filings.toolsItem 8. Financial Statements and Supplementary Data
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Item 8. Financial Statements and Supplementary Data
INDEX TO QUANTA SERVICES, INC.’S CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF MANAGEMENT
Management’s Report on Financial Information and Procedures
The accompanying financial statements of Quanta Services, Inc. and its subsidiaries were prepared by management. These financial statements were prepared in accordance with accounting principles generally accepted in the United States, applying certain estimates and judgments as required.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurances and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
The effectiveness of Quanta Services, Inc.’s internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein.
Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025 excluded the eight businesses we acquired in 2025. Such exclusion was in accordance with guidance from the U.S. Securities and Exchange Commission that an assessment of recently acquired businesses may be omitted in management’s report on internal control over financial reporting, provided the acquisition took place within twelve months of management’s evaluation. These acquisitions comprised approximately 6.2% and 3.9% of our consolidated assets and revenues as of and for the year ended December 31, 2025 and included the acquisition of Dynamic Systems (DSI), LLC, which comprised approximately 1.5% and 1.4% of our consolidated assets and revenues as of and for the year ended December 31, 2025.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Quanta Services, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Quanta Services, Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded eight businesses from its assessment of internal control over financial reporting as of December 31, 2025 because they were acquired by the Company during 2025. We have also excluded these eight acquired businesses from our audit of internal control over financial reporting. These acquired businesses, each of which is wholly-owned, comprised, in the aggregate, total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting of approximately 6.2% and 3.9%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. The most significant of these acquired businesses, representing 1.5% of consolidated total assets and 1.4% of consolidated total revenues was Dynamic Systems (DSI), LLC.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition - Determination of Total Estimated Contract Costs and Revenue Related to Estimated Change Orders and Claims for Contracts Recognized Over Time
As described in Note 4 to the consolidated financial statements, the Company recognizes certain revenue over time as it performs its obligations because there is a continuous transfer of control of the deliverable to the customer. Under fixed-price contracts, as well as unit-price contracts with more than an insignificant amount of partially completed units, revenue is recognized as performance obligations are satisfied over time, with the percentage of completion generally measured as the percentage of costs incurred to total estimated costs for such performance obligation. During the year ended December 31, 2025, approximately 63.8% of the Company’s revenues recognized were associated with this revenue recognition method. Contract costs include labor, subcontract costs and certain direct material costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety of factors, including unforeseen or changed circumstances not included in management’s cost estimates or covered by the contracts. Changes in cost estimates on certain contracts may result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims. Management determines the probability that costs associated with change orders and claims will be recovered based on, among other things, contractual entitlement, past practices with the customer, specific discussions or preliminary negotiations with the customer and verbal approvals by the customer. The Company recognizes amounts associated with change orders and claims as revenue if it is probable that the contract price will be adjusted and the amount of any such adjustment can be reasonably estimated. As of December 31, 2025, the Company recognized revenues of $983.6 million related to unapproved change orders and claims included as contract price adjustments that were in the process of being negotiated in the normal course of business.
The principal considerations for our determination that performing procedures relating to revenue recognition for contracts recognized over time is a critical audit matter are (i) the significant judgment by management when determining the total estimated contract costs and revenue related to estimated change orders and claims and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s estimate of the total estimated contract costs and revenue related to estimated change orders and claims.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to the determination of total estimated contract costs and revenue related to estimated change orders and claims. These procedures also included, among others, for a sample of contracts (i) testing management’s process for determining the total estimated contract costs, which included evaluating contracts and other documents, and testing the underlying contract costs; (ii) evaluating management’s ability to reasonably estimate total contract costs by performing a comparison of the total estimated contract costs as compared with prior period estimates, including evaluating the timely identification of circumstances that may warrant a modification to the total estimated contract costs; (iii) testing management’s process for determining the revenue related to estimated change orders and claims, which included evaluating management’s assessment of whether it is probable that the contract price will be adjusted, and testing the amount of any such adjustment for the change order or claim; and (iv) evaluating management’s methodologies and the consistency of management’s methodologies over the lives of the contracts.
Acquisition of Dynamic Systems – Valuation of Customer Relationships
As described in Note 6 to the consolidated financial statements, on July 25, 2025, the Company completed the acquisition of Dynamic Systems. The acquisition resulted in $532.4 million of identifiable intangible assets being recorded, of which $355.0 million related to customer relationships. The fair value of customer relationships is estimated as of the date a business is
acquired based on the value-in-use concept utilizing the income approach, specifically the multi-period excess earnings method. This method discounts to present value the projected cash flows attributable to the customer relationships, with consideration given to customer contract renewals and estimated customer attrition rates. The significant assumptions used by management in determining the fair values of customer relationships include future revenues, margins, discount rates and customer attrition rates.
The principal considerations for our determination that performing procedures relating to the valuation of customer relationships acquired in the acquisition of Dynamic Systems is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues, margins, and the customer attrition rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management related to future revenues, margins, and the customer attrition rate. Evaluating management's assumptions related to future revenues and margins involved considering (i) the current and past performance of the acquired business; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the customer attrition rate assumption.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 19, 2026
We have served as the Company’s auditor since 2002.
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| ASSETS | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | 439,508 | $ | 741,960 | ||||||||||
| Accounts receivable, net | 6,847,091 | 5,170,935 | ||||||||||||
| Contract assets | 1,522,186 | 1,208,619 | ||||||||||||
| Inventories | 370,372 | 260,181 | ||||||||||||
| Prepaid expenses and other current assets | 724,260 | 469,338 | ||||||||||||
| Total current assets | 9,903,417 | 7,851,033 | ||||||||||||
| Property and equipment, net | 3,455,204 | 2,700,277 | ||||||||||||
| Operating lease right-of-use assets | 400,814 | 299,895 | ||||||||||||
| Other assets, net | 944,050 | 655,709 | ||||||||||||
| Other intangible assets, net | 2,906,188 | 1,860,537 | ||||||||||||
| Goodwill | 7,317,228 | 5,316,443 | ||||||||||||
| Total assets | $ | 24,926,901 | $ | 18,683,894 | ||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Current maturities of long-term debt | $ | 763,898 | $ | 62,680 | ||||||||||
| Current portion of operating lease liabilities | 114,377 | 94,162 | ||||||||||||
| Accounts payable and accrued expenses | 4,579,458 | 3,722,343 | ||||||||||||
| Contract liabilities | 3,258,465 | 2,149,328 | ||||||||||||
| Total current liabilities | 8,716,198 | 6,028,513 | ||||||||||||
| Long-term debt, net of current maturities | 5,231,008 | 4,099,756 | ||||||||||||
| Operating lease liabilities, net of current portion | 309,671 | 222,359 | ||||||||||||
| Deferred income taxes | 502,626 | 353,268 | ||||||||||||
| Insurance and other non-current liabilities | 1,139,524 | 650,281 | ||||||||||||
| Total liabilities | 15,899,027 | 11,354,177 | ||||||||||||
| Commitments and Contingencies | ||||||||||||||
| Equity: | ||||||||||||||
| Common stock, $0.00001 par value, 600,000,000 shares authorized, 179,534,355 and 176,718,480 shares issued, and 149,577,564 and 147,678,512 shares outstanding | 2 | 2 | ||||||||||||
| Additional paid-in capital | 4,278,741 | 3,444,108 | ||||||||||||
| Retained earnings | 6,673,990 | 5,707,286 | ||||||||||||
| Accumulated other comprehensive loss | (307,211) | (372,708) | ||||||||||||
| Treasury stock, 29,956,791 and 29,039,968 common shares | (1,707,273) | (1,460,957) | ||||||||||||
| Total stockholders’ equity | 8,938,249 | 7,317,731 | ||||||||||||
| Non-controlling interests | 89,625 | 11,986 | ||||||||||||
| Total equity | 9,027,874 | 7,329,717 | ||||||||||||
| Total liabilities and equity | $ | 24,926,901 | $ | 18,683,894 |
The accompanying notes are an integral part of these consolidated financial statements.
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenues | $ | 28,479,697 | $ | 23,672,795 | $ | 20,882,206 | ||||||||||||||
| Cost of services | 24,204,616 | 20,162,034 | 17,945,120 | |||||||||||||||||
| Gross profit | 4,275,081 | 3,510,761 | 2,937,086 | |||||||||||||||||
| Equity in earnings of integral unconsolidated affiliates | 55,635 | 50,484 | 41,609 | |||||||||||||||||
| Selling, general and administrative expenses | (2,189,209) | (1,824,754) | (1,555,137) | |||||||||||||||||
| Amortization of intangible assets | (498,795) | (382,959) | (289,014) | |||||||||||||||||
| Increase in fair value of contingent consideration liabilities | (31,203) | (7,064) | (6,568) | |||||||||||||||||
| Operating income | 1,611,509 | 1,346,468 | 1,127,976 | |||||||||||||||||
| Interest and other financing expenses | (261,445) | (202,687) | (186,913) | |||||||||||||||||
| Interest income | 15,702 | 32,404 | 10,830 | |||||||||||||||||
| Other income, net | 23,739 | 35,845 | 18,063 | |||||||||||||||||
| Income before income taxes | 1,389,505 | 1,212,030 | 969,956 | |||||||||||||||||
| Provision for income taxes | 347,588 | 284,747 | 219,267 | |||||||||||||||||
| Net income | 1,041,917 | 927,283 | 750,689 | |||||||||||||||||
| Less: Net income attributable to non-controlling interests | 13,539 | 22,459 | 6,000 | |||||||||||||||||
| Net income attributable to common stock | $ | 1,028,378 | $ | 904,824 | $ | 744,689 | ||||||||||||||
| Earnings per share attributable to common stock: | ||||||||||||||||||||
| Basic | $ | 6.91 | $ | 6.16 | $ | 5.13 | ||||||||||||||
| Diluted | $ | 6.80 | $ | 6.03 | $ | 5.00 | ||||||||||||||
| Shares used in computing earnings per share: | ||||||||||||||||||||
| Weighted average basic shares outstanding | 148,790 | 146,929 | 145,222 | |||||||||||||||||
| Weighted average diluted shares outstanding | 151,291 | 150,056 | 148,823 |
The accompanying notes are an integral part of these consolidated financial statements.
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Net income | $ | 1,041,917 | $ | 927,283 | $ | 750,689 | ||||||||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
| Foreign currency translation adjustment gain (loss) | 64,949 | (107,964) | 26,707 | |||||||||||||||||
| Reclassification of foreign currency translation losses to net income | — | 18,531 | — | |||||||||||||||||
| Other comprehensive income (loss) | 548 | (330) | 1,025 | |||||||||||||||||
| Other comprehensive income (loss), net of taxes | 65,497 | (89,763) | 27,732 | |||||||||||||||||
| Comprehensive income | 1,107,414 | 837,520 | 778,421 | |||||||||||||||||
| Less: Comprehensive income attributable to non-controlling interests | 13,539 | 22,459 | 6,000 | |||||||||||||||||
| Comprehensive income attributable to common stock | $ | 1,093,875 | $ | 815,061 | $ | 772,421 |
The accompanying notes are an integral part of these consolidated financial statements.
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||||||
| Net income | $ | 1,041,917 | $ | 927,283 | $ | 750,689 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation | 411,538 | 359,363 | 324,786 | |||||||||||||||||
| Amortization of intangible assets | 498,795 | 382,959 | 289,014 | |||||||||||||||||
| Non-cash stock-based compensation | 181,947 | 150,526 | 126,762 | |||||||||||||||||
| Other non-cash adjustments, net | 79,795 | 14,899 | 22,084 | |||||||||||||||||
| Changes in assets and liabilities, net of non-cash transactions: | ||||||||||||||||||||
| Accounts, notes and retainage receivable | (853,835) | (428,127) | (615,668) | |||||||||||||||||
| Contract assets | (217,627) | 255,744 | (303,064) | |||||||||||||||||
| Inventories | (121,743) | (39,517) | 2,818 | |||||||||||||||||
| Prepaid expenses and other current assets | (240,515) | 40,356 | (90,329) | |||||||||||||||||
| Accounts payable and accrued expenses, insurance and other non-current liabilities | 654,961 | 52,421 | 771,854 | |||||||||||||||||
| Contract liabilities | 824,454 | 373,622 | 293,106 | |||||||||||||||||
| Other assets and liabilities, net | (29,717) | (8,333) | 3,900 | |||||||||||||||||
| Net cash provided by operating activities | 2,229,970 | 2,081,196 | 1,575,952 | |||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||||
| Capital expenditures | (609,154) | (604,078) | (434,803) | |||||||||||||||||
| Proceeds from sale of and insurance settlements related to property and equipment | 51,916 | 77,643 | 69,347 | |||||||||||||||||
| Cash paid for asset acquisitions | (103,370) | — | — | |||||||||||||||||
| Cash paid for acquisitions, net of cash, cash equivalents and restricted cash acquired | (3,052,116) | (1,745,735) | (651,623) | |||||||||||||||||
| Investments in unconsolidated affiliates and other | (148,900) | (81,871) | (7,537) | |||||||||||||||||
| Proceeds from the sale or settlement of certain investments | 17,012 | 29,239 | 42,277 | |||||||||||||||||
| Other, net | 13,638 | 30,483 | (7,311) | |||||||||||||||||
| Net cash used in investing activities | (3,830,974) | (2,294,319) | (989,650) | |||||||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||||
| Borrowings under credit facility and commercial paper program | 53,033,943 | 19,884,184 | 18,178,910 | |||||||||||||||||
| Payments under credit facility and commercial paper program | (52,778,666) | (20,714,993) | (17,770,246) | |||||||||||||||||
| Net proceeds from notes offering | 1,488,995 | 1,238,741 | — | |||||||||||||||||
| Payments related to senior notes | — | (500,000) | — | |||||||||||||||||
| Payments of contingent consideration liabilities recorded at acquisition date | (102,558) | — | (4,754) | |||||||||||||||||
| Payments related to tax withholding for stock-based compensation | (112,299) | (155,550) | (119,793) | |||||||||||||||||
| Payments of dividends | (60,416) | (54,196) | (47,752) | |||||||||||||||||
| Repurchase of common stock | (134,555) | — | (350) | |||||||||||||||||
| Other, net | (59,460) | (3,822) | 32,485 | |||||||||||||||||
| Net cash provided by (used in) financing activities | 1,274,984 | (305,636) | 268,500 | |||||||||||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 22,833 | (30,272) | 7,025 | |||||||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (303,187) | (549,031) | 861,827 | |||||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 746,010 | 1,295,041 | 433,214 | |||||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 442,823 | $ | 746,010 | $ | 1,295,041 |
The accompanying notes are an integral part of these consolidated financial statements.
QUANTA SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share information)
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional | Other | Total | Non- | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Paid-In | Retained | Comprehensive | Treasury | Stockholders’ | Controlling | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding | Amount | Capital | Earnings | Income (Loss) | Stock | Equity | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | 142,930,598 | $ | 2 | $ | 2,718,988 | $ | 4,163,212 | $ | (310,677) | $ | (1,188,061) | $ | 5,383,464 | $ | 15,355 | $ | 5,398,819 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 27,732 | — | 27,732 | — | 27,732 | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions | 1,238,576 | — | 158,922 | — | — | — | 158,922 | — | 158,922 | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | 1,341,604 | — | 124,742 | — | — | (117,123) | 7,619 | — | 7,619 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (2,229) | — | — | — | — | (350) | (350) | — | (350) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.33 per share) | — | — | — | (49,835) | — | — | (49,835) | — | (49,835) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to non-controlling interests, net | — | — | — | — | — | — | — | (10,241) | (10,241) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 744,689 | — | — | 744,689 | 6,000 | 750,689 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | 145,508,549 | 2 | 3,002,652 | 4,858,066 | (282,945) | (1,305,534) | 6,272,241 | 11,114 | 6,283,355 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (89,763) | — | (89,763) | — | (89,763) | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions | 1,217,398 | — | 291,061 | — | — | — | 291,061 | — | 291,061 | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | 952,565 | — | 150,395 | — | — | (155,423) | (5,028) | — | (5,028) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.37 per share) | — | — | — | (55,604) | — | — | (55,604) | — | (55,604) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to non-controlling interests, net | — | — | — | — | — | — | — | (21,587) | (21,587) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 904,824 | — | — | 904,824 | 22,459 | 927,283 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 147,678,512 | 2 | 3,444,108 | 5,707,286 | (372,708) | (1,460,957) | 7,317,731 | 11,986 | 7,329,717 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 65,497 | — | 65,497 | — | 65,497 | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions | 1,705,774 | — | 653,237 | — | — | — | 653,237 | 84,380 | 737,617 | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | 731,837 | — | 181,396 | — | — | (111,761) | 69,635 | — | 69,635 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (538,559) | — | — | — | — | (134,555) | (134,555) | — | (134,555) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.41 per share) | — | — | — | (61,674) | — | — | (61,674) | — | (61,674) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to non-controlling interests, net | — | — | — | — | — | — | — | (20,026) | (20,026) | ||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | — | (254) | (254) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 1,028,378 | — | — | 1,028,378 | 13,539 | 1,041,917 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 149,577,564 | $ | 2 | $ | 4,278,741 | $ | 6,673,990 | $ | (307,211) | $ | (1,707,273) | $ | 8,938,249 | $ | 89,625 | $ | 9,027,874 |
The accompanying notes are an integral part of these consolidated financial statements.
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TABLE OF CONTENTS
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**1.**DESCRIPTION OF BUSINESS:
Quanta Services, Inc. (together with its subsidiaries, Quanta) is a leading provider of comprehensive infrastructure solutions for the electric and gas utility, power generation, large load center, manufacturing, communications, pipeline and energy industries in the United States, Canada, Australia and select other international markets. Quanta provides design, engineering, procurement, construction, upgrade and repair and maintenance services for infrastructure within each of these industries, including electric power transmission and distribution networks; substation facilities; wind, solar and gas power generation and transmission and battery storage facilities; low voltage electrical, mechanical, plumbing and process infrastructure for large load centers, such as data center, advanced manufacturing and industrial facilities; communications and cable multi-system operator networks; gas utility systems; pipeline transmission systems and facilities; and downstream industrial facilities.
The results of Quanta have historically been subject to seasonal fluctuations. The results of operations, comprehensive income and operating cash flows for the interim periods are not necessarily indicative of the results for the entire fiscal year.
**2.**BASIS OF PRESENTATION AND ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements of Quanta include the accounts of Quanta Services, Inc. and its wholly-owned subsidiaries, which are also referred to as its operating companies. The consolidated financial statements also include the accounts of certain of Quanta’s investments in joint ventures, which are either consolidated or proportionately consolidated, as discussed in the following summary of accounting policies. Unless the context requires otherwise, references to Quanta include Quanta Services, Inc. and its consolidated subsidiaries.
Quanta holds interests in various joint ventures and other partially owned entities entered into in the normal course of business. Certain of these interests are investments in variable interest entities (VIE). If an entity is identified as a VIE, management determines whether Quanta is the entity’s primary beneficiary and must consolidate the VIE. The primary beneficiary of a VIE is the entity with both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses or right to receive benefits that could potentially be significant to the VIE. When Quanta is deemed to be the primary beneficiary, the VIE is consolidated and equity interests held by third parties are accounted for as non-controlling interests. See Investments in Affiliates and Other below and Note 16 for additional information on joint venture liabilities.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses recognized during the periods presented. Quanta reviews all significant estimates affecting its consolidated financial statements on a recurring basis and records the effect of any necessary adjustments prior to their publication. Judgments and estimates are based on Quanta’s beliefs and assumptions derived from information available at the time such judgments and estimates are made. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. Estimates are primarily used in Quanta’s assessment of revenue recognition for construction contracts, including contractual change orders and claims; allowance for credit losses; valuation of inventory; useful lives of assets; fair value assumptions in analyzing goodwill, other intangibles and long-lived asset impairments; fair value assumptions in analyzing equity and other investment impairments; purchase price consideration and allocations; acquisition-related contingent consideration liabilities; contingent liabilities associated with, among other things, legal proceedings and claims, parent guarantees and indemnity obligations; estimated insurance claims and recoveries; stock-based compensation; classification of operating company revenues by type of work for segment reporting purposes; provision for income taxes; and uncertain tax positions.
Revenue Recognition
See Note 4 for Quanta’s accounting policy related to revenue recognition and related balance sheet accounts.
Cash and Cash Equivalents
Quanta considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents, which are carried at fair value. Quanta’s cash equivalents are categorized as Level 1 assets, as all values are based on unadjusted quoted prices for identical assets in an active market.
