively impacted margins and the ability to cover fixed and overhead costs, as discussed further above in COVID-19 – Response and Impact. Partially offsetting these adverse impacts were proactive cost management activities across the impacted operations. Operating income and operating income as a percentage of segment revenues in 2020 were also negatively impacted by $4.1 million of severance and restructuring charges related to the exit of certain ancillary pipeline operations and $1.3 million of asset impairment charges related to the planned sale of certain equipment. Operating income and operating income as a percentage of segment revenues for the year ended December 31, 2019 were negatively impacted by $28.3 million of project losses associated with engineering and production delays on a processing facility project, which was completed as of December 31, 2020, and $10.2 million of asset impairment charges from the winding down and exit of certain oil-influenced operations and assets.

Corporate and Non-allocated Costs

The increase in corporate and non-allocated costs was primarily due to a $40.2 million increase in non-cash stock-based compensation, including a $14.0 million correction of prior period amounts related to the valuation of and accounting for certain performance-based equity awards that were awarded during the years 2017 to 2019. Included in the correction was $7.2 million of non-cash stock-based compensation related to 2019. Also contributing to higher non-cash stock-based compensation in 2020 was higher achievement under performance-based equity awards, as well as an increase in the amount of equity-based awards due to acquisitions and business growth. Additionally, the increase in corporate and non-allocated costs included a $14.6 million increase in intangible asset amortization. Partially offsetting these increases were decreases in certain expenses related to our cost containment measures in the current operating environment, including a $6.3 million decrease in travel and related expenses and a $6.1 million decrease in costs associated with legal and other contracted services. Also partially offsetting the increases were a $5.0 million decrease in acquisition and integration costs and. with respect to contingent consideration liabilities, a $0.7 million increase in the fair value recognized during the year ended December 31, 2020 as compared to a $13.4 million increase in the fair value recognized during the year ended December 31, 2019.

Non-GAAP Reconciliations

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA, measures not recognized under generally accepted accounting principles in the United States (GAAP), when used in connection with net income attributable to common stock, are intended to provide useful information to investors and analysts as they evaluate our performance. EBITDA is defined as earnings before interest, taxes, depreciation, amortization, equity in (earnings) losses of non-integral unconsolidated affiliates and interest, taxes depreciation and amortization of integral unconsolidated affiliates, and adjusted EBITDA is defined as EBITDA adjusted for certain other items as described below. These measures should not be considered as an alternative to net income attributable to common stock or other measures of performance that are derived in accordance with GAAP. Management believes that the exclusion of

these items from net income attributable to common stock enables it to more effectively evaluate our operations period over period and to identify operating trends that might not be apparent when including the excluded items.

As to certain of the items below, (i) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of non-integral unconsolidated affiliates, including deferral and subsequent recognition upon completion of construction of earnings on contracts performed for entities in which Quanta has an equity interest and gain or loss on sales of investments accounted for using the equity method of accounting; (ii) 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; (iii) acquisition and integration costs vary from period to period depending on the level of our acquisition activity; (iv) asset impairment charges can vary from period to period depending on economic and other factors; (v) restructuring and severance charges vary from period to period depending on restructuring activities; (vi) bargain purchase gains can vary from period to period depending on our acquisition activity and the valuation of acquired businesses; (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 (viii) tax settlements and adjustments to related indemnification assets can vary from period to period depending on the status and resolution of pending matters. 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. The following table shows dollars in thousands.

												Year Ended
												December 31,
												2020						2019
Net income attributable to common stock (GAAP as reported)												$	445,596					$	402,044
Interest expense												45,013						66,890
Interest income												(2,449)						(927)
Provision for income taxes												119,387						165,472
Amortization of intangible assets												76,704						62,091
Equity in (earnings) losses of unconsolidated affiliates												9,994						(76,801)
Income taxes and depreciation included in equity in earnings of integral unconsolidated affiliates												3,174						—
Depreciation expense												225,256						218,107
EBITDA												922,675						836,876
Non-cash stock-based compensation (a)												91,641						52,013
Acquisition and integration costs												19,809						24,767
Asset impairment charges (b)												8,282						13,892
Severance and restructuring charges (c)												6,808						—
Bargain purchase gain (d)												—						(3,138)
Change in fair value of contingent consideration liabilities												719						13,404
Reduction of indemnification asset (e)												—						3,991
Adjusted EBITDA												$	1,049,934					$	941,805

(a) The amount for the year ended December 31, 2020 includes a $14.0 million correction of prior period amounts related to the valuation of and accounting for certain performance-based equity awards that were awarded during the years 2017 to 2019. Included in the correction was $7.2 million of non-cash stock-based compensation related to 2019.