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Inventories
Inventories are valued at the lower of cost or net realizable value, and consist primarily of solar tracker installation materials and safety equipment purchased for resale, transmission and distribution parts and equipment, aviation parts, transformer parts, and other construction supplies and parts held for use in the ordinary course of business. Cost is determined by using either the first-in, first-out (FIFO) method or the average costing method. Inventories also include certain job specific materials not yet installed, which are valued using the specific identification method.
Property and Equipment
Property and equipment are stated at cost, and depreciation is computed using the straight-line method, net of estimated salvage values, over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the estimated useful life of the asset.
Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of existing equipment, are capitalized and depreciated over the remaining useful lives of the assets. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in selling, general and administrative expenses.
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable. When an evaluation is required, the estimated future undiscounted cash flows associated with the asset group are compared to the asset group’s carrying amount to determine if an impairment is necessary. The effect of any impairment involves expensing the difference between the fair value of the asset group and its carrying amount in the period incurred.
Goodwill
Goodwill represents the excess of cost over the fair market value of net tangible and identifiable intangible assets of acquired businesses and is stated at cost. Quanta has recorded goodwill in connection with its historical acquisitions of businesses. Goodwill is required to be assessed for impairment at the reporting unit level, which represents the operating segment level or one level below the operating segment level for which discrete financial information is available.
Goodwill is tested for impairment annually in the fourth quarter of the fiscal year, or more frequently if events or circumstances arise which indicate that the fair value of a reporting unit with goodwill is below its carrying amount. Quanta assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each reporting unit include, among other things, deterioration in macroeconomic conditions; declining financial performance; deterioration in the operational environment; an expectation of selling or disposing of a portion of a reporting unit; a significant change in market, management, business strategy or business climate; a loss of a significant customer; increased competition; a sustained decrease in share price; or a decrease in Quanta’s market capitalization below book value.
If Quanta believes that, as a result of its qualitative assessment, it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded to “Asset impairment charges” in the consolidated statements of operations.
Quanta generally determines the fair value of its reporting units using a weighted combination of the income approach (discounted cash flow method) and market multiple valuation techniques (market guideline transaction method and market guideline public company method).
Under the discounted cash flow method, Quanta determines fair value based on the estimated future cash flows for each reporting unit, discounted to present value using a risk-adjusted industry weighted average cost of capital, which reflects the overall level of inherent risk for each reporting unit and the rate of return an outside investor would expect to earn.
Under the market guideline transaction and market guideline public company methods, Quanta determines the estimated fair value for each of its reporting units by applying transaction multiples and public company multiples, respectively, to each reporting unit’s historical and projected results. The transaction multiples are based on observed purchase transactions for similar businesses adjusted for size, volatility and risk. The public company multiples are based on peer group multiples adjusted for size, volatility and risk. For the market guideline public company method, Quanta adds a reasonable control premium, which is estimated as the premium that would be appropriate to convert the reporting unit value to a controlling interest basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other Intangible Assets
Quanta’s identifiable intangible assets primarily include customer relationships; backlog; trade names; non-compete agreements; curriculum; patented rights, developed technology, process certifications and other, all of which are subject to amortization.
Definite-lived intangible assets are amortized based upon the estimated consumption of their economic benefits, or on a straight-line basis if the pattern of economic benefit cannot otherwise be reliably estimated. Quanta evaluates identifiable intangible assets with the associated long-lived asset group for impairment whenever impairment indicators are present. If the carrying amount of an identifiable intangible asset exceeds its fair value, an impairment loss is recorded to “Asset impairment charges” in the consolidated statements of operations.
Leases
Leases with terms longer than 12 months are recorded on the consolidated balance sheets as lease assets and lease liabilities. If at inception of a contract a lease is identified, Quanta recognizes a lease asset and corresponding liability based on the present value of the future minimum lease payments over the lease term as of the commencement date. Lease assets also include any initial direct costs incurred less any lease incentives received.
Finance leases are leases that meet any of the following criteria: the lease transfers ownership of the underlying asset at the end of the lease term; the lessee is reasonably certain to exercise an option to purchase the underlying asset; the lease term is for the major part of the remaining economic life of the underlying asset; the present value of the sum of the lease payments and any additional residual value guarantee by the lessee equals or exceeds substantially all of the fair value of the underlying asset; or the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease that does not meet any of these criteria is considered an operating lease. After the commencement date, lease cost for an operating lease is recognized over the remaining lease term on a straight-line basis, while lease cost for a finance lease is based on the depreciation of the lease asset and interest on the lease liability. Lease expense for leases with an initial term of 12 months or less is recognized on a straight-line basis over the lease term.
The terms of Quanta’s lease arrangements vary, and certain leases include one or more of the following: a renewal option, a cancellation option, a residual value guarantee, a purchase option or an escalation clause. An option to extend or terminate a lease is accounted for when assessing a lease term when it is reasonably certain that Quanta will exercise such option. Additionally, certain of Quanta’s real estate and equipment arrangements contain both lease and non-lease components (e.g., maintenance services). Quanta made a policy election that allows an entity to not separate lease components from their associated non-lease components under arrangements with both components. Accordingly, Quanta accounts for both lease and non-lease components of such arrangements under the lease accounting guidance.
Determinations with respect to lease term, discount rate, variable lease cost and future minimum lease payments require the use of judgment based on the facts and circumstances related to each lease. Quanta considers various factors, including economic incentives, penalties, and business need, to determine the likelihood that a renewal option will be exercised. Unless a renewal option is reasonably certain to be exercised, which is typically at Quanta’s sole discretion, the initial non-cancelable lease term is used. Quanta generally uses its incremental borrowing rates to determine the present value of future minimum lease payments.
Investments in Affiliates and Other
In the normal course of business, Quanta enters into various types of investment arrangements, each having unique terms and conditions. These investments may include equity interests held by Quanta in business entities, including general or limited partnerships, contractual joint ventures, or other forms of equity or profit participation. Quanta also enters into strategic partnerships with customers and infrastructure investors to provide fully integrated infrastructure solutions on certain projects, including planning and feasibility analyses, engineering, design, procurement, construction and project operation and maintenance. These projects include public-private partnerships and concessions, along with private infrastructure projects such as build, own, operate (and in some cases transfer) and build-to-suit arrangements. In cases where Quanta determines that it is not the primary beneficiary but has an undivided interest in the assets, liabilities, revenues and profits of an unincorporated VIE (e.g., a general partnership interest), such amounts are consolidated on a basis proportional to Quanta’s ownership interest in the unincorporated entity. See Note 8 for additional information on Quanta’s investments and Note 16 for additional information on joint venture liabilities.
Equity Method Investments
Investments in affiliated entities in which Quanta does not have a controlling financial interest, but over which Quanta has the ability to exercise significant influence, usually because Quanta holds a voting interest of between 20% and 50% in the affiliated entity, are accounted for using the equity method. Under the equity method of accounting, investments are stated
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
initially at cost and are adjusted for subsequent additional investments and Quanta’s proportionate share of profit or loss and distributions. Certain of Quanta’s equity method investments are equity interests in private equity funds. These underlying private equity funds are carried at fair value. Quanta’s profit or loss is determined by its share of the change in fair value.
Quanta’s equity method investments are reported in “Other assets, net” in the accompanying consolidated balance sheets. Quanta’s share of net income or losses of these investments is reported as “Equity in earnings of integral unconsolidated affiliates” within operating income when the investee is integral to the operations of Quanta, and is reported as “Other income (expense), net” when the investee is not considered integral to the business. Additionally, Quanta utilizes the cumulative earnings approach to determine whether distributions received from equity method investees are returns on investment and classified as operating cash inflows or returns of investment and reported as investing cash flows.
Quanta recognizes impairments on equity method investments if there are sufficient indicators that the fair value of the investment is less than its carrying value and considered other-than-temporary. Any impairment losses related to integral unconsolidated affiliates are included in “Equity in earnings of integral unconsolidated affiliates,” while any impairments related to non-integral unconsolidated affiliates are included in “Other income (expense), net” in the accompanying consolidated statements of operations.
Marketable and Non-Marketable Equity Securities
Investments in entities over which Quanta does not have the ability to exercise significant influence are either considered marketable securities or non-marketable equity securities. The carrying value of any marketable and non-marketable equity securities is reported in “Other assets, net” in the accompanying consolidated balance sheets.
Non-marketable equity securities are equity securities without a readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus observable price changes in orderly transactions for an identical or similar investment in the same company. Non-marketable equity securities are measured on a nonrecurring basis and recorded at fair value only if an impairment or observable price adjustment is recognized in the reporting period. Quanta recognizes impairments on non-marketable equity securities if there are sufficient indicators that the fair value of the investment is less than its carrying value. Any changes in fair value and any impairments of non-marketable equity securities are reported in “Other income (expense), net” in the accompanying consolidated statements of operations.
Income Taxes
Quanta follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded based on future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled.
Quanta regularly evaluates valuation allowances established for deferred tax assets (DTAs) for which future realization is uncertain, including in connection with changes in tax laws. The estimation of required valuation allowances includes estimates of future taxable income. The ultimate realization of DTAs is dependent upon the generation of future taxable income in the jurisdiction of the DTA during the periods in which those temporary differences become deductible. Quanta considers projected future taxable income and tax planning strategies in making this assessment. If actual future taxable income differs from these estimates, Quanta may not realize DTAs to the extent estimated.
Quanta records reserves for income taxes related to certain tax positions when management considers it more likely than not that additional taxes may be due in excess of amounts reflected on income tax returns filed. When recording these reserves, Quanta assumes that taxing authorities have full knowledge of the position and all relevant facts. Quanta continually reviews exposure to additional tax obligations, and as further information is known or events occur, changes in tax reserves may be recorded. Quanta adjusts its tax contingencies accrual and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from Quanta’s established accrual, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and included in the provision for income taxes.
Quanta uses the flow-through method to account investment tax credits. Under this method, the tax credits are recognized as a reduction in income tax expense, in the period the related qualified property is placed in service.
U.S. federal and state and foreign income tax laws and regulations are voluminous and often ambiguous. As such, Quanta is required to make many subjective assumptions and judgments regarding its tax positions that could materially affect amounts recognized in future consolidated balance sheets, statements of operations and statements of comprehensive income.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Deferred Financing Costs
Capitalized deferred financing costs related to Quanta’s senior credit facility (other than deferred financing costs related to the term loan, which are recorded along with deferred financing costs related to the senior notes in a contra account to long-term debt) are included in “Other assets, net” in the accompanying consolidated balance sheets and are amortized to “Interest and other financing expenses” on a straight-line basis over the terms of the respective agreements giving rise to the costs, which Quanta believes approximates the effective interest rate method.
Earnings Per Share
Basic and diluted earnings per share attributable to common stock are computed using the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share attributable to common stock is computed using the weighted average number of shares of common stock outstanding during the period adjusted for all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalents would be antidilutive.
Insurance
See Note 16 for Quanta’s accounting policy related to insurance and related balance sheet accounts.
Stock-Based Compensation
Restricted Stock Units to be Settled in Stock
Quanta recognizes compensation expense for restricted stock units (RSUs) to be settled in common stock based on the grant date fair value of the awards, which is the number of RSUs granted multiplied by the closing price of Quanta’s common stock on the date of grant, net of estimated forfeitures. The resulting compensation expense for time-based RSU awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The non-cash stock compensation expense related to RSUs to be settled in common stock is included in “Selling, general and administrative expenses.”
RSU awards to be settled in common stock are subject to forfeiture, restrictions on transfer and certain other conditions until vesting. Vesting generally occurs in three equal annual installments following the date of grant or over a period of five to ten years following the date of grant. Holders of RSUs to be settled in common stock awarded under the Quanta Services, Inc. 2019 Omnibus Equity Incentive Plan (the Omnibus Plan) are entitled to cash dividend equivalent payments in an amount equal to any cash dividend payable on account of the underlying Quanta common stock; however, payment of such amounts is not made until the RSUs vest, such that the dividend equivalent payments are subject to forfeiture until vesting of the applicable RSUs.
Payments made by Quanta to satisfy employee tax withholding obligations associated with stock-based compensation are classified as financing cash flows.
Performance Stock Units to be Settled in Stock
Quanta recognizes compensation expense for performance stock units (PSUs) to be settled in common stock based on the fair value of the awards, net of estimated forfeitures. The resulting compensation expense for PSU awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. Non-cash stock compensation expense related to PSUs to be settled in common stock is included in “Selling, general and administrative expenses.”
PSUs provide for the issuance of shares of common stock upon vesting, which generally occurs following a three-year performance period based on achievement of performance metrics established by the Compensation Committee of Quanta’s Board of Directors, including financial and operational goals and Quanta’s total shareholder return as compared to a broad equity market index. The final number of shares of common stock issuable upon vesting of PSUs can range from 0% to 215% of the number of PSUs initially granted, depending on the level of achievement. Holders of PSUs are entitled to cash dividend equivalent payments in an amount equal to any cash dividend payable on account of the underlying Quanta common stock that ultimately vests; however, payment of such amounts is not made until the PSUs vest, such that the dividend equivalent payments are subject to forfeiture until vesting of the applicable PSUs.
The grant date fair value of the PSUs is determined as follows: (i) for the portion of the awards based on company financial and operational performance metrics, by multiplying the number of units granted by the closing price of Quanta’s common stock on the date of grant and (ii) for the portion of the awards based on relative total shareholder return, by multiplying the number of units granted by a stock price estimated by utilizing a Monte Carlo simulation valuation methodology. Quanta recognizes compensation expense for PSUs, net of estimated forfeitures, based on the forecasted achievement of the company financial and operational performance metrics and forecasted performance with respect to relative
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
total shareholder return, multiplied by the grant date fair value of the total number of shares of common stock that Quanta anticipates will be issued based on such achievement for the completed portion of the performance period. The compensation expense related to outstanding PSUs can vary from period to period based on changes in forecasted achievement of established performance metrics, the total number of shares of common stock that Quanta anticipates will be issued upon vesting of such PSUs and changes in forfeiture estimates.
Payments made by Quanta to satisfy employee tax withholding obligations associated with stock-based compensation are classified as financing cash flows.
Litigation Costs and Reserves
Quanta records reserves when the likelihood of incurring a loss is probable and the amount of loss can be reasonably estimated. Costs incurred for litigation are expensed as incurred. See Note 16 for additional information related to legal proceedings and other contingencies.
Functional Currency and Translation of Financial Statements
The U.S. dollar is the functional currency for the majority of Quanta’s operations, which are primarily located within the United States. The functional currency for Quanta’s foreign operations, which are primarily located in Canada and Australia, is typically the currency of the country where the foreign operating company is located and transacts the majority of its activities, including billings, financing, payroll and other expenditures. When preparing its consolidated financial statements, Quanta translates the financial statements of its foreign operating companies from their functional currency into U.S. dollars. Statements of operations, comprehensive income and cash flows are translated at average monthly rates, while balance sheets are translated at month-end exchange rates. The translation of the balance sheet results in translation gains or losses that are included as a separate component of equity under “Accumulated other comprehensive income (loss).” Gains and losses arising from transactions not denominated in functional currencies are included within “Other income (expense), net” in the accompanying consolidated statements of operations.
Fair Value Measurements
Quanta categorizes assets and liabilities, measured at fair value, into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices for identical instruments in active markets. Level 2 inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable. Level 3 inputs are model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable. Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation.
Inputs, valuation techniques to estimate the fair value and levels are disclosed within the notes to these consolidated financial statements.
**3.**NEW ACCOUNTING PRONOUNCEMENTS:
Recently Adopted Guidance
In December 2023, the FASB issued an update that, among other things, expands disclosures for tax rate reconciliation tables, primarily by requiring disaggregation of income taxes paid by jurisdiction, as well as greater disaggregation within the rate reconciliation. This update is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025. Quanta adopted this update in its Form 10-K for the year ended December 31, 2025 using the prospective approach.
New Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued an update that improves the navigability of the required interim disclosures and clarifies when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods and add a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. For public business entities, this update is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption and a prospective or retrospective approach are permitted. Quanta is currently assessing the effect of this update.
In September 2025, the FASB issued an update that clarifies the threshold entities apply to begin capitalizing costs related to software. The standard removes all references to the project stages and requires entities to begin capitalizing software costs
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
when both of the following occur: (1) management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. This update is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption and a prospective, retrospective or modified transition approach are permitted. Quanta is currently assessing the effect of this update.
In November 2024, the FASB issued an update that requires incremental disclosures about specific expense categories. Entities are required to disclose in the notes to financial statements the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization and selling expense included in each relevant expense caption of the statements of operations. The standard also requires disclosure of the amount, and a qualitative description of, other items remaining in relevant expense captions that are not separately disaggregated. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and both prospective and retrospective application are permitted. Quanta is currently assessing the effect of this update.
4. REVENUE RECOGNITION AND RELATED BALANCE SHEET ACCOUNTS:
Contracts
Quanta’s services include the design, new construction, upgrade and repair and maintenance of infrastructure primarily in the electric and gas utility, renewable energy, technology, communications, pipeline and energy industries. These services are generally provided pursuant to master service agreements (MSAs), repair and maintenance contracts, and fixed price and non-fixed price construction contracts. Contracts are combined if they are entered into at or near the same time as one another and negotiated as a group, in contemplation of one another, for a related commercial purpose. When applicable, the transaction price is allocated to performance obligations on the basis of relative standalone selling prices that is generally determined using an expected profit margin on anticipated costs related to the performance obligation. Quanta’s contracts are classified into three categories based on the methods by which transaction prices are determined and revenue is recognized: unit-price contracts, cost-plus contracts and fixed price contracts. Transaction prices for unit-price contracts are determined on a per unit basis, transaction prices for cost-plus contracts are determined by applying a profit margin to costs incurred on the contracts and transaction prices for fixed price contracts are determined on a lump-sum basis. All of Quanta’s revenues are recognized from contracts with its customers. In addition to the considerations described below, revenue is not recognized unless collectability under the contract is considered probable, the contract has commercial substance and the contract has been approved. Additionally, the contract must contain payment terms, as well as the rights and commitments of both parties.
Performance Obligations
A performance obligation is a promise in a contract with a customer to transfer a distinct good or service. Most of Quanta’s contracts are considered to have a single performance obligation whereby Quanta is required to integrate complex activities and equipment into a deliverable for a customer. For contracts with multiple performance obligations, Quanta allocates a portion of the total transaction price to each performance obligation using its best estimate of the standalone selling price of the distinct good or service associated with each performance obligation. Standalone selling price is estimated using the expected costs plus a margin.
As of December 31, 2025 and 2024, the aggregate transaction price allocated to unsatisfied or partially satisfied performance obligations was approximately $23.76 billion and $16.76 billion, with 66.1% and 67.1% expected to be recognized in the subsequent twelve months. These amounts represent management’s estimates of the consolidated revenues that are expected to be realized from the remaining portion of firm orders under fixed price contracts not yet completed or for which work had not yet begun as of such dates and, to a lesser extent, from certain unit-price contracts with more than an insignificant amount of partially completed units. For purposes of calculating remaining performance obligations, Quanta includes all estimated revenues attributable to consolidated joint ventures and 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 additional contract revenues will be earned and are deemed probable of collection. Excluded from remaining performance obligations are potential orders under MSAs and expected revenues under certain non-fixed price contracts.
Recognition of Revenue Upon Satisfaction of Performance Obligations
A transaction price is determined for each contract, and that amount is allocated to each performance obligation within the contract and recognized as revenue when, or as, the performance obligation is satisfied. Quanta recognizes certain revenue over time as it performs its obligations because there is a continuous transfer of control of the deliverable to the customer. Under unit-price contracts with an insignificant amount of partially completed units, Quanta recognizes revenue as units are completed
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based on contractual pricing amounts. Under fixed-price contracts, as well as unit-price contracts with more than an insignificant amount of partially completed units, revenue is recognized as performance obligations are satisfied over time, with the percentage of completion generally measured as the percentage of costs incurred to total estimated costs for such performance obligation. Under cost-plus contracts, Quanta recognizes revenue on an input basis, as labor hours are incurred, materials are utilized and services are performed.
Under contracts where Quanta has a right to consideration in an amount that directly corresponds to the value of completed performance, Quanta recognizes revenue in such amount and does not include such performance as a remaining performance obligation. Also, contract consideration is not adjusted for a significant financing component if payment is expected to be collected less than one year from when the services are performed.
Contract costs include labor, subcontract costs and certain direct material costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Additionally, Quanta may incur incremental costs to obtain certain contracts, such as selling and marketing costs, bid and proposal costs, sales commissions, and legal fees or initial set-up or mobilization costs, certain of which can be capitalized. There were no significant capitalized costs during the years ended December 31, 2025, 2024 and 2023.
Quanta provides limited warranties to customers for work performed under its contracts that typically extend for a limited duration following substantial completion of its work on a project. Such warranties are not sold separately and do not provide customers with a service other than the assurance of compliance with agreed-upon specifications. Accordingly, these types of warranties are not considered to be separate performance obligations, but any costs incurred or expected to be incurred, by Quanta in connection with these warranties are included in contract costs. During the years ended December 31, 2025, 2024 and 2023, Quanta has not been subject to a significant number of material warranty claims in connection with its services.
Contract Estimates and Changes in Estimates
Actual revenues and project costs can vary, sometimes substantially, from previous estimates due to changes in a variety of factors, including unforeseen or changed circumstances not included in Quanta’s cost estimates or covered by its contracts. Some of the factors that can result in positive changes in estimates on projects include successful execution through project risks, reduction of estimated project costs or increases of estimated revenues. Some of the factors that can result in negative changes in estimates include concealed or unknown site conditions; changes to or disputes with customers regarding the scope of services; changes in estimates related to the length of time to complete a performance obligation; changes or delays with respect to permitting and regulatory requirements and materials; changes in the cost of equipment, commodities, materials or skilled labor; unanticipated costs or claims due to delays or failure to perform by customers or third parties; customer failure to provide, or supply chain and logistical challenges related to, required materials or equipment; errors in engineering, specifications or designs; project modifications; adverse weather conditions, natural disasters, and other emergencies; and performance and quality issues causing delay (including payment of liquidated damages) or requiring rework or replacement. Any changes in estimates could result in changes to profitability or losses associated with the related performance obligations. For example, estimated costs for a performance obligation may increase from an original estimate, and contractual provisions may not allow for adequate compensation or reimbursement for such additional costs. Changes in estimated revenues, costs and profit are recorded in the period they are determined to be probable and can be reasonably estimated. Contract losses are recognized in full when they are determined to be probable and can be reasonably estimated.
Additionally, changes in cost estimates on certain contracts may result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims. Quanta determines the probability that costs associated with change orders and claims will be recovered based on, among other things, contractual entitlement, past practices with the customer, specific discussions or preliminary negotiations with the customer and verbal approvals by the customer. Quanta recognizes amounts associated with change orders and claims as revenue if it is probable that the contract price will be adjusted and the amount of any such adjustment can be reasonably estimated. Most of Quanta’s change orders are for services that are not distinct from an existing contract and are accounted for as part of an existing contract on a cumulative catch-up basis. Quanta accounts for a change order as a separate contract if the additional goods or services are distinct from and increase the scope of the contract, and the price of the contract increases by an amount commensurate to Quanta’s standalone selling price for the additional goods or services.
As of December 31, 2025 and 2024, Quanta had recognized revenues of $983.6 million and $733.6 million related to unapproved change orders and claims included as contract price adjustments primarily in “Contract assets” in the accompanying consolidated balance sheets. These change orders and claims were in the process of being negotiated in the normal course of business and represent management’s estimates of additional contract revenues that have been earned and are probable of collection. The largest component of revenues recognized related to unapproved change orders and claims as of December 31, 2025 and 2024 is associated with a large renewable transmission project in Canada. During the course of construction, the project experienced decreased productivity and additional costs from delays, administrative requirements and labor issues due to the COVID-19 pandemic, including incremental governmental requirements and worksite restrictions, as
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well as work resequencing and acceleration, access delays, and logistical challenges and other issues outside of Quanta’s control. The project was completed in 2024.
Variable consideration amounts, including performance incentives, early pay discounts and penalties, may also cause changes in contract estimates. The amount of variable consideration is estimated based on the most likely amount that is deemed probable of realization. Contract consideration is adjusted for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty related to the variable consideration is resolved.
Changes in estimates can result in the recognition of revenue in a current period for performance obligations that were satisfied or partially satisfied in prior periods or the reversal of previously recognized revenue if the currently estimated revenue is less than the previous estimate. The impact of a change in contract estimate is measured as the difference between the revenue or gross profit recognized in the prior period as compared to the revenue or gross profit which would have been recognized had the revised estimate been used as the basis of recognition in the prior period. Changes in estimates can also result in contract losses, which are recognized in full when they are determined to be probable and can be reasonably estimated.
Revenues were positively impacted by 0.2%, 0.2% and 0.4% during the years ended December 31, 2025, 2024 and 2023 as a result of changes in estimates associated with performance obligations on fixed price contracts partially satisfied prior to December 31, 2024, 2023 and 2022. The net impacts resulted from net changes in estimates across a large number of projects, primarily as a result of favorable or unfavorable performance and changes on estimates related to mitigation of risks and contingencies as the projects progressed to completion. These changes were made in the ordinary course of business and there were no changes that resulted in material amounts that should have been recognized in a prior period.
Revenues by Category
The following tables present Quanta’s revenue disaggregated by contract type and by geographic location, as determined by the job location (in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| By contract type: | ||||||||||||||||||||||||||||||||||||||
| Fixed price contracts | $ | 17,258,996 | 60.6 | % | $ | 13,307,321 | 56.2 | % | $ | 10,251,037 | 49.1 | % | ||||||||||||||||||||||||||
| Unit-price contracts | 6,790,221 | 23.8 | 6,475,714 | 27.4 | 6,586,982 | 31.5 | ||||||||||||||||||||||||||||||||
| Cost-plus contracts | 4,430,480 | 15.6 | 3,889,760 | 16.4 | 4,044,187 | 19.4 | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 28,479,697 | 100.0 | % | $ | 23,672,795 | 100.0 | % | $ | 20,882,206 | 100.0 | % |
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| By primary geographic location: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 26,482,963 | 93.0 | % | $ | 21,606,807 | 91.3 | % | $ | 17,910,892 | 85.8 | % | ||||||||||||||||||||||||||
| Canada | 1,018,752 | 3.6 | 1,025,074 | 4.3 | 2,045,999 | 9.8 | ||||||||||||||||||||||||||||||||
| Australia | 779,532 | 2.7 | 666,870 | 2.8 | 612,497 | 2.9 | ||||||||||||||||||||||||||||||||
| Others | 198,450 | 0.7 | 374,044 | 1.6 | 312,818 | 1.5 | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 28,479,697 | 100.0 | % | $ | 23,672,795 | 100.0 | % | $ | 20,882,206 | 100.0 | % |
As described above, under fixed price contracts, as well as unit-price contracts with more than an insignificant amount of partially completed units, revenue is recognized as performance obligations are satisfied over time, with the percentage of completion generally measured as the percentage of costs incurred to total estimated costs for such performance obligation. Approximately 63.8%, 60.0% and 56.5% of Quanta’s revenues recognized during the years ended December 31, 2025, 2024 and 2023 were associated with this revenue recognition method.
Contract Assets and Liabilities
With respect to Quanta’s contracts, interim payments are typically received as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. As a result, under fixed price contracts and unit-price contracts with more than an insignificant amount of partially completed units, the timing of revenue recognition and contract billings results in contract assets and contract liabilities. Contract assets represent revenues recognized in excess of amounts billed and are current assets that are transferred to accounts receivable when billed or the billing rights
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become unconditional. Contract assets are not considered a significant financing component as they are intended to protect the customer in the event Quanta does not perform on its obligations under the contract.
Conversely, contract liabilities represent billings in excess of revenues. These arise under certain contracts that allow for upfront payments from the customer or contain contractual billing milestones, which result in billings that exceed the amount of revenues recognized for certain periods. Contract liabilities are current liabilities and are not considered to have a significant financing component, as they are used to meet working capital requirements that are generally higher in the early stages of a contract and are intended to protect Quanta from the other party failing to meet its obligations under the contract. Contract assets and liabilities are recorded on a performance obligation basis at the end of each reporting period.
Contract assets and liabilities consisted of the following (in thousands):
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||
| Contract assets | $ | 1,522,186 | $ | 1,208,619 | $ | 1,413,057 | ||||||||||||||
| Contract liabilities | $ | 3,258,465 | $ | 2,149,328 | $ | 1,538,677 |
Contract assets and liabilities fluctuate period to period based on various factors, including, among others, changes in the number and size of projects in progress at period end; variability in billing and payment terms, such as up-front or advance billings, interim or milestone billings, or deferred billings; and recognized unapproved change orders and contract claims. The increase in contract assets from December 31, 2024 to December 31, 2025 was primarily due to increased activity of large projects. The decrease in contract assets from December 31, 2023 to December 31, 2024 was primarily due to the completion of certain large projects and the corresponding billing of amounts previously recorded as contract assets. The increase in contract liabilities from December 31, 2024 to December 31, 2025 and from December 31, 2023 to December 31, 2024 was primarily due to an increase in contract liabilities related to recent acquisitions and favorable billing terms on certain projects.
During the years ended December 31, 2025, 2024 and 2023, Quanta recognized revenue of approximately $1.98 billion, $1.42 billion and $1.04 billion related to contract liabilities outstanding as of the end of each respective prior year.
Accounts Receivable, Allowance for Credit Losses and Concentrations of Credit Risk
Quanta determines its allowance for credit losses based on an estimate of expected credit losses for financial instruments, primarily accounts receivable and contract assets. The assessment of the allowance for credit losses involves certain judgments and estimates. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Expected credit losses are estimated by evaluating trends with respect to Quanta’s historical write-off experience and applying historical loss ratios to pools of financial assets with similar risk characteristics. Quanta has determined that it has two risk pools for the purpose of calculating its historical credit loss experience.
Quanta’s historical loss ratio and its determination of risk pools, which are used to calculate expected credit losses, may be adjusted for changes in customer credit concentrations within its portfolio of financial assets, changes in customers’ ability to pay, and other considerations, such as economic and market changes, changes to regulatory or technological environments affecting customers and the consistency between current and forecasted economic conditions and the historical economic conditions used to derive historical loss ratios. At the end of each quarter, management reassesses these and other relevant factors, including the impact of uncertainty and challenges in the overall economy and in Quanta’s industries and markets, (e.g., inflationary pressure, supply chain and other logistical challenges and increased interest rates).
Additional allowance for credit losses is established for financial asset balances with specific customers where collectability has been determined to be improbable based on customer specific facts and circumstances. Quanta considers accounts receivable delinquent after 30 days but, absent certain specific considerations, generally does not consider such amounts delinquent in its credit loss analysis unless the accounts receivable are at least 120 days outstanding. In addition, management monitors the credit quality of its receivables by, among other things, obtaining credit ratings for significant customers, assessing economic and market conditions and evaluating material changes to a customer’s business, cash flows and financial condition. Should anticipated recoveries relating to receivables fail to materialize, including anticipated recoveries relating to bankruptcies or other workout situations, Quanta could experience reduced cash flows and losses in excess of current allowances provided.
Accounts receivable are written-off against the allowance for credit losses if they are deemed uncollectible.
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Activity in Quanta’s allowance for credit losses consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at beginning of year | $ | 15,185 | $ | 13,962 | $ | 15,644 | ||||||||||||||
| Increase in provision for credit losses | 3,717 | 4,279 | 5,927 | |||||||||||||||||
| Write-offs charged against the allowance net of recoveries of amounts previously written off | (3,196) | (3,056) | (7,609) | |||||||||||||||||
| Balance at end of year | $ | 15,706 | $ | 15,185 | $ | 13,962 |
The above activity relates to the largest risk pool Quanta utilizes for assessing credit loss. The second risk pool represents approximately 8% of Quanta’s consolidated financial instruments as of December 31, 2025 and did not have any allowance for credit loss or experience any credit loss during the periods presented. Quanta’s customers generally have high credit ratings. In addition, the customers in the second risk pool typically pre-approve invoices and often receive project financing.
Provision for credit losses is included in “Selling, general and administrative expenses” in the consolidated statements of operations.
Quanta is subject to concentrations of credit risk related primarily to its receivable position for services Quanta has performed for customers. Quanta grants credit under normal payment terms, generally without collateral. No customer represented 10% or more of Quanta’s consolidated revenues for the years ended December 31, 2025, 2024 or 2023, and no customer represented 10% or more of Quanta’s consolidated receivable position as of December 31, 2025 or 2024.
Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on Quanta’s experience in recent years, the majority of these retainage balances are expected to be collected within one year. Retainage balances with expected settlement dates within one year of December 31, 2025 and 2024 were $994.1 million and $666.5 million, which are included in “Accounts receivable.” Retainage balances with expected settlement dates beyond one year were $228.7 million and $143.6 million as of December 31, 2025 and 2024 and are included in “Other assets, net.”
Quanta recognizes unbilled receivables for non-fixed price contracts within “Accounts receivable” in certain circumstances, such as when revenues have been earned and recorded but the amount cannot be billed under the terms of the contract until a later date or when amounts arise from routine lags in billing. These balances do not include revenues recognized for work performed under fixed-price contracts and unit-price contracts with more than an insignificant amount of partially completed units, as these amounts are recorded as “Contract assets.” As of December 31, 2025 and 2024, unbilled receivables included in “Accounts receivable” were $1.10 billion and $859.9 million. Quanta also recognizes unearned revenues for non-fixed price contracts when cash is received prior to recognizing revenues for the related performance obligation. Unearned revenues, which are included in “Accounts payable and accrued expenses,” were $121.0 million and $97.9 million as of December 31, 2025 and 2024.
5. SEGMENT INFORMATION:
Quanta’s operations are managed by senior executives who report to its Chief Executive Officer, the chief operating decision maker. The Chief Executive Officer uses operating income for each of Quanta’s reportable segments and considers forecast to actual variances to assess performance and when making decisions about allocating capital, craft skill labor and other resources.
During the three months ended March 31, 2025, Quanta’s Chief Executive Officer reevaluated how performance of the business is assessed and how resources are allocated, which resulted in a change in the reporting of management’s internal financial information. As a result, beginning with the three months ended March 31, 2025, Quanta began reporting the results of its two operating segments, which are also its two reportable segments: (1) Electric Infrastructure Solutions (Electric) and (2) Underground Utility and Infrastructure Solutions (Underground and Infrastructure). The Electric segment consists of the historical Electric Power Infrastructure Solutions and the Renewable Energy Infrastructure Solutions segments. In conjunction with this change, certain prior period amounts have been recast to conform to this new segment reporting structure.
Electric. Quanta’s Electric segment provides comprehensive services for the electric power, power generation, large load center and communications markets. Services include, but are not limited to, the design, procurement, new construction, upgrade and repair and maintenance services for electric power transmission and distribution infrastructure, both overhead and underground, and substation facilities, along with other engineering and technical services, including services that support the implementation of upgrades by utilities to modernize and harden the electric power grid in order to ensure its safety and
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enhance reliability, to interconnect and transmit electricity from power generation and battery storage facilities and to accommodate increased residential and commercial use of electric vehicles. In addition, this segment provides engineering, procurement, new construction, repowering, and repair and maintenance services for power generation facilities, such as utility-scale wind, solar and hydropower generation facilities and battery storage facilities, as well as emergency restoration services, including the repair of infrastructure damaged by fire and inclement weather and the installation of “smart grid” technologies on electric power networks. This segment also provides comprehensive design and construction solutions to wireline and wireless communications companies; electrical systems for technology, advanced manufacturing and industrial facilities and other load centers; and cable multi-system operators and other customers within the communications industry, as well as other related services. Additionally, this segment manufactures power transformers and components for the electric utility, renewable energy, municipal power and industrial markets.
Underground and Infrastructure. Quanta’s Underground and Infrastructure segment provides comprehensive infrastructure solutions to customers involved in the transportation, distribution, storage, development and processing of natural gas, oil and other products. Services include, but are not limited to design, engineering, procurement, new construction, upgrade and repair and maintenance services for natural gas systems for gas utility customers; pipeline construction protection, integrity testing, rehabilitation and replacement services; and civil solutions. Additionally, Quanta serves the midstream and downstream industrial energy markets through catalyst replacement services, high-pressure and critical-path turnaround services, instrumentation and electrical services, piping, fabrication and storage tank services. In addition, this segment provides turnkey mechanical plumbing and process infrastructure solutions for large load facilities in the technology, semiconductor, healthcare and other industries.
Quanta’s segment results are derived from the types of services provided across its operating companies in each of its end user markets. Quanta’s entrepreneurial business model allows multiple operating companies to serve the same or similar customers and to provide a range of services across end user markets. Reportable segment information, including revenues and operating income by type of work, is gathered from each operating company. Classification of operating company revenues by type of work for segment reporting purposes can require judgment on the part of management.
Segment operating expenses (excluding depreciation expense) primarily include cost of services, such as wages and benefits; subcontractor costs; materials; certain equipment rental and maintenance costs, and other direct and indirect project costs, as well as allocated segment selling, general and administrative expenses. Integrated operations and common administrative support for Quanta’s operating companies require that allocations be made to determine segment profitability, including allocations of certain corporate shared and indirect operating costs, as well as general and administrative costs.
Separate measures of Quanta’s assets and cash flows by reportable segment, including capital expenditures, are not produced or utilized by the Chief Executive Officer to evaluate segment performance since certain of Quanta’s fixed assets are used on an interchangeable basis across its reportable segments. As such, for reporting purposes, total depreciation expense is determined quarterly by allocating depreciation expense at each legal entity to Quanta’s reportable segments based on the ratio of each legal entity’s revenue contribution to each of Quanta’s segments.
Corporate and non-allocated costs include corporate facility costs; non-allocated corporate salaries, benefits and incentive compensation; acquisition and integration 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 tables show segment financial information in thousands of dollars for the periods presented. All revenues are from external customers. Segment operating margin is calculated by dividing operating income by revenues.
| Year Ended December 31, 2025 | Electric | Underground and Infrastructure | Total | |||||||||||||||||
| Revenues | $ | 23,001,468 | $ | 5,478,229 | $ | 28,479,697 | ||||||||||||||
| Segment operating expense (excluding segment depreciation expense) | 20,411,709 | 4,973,887 | 25,385,596 | |||||||||||||||||
| Segment depreciation expense | 285,132 | 106,066 | 391,198 | |||||||||||||||||
| Segment operating expenses | 20,696,841 | 5,079,953 | 25,776,794 | |||||||||||||||||
| Equity in earnings on integral unconsolidated affiliates | 55,635 | — | 55,635 | |||||||||||||||||
| Segment operating income | $ | 2,360,262 | $ | 398,276 | $ | 2,758,538 | ||||||||||||||
| Segment operating margin | 10.3 | % | 7.3 | % | ||||||||||||||||
| Corporate and non-allocated costs (1) | (1,147,029) | |||||||||||||||||||
| Total consolidated operating income | $ | 1,611,509 |
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| Year Ended December 31, 2024 | Electric (2) | Underground and Infrastructure (3) | Total | |||||||||||||||||
| Revenues | $ | 19,012,379 | $ | 4,660,416 | $ | 23,672,795 | ||||||||||||||
| Segment operating expense (excluding segment depreciation expense) | 16,855,409 | 4,308,470 | 21,163,879 | |||||||||||||||||
| Segment depreciation expense | 248,762 | 86,916 | 335,678 | |||||||||||||||||
| Segment operating expenses | 17,104,171 | 4,395,386 | 21,499,557 | |||||||||||||||||
| Equity in earnings on integral unconsolidated affiliates | 50,484 | — | 50,484 | |||||||||||||||||
| Segment operating income | $ | 1,958,692 | $ | 265,030 | $ | 2,223,722 | ||||||||||||||
| Segment operating margin | 10.3 | % | 5.7 | % | ||||||||||||||||
| Corporate and non-allocated costs (1) | (877,254) | |||||||||||||||||||
| Total consolidated operating income | $ | 1,346,468 |
| Year ended December 31, 2023 | Electric | Underground and Infrastructure | Total | |||||||||||||||||
| Revenues | $ | 15,867,198 | $ | 5,015,008 | $ | 20,882,206 | ||||||||||||||
| Segment operating expense (excluding segment depreciation expense) | 14,195,394 | 4,559,507 | 18,754,901 | |||||||||||||||||
| Segment depreciation expense | 222,855 | 77,524 | 300,379 | |||||||||||||||||
| Segment operating expenses | 14,418,249 | 4,637,031 | 19,055,280 | |||||||||||||||||
| Equity in earnings on integral unconsolidated affiliates | 41,609 | — | 41,609 | |||||||||||||||||
| Segment operating income | $ | 1,490,558 | $ | 377,977 | $ | 1,868,535 | ||||||||||||||
| Segment operating margin | 9.4 | % | 7.5 | % | ||||||||||||||||
| Corporate and non-allocated costs (1) | (740,559) | |||||||||||||||||||
| Total consolidated operating income | $ | 1,127,976 |
(1) Corporate and non-allocated costs included amortization expense of $498.8 million, $383.0 million and $289.0 million and non-cash stock-based compensation of $181.9 million, $150.5 million and $126.8 million for the years ended December 31, 2025, 2024 and 2023.