(b) The amount for the year ended December 31, 2020 reflects asset impairment charges related to the exit of the Latin American operations and the planned sale of certain equipment. The amount for the year ended December 31, 2019 reflects asset impairment charges related to the winding down and exit of certain oil-influenced operations and assets, the replacement of an internally developed software application and the planned sale of certain foreign operations and assets.

(c) The amount for the three and twelve months ended December 31, 2020 relates to severance and restructuring charges related to the exit of certain ancillary pipeline operations and our Latin American operations.

(d) The amount for the year ended December 31, 2019 reflects a bargain purchase gain related to the acquisition of an electrical infrastructure solutions business.

(e) The amount for the year ended December 31, 2019 reflects an expense associated with the reduction of an indemnification asset related to the favorable settlement of certain non-U.S. income tax obligations associated with an acquired business.

Remaining Performance Obligations and Backlog

A performance obligation is a promise in a contract with a customer to transfer a distinct good or service. Our remaining performance obligations represent management’s estimate of consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work has not yet begun, which includes estimated revenues attributable to consolidated joint ventures and variable interest entities (VIEs), revenues from funded and unfunded portions of government contracts to the extent they are reasonably expected to be realized, and revenues from change orders and claims to the extent management believes they will be earned and are probable of collection.

We have also historically disclosed our backlog, a measure commonly used in our industry but not recognized under GAAP. We believe this measure enables management to more effectively forecast our future capital needs and results and better identify future operating trends that may not otherwise be apparent. We believe this measure is also useful for investors in forecasting our future results and comparing us to our competitors. Our remaining performance obligations are a component of backlog, which also includes estimated orders under MSAs, including estimated renewals, and non-fixed price contracts expected to be completed within one year. Our methodology for determining backlog may not be comparable to the methodologies used by other companies.

As of December 31, 2020 and 2019, MSAs accounted for 63% and 53% of our estimated 12-month backlog and 70% and 61% of total backlog. The increase in MSA backlog resulted from our entry into several new multiyear MSAs with electric and gas utility customers during the three months ended September 30, 2020. Generally, our customers are not contractually committed to specific volumes of services under our MSAs, and most of our contracts can be terminated on short notice even if we are not in default. We determine the estimated backlog for these MSAs using recurring historical trends, factoring in seasonal demand and projected customer needs based upon ongoing communications. In addition, many of our MSAs are subject to renewal, and these potential renewals are considered in determining estimated backlog. 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 ongoing COVID-19 pandemic) and adverse weather conditions; and final acceptance of change orders by customers. These factors can cause revenues to be realized in periods and at levels that are different than originally projected.

The following table reconciles total remaining performance obligations to our backlog (a non-GAAP measure) by reportable segment, along with estimates of amounts expected to be realized within 12 months (in thousands):

						December 31, 2020												December 31, 2019
						12 Month						Total						12 Month						Total
Electric Power Infrastructure Solutions
Remaining performance obligations						$	2,511,157					$	3,547,838					$	2,483,109					$	3,957,710
Estimated orders under MSAs and short-term, non-fixed price contracts						3,559,443						7,433,445						2,873,446						5,864,527
Backlog						6,070,600						10,981,283						5,356,555						9,822,237
Underground Utility and Infrastructure Solutions
Remaining performance obligations						327,205						437,544						670,707						1,344,741
Estimated orders under MSAs and short-term, non-fixed price contracts						1,868,820						3,713,607						1,919,791						3,837,923
Backlog						2,196,025						4,151,151						2,590,498						5,182,664
Total
Remaining performance obligations						2,838,362						3,985,382						3,153,816						5,302,451
Estimated orders under MSAs and short-term, non-fixed price contracts						5,428,263						11,147,052						4,793,237						9,702,450
Backlog						$	8,266,625					$	15,132,434					$	7,947,053					$	15,004,901

The decrease in remaining performance obligations from December 31, 2019 to December 31, 2020 was primarily due to a reduction in larger pipeline projects. Total backlog increased due to the increase in MSA backlog related to expanding base business activities.

Liquidity and Capital Resources

Cash Requirements

Management monitors financial markets and national and global economic conditions for factors that may affect our liquidity and capital resources. We consider our investment policies related to cash and cash equivalents to be conservative in that we maintain a diverse portfolio of what we believe to be high-quality cash and cash equivalent investments with short-term maturities.