(2) Included in the Electric segment revenues during the year ended December 31, 2024 was $30.2 million recognized in connection with payments received pursuant to an arbitration award related to a large telecommunications project in Peru that was terminated during 2019. The segment operating income impact related to such payments was $20.7 million, including the reimbursement of certain cost of services and net of foreign currency translation losses in connection with Quanta’s substantial liquidation from Latin American operations.
(3) Included in operating expenses (excluding segment depreciation expense) for the Underground and Infrastructure segment during the year ended December 31, 2024 were losses of $11.9 million related to the disposition of a non-core business.
6. ACQUISITIONS:
On July 25, 2025, Quanta completed the acquisition of Dynamic Systems (DSI), LLC (Dynamic Systems), which provides turnkey mechanical, plumbing and process infrastructure solutions to a diversified customer base that includes technology, semiconductor, healthcare and other load center markets. Dynamic Systems is located in the United States, and its results have been primarily included in the Underground and Infrastructure segment. The consideration for the acquisition included approximately $1.26 billion in cash (subject to certain adjustments and including payment for cash held by Dynamic Systems as of the acquisition date) and 518,772 shares of Quanta common stock, which had a fair value of $218.8 million as of the acquisition date. Additionally, the former owner of Dynamic Systems is eligible for a potential contingent consideration payment of up to $216.0 million to the extent the acquired business achieves certain financial and other operating performance targets during a two-year post-acquisition period beginning in January 2026. To the extent payable, Quanta, at its sole discretion, can pay 15% of any such contingent consideration amount in Quanta common stock. The final amount of consideration for the acquisition remains subject to certain post-closing adjustments, including with respect to net working capital (inclusive of cash) and certain assumed liabilities.
During the year ended December 31, 2025, Quanta also acquired seven additional businesses, including two businesses located in the United States that specialize in civil solutions, including site clearing, earthwork, soil stabilization and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
infrastructure development (which have been included in the Underground and Infrastructure segment), a business located in Australia that specializes in electrical engineering and the design and manufacturing of industrial technology solutions (which has been included in both the Electric and Underground and Infrastructure segments), a business located in the United States that specializes in utility construction and related support services (which has primarily been included in the Electric segment), a business located in the United States that specializes in the design, construction and repair of overhead and underground transmission and distribution infrastructure, civil construction services related to substations as well as helicopter services for electric utility infrastructure (which has primarily been included in the Electric segment), a business located in the United States that specializes in electrical solutions including low voltage technology, testing, engineering, integration, renewable energy and electric prefabrication solutions (which has primarily been included in the Electric segment) and a business located in the United States that provides helicopter services (which has primarily been included in the Electric segment and was accounted for as an asset acquisition so is not included in the disclosures in this note). The consideration for the transactions acquired in 2025, other than Dynamic Systems, and accounted for as business combinations consisted of approximately $2.00 billion in cash and 789,824 shares of Quanta common stock, which had a fair value of $284.5 million as of the respective acquisition dates. The final amount of consideration for these acquisitions remains subject to certain post-closing adjustments, including with respect to net working capital, tax estimates and other contractually agreed-upon adjustments to consideration. Additionally, pursuant to the terms of the agreements, the former owners of certain of these businesses are eligible to receive payments of contingent consideration of up to approximately $228.0 million to the extent the acquired businesses achieve certain financial and other operating performance targets over a three-year period. To the extent payable, Quanta, at its sole discretion, can pay up to approximately one-fourth of certain contingent consideration amounts in Quanta common stock.
On July 17, 2024, Quanta completed the acquisition of Cupertino Electric, Inc. (CEI), which provides electrical infrastructure solutions, including engineering, procurement, project management, construction and modularization services, to the technology, renewable energy and infrastructure and commercial industries. CEI is located in the United States, and its results have been included in the Electric segment. The aggregate consideration for the acquisition was approximately $2.04 billion, which included approximately $1.65 billion in cash, including payment for cash held by CEI as of the acquisition date, and 882,926 shares of Quanta common stock, which had a fair value of $216.3 million as of the acquisition date. The cash consideration paid by Quanta, net of cash received from CEI, was $1.24 billion. Additionally, the former equity holders and award holders of CEI are eligible for a contingent consideration payment of up to $200.0 million based on achievement of certain financial and other operating performance targets during the three-year post-acquisition period beginning in January 2025. To the extent payable, Quanta, at its sole discretion, can pay up to 10% of any such contingent consideration amount in Quanta common stock.
During the year ended December 31, 2024, Quanta also acquired seven additional businesses located in the United States, including: a business that provides specialty environmental solutions to utility, industrial and petrochemical companies (which has been primarily included in the Underground and Infrastructure segment); a business that specializes in testing, manufacturing and distributing safety equipment and supplies (which has been primarily included in the Electric segment); a business that specializes in electrical infrastructure services for substations, data centers and governmental entities (which has been primarily included in the Electric segment); a business that manufactures transmission and distribution equipment for the electric utility industry (which has been primarily included in the Electric segment); a business that provides services and equipment related to aerial telecommunications infrastructure and networks (which has been primarily included in the Electric segment); a business that provides services related to fiber optic networks (which has been primarily included in the Electric segment); and a business that specializes in designing, manufacturing, and distributing liquid-filled power transformers primarily for electrical companies and utilities (which has been primarily included in the Electric segment). The consideration for these businesses consisted of approximately $540.9 million in cash and 334,472 shares of Quanta common stock, which had a fair value of $74.8 million as of the acquisition dates.
During the year ended December 31, 2023, Quanta acquired five businesses located in the United States that are primarily included in the Electric segment including: a business that provides services related to high-voltage transmission lines, overhead and underground distribution, emergency restoration and industrial and commercial wiring and lighting; a business that procures parts, assembles kits for sale, manages logistics and installs solar tracking equipment for utility and development customers; a business that provides concrete construction services; a business specializing in power studies, maintenance testing and commissioning primarily for utility and commercial customers; and a business that manufactures power transformers for the electric utility, renewable energy, municipal power and industrial markets. The consideration for these transactions consisted of approximately $780.8 million in cash and 1,238,576 shares of Quanta common stock, which had a fair value of $158.9 million as of the dates of the acquisitions.
The results of operations of acquired businesses have been included in Quanta’s consolidated financial statements since their respective acquisition dates. Additionally, the former owners of certain acquired businesses are eligible to receive potential
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
payments of contingent consideration to the extent the acquired businesses achieve certain financial performance targets over specified post-acquisition periods.
Purchase Price Allocation
Purchase price allocations require significant use of estimates and are based on information that was available to management at the time these consolidated financial statements were prepared. Quanta uses a variety of information to estimate fair values, including quoted market prices, carrying amounts and valuation techniques such as discounted cash flows. When deemed appropriate, third-party appraisal firms are engaged to assist in fair value determination of fixed assets, intangible assets and certain other assets and liabilities.
Quanta is finalizing its purchase price allocations related to certain businesses acquired in 2025 and further adjustments to the purchase price allocations may occur, with possible updates primarily related to intangible asset values, property and equipment values, certain contingent liabilities, tax estimates, and the finalization of closing working capital adjustments and other contractually agreed-upon adjustments to consideration. The following table summarizes the estimated fair value of total consideration transferred or estimated to be transferred and the fair value of assets acquired, liabilities assumed and non-controlling interest recognized as of their respective acquisition dates as of December 31, 2025 for acquisitions completed in the year ended December 31, 2025 and 2024 (in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Dynamic Systems | All Others | CEI | All Others | |||||||||||||||||||||||
| Consideration: | ||||||||||||||||||||||||||
| Cash paid or payable | $ | 1,264,009 | $ | 1,997,842 | $ | 1,654,967 | $ | 540,882 | ||||||||||||||||||
| Value of Quanta common stock issued | 218,756 | 284,478 | 216,264 | 74,797 | ||||||||||||||||||||||
| Contingent consideration | 190,561 | 188,737 | 163,999 | 24,266 | ||||||||||||||||||||||
| Fair value of total consideration transferred or estimated to be transferred | $ | 1,673,326 | $ | 2,471,057 | $ | 2,035,230 | $ | 639,945 | ||||||||||||||||||
| Cash and cash equivalents | $ | 66,696 | $ | 125,040 | $ | 414,705 | $ | 31,403 | ||||||||||||||||||
| Accounts receivable | 279,720 | 608,139 | 339,254 | 72,263 | ||||||||||||||||||||||
| Contract assets | 9,859 | 62,415 | 92,160 | 8,995 | ||||||||||||||||||||||
| Inventories | 1,955 | 3,479 | — | 46,345 | ||||||||||||||||||||||
| Prepaid expenses and other current assets | 1,303 | 23,054 | 23,233 | 12,455 | ||||||||||||||||||||||
| Property and equipment | 30,398 | 237,197 | 32,207 | 92,214 | ||||||||||||||||||||||
| Operating lease right-of-use assets | 19,281 | 21,987 | 28,906 | 25,429 | ||||||||||||||||||||||
| Other assets | 9,767 | 2,395 | 35,713 | 616 | ||||||||||||||||||||||
| Identifiable intangible assets | 532,400 | 1,010,069 | 669,000 | 211,042 | ||||||||||||||||||||||
| Current portion of operating lease liabilities | (4,850) | (4,605) | (10,665) | (4,908) | ||||||||||||||||||||||
| Accounts payable and accrued expenses | (97,541) | (275,879) | (315,436) | (72,885) | ||||||||||||||||||||||
| Contract liabilities | (145,553) | (140,618) | (222,538) | (28,434) | ||||||||||||||||||||||
| Operating lease liabilities, net of current portion | (14,431) | (17,385) | (19,448) | (20,524) | ||||||||||||||||||||||
| Deferred income taxes | — | (81,443) | (15,936) | (48,646) | ||||||||||||||||||||||
| Insurance and other non-current liabilities | — | (11,983) | (11,011) | (9,744) | ||||||||||||||||||||||
| Non-controlling interest | — | (84,379) | — | — | ||||||||||||||||||||||
| Total identifiable net assets | 689,004 | 1,477,483 | 1,040,144 | 315,621 | ||||||||||||||||||||||
| Goodwill | 984,322 | 993,574 | 995,086 | 324,324 | ||||||||||||||||||||||
| Fair value of net assets acquired | $ | 1,673,326 | $ | 2,471,057 | $ | 2,035,230 | $ | 639,945 | ||||||||||||||||||
Goodwill represents the amount by which the purchase price for an acquired business exceeds the net fair value of the identifiable assets acquired and liabilities assumed. The acquisitions completed during the year ended December 31, 2025, 2024 and 2023 contributed to the recognition of goodwill by strategically expanding Quanta’s Electric and Underground and Infrastructure segments, primarily in the U.S. Goodwill, included in the Underground and Infrastructure segment, increased by $44.0 million during the year ended December 31, 2025 as a result of certain contingent consideration adjustments associated
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
with Quanta’s 2025 acquisitions. Goodwill increased by $58.5 million during the year ended December 31, 2024 as a result of certain post-closing adjustments associated with Quanta’s acquisition of CEI. As of December 31, 2025, approximately $1.75 billion, $43.2 million and $380.6 million of goodwill is expected to be deductible for income tax purposes related to acquisitions completed in 2025, 2024 and 2023.
Quanta’s identifiable intangible assets subject to amortization include customer relationships, backlog, trade names, non-compete agreements, and patented rights and other. The following table summarizes the estimated fair values of identifiable intangible assets for the acquisitions completed in 2025 and 2024 as of the acquisition dates and the related weighted average amortization periods by type (in thousands, except for weighted average amortization periods, which are in years).
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| Dynamic Systems | All Others | |||||||||||||||||||||||||
| Estimated Fair Value | Amortization Period in Years | Estimated Fair Value | Weighted Average Amortization Period in Years | |||||||||||||||||||||||
| Customer relationships | $ | 355,000 | 8.0 | $ | 758,389 | 7.1 | ||||||||||||||||||||
| Backlog | 58,200 | 2.0 | 116,635 | 1.6 | ||||||||||||||||||||||
| Trade names | 101,000 | 15.0 | 123,366 | 15.0 | ||||||||||||||||||||||
| Non-compete agreements | 18,200 | 5.0 | 11,679 | 5.0 | ||||||||||||||||||||||
| Total identifiable intangible assets | $ | 532,400 | 8.6 | $ | 1,010,069 | 7.4 |
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| CEI | All Others | |||||||||||||||||||||||||
| Estimated Fair Value | Amortization Period in Years | Estimated Fair Value | Weighted Average Amortization Period in Years | |||||||||||||||||||||||
| Customer relationships | $ | 404,000 | 8.0 | $ | 163,355 | 7.1 | ||||||||||||||||||||
| Backlog | 90,000 | 3.0 | 21,425 | 2.8 | ||||||||||||||||||||||
| Trade names | 175,000 | 15.0 | 20,542 | 14.9 | ||||||||||||||||||||||
| Non-compete agreements | — | N/A | 3,444 | 5.0 | ||||||||||||||||||||||
| Patented rights, developed technology, process certifications and other | — | N/A | 2,276 | 15.0 | ||||||||||||||||||||||
| Total identifiable intangible assets | $ | 669,000 | 9.2 | $ | 211,042 | 7.4 |
The fair value of customer relationships is estimated as of the date a business is acquired based on the value-in-use concept utilizing the income approach, specifically the multi-period excess earnings method. This method discounts to present value the projected cash flows attributable to the customer relationships, with consideration given to customer contract renewals and estimated customer attrition rates. The significant assumptions used by management in determining the fair values of customer relationships include future revenues, margins, discount rates and customer attrition rates. The following table includes the discount rates and customer attrition rates used to determine the fair value of customer relationships for businesses acquired during the year ended December 31, 2025 and 2024 as of the respective acquisition dates:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Range | Weighted Average | Range | Weighted Average | |||||||||||||||||||||||
| Discount rates | 13% to 20% | 16% | 15% to 24% | 15% | ||||||||||||||||||||||
| Customer attrition rates | 5% to 30% | 11% | 10% to 25% | 11% |
The fair value of backlog is estimated as of the acquisition date based upon the contractual nature of the backlog using the multi-period excess earnings method, which discounts to present value the projected cash flows attributable to the backlog. The fair value of trade names is estimated using the income approach, specifically the relief-from-royalty method, which is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty for use of the trade name. The significant assumptions used by management in determining the fair values of trade name intangible assets include future revenues, royalty rates, and discount rates. The value of a non-compete agreement is estimated based on the difference between the present value of the prospective cash flows with the agreement in place and the present value of the prospective cash flows without the agreement in place. The level of inputs used for these identifiable intangible asset fair value measurements is Level 3.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Contingent Consideration
As described above, certain business acquisitions have contingent consideration liabilities associated with the transactions. The aggregate fair value of outstanding contingent consideration liabilities for acquisitions completed prior to December 31, 2025 and their classification in the accompanying consolidated balance sheets is as follows (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Accounts payable and accrued expenses | $ | 7,333 | $ | 152,030 | ||||||||||
| Insurance and other non-current liabilities | 586,496 | 192,954 | ||||||||||||
| Total contingent consideration liabilities | $ | 593,829 | $ | 344,984 |
The estimated fair values of these contingent consideration liabilities are generally measured on a recurring basis using a scenario-based discounted cash flow method, which considers significant inputs not observable in the market and are Level 3 inputs. The significant estimates used by management in determining fair value consist of projections of future financial results in relation to specific performance criteria and other discretionary operating provisions specified in the contingent consideration agreements. These forecast projections include inputs such as revenues, operating margins and management’s probability assessment with respect to the likelihood of acquired businesses achieving those performance criteria during designated post-acquisition periods. Appropriate discount rates are also applied to determine the present value of the future expected payments.
Quanta’s aggregate contingent consideration liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, accretion in present value, changes in estimated fair value, the performance of acquired businesses in post-acquisition periods, the incremental impact on Quanta’s performance attributable to an acquired business and in certain cases, management discretion. These changes are reflected in “Increase in fair value of contingent consideration liabilities” in the accompanying consolidated statements of operations.
All of Quanta’s outstanding contingent consideration liabilities are each subject to a maximum payment amount, and the aggregate maximum payment amount of these liabilities for acquisitions completed prior to December 31, 2025 totaled $713.0 million as of December 31, 2025. During the year ended December 31, 2025, Quanta made cash payments of $106.8 million and issued 158,040 shares of its common stock to settle contingent consideration liabilities. During the year ended December 31, 2023, Quanta settled certain contingent consideration liabilities with cash payments of $5.0 million.
Pro Forma Results of Operations
The following unaudited supplemental pro forma results of operations for Quanta, which incorporate the acquisitions completed in 2025, 2024 and 2023, have been provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future (in thousands).
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenues | $ | 30,550,869 | $ | 28,221,667 | $ | 23,403,024 | ||||||||||||||
| Net income attributable to common stock (1) | $ | 1,005,724 | $ | 582,499 | $ | 638,973 |
(1) The pro forma results of operations for the year ended December 31, 2025 include one-time acquisition-related expenses of $78.7 million ($58.2 million net of tax) for pre-acquisition transaction costs incurred by certain acquired businesses. The pro forma results of operations for the year ended December 31, 2024 include one-time acquisition-related expenses of $453.8 million ($335.8 million net of tax) for pre-acquisition transaction costs incurred by CEI, primarily related to the vesting and increase in value of stock appreciation rights as a result of the acquisition.
The pro forma combined results of operations for the years ended December 31, 2025 and 2024 were prepared by adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2025 as if such acquisitions had occurred January 1, 2024. The pro forma combined results of operations for the years ended December 31, 2024 and 2023 were prepared by further adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2024 as if such acquisitions had occurred January 1, 2023. The pro forma combined results of operations for the year ended December 31, 2023 were prepared by further adjusting the historical results of Quanta to include the historical results of the businesses acquired in 2023 as if such acquisitions occurred January 1, 2022. These pro forma combined historical results were adjusted for the following: a reduction of interest and other financing expenses as a result of the repayment of outstanding indebtedness of the acquired businesses; an increase in interest and other financing expenses as a result of the debt incurred by Quanta for the purpose of financing the acquisitions of CEI and Dynamic Systems and cash consideration paid for the other acquired businesses; an increase in amortization expense due to the intangible assets recorded; elimination of inter-company sales; and changes in depreciation expense to adjust acquired property and equipment to the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
acquisition date fair value and to conform with Quanta’s accounting policies. The pro forma combined results of operations do not include any adjustments to eliminate the impact of acquisition-related costs incurred by Quanta or acquired businesses or any cost savings or other synergies that resulted or may result from the acquisitions.
Impact on Consolidated Results of Operations Related to Acquisitions
Included in Quanta’s consolidated results of operations were the following revenues and income before income taxes related to acquisitions completed in each respective year (in thousands). Also included in Quanta’s consolidated results of operations for the years ended December 31, 2025, 2024 and 2023 were acquisition costs of $48.8 million, $17.1 million and $31.8 million related to the acquisitions completed in 2025, 2024 and 2023, respectively.
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenues | $ | 1,114,577 | $ | 1,596,606 | $ | 475,223 | ||||||||||||||
| Income before income taxes | $ | 83,113 | $ | 17,744 | $ | 15,871 |
7. GOODWILL AND OTHER INTANGIBLE ASSETS:
Goodwill
The changes in the carrying amount of goodwill of each of Quanta’s reportable segments were as follows (in thousands):
| Electric Segment | Underground and Infrastructure Segment | Total | ||||||||||||||||||
| Balance at December 31, 2023 (1) | $ | 3,371,687 | $ | 674,218 | $ | 4,045,905 | ||||||||||||||
| Goodwill related to acquisition completed in 2024 | 1,126,121 | 186,993 | 1,313,114 | |||||||||||||||||
| Purchase price allocation adjustments | (10,996) | — | (10,996) | |||||||||||||||||
| Goodwill written off due to sale of business (1) | — | (6,147) | (6,147) | |||||||||||||||||
| Foreign currency translation adjustments | (13,725) | (11,708) | (25,433) | |||||||||||||||||
| Balance at December 31, 2024 (1) | 4,473,087 | 843,356 | 5,316,443 | |||||||||||||||||
| Goodwill related to the acquisitions completed in 2025 | 645,725 | 1,332,171 | 1,977,896 | |||||||||||||||||
| Purchase price allocation adjustments | 5,933 | 364 | 6,297 | |||||||||||||||||
| Foreign currency translation adjustments | 8,951 | 7,641 | 16,592 | |||||||||||||||||
| Balance at December 31, 2025 (1) | $ | 5,133,696 | $ | 2,183,532 | $ | 7,317,228 |
(1) Included in the Underground and Infrastructure segment for the years ended December 31, 2025, 2024, and 2023 was accumulated impairment of $50.7 million, $49.9 million and $96.1 million. During the year ended December 31, 2024, $45.1 million of accumulated impairment was written off related to the Underground and Infrastructure segment due to the sale of a business.
In connection with the 2025, 2024 and 2023 annual goodwill assessments, management performed a qualitative impairment assessment of Quanta’s reporting units, which indicated that it was more likely than not that the fair value of its reporting units was greater than their carrying value including goodwill. Accordingly, a quantitative goodwill impairment test was not required, and no goodwill impairment was recognized in 2025, 2024 or 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other Intangible Assets
Quanta’s identifiable intangible assets and the remaining weighted average amortization periods related to its intangible assets subject to amortization were as follows (in thousands except for weighted average amortization periods, which are in years):
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Remaining Weighted Average Amortization Period in Years | Intangible Assets | Accumulated Amortization | Intangible Assets, Net | Intangible Assets | Accumulated Amortization | Intangible Assets, Net | ||||||||||||||||||||||||||||||||||||||
| Customer relationships | 5.7 | $ | 3,523,939 | $ | (1,464,107) | $ | 2,059,832 | $ | 2,405,606 | $ | (1,105,099) | $ | 1,300,507 | |||||||||||||||||||||||||||||||
| Backlog | 1.6 | 618,911 | (454,847) | 164,064 | 442,459 | (358,596) | 83,863 | |||||||||||||||||||||||||||||||||||||
| Trade names | 12.9 | 794,379 | (156,085) | 638,294 | 569,307 | (113,970) | 455,337 | |||||||||||||||||||||||||||||||||||||
| Non-compete agreements | 4.5 | 91,781 | (57,513) | 34,268 | 61,589 | (51,453) | 10,136 | |||||||||||||||||||||||||||||||||||||
| Patented rights, developed technology, process certifications and other | 12.5 | 35,413 | (33,140) | 2,273 | 35,317 | (32,763) | 2,554 | |||||||||||||||||||||||||||||||||||||
| Curriculum | 3.2 | 16,691 | (12,234) | 4,457 | 15,618 | (10,478) | 5,140 | |||||||||||||||||||||||||||||||||||||
| Total intangible assets subject to amortization | 7.1 | 5,081,114 | (2,177,926) | 2,903,188 | 3,529,896 | (1,672,359) | 1,857,537 | |||||||||||||||||||||||||||||||||||||
| Engineering license | 3,000 | — | 3,000 | 3,000 | — | 3,000 | ||||||||||||||||||||||||||||||||||||||
| Other intangible assets, net | $ | 5,084,114 | $ | (2,177,926) | $ | 2,906,188 | $ | 3,532,896 | $ | (1,672,359) | $ | 1,860,537 |
Amortization expense for intangible assets was $498.8 million, $383.0 million and $289.0 million for the years ended December 31, 2025, 2024 and 2023.
The estimated future aggregate amortization expense of intangible assets subject to amortization as of December 31, 2025 is set forth below (in thousands):
| Year Ending December 31: | ||||||||
| 2026 | $ | 623,128 | ||||||
| 2027 | 541,168 | |||||||
| 2028 | 429,002 | |||||||
| 2029 | 274,067 | |||||||
| 2030 | 260,335 | |||||||
| Thereafter | 775,488 | |||||||
| Total | $ | 2,903,188 |
8. INVESTMENTS IN AFFILIATES AND OTHER ENTITIES:
Equity Investments
The following table presents Quanta’s equity investments by type (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Equity method investments - integral unconsolidated affiliates | $ | 265,094 | $ | 101,460 | ||||||||||
| Equity method investments - non-integral unconsolidated affiliates | 76,134 | 77,617 | ||||||||||||
| Non-marketable equity securities | 70,453 | 62,539 | ||||||||||||
| Total equity investments | $ | 411,681 | $ | 241,616 |
Equity Method Investments
During the year ended December 31, 2025, Quanta acquired a 40.0% equity interest in a company that specializes in
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
harvesting, treating and manufacturing wood utility poles and laminated wood products for utility and telecommunication companies. Quanta’s investment is accounted for as an equity method investment and the investee is considered to be an integral unconsolidated affiliate.
During the year ended December 31, 2024, Quanta sold a non-integral equity method investment and recognized a $12.6 million gain, $5.0 million of which was attributable to non-controlling interests. Also during the year ended December 31, 2024, Quanta received $35.4 million in cash related to the sale of this investment, $5.0 million of which was distributed to non-controlling interests.
During the three months ended December 31, 2022, Quanta entered into an agreement to sell a non-integral equity method investment. The transaction was subject to certain customary closing conditions that were satisfied in early 2023. As a result, a $25.9 million gain was recognized in the fourth quarter of 2022, $10.4 million of which was attributable to non-controlling interests. During the year ended December 31, 2023, Quanta received $58.5 million in cash related to the sale of this investment, $9.8 million of which was distributed to non-controlling interests.
As of December 31, 2025 and 2024, Quanta had receivables of $165.0 million and $133.3 million from its unconsolidated affiliates and payables of $20.3 million and $15.4 million to its unconsolidated affiliates. Quanta recognized revenues of $163.2 million, $226.2 million and $215.0 million during the years ended December 31, 2025, 2024 and 2023 from services provided to its unconsolidated affiliates. The receivables balances and revenues recognized are primarily related to services provided to LUMA Energy, LLC (LUMA), Quanta’s joint venture that operates and maintains the electric transmission and distribution system in Puerto Rico, at cost. During the years ended December 31, 2025, 2024 and 2023, Quanta recognized costs of services of $527.8 million, $411.4 million and $201.3 million for services provided to Quanta by unconsolidated affiliates other than LUMA.
Total equity in earnings from integral unconsolidated affiliates was $55.6 million, $50.5 million, and $41.6 million for the years ended December 31, 2025, 2024 and 2023. Total equity in (losses) earnings from non-integral unconsolidated affiliates was $(9.2) million, $2.6 million and $1.3 million for the years ended December 31, 2025, 2024 and 2023. Equity in losses and earnings from non-integral unconsolidated affiliates are included in “Other income, net” in the accompanying consolidated statements of operations. As of December 31, 2025, Quanta had $62.4 million of undistributed earnings from unconsolidated affiliates.
Any difference between Quanta’s carrying value and the underlying equity in the net assets of its equity investments is assigned to the assets and liabilities of the investment and gives rise to a basis difference, which was $168.0 million and $44.5 million as of December 31, 2025 and 2024. The amortization of the basis difference is primarily included in “Equity in earnings of integral unconsolidated affiliates” in the accompanying consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, was $7.3 million, $4.3 million and $6.2 million.
9. PER SHARE INFORMATION:
The amounts used to compute basic and diluted earnings per share attributable to common stock consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Amounts attributable to common stock: | ||||||||||||||||||||
| Net income attributable to common stock | $ | 1,028,378 | $ | 904,824 | $ | 744,689 | ||||||||||||||
| Weighted average shares: | ||||||||||||||||||||
| Weighted average shares outstanding for basic earnings per share attributable to common stock | 148,790 | 146,929 | 145,222 | |||||||||||||||||
| Effect of dilutive unvested non-participating stock-based awards | 2,501 | 3,127 | 3,601 | |||||||||||||||||
| Weighted average shares outstanding for diluted earnings per share attributable to common stock | 151,291 | 150,056 | 148,823 |
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
10. DEBT OBLIGATIONS:
Quanta’s long-term debt obligations consisted of the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| 4.75% Senior Notes due August 2027 | $ | 600,000 | $ | 600,000 | |||||||
| 4.30% Senior Notes due August 2028 | 500,000 | — | |||||||||
| 2.90% Senior Notes due October 2030 | 1,000,000 | 1,000,000 | |||||||||
| 4.50% Senior Notes due January 2031 | 500,000 | — | |||||||||
| 2.35% Senior Notes due January 2032 | 500,000 | 500,000 | |||||||||
| 5.25% Senior Notes due August 2034 | 650,000 | 650,000 | |||||||||
| 5.10% Senior Notes due August 2035 | 500,000 | — | |||||||||
| 3.05% Senior Notes due October 2041 | 500,000 | 500,000 | |||||||||
| Borrowings under senior credit facility (including Term Loan) | 675,000 | 735,445 | |||||||||
| Borrowings under commercial paper program | 316,000 | — | |||||||||
| Lease financing transactions | 198,847 | 155,549 | |||||||||
| Other long-term debt | 2,761 | 4,939 | |||||||||
| Finance leases | 93,055 | 47,993 | |||||||||
| Unamortized discount and financing costs | (40,757) | (31,490) | |||||||||
| Total long-term debt obligations | 5,994,906 | 4,162,436 | |||||||||
| Less — Current maturities of long-term debt | 763,898 | 62,680 | |||||||||
| Total long-term debt obligations, net of current maturities | $ | 5,231,008 | $ | 4,099,756 |
As of December 31, 2025, principal payments required to be made during the next five years are set forth in the table below (in thousands). The payments required under finance leases are provided in Note 11.
| 2026 | $ | 689,829 | ||||||
| 2027 | $ | 615,086 | ||||||
| 2028 | $ | 511,556 | ||||||
| 2029 | $ | 9,026 | ||||||
| 2030 | $ | 1,321,920 |
Senior Notes
In August 2025, Quanta issued $1.50 billion aggregate principal amount of senior notes consisting of $500.0 million aggregate principal amount of 4.30% senior notes due August 2028 (the 2028 notes), $500.0 million aggregate principal amount of 4.50% senior notes due January 2031 (the 2031 notes) and $500.0 million aggregate principal amount of 5.10% senior notes due August 2035 (the 2035 notes). The cumulative proceeds from the public offering of the 2028 notes, 2031 notes and 2035 notes were $1.48 billion, net of the original issue discount, underwriting discounts and deferred financing costs, and were used to repay indebtedness, including certain commercial paper borrowings and revolving loans under Quanta’s senior credit facility that were utilized primarily to acquire Dynamic Systems.
In August 2024, Quanta issued $1.25 billion aggregate principal amount of senior notes consisting of $600.0 million aggregate principal amount of 4.75% senior notes due August 2027 (the 2027 notes) and $650.0 million aggregate principal amount of 5.25% senior notes due August 2034 (the 2034 notes). The cumulative proceeds from the public offering of the 2027 notes and 2034 notes were $1.24 billion, net of the original issue discount, underwriting discounts and deferred financing costs, which were used to repay certain short-term and commercial paper borrowings that were utilized to acquire CEI.
The indenture and supplemental indentures governing our senior notes (collectively, the indenture) contain covenants that, among other things, limit Quanta’s ability to incur liens securing certain indebtedness, to engage in certain sale and leaseback transactions with respect to certain properties and to sell all or substantially all of Quanta’s assets or merge or consolidate with or into other companies. The indenture also contains customary events of default.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The interest amounts due on Quanta’s senior notes on each payment date are set forth below (dollars in thousands):
| Title of the Notes | Interest Amount | Payment Dates | Commencement Date | |||||||||||||||||
| 4.75% Senior Notes due August 2027 | $ | 14,250 | February 9 and August 9 | February 9, 2025 | ||||||||||||||||
| 4.30% Senior Notes due August 2028 | $ | 10,750 | February 9 and August 9 | February 9, 2026 | ||||||||||||||||
| 2.90% Senior Notes due October 2030 | $ | 14,500 | April 1 and October 1 | April 1, 2021 | ||||||||||||||||
| 4.50% Senior Notes due January 2031 | $ | 11,250 | January 15 and July 15 | January 15, 2026 | ||||||||||||||||
| 2.35% Senior Notes due January 2032 | $ | 5,875 | January 15 and July 15 | July 15, 2022 | ||||||||||||||||
| 5.25% Senior Notes due August 2034 | $ | 17,063 | February 9 and August 9 | February 9, 2025 | ||||||||||||||||
| 5.10% Senior Notes due August 2035 | $ | 12,750 | February 9 and August 9 | February 9, 2026 | ||||||||||||||||
| 3.05% Senior Notes due October 2041 | $ | 7,625 | April 1 and October 1 | April 1, 2022 |
The fair value of Quanta’s senior notes was $4.53 billion as of December 31, 2025, compared to a carrying value of $4.71 billion net of unamortized bond discount, underwriting discounts and deferred financing costs of $40.3 million. The fair value of the senior notes is based on the quoted market prices for the same issue, and the senior notes are categorized as Level 1 liabilities.
Senior Credit Facility
As of December 31, 2025, the credit agreement for Quanta’s senior credit facility provided for a term loan facility with $675.0 million outstanding and a maturity date of October 8, 2026, and aggregate revolving commitments of $2.80 billion, with a maturity date of July 31, 2030. Subject to the conditions specified in the credit agreement, Quanta has 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 senior credit facility and the applicable interest rates were as follows (dollars in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Maximum amount outstanding | $ | 1,444,375 | $ | 1,262,736 | $ | 1,004,677 | |||||||||||
| Average daily amount outstanding | $ | 707,513 | $ | 855,033 | $ | 929,201 | |||||||||||
| Weighted-average interest rate | 5.61 | % | 6.62 | % | 6.62 | % |
The credit agreement contains certain covenants, including, as of the end of any fiscal quarter of Quanta, (i) a maximum Consolidated Leverage Ratio (as defined in the credit agreement) of 3.5 to 1.0 (except that in connection with certain permitted acquisitions in excess of $200.0 million, such ratio is 4.0 to 1.0 for the fiscal quarter in which the acquisition is completed and the four subsequent fiscal quarters) and (ii) a minimum Consolidated Interest Coverage Ratio (as defined in the credit agreement) of 3.0 to 1.0. As of December 31, 2025, Quanta was in compliance with all of the financial covenants under the credit agreement.
The Consolidated Leverage Ratio is the ratio of Quanta’s total funded debt to Consolidated EBITDA (as defined in the credit agreement). For purposes of calculating the Consolidated Leverage Ratio, total funded debt is reduced by available cash and Cash Equivalents (as defined in the credit agreement) in excess of $25.0 million. Consolidated Interest Coverage Ratio is the ratio of (i) Consolidated EBIT (as defined in the credit agreement) for the four fiscal quarters most recently ended to (ii) Consolidated Interest Expense (as defined in the credit agreement) for such period (excluding all interest expense attributable to capitalized loan costs and the amount of fees paid in connection with the issuance of letters of credit on behalf of Quanta during such period).
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 Quanta’s assets. These limits include a limit on surety-backed letters of credit issued separate from the senior credit facility, which are not to exceed $500.0 million at any one time outstanding. 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.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The credit agreement provides for customary events of default and contains cross-default provisions with other debt instruments exceeding $400.0 million in borrowings or availability. If an Event of Default (as defined in the credit agreement) occurs and is continuing, on the terms and subject to the conditions set forth in the credit agreement, the lenders may declare all amounts outstanding and accrued and unpaid interest immediately due and payable, require that Quanta provide cash collateral for all outstanding letter of credit obligations and terminate the commitments under the credit agreement.
Term Loan. As of December 31, 2025, Quanta had $675.0 million outstanding under its term loan facility. The carrying amount of the term loan under Quanta’s senior credit facility approximates fair value due to its variable interest rate.
The term loan requires quarterly principal payments in the amount of $18.8 million per quarter in 2026, with the remaining principal amount outstanding paid at maturity in October 2026. Quanta may voluntarily prepay the term loan borrowings from time to time, in whole or in part, without premium or penalty. Amounts borrowed under the term loan facility bear interest at Term SOFR (as defined in the credit agreement) plus 1.125%.
Revolving Loans. As of December 31, 2025, Quanta had no outstanding revolving loans under the senior credit facility. Available commitments for revolving loans under our senior credit facility must be maintained to provide credit support for notes issued under our commercial paper program, and therefore such notes effectively reduce the available capacity under our senior credit facility. During the year ended December 31, 2025, Quanta extended the maturity date for revolving loans under the credit agreement for its senior credit facility from July 31, 2029 to July 31, 2030.
Letters of Credit. As of December 31, 2025, Quanta had $65.7 million of letters of credit issued under the senior credit facility, which were primarily denominated in U.S. dollars. Additionally, available commitments for revolving loans under the senior credit facility must be maintained in order to provide credit support for notes issued under Quanta’s commercial paper program, and therefore such notes effectively reduce the available borrowing capacity under the senior credit facility.
As of December 31, 2025, $2.42 billion remained available under the senior credit facility for new revolving loans, letters of credit and support of the commercial paper program.
Amounts borrowed in U.S. dollars under the revolving credit facility bear interest, at Quanta’s option, at a rate equal to either (a) the Term SOFR plus 1.125% to 1.750%, or (b) the Base Rate plus 0.125% to 0.750%, each as determined based on either Quanta’s Consolidated Leverage Ratio or its Debt Rating, whichever is more favorable to Quanta. Revolving loans borrowed in any currency other than U.S. dollars bear interest at a rate equal to the Alternative Currency Daily Rate or the Alternative Currency Term Rate (each as defined in the credit agreement), as applicable, plus 1.125% to 1.750%, as determined based on either Quanta’s Consolidated Leverage Ratio or Quanta’s Debt Rating, whichever is more favorable to Quanta. On June 10, 2024, the senior credit facility was amended to establish Term CORRA (as defined in the Amended Credit Agreement) as the benchmark rate for borrowings denominated in Canadian dollars, in replacement of the CDOR Rate (as defined therein prior to giving effect to the amendment). Additionally, standby or commercial letters of credit issued under the credit agreement are subject to a letter of credit fee of 1.125% to 1.750%; Performance Letters of Credit (as defined in the credit agreement) issued under the credit agreement in support of certain contractual obligations are subject to a letter of credit fee of 0.675% to 1.125%; and Quanta is subject to a commitment fee of 0.100% to 0.275% on any unused availability under the revolving credit facility, in each case as determined based on either the Quanta’s Consolidated Leverage Ratio or its Debt Rating, whichever is more favorable to Quanta.
Commercial Paper Program
Effective November 7, 2025, Quanta increased the maximum aggregate amount of its existing unsecured commercial paper program to $2.80 billion of notes outstanding at any time. Prior to the increase, the maximum aggregate amount of the program was $1.50 billion. The notes are sold under customary market terms in the U.S. commercial paper market at a discount from par or at par and bear interest at rates determined at the time of issuance. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. The carrying amounts of the notes issued under Quanta’s commercial paper program approximate fair value, as all notes currently have a short maturity. As of December 31, 2025, Quanta had $316.0 million of outstanding notes with a weighted average maturity of two days.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Borrowings under the commercial paper program and the applicable interest rates were as follows (dollars in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Maximum amount outstanding | $ | 1,500,000 | $ | 1,415,000 | $ | 938,400 | ||||||||||||||
| Average daily amount outstanding | $ | 481,636 | $ | 362,220 | $ | 644,942 | ||||||||||||||
| Weighted-average interest rate | 4.61 | % | 5.37 | % | 5.82 | % |
On July 17, 2024, Quanta utilized approximately $1.20 billion of borrowings under its commercial paper program, $400.0 million of borrowings under an additional term loan described below, and cash on hand, primarily to finance the cash portion of the acquisition of CEI and pay certain related costs and expenses and working capital requirements. As described above, the proceeds from the issuance of the 2027 notes and the 2034 notes were utilized to repay the $400.0 million additional term loan and certain commercial paper borrowings.
Additional Term Loan
In July 2024, Quanta entered into, and borrowed the full amount available under, a $400.0 million 90-day term loan facility outside of the senior credit facility for the purpose of financing a portion of the acquisition of CEI. Quanta voluntarily prepaid the term loan borrowings, in whole without premium or penalty, in August 2024 with proceeds from the issuance of the 2027 notes and 2034 notes. The term loan facility bore interest at a rate equal to the Term SOFR (as defined in the 90-day term loan agreement) plus 1.375%.
Additional Letters of Credit
As of December 31, 2025, Quanta had $705.7 million of letters of credit issued outside of its senior credit facility, which were primarily denominated in U.S. dollars.