While the extent of the impact of the COVID-19 pandemic on our future operational and financial performance will depend on future developments and remains uncertain, based on our current business forecast for 2021, including revenue and earnings prospects and other cost management actions taken in response to market conditions, we anticipate that our cash and cash equivalents on hand, future cash flows from operations and existing borrowing capacity under our senior credit facility, which we increased and extended the maturity of during the three months ended September 30, 2020, as well as other available financing alternatives, will provide sufficient funds to enable us to meet our interest payment obligations, fund ongoing operating needs, facilitate our ability to repurchase stock and pay any future dividends we declare, fund acquisitions or strategic investments that facilitate the long-term growth and sustainability of our business and fund essential capital expenditures and lease payments during 2021. Our industry is capital intensive, and we expect substantial capital expenditures and commitments under 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 the year ended December 31, 2021 to be approximately $325 million. Additionally, refer to Contractual Obligations below for a summary of our future contractual obligations and a description of other contingencies as of December 31, 2020 and Off-Balance Sheet Transactions below for a description of certain contingent obligations that are not recorded on our consolidated balance sheets. Although any of these contingent obligations could require the use of cash in future periods, certain contingent obligations are excluded from the Contractual Obligations table because we are unable to accurately predict the timing and amount of any such obligations as of December 31, 2020 as described below.

Our available commitments under our senior credit facility and cash and cash equivalents at December 31, 2020 were as follows (in thousands):

						December 31, 2020
Total capacity available for revolving loans and letters of credit						$	2,510,000
Less:
Borrowings of revolving loans under our senior credit facility						148,508
Letters of credit outstanding under our senior credit facility						348,300
Available commitments under senior credit facility for issuing revolving loans or new letters of credit						2,013,192
Plus:
Cash and cash equivalents						184,620
Total available commitments under senior credit facility and cash and cash equivalents						$	2,197,812

Our financial strategy and consistent performance has earned us an investment grade credit rating from S&P Global Ratings and Moody’s Investors Service. However, our ability to access the capital markets in the future depends on a number of factors, including our financial performance and financial position, our credit rating, industry conditions, general economic conditions, our backlog, capital expenditure commitments, market conditions and market perceptions of us and our industry.

We may seek to access the capital markets from time to time to raise additional capital, increase liquidity as necessary, refinance or extend the term of our existing indebtedness or otherwise fund our capital needs. For example, on September 22, 2020, we issued $1.00 billion aggregate principal amount of our senior notes, receiving proceeds of $986.7 million, net of the original issue discount, underwriting discounts and debt issuance costs. We utilized those proceeds, together with cash on hand, to voluntarily prepay $1.21 billion of outstanding term loans under our senior credit facility, which had a maturity date in October 2022. Additionally, we entered into an amendment to our senior credit facility that, among other things, increased the aggregate revolving commitments from $2.14 billion to $2.51 billion and extended the maturity date from October 31, 2022 to September 22, 2025.

Sources and Uses of Cash

In summary, our cash flows for each period were as follows (in thousands):

						Year Ended December 31,
						2020						2019
Net cash provided by operating activities						$	1,115,977					$	526,551
Net cash used in investing activities						(499,323)						(617,596)
Net cash provided by (used in) financing activities						(601,365)						177,687

Operating Activities

Cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by working capital needs associated with the various types of services that we provide. Our working capital needs may increase when we commence large volumes of work under circumstances where project costs, primarily labor, equipment and subcontractors, are required to be paid before the associated receivables are billed and collected. 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. Additionally, working capital needs are generally higher during the summer and fall due to increased demand for our services when favorable weather conditions exist in many of our operating regions. Conversely, working capital assets are typically converted to cash during the winter. These seasonal trends can be offset by changes in project timing due to delays or accelerations and other economic factors that may affect customer spending, including the impact of the COVID-19 pandemic.

Net cash provided by operating activities during 2020 was favorably impacted by lower working capital requirements resulting from a decrease in revenues, as well as increased earnings as compared to 2019. Also favorably impacting cash provided by operating activities during 2020 was the deferral of $108.9 million of the employer portion of payroll tax payments under the CARES Act, 50% of which are due by December 31, 2021 and the remainder of which are due by December 31, 2022. The CARES Act permitted deferral of the employer portion of payroll taxes through December 31, 2020. Net cash provided by operating activities during the year ended December 31, 2020 also included the receipt of $82.0 million of insurance proceeds associated with the settlement of two pipeline project claims in the fourth quarter of 2019.

Net cash provided by operating activities during 2019 was lower due to the payment of $112 million as a result of the exercise of on-demand advance payment and performance bonds in connection with the termination of the large telecommunications project in Peru, which is described in further detail in Legal Proceedings in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data. Net cash used in operating activities for the year ended December 31, 2019 was also impacted by higher working capital requirements, including mobilization and tooling costs, to support business growth and extended billing and collection cycles for certain utility customers.

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. 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 for the quarter ended December 31, 2020 was 83 days, which compares to our historical average over the last five years of 80 days and our DSO for the quarter ended December 31, 2019. which was 81 days.

Investing Activities

Net cash used in investing activities during 2020 included $292.6 million used for acquisitions, $260.1 million of capital expenditures and $14.9 million of cash paid for investments in unconsolidated affiliates and other entities, partially offset by $35.4 million of proceeds from the sale of property and equipment, $18.8 million of proceeds from the disposition of businesses and $14.0 million of cash received from investments in unconsolidated affiliates and other entities.

Net cash used in investing activities during 2019 included $388.0 million used for acquisitions, $261.8 million of capital expenditures and $47.1 million of cash paid for investments in unconsolidated affiliates and other entities, which were partially offset by $46.6 million of cash received from investments in unconsolidated affiliates and other entities related to the sale of our equity interest in the limited partnership that built, owned and operated the large electric transmission project in Canada and $31.1 million of proceeds from the sale of property and equipment.

Our industry is capital intensive, and we expect substantial capital expenditures and commitments under equipment lease and rental arrangements to be needed into the foreseeable future. We also have various other capital commitments that are detailed in Contractual Obligations below. In addition, we expect to continue to pursue strategic acquisitions and investments, although we cannot predict the timing or amount of the cash needed for these initiatives.

Financing Activities

On September 22, 2020, we received proceeds from the issuance of the senior notes of $990.1 million, which is net of the original issue discount and underwriting discounts, as described further in Debt Instruments – 2.900% Senior Notes due October 2030. These proceeds, together with cash on hand, were used to voluntarily prepay the then-outstanding term loans under the credit agreement, which is reflected in the $1.20 billion of net repayments under our senior credit facility. Net cash used in financing activities in 2020 also included $247.2 million of cash payments for common stock repurchases, $61.5 million of payments to settle certain contingent consideration liabilities, $28.9 million of cash dividends and dividend equivalents, $25.4 million of cash payments to satisfy tax withholding obligations associated with stock-based compensation, and $11.1 million of debt issuance and amendment costs related to the senior notes issuance and the September 2020 amendment to our credit agreement.

Net cash provided by financing activities in 2019 included $272.5 million of net borrowings under our senior credit facility, partially offset by $28.3 million of net short-term repayments, $23.2 million of cash payments for dividends and cash dividend equivalents, $20.1 million of cash payments for common stock repurchases and $16.1 million of payments to satisfy tax withholding obligations associated with stock-based compensation.

Stock Repurchases

We repurchased the following shares of common stock in the open market under our stock repurchase programs (in thousands):

Year ended:						Shares						Amount
December 31, 2020						6,680						$	249,949
December 31, 2019						376						$	11,954
December 31, 2018						13,917						$	451,290

Our policy is to record a stock repurchase as of the trade date; however, the payment of cash related to a repurchase is made on the settlement date of the trade. During the years ended December 31, 2020, 2019 and 2018, cash payments related to stock repurchases were $247.2 million, $20.1 million and $443.2 million.

As of December 31, 2020, $36.8 million remained authorized under our stock repurchase program approved during the third quarter of 2018, which permits us to repurchase outstanding common stock from time to time through June 30, 2021. In August 2020, our Board of Directors authorized us to repurchase, from time to time through June 30, 2023, up to an additional $500.0 million in shares of our outstanding common stock under a new stock repurchase program, for an aggregate of $536.8 million remaining under the stock repurchase programs as of December 31, 2020. We are not obligated to acquire any specific amount of common stock and the repurchase programs may be modified or terminated by our Board of Directors at any time at its sole discretion and without notice.

For additional detail regarding the terms of stock repurchase programs, refer to Note 11 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.