11. LEASES:
Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2025, the majority of Quanta’s leases had remaining lease terms of less than 11 years. Certain leases include options to extend their terms in increments of up to ten years and/or options to terminate. The components of lease costs in the accompanying consolidated statements of operations are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||||||||
| Lease and lease financing cost | Classification | 2025 | 2024 | 2023 | |||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||
| Amortization of lease assets | Depreciation (1) | $ | 12,321 | $ | 11,462 | $ | 4,944 | ||||||||||||||||
| Interest on lease liabilities | Interest and other financing expenses | 2,445 | 2,798 | 1,463 | |||||||||||||||||||
| Lease financing transactions:(2) | |||||||||||||||||||||||
| Depreciation | Depreciation (1) | 13,092 | 10,396 | 7,698 | |||||||||||||||||||
| Interest | Interest and other financing expenses | 27,505 | 17,600 | 12,992 | |||||||||||||||||||
| Operating lease cost | Cost of services and Selling, general and administrative expenses | 129,611 | 108,879 | 93,133 | |||||||||||||||||||
| Short-term and variable lease cost (3) | Cost of services and Selling, general and administrative expenses | 1,483,281 | 1,245,011 | 1,106,454 | |||||||||||||||||||
| Total lease and lease financing cost | $ | 1,668,255 | $ | 1,396,146 | $ | 1,226,684 |
(1) Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations.
(2) Certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. When these purchase options are exercised by a third-party lessor on behalf of Quanta, the transaction is deemed to be a financing transaction for accounting purposes, which results in the recognition of an asset equal to the purchase price and a corresponding liability.
(3) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Variable lease cost is insignificant.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Quanta has entered into arrangements with certain related parties to lease real and personal property and facilities. Typically, the parties are employees of Quanta who are also the former owners of businesses acquired by Quanta, and the real property and facilities continue to be utilized by Quanta subsequent to the acquisitions. Quanta utilizes third-party market valuations to evaluate rental rates for these properties and facilities, and the lease agreements generally have remaining lease terms of up to 11 years, subject to renewal options. Related party lease expense was $27.2 million, $18.7 million and $16.5 million for the years ended December 31, 2025, 2024 and 2023.
The components of leases in the accompanying consolidated balance sheets were as follows (in thousands):
| December 31, | |||||||||||||||||||||||
| Lease type | Classification | 2025 | 2024 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | $ | 400,814 | $ | 299,895 | ||||||||||||||||||
| Finance lease assets | Property and equipment, net of accumulated depreciation | 87,242 | 43,018 | ||||||||||||||||||||
| Lease financing transaction assets | Property and equipment, net of accumulated depreciation | 193,658 | 155,548 | ||||||||||||||||||||
| Total lease and lease financing assets | $ | 681,714 | $ | 498,461 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Current: | |||||||||||||||||||||||
| Operating | Current portion of operating lease liabilities | $ | 114,377 | $ | 94,162 | ||||||||||||||||||
| Finance | Current maturities of long-term debt and short-term debt | 69,608 | 11,641 | ||||||||||||||||||||
| Lease financing transaction liabilities | Current maturities of long-term debt and short-term debt | 17,933 | 11,307 | ||||||||||||||||||||
| Non-current: | |||||||||||||||||||||||
| Operating | Operating lease liabilities, net of current portion | 309,671 | 222,359 | ||||||||||||||||||||
| Finance | Long-term debt, net of current maturities | 23,447 | 36,352 | ||||||||||||||||||||
| Lease financing transaction liabilities | Long-term debt, net of current maturities | 180,914 | 144,242 | ||||||||||||||||||||
| Total lease and lease financing liabilities | $ | 715,950 | $ | 520,063 |
Future minimum lease payments for operating leases and finance leases were as follows (in thousands):
| As of December 31, 2025 | ||||||||||||||||||||
| Operating Leases | Finance Leases | Total | ||||||||||||||||||
| 2026 | $ | 133,445 | $ | 71,256 | $ | 204,701 | ||||||||||||||
| 2027 | 108,919 | 9,810 | 118,729 | |||||||||||||||||
| 2028 | 81,279 | 7,602 | 88,881 | |||||||||||||||||
| 2029 | 54,540 | 5,207 | 59,747 | |||||||||||||||||
| 2030 | 35,988 | 2,560 | 38,548 | |||||||||||||||||
| Thereafter | 70,163 | 259 | 70,422 | |||||||||||||||||
| Total future minimum payments related to operating leases and finance leases | 484,334 | 96,694 | 581,028 | |||||||||||||||||
| Less imputed interest | (60,286) | (3,639) | (63,925) | |||||||||||||||||
| Total | $ | 424,048 | $ | 93,055 | $ | 517,103 |
Future minimum lease payments for short-term leases were $42.1 million as of December 31, 2025. As of December 31, 2025, Quanta also had minimum lease payments related to operating lease obligations of $47.7 million for leases that had not yet commenced as of such date, are expected to commence in 2026 and have lease terms of one to eleven years. Additionally, as described above, certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. The future payments related to these lease financing transactions totaled
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
$142.1 million and comprise principal and interest payments. The principal payments related to lease financing transactions required to be made during the next five years are included in the debt maturity table in Note 10.
The weighted average remaining lease terms (other than for short-term leases) and discount rates were as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Weighted average remaining lease term (in years): | ||||||||||||||
| Operating leases | 4.87 | 4.48 | ||||||||||||
| Finance leases | 1.36 | 4.35 | ||||||||||||
| Weighted average discount rate: | ||||||||||||||
| Operating leases | 5.4 | % | 5.1 | % | ||||||||||
| Finance leases | 5.7 | % | 6.1 | % |
Quanta has also guaranteed the residual value under certain of its equipment operating leases and real estate finance leases, agreeing to pay any difference between the residual value and the fair market value of the underlying asset at the date of lease termination. Historically, the fair value of the assets at the time of lease termination generally has approximated or exceeded the residual value guarantees, and therefore such guarantees are not expected to result in significant payments.
12. INCOME TAXES:
The components of income before income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income before income taxes: | |||||||||||||||||
| Domestic | $ | 1,238,190 | $ | 1,052,185 | $ | 823,691 | |||||||||||
| Foreign | 151,315 | 159,845 | 146,265 | ||||||||||||||
| Total | $ | 1,389,505 | $ | 1,212,030 | $ | 969,956 |
The components of the provision for income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 184,159 | $ | 185,357 | $ | 132,727 | |||||||||||
| State | 58,955 | 55,691 | 42,783 | ||||||||||||||
| Foreign | 66,871 | 52,024 | 39,941 | ||||||||||||||
| Total current tax provision | 309,985 | 293,072 | 215,451 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 62,992 | 34,498 | 16,055 | ||||||||||||||
| State | 6,201 | 14,556 | (556) | ||||||||||||||
| Foreign | (31,590) | (57,379) | (11,683) | ||||||||||||||
| Total deferred tax provision (benefit) | 37,603 | (8,325) | 3,816 | ||||||||||||||
| Total provision for income taxes | $ | 347,588 | $ | 284,747 | $ | 219,267 |
There was no tax on foreign currency translation adjustment within other comprehensive income (loss) for the years
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
ended December 31, 2025, 2024 and 2023.
The actual income tax provision differed from the income tax provision computed by applying the U.S. federal statutory corporate rate to income before provision for income taxes as follows (in thousands, except percentages):
| Year Ended | |||||||||||
| December 31, 2025 | |||||||||||
| Amount | Percentage of Pre-Tax Income | ||||||||||
| U.S. federal statutory tax rate | $ | 291,796 | 21.0 | % | |||||||
| State and local income tax, net of federal (national) income tax effect (1) | 53,215 | 3.8 | |||||||||
| Foreign tax effects | (2,973) | (0.2) | |||||||||
| Effect of cross-border tax laws | 14,163 | 1.0 | |||||||||
| Tax credits | (11,408) | (0.8) | |||||||||
| Changes in valuation allowances | 51 | — | |||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Employee per diems, meals and entertainment | 35,710 | 2.6 | |||||||||
| Share-based payment awards | (23,662) | (1.7) | |||||||||
| Other | (10,977) | (0.8) | |||||||||
| Changes in unrecognized tax benefits | 3,030 | 0.2 | |||||||||
| Other adjustments | (1,357) | (0.1) | |||||||||
| Total provision for income taxes and effective tax rate | $ | 347,588 | 25.0 | % |
(1) State taxes in California, Florida, Illinois, Indiana, Iowa, New Mexico, New York, Texas and Wisconsin made up the majority (greater than 50 percent) of the tax effect in this category.
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Provision at the statutory rate | $ | 254,526 | $ | 203,691 | |||||||
| Increases (decreases) resulting from: | |||||||||||
| State taxes | 51,575 | 41,920 | |||||||||
| Employee per diems, meals and entertainment | 31,768 | 27,039 | |||||||||
| Tax contingency reserves, net | 15,046 | 6,882 | |||||||||
| Valuation allowance on deferred tax assets | 4,868 | (20,177) | |||||||||
| Company-owned life insurance | (2,430) | (2,262) | |||||||||
| Foreign taxes | (2,861) | 2,927 | |||||||||
| Entity restructuring efforts | (10,195) | — | |||||||||
| Taxes on certain equity method investments and non-controlling interests | (14,007) | (9,519) | |||||||||
| Stock-based compensation (1) | (55,068) | (35,007) | |||||||||
| Other | 11,525 | 3,773 | |||||||||
| Total provision for income taxes | $ | 284,747 | $ | 219,267 |
(1) Stock-based compensation for the years ended December 31, 2024 and 2023, include state tax benefits of $7.2 million and $5.4 million.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income tax liabilities: | |||||||||||
| Property and equipment | $ | (460,786) | $ | (370,703) | |||||||
| Goodwill | (261,272) | (212,724) | |||||||||
| Leased assets | (177,259) | (135,361) | |||||||||
| Retainage | (17,805) | (14,059) | |||||||||
| Other | (11,408) | (13,502) | |||||||||
| Total deferred income tax liabilities | (928,530) | (746,349) | |||||||||
| Deferred income tax assets: | |||||||||||
| Net operating loss carryforwards | 122,860 | 179,276 | |||||||||
| Lease liabilities | 167,739 | 129,623 | |||||||||
| Stock and incentive compensation | 102,099 | 78,396 | |||||||||
| Accruals and reserves | 98,374 | 64,449 | |||||||||
| Tax credits | 21,536 | 14,644 | |||||||||
| Deferred tax benefits on unrecognized tax positions | 6,896 | 7,726 | |||||||||
| Equity method investments and non-controlling interests | 11,423 | 6,751 | |||||||||
| Other intangible assets | 17,971 | 3,118 | |||||||||
| Other | 4,220 | 14,777 | |||||||||
| Subtotal | 553,118 | 498,760 | |||||||||
| Valuation allowance | (34,766) | (42,576) | |||||||||
| Total deferred income tax assets | 518,352 | 456,184 | |||||||||
| Total net deferred income tax liabilities | $ | (410,178) | $ | (290,165) |
The net deferred income tax assets and liabilities comprised the following in the accompanying consolidated balance sheets (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred income taxes: | |||||||||||
| Assets | $ | 92,448 | $ | 63,103 | |||||||
| Liabilities | (502,626) | (353,268) | |||||||||
| Total net deferred income tax liabilities | $ | (410,178) | $ | (290,165) |
The valuation allowances for deferred income tax assets at December 31, 2025, 2024 and 2023 were $34.8 million, $42.6 million and $40.0 million. These valuation allowances relate to state and foreign net operating loss carryforwards and foreign tax credits. The valuation allowances were established primarily as a result of uncertainty as to the amount of future taxable income in particular jurisdictions. Quanta believes it is more likely than not that it will realize the benefit of its deferred income tax assets, net of existing valuation allowances.
At December 31, 2025, Quanta had federal, state and foreign net operating loss carryforwards, the tax effect of which was $128.5 million. These carryforwards will expire as follows: 2026, $0.5 million; 2027, $1.3 million; 2028, $0.1 million; 2029, $1.1 million; 2030, $0.9 million and $124.6 million after 2030. A valuation allowance of $28.4 million has been recorded against certain foreign and state net operating loss carryforwards.
Quanta generally does not provide for taxes related to undistributed earnings of its foreign subsidiaries because such earnings either would not be taxable when remitted or they are considered to be indefinitely reinvested. Quanta could also be
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
subject to additional foreign withholding taxes if it were to repatriate cash that is indefinitely reinvested outside the United States, but it does not expect such amount to be material.
A reconciliation of unrecognized tax benefit balances is as follows (in thousands):
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 74,118 | $ | 45,136 | $ | 41,639 | |||||||||||
| Additions based on tax positions related to the current year | 12,492 | 19,155 | 10,304 | ||||||||||||||
| Additions for tax positions of prior years from business combinations | 734 | 12,461 | — | ||||||||||||||
| Additions for tax positions of prior years | — | 2,924 | — | ||||||||||||||
| Reductions resulting from a lapse of the applicable statute of limitations periods | (12,929) | (5,558) | (6,807) | ||||||||||||||
| Balance at end of year | $ | 74,415 | $ | 74,118 | $ | 45,136 |
The balances of unrecognized tax benefits, the amount of related interest and penalties are as follows (in thousands):
| December 31, 2025 | |||||
| Unrecognized tax benefits | $ | 74,415 | |||
| Portion that, if recognized, would reduce tax expense and effective tax rate | $ | 71,055 | |||
| Accrued interest on unrecognized tax benefits | $ | 9,294 | |||
| Accrued penalties on unrecognized tax benefits | $ | 2,285 |
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized interest expense of $1.5 million, $1.7 million and $0.5 million in the provision for income taxes for the years ended December 31, 2025, 2024 and 2023.
Quanta’s consolidated federal income tax returns for tax years 2022 through 2024 remain open to examination by the IRS, as the applicable statute of limitations periods have not yet expired. Additionally, various state and foreign tax returns filed by Quanta and certain subsidiaries for multiple periods remain under examination by various U.S. state and foreign tax authorities. Quanta does not consider any U.S. state in which it does business to be a major tax jurisdiction.
On July 4, 2025, the U.S. government enacted new tax legislation pursuant to Public Law No: 119-21 (the One Big Beautiful Bill). Among other provisions, the legislation extends 100% bonus depreciation for qualifying property effective January 19, 2025 and modifies certain provisions of the Tax Cuts and Jobs Act previously scheduled to expire or change after 2025. Quanta incorporated the effects of the legislation within its financial statements for the year ended December 31, 2025, which did not have a material impact on its effective annual tax rate.
13. EQUITY:
Treasury Stock
General
Treasury stock is recorded at cost. Under Delaware law, treasury stock is not counted for quorum purposes or entitled to vote.
Shares withheld for tax withholding obligations
The tax withholding obligations of employees with respect to RSUs and PSUs that are settled in common stock are typically satisfied by Quanta making tax payments and withholding the number of shares of common stock having a value equal to the tax withholding obligation that is due on the date of vesting or settlement (as applicable). With respect to these liabilities, Quanta withheld 0.4 million shares of Quanta common stock during the year ended December 31, 2025, which had a market value of $112.3 million, 0.6 million shares of Quanta common stock during the year ended December 31, 2024, which had a market value of $155.5 million, and 0.7 million shares of Quanta common stock during the year ended December 31, 2023, which had a market value of $119.1 million. These shares and the related costs to acquire them were accounted for as adjustments to the balance of treasury stock.
Stock repurchases
On May 23, 2023, Quanta’s Board of Directors approved a stock repurchase program that authorizes Quanta to purchase, from time to time through June 30, 2026, up to $500 million of its outstanding common stock. As of December 31, 2025,
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
$365.1 million remained available under this repurchase program. Quanta repurchased the following shares of common stock in the open market under its stock repurchase programs (in thousands):
| Year ended: | Shares | Amount | ||||||||||||
| December 31, 2025 | 539 | $ | 134,555 | |||||||||||
| December 31, 2024 | — | $ | — | |||||||||||
| December 31, 2023 | 2 | $ | 350 |
Quanta’s policy is to record a stock repurchase as of the trade date of the transaction; however, the payment of cash related to the repurchase is made on the settlement date of the transaction. During the year ended December 31, 2025 and 2023, there were $134.6 million and $0.4 million of cash payments related to stock repurchases. Repurchases may be implemented through open market repurchases or privately negotiated transactions, at management’s discretion, based on market and business conditions, applicable contractual and legal requirements and other factors. Quanta is not obligated to acquire any specific amount of common stock, and the repurchase program may be modified or terminated by Quanta’s Board of Directors at any time at its sole discretion and without notice.
Dividends
Quanta declared and paid the following cash dividends and cash dividend equivalents during 2025, 2024 and 2023 (in thousands, except per share amounts):
| Declaration | Record | Payment | Dividend | Dividends | ||||||||||||||||||||||
| Date | Date | Date | Per Share | Declared | ||||||||||||||||||||||
| November 17, 2025 | January 2, 2026 | January 12, 2026 | $ | 0.11 | $ | 16,742 | ||||||||||||||||||||
| August 27, 2025 | October 1, 2025 | October 10, 2025 | $ | 0.10 | $ | 14,739 | ||||||||||||||||||||
| May 22, 2025 | July 1, 2025 | July 11, 20205 | $ | 0.10 | $ | 15,104 | ||||||||||||||||||||
| March 21, 2025 | April 3, 2025 | April 11, 2025 | $ | 0.10 | $ | 15,089 | ||||||||||||||||||||
| November 20, 2024 | January 2, 2025 | January 13, 2025 | $ | 0.10 | $ | 15,074 | ||||||||||||||||||||
| August 28, 2024 | October 1, 2024 | October 11, 2024 | $ | 0.09 | $ | 13,532 | ||||||||||||||||||||
| May 23, 2024 | July 1, 2024 | July 12, 2024 | $ | 0.09 | $ | 13,521 | ||||||||||||||||||||
| March 28, 2024 | April 9, 2024 | April 17, 2024 | $ | 0.09 | $ | 13,477 | ||||||||||||||||||||
| December 5, 2023 | January 2, 2024 | January 12, 2024 | $ | 0.09 | $ | 13,412 | ||||||||||||||||||||
| August 30, 2023 | October 2, 2023 | October 13, 2023 | $ | 0.08 | $ | 12,430 | ||||||||||||||||||||
| May 23, 2023 | July 3, 2023 | July 14, 2023 | $ | 0.08 | $ | 11,893 | ||||||||||||||||||||
| March 29, 2023 | April 10, 2023 | April 18, 2023 | $ | 0.08 | $ | 12,100 | ||||||||||||||||||||
| December 13, 2022 | January 3, 2023 | January 13, 2023 | $ | 0.08 | $ | 11,756 |
A significant majority of the dividends declared were paid on the corresponding payment dates, which are generally within two months of the declaration date. Holders of certain stock awards generally received cash dividend equivalent payments equal to the cash dividends payable on account of the underlying Quanta common stock. Holders of other stock awards receive cash dividend equivalent payments only to the extent such awards 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 Quanta’s deferred compensation plan are recorded as liabilities in such plans until the deferred awards are settled.
14. STOCK-BASED COMPENSATION:
Stock Incentive Plans
The Omnibus Plan was approved by Quanta’s stockholders in May 2019 and provides for the award of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, RSUs, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Current and prospective employees, directors, officers, advisors or consultants of Quanta or its affiliates are eligible to participate in the Omnibus Plan. In May 2022 and May 2025, Quanta’s stockholders approved amendments to the Omnibus Plan to increase the shares available for issuance. Subject to certain adjustments, the maximum number of shares available for issuance under the Omnibus Plan is 14.1 million. As of December 31, 2025, there were approximately 5.1 million shares available for issuance under the Omnibus
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Plan. All awards subsequent to stockholder approval of the Omnibus Plan have been and will be made pursuant to the Omnibus Plan and applicable award agreements.
RSUs to be Settled in Common Stock
A summary of the activity for RSUs to be settled in common stock for the years ended December 31, 2025, 2024 and 2023 is as follows (RSUs in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| RSUs | Weighted Average Grant Date Fair Value (Per Unit) | RSUs | Weighted Average Grant Date Fair Value (Per Unit) | RSUs | Weighted Average Grant Date Fair Value (Per Unit) | ||||||||||||||||||||||||||||||
| Unvested at January 1 | 2,024 | $173.32 | 2,548 | $104.76 | 3,263 | $78.74 | |||||||||||||||||||||||||||||
| Granted | 638 | $302.14 | 857 | $246.34 | 684 | $161.81 | |||||||||||||||||||||||||||||
| Vested | (759) | $154.01 | (1,216) | $82.86 | (1,268) | $68.06 | |||||||||||||||||||||||||||||
| Forfeited | (149) | $192.97 | (165) | $165.14 | (131) | $116.29 | |||||||||||||||||||||||||||||
| Unvested at December 31 | 1,754 | $226.39 | 2,024 | $173.32 | 2,548 | $104.76 |
The approximate fair value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023 was $228.1 million, $316.4 million and $208.0 million, respectively.