Dividends

We declared and paid the following cash dividends and cash dividend equivalents during 2020, 2019 and 2018 (in thousands, except per share amounts):

Declaration						Record						Payment						Dividend						Dividends
Date						Date						Date						Per Share						Declared
December 11, 2020						January 4, 2021						January 15, 2021						$	0.06					$	8,933
August 26, 2020						October 1, 2020						October 15, 2020						$	0.05					$	7,244
May 28, 2020						July 1, 2020						July 15, 2020						$	0.05					$	7,182
March 26, 2020						April 6, 2020						April 15, 2020						$	0.05					$	7,184
December 11, 2019						January 2, 2020						January 16, 2020						$	0.05					$	7,371
August 28, 2019						October 1, 2019						October 15, 2019						$	0.04					$	5,564
May 24, 2019						July 1, 2019						July 15, 2019						$	0.04					$	6,233
March 21, 2019						April 5, 2019						April 19, 2019						$	0.04					$	5,896
December 6, 2018						January 2, 2019						January 16, 2019						$	0.04					$	5,838

A significant majority of dividends declared were paid on the corresponding payment dates. Holders of restricted stock units (RSUs) awarded under the Quanta Services, Inc. 2011 Omnibus Equity Incentive Plan (the 2011 Plan) generally received cash dividend equivalent payments equal to the cash dividend payable on account of the underlying Quanta common stock. Holders of RSUs awarded under the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan (the 2019 Plan) and holders of unearned and unvested performance stock units (PSUs) awarded under the 2011 Plan and the 2019 Plan receive cash dividend equivalent payments only to the extent such RSUs and PSUs become earned and/or vest. Additionally, cash dividend equivalent payments related to certain stock-based awards that have been deferred pursuant to the terms of a deferred compensation plan maintained by us are recorded as liabilities in such plans until the deferred awards are settled.

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 and cash flows from operations; current and anticipated capital requirements and expansion plans; the current and potential impact of the COVID-19 pandemic and other market, industry, economic and political conditions; income tax laws then in effect; and the requirements of Delaware law. In addition, as discussed below*,* our credit agreement restricts the payment of cash dividends unless certain conditions are met.

Debt Instruments

2.900% Senior Notes due October 2030

On September 22, 2020, we issued $1.00 billion aggregate principal amount of the senior notes and received proceeds of $986.7 million from the offering, net of the original issue discount, underwriting discounts and debt issuance costs. We used the net proceeds, together with cash on hand, to voluntarily prepay the $1.21 billion of term loans then-outstanding under the credit agreement.

Interest on the senior notes, in the amount of $14.5 million, is payable semi-annually in arrears on April 1 and October 1 of each year, commencing April 1, 2021. The maturity date for the senior notes is October 1, 2030. We may redeem all or a portion of the senior notes at any time prior to July 1, 2030 at a price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest, and at any time on or after July 1, 2030 at a price equal to 100% of the principal amount plus accrued and unpaid interest, in each case as further specified by terms of the senior notes and the indenture and supplemental indenture governing the senior notes (together, the indenture). Additionally, upon the occurrence of a Change of Control Triggering Event (as defined in the indenture), unless we have exercised our right to redeem the senior notes in full by giving irrevocable notice to the trustee, each noteholder will have the right to require us to purchase all or a portion of such holder’s senior notes at a purchase price equal to 101% of the principal amount thereof plus any accrued and unpaid interest.

The indenture also contains customary events of default and covenants that, among other things, limit our ability to incur liens securing indebtedness, to engage in certain sale and leaseback transactions with respect to certain properties and to sell all or substantially all of our assets or merge or consolidate with or into other companies.

Senior Credit Facility

On September 22, 2020, we entered into an amendment to the credit agreement for our senior credit facility that, among other things, increased the aggregate revolving commitments from $2.14 billion to $2.51 billion and extended the maturity date for the revolving commitments from October 31, 2022 to September 22, 2025. Pursuant to the amendment, the pledge of capital stock of certain of our subsidiaries and the liens on the collateral that secured the obligations under the credit agreement were released and all of our subsidiaries that were guarantors of the obligations under the credit agreement were released from their guarantees of such obligations. In addition, the amendment removed the collateral reinstatement provision that would have applied in the event our corporate credit rating were to fall below an investment grade rating. As referenced above, we also used the net proceeds from the offering of our senior notes, together with cash on hand, to voluntarily prepay all the term loans then-outstanding under the credit agreement in the aggregate principal amount of $1.21 billion.

Additionally, subject to the conditions specified in the credit agreement, we have the option to increase the capacity of the 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. The Incremental Leverage Ratio Requirement requires, among other things, after giving pro forma effect to such increase and the use of proceeds therefrom, compliance with the credit agreement’s financial covenants as of the most recent fiscal quarter end for which financial statements were required to be delivered.

Borrowings under the credit agreement are to be used to refinance existing indebtedness and for working capital, capital expenditures, acquisitions, stock repurchases and other general corporate purposes. The maturity date for the senior credit facility is September 22, 2025. During the years ended December 31, 2020 and 2019, our weighted average interest rates associated with our senior credit facility were 2.1% and 3.8%.

As of December 31, 2020, we had $148.5 million of outstanding revolving loans under the credit agreement and $348.3 million of letters of credit issued under our senior credit facility. As of December 31, 2020, we also had $18.2 million of letters of credit issued by a financial institution that ceased to be a lender under the senior credit facility subsequent to the September 2020 amendment to the credit agreement, which are collateralized by a $19.1 million letter of credit issued by a lender under our senior credit facility. As of December 31, 2020, subject to the applicable sublimits, the remaining $2.01 billion of available commitments under the senior credit facility was available for additional revolving loans or letters of credit in U.S. dollars and certain alternative currencies.

As of December 31, 2020, we were in compliance with all of the financial covenants under the credit agreement, which are further described in Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.

The credit agreement provides for customary events of default and generally contains cross-default provisions with other debt instruments exceeding $150.0 million in borrowings or availability. The credit agreement also limits certain acquisitions, mergers and consolidations, indebtedness, asset sales and prepayments of indebtedness and, subject to certain exceptions, prohibits liens on our assets. The credit agreement allows cash payments for dividends and stock repurchases subject to compliance with the following requirements (including after giving effect to the dividend or stock repurchase): (i) no default or event of default under the credit agreement; (ii) continued compliance with the financial covenants in the credit agreement; and (iii) at least $100.0 million of availability under the senior credit facility and/or cash and cash equivalents on hand.

To address the transition in financial markets away from the London Interest Bank Offered Rate (LIBOR) by the end of 2021, our senior credit facility agreement includes provisions related to the replacement of LIBOR with a LIBOR Successor Rate (as defined in the credit agreement for such facility), which may be a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York. If no LIBOR Successor Rate has been determined at the time certain circumstances are present, the lenders’ obligation to make or maintain loans based on a Eurocurrency rate could be suspended, and loans in U.S. dollars would default to the Base Rate (as described in Senior Credit Facility within Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data) rather than a rate using the Eurocurrency Rate. Changing to an alternative interest rate or to the Base Rate may lead to additional volatility in interest rates and could cause our debt service obligations to increase significantly.

Contractual Obligations and Contingencies

The following table summarizes our future contractual obligations as of December 31, 2020, excluding certain amounts discussed below (in thousands):

						Total						2021						2022						2023						2024						2025						Thereafter
Long-term debt - principal (1)						$	1,195,489					$	9,685					$	8,314					$	8,318					$	8,317					$	156,825					$	1,004,030
Long-term debt - cash interest (2)						295,756						30,778						30,436						30,116						29,796						29,475						145,155
Short-term debt (3)						4,233						4,233						—						—						—						—						—
Operating lease obligations (4)						288,680						94,166						68,284						47,872						29,362						18,685						30,311
Operating lease obligations that have not yet commenced (5)						3,842						679						620						612						455						470						1,006
Finance lease obligations (6)						2,367						920						690						493						264						—						—
Short-term lease obligations (7)						13,577						13,577						—						—						—						—						—
Deferral of tax payments (8)						108,870						54,435						54,435						—						—						—						—
Equipment purchase commitments (9)						69,689						69,689						—						—						—						—						—
Total contractual obligations						$	1,982,503					$	278,162					$	162,779					$	87,411					$	68,194					$	205,455					$	1,180,502

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(1) Amount represents the principal amount of our long-term debt. The cash interest obligations related to the fixed-rate portion of our long-term debt are included in Long-term debt - cash interest; however, our $148.5 million of outstanding revolving loans under our senior credit facility bear interest at variable market rates. Assuming the principal amount outstanding and interest rate in effect at December 31, 2020 remained the same, the annual cash interest expense would be approximately $3.1 million, payable until September 22, 2025, the maturity date of the facility.

(2) Amount represents cash interest expense associated with our fixed-rate, long-term debt, which primarily includes our senior notes and financing transactions arising from the exercise of our equipment rental purchase options.

(3) Amount represents short-term borrowings recorded on our December 31, 2020 consolidated balance sheet.

(4) Amounts represent undiscounted operating lease obligations at December 31, 2020 for our real estate and equipment leases. The operating lease obligations recorded on our December 31, 2020 consolidated balance sheet represent the present value of these amounts.

(5) Amounts represent undiscounted operating lease obligations that had not commenced as of December 31, 2020. The operating lease obligations will be recorded on our consolidated balance sheet beginning on the commencement date of each lease.