During the years ended December 31, 2025, 2024 and 2023, Quanta recognized $141.4 million, $114.0 million and $94.5 million of non-cash stock compensation expense related to RSUs to be settled in common stock. As of December 31, 2025, there was $238.3 million of total unrecognized compensation expense related to unvested RSUs to be settled in common stock granted to both employees and non-employees. This cost is expected to be recognized over a weighted average period of 2.44 years.
PSUs to be Settled in Common Stock
A summary of the activity for PSUs to be settled in common stock for the years ended December 31, 2025, 2024 and 2023 is as follows (PSUs in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| PSUs | Weighted Average Grant Date Fair Value (Per Unit) | PSUs | Weighted Average Grant Date Fair Value (Per Unit) | PSUs | Weighted Average Grant Date Fair Value (Per Unit) | ||||||||||||||||||||||||||||||
| Unvested at January 1 | 425 | $177.69 | 491 | $129.70 | 733 | $65.39 | |||||||||||||||||||||||||||||
| Granted | 92 | $259.17 | 109 | $263.34 | 177 | $174.50 | |||||||||||||||||||||||||||||
| Vested | (165) | $123.88 | (175) | $96.45 | (413) | $35.12 | |||||||||||||||||||||||||||||
| Forfeited | (4) | $222.94 | — | N/A | (6) | $101.66 | |||||||||||||||||||||||||||||
| Unvested at December 31 | 348 | $224.15 | 425 | $177.69 | 491 | $129.70 |
The Monte Carlo simulation valuation methodology applied the following key inputs:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Valuation date price based on February 27, 2025, March 4, 2024 and March 9, 2023 closing stock prices of Quanta common stock | $259.26 | $243.34 | $160.55 | |||||||||||||||||
| Expected volatility (1) | 34 | % | 33 | % | 35 | % | ||||||||||||||
| Risk-free interest rate | 4.05 | % | 4.43 | % | 4.62 | % | ||||||||||||||
| Term in years | 2.84 | 2.83 | 2.81 |
(1) The expected volatility inputs for Quanta are based on historical volatility, which is based on Quanta’s dividend-adjusted closing prices over a period equivalent to the performance period.
During the years ended December 31, 2025, 2024 and 2023, Quanta recognized $40.5 million, $36.5 million and $32.3 million of non-cash stock compensation expense related to PSUs to be settled in common stock.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2025, there was an estimated $30.1 million of total unrecognized compensation expense related to unearned and unvested PSUs. This amount is based on forecasted attainment of performance metrics and estimated forfeitures of unearned and unvested PSUs. The compensation expense related to outstanding PSUs can vary from period to period based on changes in forecasted achievement of established performance goals and the total number of shares of common stock that Quanta anticipates will be issued upon vesting of such PSUs. This cost is expected to be recognized over a weighted average period of 1.61 years.
During the years ended December 31, 2025, 2024 and 2023, 0.3 million, 0.3 million and 0.7 million shares of common stock were issued in connection with earned and vested PSUs. The approximate fair values of PSUs earned and vested during the years ended December 31, 2025, 2024 and 2023 were $83.9 million, $75.4 million and $115.5 million, respectively.
15. EMPLOYEE BENEFIT PLANS:
Unions’ Multiemployer Pension Plans
Quanta contributes to a number of multiemployer defined benefit pension plans under the terms of collective bargaining agreements with various unions that represent certain of Quanta’s employees. Approximately 36% of Quanta’s employees as of December 31, 2025 were covered by collective bargaining agreements. Quanta’s multiemployer pension plan contribution rates generally are specified in the collective bargaining agreements (usually on a monthly or annual basis), and contributions are made to the plans on a “pay-as-you-go” basis based on its union employee payrolls. Quanta may also have additional liabilities imposed by law as a result of its participation in multiemployer defined benefit pension plans. The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, imposes certain liabilities upon an employer who is a contributor to a multiemployer pension plan if the employer withdraws or is deemed to have withdrawn from the plan or the plan is terminated or experiences a mass withdrawal.
The Pension Protection Act of 2006 (PPA) also added special funding and operational rules generally applicable to plan years beginning after 2007 for multiemployer plans in the United States that are classified as “endangered,” “seriously endangered” or “critical” status based on multiple factors (including, for example, the plan’s funded percentage, cash flow position and whether a projected minimum funding deficiency exists). Plans in these classifications must adopt remedial measures to improve their funded status through a funding improvement or rehabilitation plan, as applicable, which may require additional contributions from employers (which may take the form of a surcharge on benefit contributions) and/or modifications to retiree benefits. Certain plans to which Quanta contributes or may contribute in the future are in “endangered,” “seriously endangered” or “critical” status. The amount of additional funds, if any, that Quanta may be obligated to contribute to these plans cannot be reasonably estimated due to uncertainty regarding the amount of future work involving covered union employees, future contribution levels and possible surcharges on plan contributions.
The following table summarizes plan information relating to Quanta’s participation in multiemployer defined benefit pension plans, including company contributions for the last three years, the status of the plans under the PPA and whether the plans are subject to a funding improvement or rehabilitation plan or contribution surcharges. The most recent PPA zone status available in 2025 and 2024 generally relates to the plans’ fiscal year-ends in 2024 and 2023. Forms 5500 were not yet available for the plan years ending in 2025. The PPA zone status is based on information that Quanta received from the respective plans’ administrators, as well as publicly available information on the U.S. Department of Labor website, and is certified by each plan’s actuary. Although multiple factors or tests may result in red zone or yellow zone status, plans in the red zone generally are less than 65 percent funded, plans in the yellow zone generally are less than 80 percent funded, and plans in the green zone generally are at least 80 percent funded. Under the PPA, red zone plans are classified as “critical” status, yellow zone plans are classified as “endangered” status and green zone plans are classified as neither “endangered” nor “critical” status. The “Subject to Financial Improvement/ Rehabilitation Plan” column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented. The last column lists the expiration dates of Quanta’s collective-bargaining agreements to which the plans are subject. Total contributions to these plans correspond to the number of union employees employed at any given time and the plans in which they participate and vary depending upon the location and number of ongoing projects at a given time and the need for union resources in connection with such projects, as well as changes in contractual employer contribution rates. Information has been presented separately for individually significant plans, based on PPA funding status classification, and in the aggregate for all other plans.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
| Employee Identification Number/ Pension Plan Number | PPA Zone Status | Subject to Financial Improve- ment/ Reha- bilitation Plan | Contributions (in thousands) | Sur-charge Imposed | Expiration Date of Collective Bargaining Agreement | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Fund | 2025 | 2024 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| National Electrical Benefit Fund | 53-0181657 | Green | Green | N | $ | 61,338 | $ | 41,321 | $ | 47,126 | N | Varies through May 2030 | ||||||||||||||||||||||||||||||||||||||||||||
| Eighth District Electrical Pension Fund | 84-6100393 | Green | Green | N | 17,295 | 13,820 | 6,169 | N | Varies through August 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Excavators Union Local 731 Pension Fund | 13-1809825 | Green | Green | N | 13,823 | 11,974 | 11,411 | N | April 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| IBEW 332 Pension Plan - Part A | 94-2688032 | Green | Green | N | 9,711 | 8,404 | — | N | May 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Central Pension Fund of the IUOE & Participating Employers | 36-6052390 | Green | Green | N | 9,543 | 8,496 | 7,396 | N | Varies through March 2030 | |||||||||||||||||||||||||||||||||||||||||||||||
| IBEW Local 683 Pension Fund Pension Plan | 34-1442087 | Green | Green | N | 9,347 | 5,828 | 731 | N | May 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Indiana Laborers Pension Fund | 35-6027150 | Green | Green | N | 5,556 | 512 | — | N | Varies through March 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Locals 302 & 612 of the IUOE - Employers Construction Industry Retirement Plan | 91-6028571 | Green | Green | N | 4,564 | 3,644 | 2,707 | N | Varies through May 2028 | |||||||||||||||||||||||||||||||||||||||||||||||
| Sheet Metal Workers' National Pension Fund | 52-6112463 | Green | Green | N | 4,215 | — | — | N | Varies through April 2029 | |||||||||||||||||||||||||||||||||||||||||||||||
| IBEW Local 595 Pension Plan | 94-6279541 | Green | Green | N | 3,325 | 2,367 | — | N | May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Pipeline Industry Benefit Fund | 73-6146433 | Green | Green | N | 2,990 | 2,478 | 2,733 | N | Varies through May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating Engineers' Local 324 Pension Fund | 38-1900637 | Red | Red | Y | 2,906 | 3,367 | 3,193 | Y | Varies through May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| United Association National Pension Fund | 52-6152779 | Green | Green | N | 2,667 | 1,461 | — | N | Varies through August 2029 | |||||||||||||||||||||||||||||||||||||||||||||||
| Laborers Pension Trust Fund for Northern California | 94-6277608 | Green | Green | N | 2,651 | 3,468 | 3,342 | N | Varies through June 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Local 697 I.B.E.W. and Electrical Industry Pension Plan | 51-6133048 | Green | Green | N | 2,580 | 3,228 | 2,227 | N | May 2028 | |||||||||||||||||||||||||||||||||||||||||||||||
| NECA-IBEW Pension Trust Fund | 51-6029903 | Green | Green | N | 2,505 | 1,850 | — | N | Varies through June 2028 | |||||||||||||||||||||||||||||||||||||||||||||||
| Laborers National Pension Fund | 75-1280827 | Red | Red | Y | 2,380 | 1,205 | 746 | Y | Varies through November 2028 | |||||||||||||||||||||||||||||||||||||||||||||||
| Construction Laborers Pension Trust Fund for Southern California | 43-6159056 | Green | Green | N | 2,248 | 1,764 | 2,729 | N | Varies through June 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Central Laborers' Pension Fund | 37-6052379 | Green | Yellow | N | 2,087 | 1,484 | 2,342 | N | Varies through March 2030 | |||||||||||||||||||||||||||||||||||||||||||||||
| Pension Trust Fund for Operating Engineers | 94-6090764 | Green | Green | N | 2,075 | 2,504 | 2,176 | N | Varies through June 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Southern California IBEW-NECA Pension Plan | 95-6392774 | Yellow | Yellow | Y | 1,995 | 460 | — | N | June 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Alaska Teamster-Employer Pension Trust | 92-6003463 | Red | Red | Y | 1,899 | 1,222 | 80 | Y | May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Alaska Plumbing and Pipefitting Industry Pension Plan | 52-6103810 | Red | Red | Y | 1,867 | 986 | 83 | Y | May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Local Union No. 124 I.B.E.W. Pension Trust Fund | 43-0817626 | Green | Green | N | 1,855 | 5,836 | — | N | December 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating Engineers Pension Trust | 95-6032478 | Green | Green | N | 310 | 871 | 1,473 | N | Varies through June 2028 | |||||||||||||||||||||||||||||||||||||||||||||||
| Kern County Electrical Workers Pension Fund | 95-6123049 | Green | Green | N | 273 | 2,675 | 325 | N | November 2027 | |||||||||||||||||||||||||||||||||||||||||||||||
| Employer - Teamsters Local NOs 175 & 505 Pension Trust Fund | 55-6021850 | Red | Red | Y | — | 900 | 1,027 | Y | May 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| All other plans - U.S. | 52,286 | 45,158 | 39,233 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| All other plans - Canada (1) | 2,403 | 6,473 | 12,515 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total contributions | $ | 226,694 | $ | 183,756 | $ | 149,764 |
(1) Multiemployer defined benefit pension plans in Canada are not subject to the reporting requirements under the PPA. Accordingly, certain information was not publicly available.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Quanta’s contributions to the following individually significant plans were five percent or more of the total contributions to these plans for the periods indicated based on the Forms 5500 for these plans for the years ended December 31, 2024 and 2023. Forms 5500 were not yet available for these plans for the year ended December 31, 2025.
| Pension Fund | Plan Years in which Quanta Contributions Were Five Percent or More of Total Plan Contributions | |||||||
| National Electrical Benefit Fund | 2023 | |||||||
| Eighth District Electrical Pension Fund | 2024 and 2023 | |||||||
| Excavators Union Local 731 Pension Fund | 2024 and 2023 | |||||||
| IBEW 332 Pension Plan - Part A | 2024 | |||||||
| IBEW Local 683 Pension Fund Pension Plan | 2024 | |||||||
| IBEW Local 595 Pension Plan | 2024 | |||||||
| Pipeline Industry Pension Fund | 2024 and 2023 | |||||||
| Local 697 I.B.E.W. and Electrical Industry Pension Plan | 2024 and 2023 | |||||||
| Alaska Plumbing and Pipefitting Industry Pension Plan | 2024 | |||||||
| Local Union No. 124 I.B.E.W. Pension Trust Fund | 2024 | |||||||
| Kern County Electrical Workers Pension Fund | 2024 | |||||||
| I.B.E.W. Local 456 Pension Plan (1) | 2024 and 2023 | |||||||
| Teamsters National Pipe Line Pension Plan (1) | 2024 and 2023 |
(1) This plan is included in the “All other plans - U.S.” category in the prior table.
In addition to the contributions made to multiemployer defined benefit pension plans noted above, Quanta also contributed to multiemployer defined contribution or other postretirement benefit plans on behalf of certain union employees. Contributions to union multiemployer defined contribution or other postretirement benefit plans by Quanta were $349.6 million, $282.5 million and $254.7 million for the years ended December 31, 2025, 2024 and 2023. Total contributions made to all of these multiemployer plans correspond to the number of union employees employed at any given time and the plans in which they participate and participation in project labor agreements and vary depending upon the location and number of ongoing projects at a given time and the need for union resources or project labor agreements in connection with such projects. Contributions to such plans are also impacted by acquisitions and changes in employer contribution rates.
Quanta 401(k) Plan
Quanta maintains a 401(k) plan pursuant to which employees who are not provided retirement benefits through a collective bargaining agreement may make contributions through payroll deductions. Quanta makes matching cash contributions of 100% of each employee’s contribution up to 3% of that employee’s salary and 50% of each employee’s contribution between 3% and 6% of such employee’s salary, up to the maximum amount permitted by law. Employer matching contributions to the Quanta and certain operating company 401(k) plans were $119.6 million, $93.9 million and $75.9 million for the years ended December 31, 2025, 2024 and 2023.
Deferred Compensation Plans
Quanta maintains non-qualified deferred compensation plans under which eligible directors and key employees may defer their receipt of certain cash compensation and/or the settlement of certain stock-based awards. These plans are unfunded and unsecured compensation arrangements. Individuals participating in these plans may allocate deferred cash amounts among a group of notional accounts that mirror the gains and losses of various investment alternatives. Generally, participants receive distributions of deferred balances based on predetermined payout schedules or other events.
The plan covering key employees provides for employer matching contributions for certain officers and employees whose benefits under the 401(k) plan are limited by federal tax law. Quanta may also make discretionary employer contributions to such plan. Matching contributions vest immediately, and discretionary employer contributions may be subject to a vesting schedule determined at the time of the contribution, provided that vesting accelerates upon a change in control or the participant’s death or retirement. All matching and discretionary employer contributions, whether vested or not, are forfeited upon a participant’s termination of employment for cause or upon the participant engaging in competition with Quanta or any of its affiliates.
As of December 31, 2025 and 2024, the liability related to deferred cash compensation under these plans, including amounts contributed by Quanta, was $126.1 million and $110.2 million, the majority of which was included in “Insurance and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
other non-current liabilities” in the accompanying consolidated balance sheets. Additionally, as of December 31, 2025 and 2024, the settlement and issuance of 119,208 and 154,991 shares of common stock underlying certain stock-based awards had been deferred under these plans, and such issuances are scheduled to occur in future periods.
To provide for future obligations related to deferred cash compensation under these plans, Quanta has invested in corporate-owned life insurance (COLI) policies covering certain participants in the deferred compensation plans, the underlying investments of which are intended to be aligned with the investment alternatives elected by plan participants. The COLI assets are recorded at their cash surrender value, which is considered their fair market value, and as of December 31, 2025 and 2024, the fair market values were $122.8 million and $102.7 million and were included in “Other assets, net” in the accompanying consolidated balance sheets. The level of inputs for these fair value measurements is Level 2.
Changes in the fair market value of Quanta’s COLI assets and deferred compensation liabilities largely offset and are recorded in the accompanying statements of operations as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||||||||
| Classification | Change in fair market value of | 2025 | 2024 | 2023 | |||||||||||||||||||
| Increase in Selling, general and administrative expenses | Deferred compensation liabilities | $ | (16,586) | $ | (14,108) | $ | (13,325) | ||||||||||||||||
| Other income, net | COLI assets | $ | 14,290 | $ | 12,446 | $ | 11,587 |
16. COMMITMENTS AND CONTINGENCIES:
Legal Proceedings
Quanta is from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, property damage, breach of contract, negligence or gross negligence, environmental liabilities, wage and hour and other employment-related damages, punitive damages, consequential damages, civil penalties or other losses, or injunctive or declaratory relief, as well as interest and attorneys’ fees associated with such claims. With respect to all such lawsuits, claims and proceedings, Quanta records a reserve when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, Quanta discloses matters for which management believes a material loss is at least reasonably possible.
The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. 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 and taking into account, among other things, negotiations with claimants, discovery, settlements and payments, judicial rulings, arbitration and mediation decisions, advice of internal and external legal counsel, and other information and events pertaining to a particular matter. Costs incurred for litigation are expensed as incurred. Except as otherwise stated below, none of these proceedings are expected to have a material adverse effect on Quanta’s consolidated financial position, results of operations or cash flows. However, management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.
Silverado Wildfire Matter
From 2022 to present, two of Quanta’s subsidiaries have received tenders of defense and demands for preservation of evidence from Southern California Edison Company (SCE) related to lawsuits filed against SCE and T-Mobile USA, Inc. (T-Mobile) in the Superior Court of California, County of Orange. The lawsuits generally assert property damage and related claims on behalf of certain individuals and subrogation claims on behalf of insurers relating to damages caused by a wildfire that began in October 2020 in Orange County, California (the Silverado Fire) and that is purported to have damaged approximately 13,000 acres. The lawsuits allege the Silverado Fire originated from utility poles in the area, generally claiming that each defendant failed to adequately maintain, inspect, repair or replace its overhead facilities, equipment and utility poles and remove vegetation in the vicinity; that the utility poles were overloaded with equipment from shared usage; and that SCE failed to de-energize its facilities during red flag warnings for a Santa Ana wind event. The lawsuits allege the Silverado Fire started when SCE and T-Mobile equipment contacted each other and note the Orange County Fire Department is investigating whether a T-Mobile lashing wire contacted an SCE overhead primary conductor in high winds. T-Mobile has filed cross-complaints against SCE alleging, among other things, that the ignition site of the Silverado Fire encompassed two utility poles replaced by SCE or a third party engaged by SCE, and that certain equipment, including T-Mobile’s lashing wire, was not sufficiently re-secured after the utility pole replacements. One of Quanta’s subsidiaries performed planning and other services related to the two utility poles, and another Quanta subsidiary replaced the utility poles and reattached the electrical and telecommunication equipment to the new utility poles in March 2019, approximately 19 months before the Silverado Fire.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Pursuant to the general terms of a master services agreement and a master consulting services agreement between the Quanta subsidiaries and SCE, the subsidiaries agreed to defend and indemnify SCE against certain claims arising with respect to performance or nonperformance under the agreements. The SCE tender letters seek contractual indemnification and defense from Quanta’s subsidiaries for the claims asserted against SCE in the lawsuits and the T-Mobile cross-complaints.
Quanta’s subsidiaries intend to vigorously defend against the lawsuits, the T-Mobile cross-complaints and any other claims asserted in connection with the Silverado Fire. Quanta will continue to review additional information in connection with this matter as litigation and resolution efforts progress, and any such information may potentially allow Quanta to determine an estimate of potential loss, if any. As of December 31, 2025, Quanta had not recorded an accrual with respect to this matter, and Quanta is currently unable to reasonably estimate a range of reasonably possible loss, if any, because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability. Quanta also believes that to the extent its subsidiaries are determined to be liable for any damages resulting from this matter, its insurance would be applied to any such liabilities over its deductible amount and its insurance coverage would be adequate to cover such potential liabilities. However, the ultimate amount of any potential liability and insurance coverage in connection with this matter remains subject to uncertainties associated with pending and potential future litigation.
Concentrations of Credit Risk
Quanta is subject to concentrations of credit risk related primarily to its cash and cash equivalents and its net receivable position with customers, which includes amounts related to billed and unbilled accounts receivable and contract assets for services Quanta has performed for customers. Substantially all of Quanta’s cash and cash equivalents are managed by what it believes to be high credit quality financial institutions. In accordance with Quanta’s investment policies, these institutions are authorized to invest cash and cash equivalents in a diversified portfolio of what Quanta believes to be high quality cash and cash equivalent investments, which consist primarily of interest-bearing demand deposits, money market investments and money market mutual funds. Although Quanta does not currently believe the principal amount of these cash and cash equivalents is subject to any material risk of loss, changes in economic conditions could impact the interest income Quanta receives from these investments.