(6) Amounts represent undiscounted finance lease obligations at December 31, 2020. The finance lease obligations recorded on our December 31, 2020 consolidated balance sheet represent the present value of these amounts.

(7) Amounts represent short-term lease obligations that are not recorded on our December 31, 2020 consolidated balance sheet due to our accounting policy election. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because we are unable to accurately predict future rental amounts.

(8) Amounts represent deferral of $108.9 million of the employer portion of payroll tax payments, 50% of which are due by December 31, 2021 and the remainder of which are due by December 31, 2022. The CARES Act permitted deferral of the employer portion of payroll taxes through December 31, 2020.

(9) Amount represents capital committed for the expansion of our vehicle fleet. Although we have committed to the purchase of these vehicles 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.

We have various contingencies and commitments that may require the use of cash in future periods, including those set forth below. The Contractual Obligations table excludes the contingencies described below, as we are unable to accurately predict the timing and amount of any of the following contingent obligations.

Uncollectible accounts receivable - We grant credit under normal payment terms, generally without collateral, to our customers. While we generally have certain statutory lien rights with respect to services provided, we are subject to potential credit risk related to business, economic and financial market conditions that affect these customers and locations, which has been heightened as a result of the unfavorable and uncertain economic and financial market conditions resulting from the ongoing COVID-19 pandemic and the significant decline in commodity prices and volatility in commodity production volumes. Some of our customers have experienced significant financial difficulties (including bankruptcy), and customers may experience financial difficulties in the future. These difficulties expose us to increased risk related to collectability of billed and unbilled receivables and contract assets for services we have performed. See Concentration of Credit Risk in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these potential contingencies.

Lawsuits and other legal proceedings - We are from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business, which 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 and other employment-related damages, punitive damages, consequential damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims and proceedings, we record a reserve when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at least reasonably possible. For additional information regarding litigation, claims and other legal proceedings see Legal Proceedings in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, giving due consideration to the nature of the claim, the amount and nature of damages sought and the probability of success. Management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

Collective bargaining agreements and multiemployer pension plan liabilities - Certain of our operating units are parties to collective bargaining agreements with unions that represent certain of their employees, and from time to time, we are a party to grievance and arbitration actions based on claims arising out of the collective bargaining agreements, which specify that we pay certain wages, provide certain benefits to union employees and contribute certain amounts to multiemployer pension plans and employee benefit trusts. The location and number of union employees that we employ at any given time and the plans in which they may participate vary depending on our need for union resources in connection with our ongoing projects, and therefore we are unable to accurately predict our union employee payroll and the resulting contribution obligations for future periods. Furthermore, we may be required to make additional contributions to our multiemployer pension plans if they become underfunded or if we withdraw or are deemed to have withdrawn from a plan or a plan is terminated or experiences a mass withdrawal. For additional information on these obligations and potential contingencies, see Collective Bargaining Agreements and Multiemployer Pension Plans in Notes 13 and 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.

Bonds and parent guarantees - Many customers, particularly in connection with new construction, require us to post performance and payment bonds, which provide a guarantee that we will perform under the terms of a contract and pay subcontractors and vendors. In certain circumstances, the customer may demand that our surety make payments or provide services under the bond, and we must reimburse the surety for any expenses or outlays it incurs. Additionally, from time to time, we guarantee certain obligations and liabilities of our subsidiaries that may arise in connection with, among other things, contracts with customers, equipment lease obligations, joint venture arrangements and contractor licenses, and may cover all of the subsidiary’s unperformed, undischarged and unreleased obligations and liabilities under or in connection with the relevant agreement. See Bonds and Parent Guarantees in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these obligations and potential contingencies;

Insurance liabilities - Due to the nature of our operations, at any given time we have a significant amount of accrued insurance claims. Additionally, we renew our insurance policies on an annual basis, and therefore deductibles and levels of insurance coverage may change in future periods. In addition, insurers may cancel our coverage or determine to exclude certain items from coverage, or we may elect not to obtain certain types or incremental levels of insurance based on the potential benefits considered relative to the cost of such insurance, or coverage may not be available at reasonable and competitive rates. See Insurance in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these obligations and potential contingencies.

Indemnities and assumed liabilities - In connection with our acquisition transactions, we assume certain liabilities and obtain rights to indemnification from the sellers or former owners of acquired businesses for certain risks, liabilities and

obligations arising from their prior operations, such as performance, operational, safety, workforce or tax issues. However, we may not have discovered certain liabilities during due diligence and our indemnities may not cover all of our exposure for such pre-acquisition matters or the indemnitors may be unwilling or unable to pay amounts owed to us. Accordingly, we may incur expenses that are not reimbursed, and such amounts could be material. See Indemnities in Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these potential contingencies.

Contingent consideration liabilities prior to their resolution - We have incurred liabilities related to contingent consideration associated with certain acquisitions, payable in the event certain performance objectives are achieved by the acquired businesses during designated post-acquisition periods. The aggregate amount of these liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, changes in the fair value of amounts owed based on performance in post-acquisition periods and accretion in present value. See Fair Value Measurements - Contingent Consideration Liabilities in Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these potential contingencies.

Liabilities related to our deferred compensation plans - We maintain non-qualified deferred compensation plans pursuant to which non-employee directors and certain key employees may defer receipt of some or all of their compensation. These plans are unfunded and unsecured compensation arrangements, and the amount of the obligations can fluctuate based on the market value of participants’ investment elections under the plan. See Deferred Compensation Plans in Note 13 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these plans.

Undistributed earnings of foreign subsidiaries - We generally do not provide for taxes related to undistributed earnings of our foreign subsidiaries and we could be subject to additional foreign withholding taxes if we were to repatriate cash that is indefinitely reinvested outside the United States. See Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these potential contingencies;

Unrecognized tax benefits - We remain under examination by various U.S. state, Canadian and other foreign tax authorities for multiple periods and believe it is reasonably possible that within the next 12 months unrecognized tax benefits may decrease by up to $11.9 million as a result of settlement of these examinations or the expiration of certain statute of limitations periods. See Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these potential contingencies.

Commitment fees under our senior credit facility - Fees associated with letters of credit under our senior credit facility and other letters of credit and commitment fees under our senior credit facility are variable because they depend on the amount of outstanding letters of credit, availability and applicable fees. Assuming that the amount of letters of credit outstanding and the fees as of December 31, 2020 remained the same, the annual cash expense for our letters of credit would be approximately $4.7 million. See Note 8 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further discussion related to these obligations and potential contingencies.

Off-Balance Sheet Transactions

As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected in our balance sheets. Our significant off-balance sheet transactions include certain obligations relating to our investments and joint venture arrangements; short-term, non-cancelable leases and leases that have not yet commenced; letters of credit obligations; surety guarantees related to bonds; committed expenditures for the purchase of equipment; and certain multiemployer pension plan liabilities. See Contractual Obligations above and Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for a description of these arrangements.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist as of the date the consolidated financial statements are published and the reported amounts of revenues and expenses recognized during the periods presented. We review all significant estimates affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Judgments and estimates are based on our beliefs and assumptions derived from information available at the time such judgments and estimates are made. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. 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. Our accounting policies are primarily described in Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data 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.

Revenue Recognition - The estimation of contract revenues and costs, including changes in estimates; progress on construction projects; variable consideration; and collectability of accounts receivable, long-term accounts receivable, unbilled receivables, retainage and contract assets, including amounts related to unapproved change orders in the process of being negotiated.

Property and Equipment - The valuation methods and assumptions used in assessing impairment, useful life determination and the related timing of depreciation and the determination of asset groupings.

Goodwill - The valuation methods and assumptions used in assessing impairment, including determination of whether to perform a qualitative assessment on some or all of the reporting units, weighting of various methods of determining the fair value of each reporting unit, number of years of cash flows utilized before applying a terminal value, the weighted average cost of capital, transaction multiples, guideline public company multiples and five-year compounded annual growth rates.

Other Intangible Assets - The valuation methods and assumptions used in assessing impairment.

Income Taxes - The identification and measurement of deferred tax assets and liabilities; the measurement of valuation allowances on deferred tax assets including estimates of future taxable income; estimates associated with tax liabilities in that tax laws and regulations are voluminous and often ambiguous; and benefits from uncertain tax positions (also refer to Note 10 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data).

Insurance - The estimation of liabilities and related recoveries.

Litigation Costs and Reserves and Loss Contingencies - The estimation of when a loss is probable or reasonably possible and whether any such loss is reasonably estimable or any range of possible loss is estimable, as well as uncertainties related to the outcome of litigation or other legal proceedings (also refer to Note 14 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data).

Acquisitions - The assumptions used to determine the fair value of consideration transferred and to allocate this consideration to assets acquired and liabilities assumed in connection with our acquisitions, including the estimated useful lives of other intangible assets subject to amortization (also refer to Note 4 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data).