Quanta grants credit under normal payment terms, generally without collateral, to its customers, which primarily include utilities, renewable energy and other power developers, technology and manufacturing companies, communications providers, industrial companies and energy delivery companies located primarily in the United States, Canada and Australia. While Quanta generally has certain statutory lien rights with respect to services provided, Quanta is subject to potential credit risk related to business, economic and financial market conditions that affect these customers and locations, which have been heightened as a result of recent economic and financial market conditions, including in connection with inflationary pressure, an increased interest rate environment and other uncertainties and challenges in the overall economy. Some of Quanta’s customers have experienced significant financial difficulties (including bankruptcy), and customers may experience financial difficulties in the future. These difficulties expose Quanta to increased risk related to collectability of billed and unbilled receivables and contract assets for services Quanta has performed. See Note 4 for additional discussion on concentrations on credit risk.
Insurance
Quanta is insured for, among other things, employer’s liability, workers’ compensation, auto liability, aviation and general liability claims. Quanta manages and maintains a portion of its risk through retentions and/or high deductibles, as well as, both directly and indirectly through its wholly-owned captive insurance company. The captive insurance company reimburses all claims up to the amount of the applicable deductible of any third-party insurance programs, as well as certain additional exposure related to the general and auto liability programs, which together, in certain circumstances, can be up to $70.0 million per occurrence. As a supplement to its high-deductible primary insurance and captive programs, Quanta maintains insurance with excess insurance carriers for potential losses that exceed the amount of Quanta’s deductible and captive insurance obligations. Quanta renews its insurance policies on an annual basis, and therefore deductibles, captive insurance and/or reinsurance amounts, and levels of insurance coverage may change in future periods. In addition, insurers may cancel Quanta’s coverage or determine to exclude certain items from coverage, or Quanta may elect not to obtain certain types or levels of insurance based on the potential benefits considered relative to the cost of such insurance or increase the amounts subject to self-insurance, deductibles or retention.
As of December 31, 2025 and 2024, the gross amount accrued for employer’s liability, workers’ compensation, auto liability, general liability and group health claims totaled $521.4 million and $400.2 million, of which $334.6 million and $263.3 million are included in “Insurance and other non-current liabilities,” and the remainder is included in “Accounts payables and accrued expenses.” Related insurance recoveries/receivables as of December 31, 2025 and 2024 were $5.8 million and $4.9 million, of which $0.2 million and $0.8 million are included in “Prepaid expenses and other current assets” and $5.6 million and $4.1 million are included in “Other assets, net.” Losses under these insurance programs are accrued based upon Quanta’s estimate of the ultimate liability for claims reported and an estimate of claims incurred but not reported, with assistance from third-party actuaries. These insurance liabilities are difficult to assess and estimate due to unknown factors,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
including the severity of an injury, the extent of damage, the determination of Quanta’s liability in proportion to other parties, the number of incidents not reported and the overall claims environment. The accruals are based upon known facts and historical trends, and management believes such accruals are adequate.
Letters of Credit
Certain of Quanta’s vendors require letters of credit to ensure reimbursement for amounts they are disbursing on Quanta’s behalf, such as to beneficiaries under its insurance programs. In addition, from time to time, certain customers require Quanta to post letters of credit to ensure payment of subcontractors and vendors and guarantee performance under contracts. Such letters of credit are generally issued by a bank or similar financial institution, including pursuant to Quanta’s senior credit facility and certain uncommitted bilateral arrangements. Each letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit if the holder claims that Quanta has failed to perform specified actions. If this were to occur, Quanta would be required to reimburse the issuer of the letter of credit. Depending on the circumstances of such a reimbursement, Quanta may also be required to record a charge to earnings for the reimbursement. See Note 10 for additional information regarding Quanta’s letters of credit outstanding. Quanta is not aware of any claims currently asserted or threatened under any of these letters of credit that are material, individually or in the aggregate. However, to the extent payment is required for any such claims, the amount paid could be material and could adversely affect Quanta’s consolidated business, financial condition, results of operations and cash flows.
Bonds and Parent Guarantees
Many customers, particularly in connection with new construction, require Quanta to post performance and payment bonds. These bonds provide a guarantee that Quanta will perform under the terms of a contract and pay its subcontractors and vendors. In certain circumstances, the customer may demand that the surety make payments or provide services under the bond, and Quanta must reimburse the surety for any expenses or outlays it incurs. Quanta may also be required to post letters of credit in favor of the sureties, which would reduce the borrowing availability under its senior credit facility. As of December 31, 2025, Quanta is not aware of any outstanding material obligations for payments related to bond obligations. However, to the extent future reimbursements are required, the amounts could be material and could adversely affect Quanta’s consolidated business, financial condition, results of operations and cash flows.
Performance bonds expire at various times ranging from mechanical completion of a project to a period extending beyond contract completion in certain circumstances, and therefore a determination of maximum potential amounts outstanding requires certain estimates and assumptions. Such amounts can also fluctuate from period to period based upon the mix and level of Quanta’s bonded operating activity. As of December 31, 2025, the total amount of the outstanding performance bonds was estimated to be approximately $14.9 billion. Quanta’s estimated maximum exposure related to the value of the performance bonds outstanding is lowered on each bonded project as the cost to complete is reduced, and each commitment under a performance bond generally extinguishes concurrently with the expiration of its related contractual obligation.
Additionally, from time to time, Quanta guarantees certain obligations and liabilities of its subsidiaries that may arise in connection with, among other things, contracts with customers, equipment lease obligations, joint venture arrangements and contractor licenses. These guarantees may cover all of the subsidiary’s unperformed, undischarged and unreleased obligations and liabilities under or in connection with the relevant agreement. For example, with respect to customer contracts, a guarantee may cover a variety of obligations and liabilities arising during the ordinary course of the subsidiary’s business or operations, including, among other things, warranty and breach of contract claims, third party and environmental liabilities arising from the subsidiary’s work and for which it is responsible, liquidated damages, or indemnity claims. Quanta is not aware of any claims under any guarantees that are material. To the extent a subsidiary incurs a material obligation or liability and Quanta has guaranteed the performance or payment of such obligation or liability, the recovery by a customer or other counterparty or a third party will not be limited to the assets of the subsidiary. As a result, responsibility under the guarantee could exceed the amount recoverable from the subsidiary alone and could materially and adversely affect Quanta’s consolidated business, financial condition, results of operations and cash flows.
Collective Bargaining Agreements and Multiemployer Pension Plans
Certain of Quanta’s operating companies are parties to collective bargaining agreements with unions that represent certain of their employees. The collective bargaining agreements expire at various times and have typically been renegotiated and renewed on terms similar to those in the expiring agreements. From time to time, Quanta is a party to grievance and arbitration actions based on claims arising out of the collective bargaining agreements. The agreements require the operating companies to pay specified wages, provide certain benefits to union employees and contribute certain amounts to multiemployer pension plans and employee benefit trusts. Quanta’s multiemployer pension plan contribution rates generally are made to the plans on a “pay-as-you-go” basis based on its union employee payrolls. The location and number of union employees that Quanta employs at any given time and the plans in which they may participate vary depending on Quanta’s need
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
for union resources in connection with its ongoing projects. Therefore, Quanta is unable to accurately predict its union employee payroll and the resulting multiemployer pension plan contribution obligations for future periods.
In addition, Quanta may also be subject to liabilities as a result of its participation in, or withdrawal from, multiemployer defined benefit pension plans. Quanta may be required to make additional contributions to its multiemployer pension plans if they become underfunded, and these additional contributions will be determined based on Quanta’s union employee payrolls. Certain plans to which Quanta contributes or may contribute in the future may adopt measures to improve their funded status through a funding improvement or rehabilitation plan, as applicable, which may require additional contributions from employers (e.g., a surcharge on benefit contributions) and/or modifications to retiree benefits. The amount, if any, that Quanta may be obligated to contribute to these plans cannot be reasonably estimated due to uncertainty regarding the amount of future work involving covered union employees, future contribution levels and possible surcharges on plan contributions. Quanta may also be subject to additional liabilities imposed by law if it or another participating employer withdraws from a multiemployer defined benefit pension plan, a plan is terminated or a plan experiences a mass withdrawal. These liabilities may include an allocable share of the unfunded vested benefits in the plan for all plan participants, not only the benefits payable to a contributing employer’s own retirees. As a result, participating employers may bear a higher proportion of liability for unfunded vested benefits if other participating employers cease to contribute or withdraw, with the reallocation of liability being more acute in cases when a withdrawn employer is insolvent or otherwise fails to pay its withdrawal liability. Quanta is not aware of any material withdrawal liabilities that have been incurred or asserted and that remain outstanding as a result of a withdrawal by Quanta from a multiemployer defined benefit pension plan. However, Quanta’s future contribution obligations and potential withdrawal liability exposure could vary based on the investment and actuarial performance of the multiemployer pension plans to which it contributes and other factors, which could be negatively impacted as a result of recent unfavorable and uncertain economic and financial market conditions. Quanta has been subject to significant withdrawal liabilities in the past, and to the extent Quanta is subject to material withdrawal liabilities in the future, such liability could adversely affect its business, financial condition, results of operations and cash flows.
Indemnities and Warranties
Quanta generally indemnifies its customers for the services it provides under its contracts and other specified liabilities, which may subject Quanta to indemnity claims and liabilities and related litigation. Additionally, Quanta manufactures products sold to customers and other third parties, which may subject Quanta to warranty claims and liabilities and related litigation. Quanta is not aware of any indemnity or warranty claims in connection with these obligations that are material, except as described in Legal Proceedings - Silverado Wildfire Matter above.
Additionally, in the normal course of Quanta’s acquisition transactions, Quanta has granted indemnification rights to various parties against certain potential liabilities related to the transaction or the acquired business and obtained rights to indemnification from the sellers or former owners of acquired businesses for certain risks, liabilities and obligations arising from business operations prior to the date of acquisition, such as financial, performance, operational, safety, workforce, environmental, litigation, compliance or tax issues, some of which Quanta may not have discovered during due diligence. However, the indemnities may not cover all of Quanta’s exposure for such pre-acquisition matters, or the indemnitors may be unwilling or unable to pay amounts owed to Quanta. Accordingly, Quanta may incur expenses for which it is not reimbursed, and such amounts could be material and could have a material adverse effect on Quanta’s business or consolidated financial condition, results of operations and cash flows.
Joint Venture Liabilities
As described in Note 2, Quanta is a participant in certain joint ventures, including joint venture entities that provide infrastructure-related services under specific customer contracts and partially owned entities that own, operate and/or maintain certain infrastructure assets. If losses are incurred by joint venture entities in which Quanta holds an interest, they are generally shared ratably based on the percentage ownership of the participants in the structures. However, in Quanta’s joint venture structures that provide infrastructure-related services, each participant is typically jointly and severally liable for all of the obligations of the joint venture entity pursuant to the contract with the customer, and therefore Quanta can be liable for full performance of the contract with the customer. Additionally, in circumstances where Quanta’s participation in a joint venture qualifies as a general partnership, Quanta can be liable for all obligations of the joint venture, including obligations owed to the customer or any other person or entity. Quanta is not aware of circumstances that would lead to future claims against it for material amounts in connection with these liabilities. Additionally, typically each joint venture participant agrees to indemnify the other participant for any liabilities incurred in excess of what the other participant is obligated to bear under the respective joint venture agreement or in accordance with the scope of work subcontracted to each participant. It is possible, however, that Quanta could be required to pay or perform obligations in excess of its share if another participant is unable or refuses to pay or perform its share of the obligations. Quanta is not aware of circumstances that would lead to future claims against it for material amounts that would not be indemnified. However, to the extent any such claims arise, they could be material and could adversely affect Quanta’s consolidated business, financial condition, results of operations and cash flows.
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Capital Commitments and Other Committed Expenditures
As of December 31, 2025, Quanta had commitments primarily for capital expansion of certain manufacturing facilities and expansion of its equipment fleet of $265.1 million in 2026 and $83.9 million thereafter. Although Quanta has committed to purchase this equipment at the time of their delivery, Quanta anticipates that some of these orders related to the expansion of its equipment fleet will be assigned to third-party leasing companies and made available under certain master equipment lease agreements, thereby releasing Quanta from its capital commitments.
As of December 31, 2025, Quanta had $81.8 million of outstanding capital commitments associated with investments in unconsolidated affiliates, $23.0 million of which is payable in 2026. The majority of capital commitments relate to a limited partnership interest in a fund that targets investments in certain portfolio companies that operate businesses related to the transition to a reduced-carbon economy.
During the year ended December 31, 2024, Quanta entered into an agreement to purchase production tax credits from a third party related to a solar facility. These commitments are contingent upon the third party reaching certain energy production targets. As of December 31, 2025, Quanta had up to $201.8 million of outstanding commitments associated with these production tax credits, with up to $23.8 million payable in the year ended December 31, 2026 and the remainder due by 2035.
Employment Agreements
Quanta has various employment agreements with certain executives and other employees, which provide for compensation, other benefits and, under certain circumstances, severance payments and post-termination stock-based compensation benefits. Certain employment agreements also contain clauses that require the potential payment of specified amounts to such employees upon the occurrence of a defined change in control event.
Availability of Project Materials, Equipment and Labor
Quanta’s customers depend on the availability of certain materials for construction, upgrade and repair and maintenance of their infrastructure and are typically responsible for supplying most or all of the materials required for the services Quanta performs on their projects, including, among other things, steel, copper, aluminum and components for power generation projects (e.g., solar panels, wind turbine blades). Additionally, Quanta is required to procure all or part of the materials needed for certain projects. Although there have been delays related to disruption in the supply chain for certain project materials, Quanta and its customers have generally been able to procure necessary materials.
Quanta also depends on the availability of certain equipment, including specialty vehicles, to perform services. As a result, to the extent vehicle manufacturers experience production delays with respect to new vehicles for Quanta’s fleet (both on-road and specialty vehicles) or vehicle parts (e.g., tires), Quanta could encounter significant disruptions with respect to its fleet.
Quanta’s success depends on its ability to attract, develop and retain highly qualified employees, including craft skilled labor, engineers, project management, architects, designers, management and professional and administrative employees, and the industries in which Quanta operates have experienced shortages of qualified skilled labor personnel in recent years, which is expected to continue and potentially worsen in the future. In order to help meet near-term and longer-term labor needs, Quanta supports and utilizes its own training and educational programs and has developed additional company-wide and project-specific employee training and educational programs and strategic relationships with universities, the military and unions to recruit qualified personnel.
17. DETAIL OF CERTAIN ACCOUNTS:
Cash and Cash Equivalents
As of December 31, 2025 and 2024, cash equivalents were $227.6 million and $347.5 million and consisted primarily of money market investments, money market mutual funds and short-term deposits.
Cash and cash equivalents held by joint ventures, which are either consolidated or proportionately consolidated, are available to support joint venture operations, but Quanta cannot utilize those assets to support its other operations. Quanta generally has no right to cash and cash equivalents held by a joint venture other than participating in distributions, to the extent made, and in the event of dissolution. Cash and cash equivalents held by Quanta’s wholly-owned captive insurance company are generally not available for use in support of its other operations. Amounts related to cash and cash equivalents held by
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
consolidated or proportionately consolidated joint ventures and the captive insurance company, which are included in Quanta’s total cash and cash equivalents balances, were as follows (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash and cash equivalents held by domestic joint ventures | $ | 63,620 | $ | 71,646 | ||||||||||
| Cash and cash equivalents held by foreign joint ventures | 10,639 | 10,088 | ||||||||||||
| Total cash and cash equivalents held by joint ventures | 74,259 | 81,734 | ||||||||||||
| Cash and cash equivalents held by captive insurance company | 19,595 | 19,445 | ||||||||||||
| Cash and cash equivalents not held by joint ventures or captive insurance company | 345,654 | 640,781 | ||||||||||||
| Total cash and cash equivalents | $ | 439,508 | $ | 741,960 |
Inventories
Inventories consisted of the following (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Construction materials and aviation spare parts | $ | 143,994 | $ | 114,458 | ||||||||||
| Raw materials | 64,758 | 39,930 | ||||||||||||
| Work-in-process | 4,427 | 4,607 | ||||||||||||
| Finished goods and merchandise purchased for resale | 157,193 | 101,186 | ||||||||||||
| Total Inventories, net | $ | 370,372 | $ | 260,181 |
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Prepaid expenses | $ | 488,488 | $ | 268,093 | ||||||||||
| Other current assets | 235,772 | 201,245 | ||||||||||||
| Prepaid expenses and other current assets | $ | 724,260 | $ | 469,338 |
As of December 31, 2025 and 2024, prepaid expenses primarily include prepaid job costs, prepaid insurance expense and prepaid software expense.
Property and Equipment
Property and equipment consisted of the following (in thousands):
| Estimated Useful | December 31, | ||||||||||||||||
| Lives in Years | 2025 | 2024 | |||||||||||||||
| Land | N/A | $ | 158,270 | $ | 134,590 | ||||||||||||
| Buildings and leasehold improvements | 5-30 | 619,808 | 514,888 | ||||||||||||||
| Operating machinery and equipment | 1-25 | 2,474,357 | 2,160,333 | ||||||||||||||
| Vehicles and aviation | 2-25 | 1,488,986 | 1,187,538 | ||||||||||||||
| Office equipment, furniture and fixtures and information technology systems | 3-10 | 336,153 | 298,878 | ||||||||||||||
| Construction work in progress | N/A | 287,433 | 125,676 | ||||||||||||||
| Finance lease assets and lease financing transactions | 5-20 | 337,964 | 239,806 | ||||||||||||||
| Property and equipment, gross | 5,702,971 | 4,661,709 | |||||||||||||||
| Less — Accumulated depreciation and amortization | (2,247,767) | (1,961,432) | |||||||||||||||
| Property and equipment, net of accumulated depreciation | $ | 3,455,204 | $ | 2,700,277 |
QUANTA SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Depreciation expense related to property and equipment is recognized on a straight-line basis over the estimated useful lives of the assets and was $411.5 million, $359.4 million and $324.8 million for the years ended December 31, 2025, 2024 and 2023. In addition, Quanta held property and equipment, net of $211.9 million and $177.9 million in foreign countries, primarily Canada, as of December 31, 2025 and 2024.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Accounts payable, trade | $ | 2,832,600 | $ | 2,096,125 | ||||||||||
| Accrued compensation and related expenses | 781,610 | 651,893 | ||||||||||||
| Other accrued expenses | 965,248 | 974,325 | ||||||||||||
| Accounts payable and accrued expenses | $ | 4,579,458 | $ | 3,722,343 |
As of December 31, 2025, other accrued expenses primarily include the current portion of accrued insurance liabilities as further described in Note 16, unearned revenues and income and franchise taxes payable. As of December 31, 2024, other accrued expenses primarily include these same items, as well as the current portion of contingent consideration liabilities as further described in Note 6.
18. SUPPLEMENTAL CASH FLOW INFORMATION:
Restricted cash includes any cash that is legally restricted as to withdrawal or usage. Reconciliations of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of such amounts shown in the statements of cash flows are as follows (in thousands):
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 439,508 | $ | 741,960 | $ | 1,290,248 | $ | 428,505 | ||||||||||||||||||
| Restricted cash included in “Prepaid expenses and other current assets” | 1,428 | 2,686 | 3,652 | 3,759 | ||||||||||||||||||||||
| Restricted cash included in “Other assets, net” | 1,887 | 1,364 | 1,141 | 950 | ||||||||||||||||||||||
| Total cash, cash equivalents, and restricted cash reported in the statements of cash flows | $ | 442,823 | $ | 746,010 | $ | 1,295,041 | $ | 433,214 |
Supplemental cash flow information related to leases is as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
| Operating cash flows used by operating leases | $ | (128,410) | $ | (110,745) | $ | (95,900) | ||||||||||||||
| Operating cash flows used by finance leases | $ | (2,445) | $ | (2,606) | $ | (1,463) | ||||||||||||||
| Financing cash flows used by finance leases | $ | (11,852) | $ | (10,583) | $ | (2,511) | ||||||||||||||
| Lease assets obtained in exchange for lease liabilities: | ||||||||||||||||||||
| Operating leases | $ | 165,826 | $ | 109,708 | $ | 100,594 | ||||||||||||||
| Finance leases | $ | 56,560 | $ | 10,397 | $ | 37,299 | ||||||||||||||
| Lease financing transaction assets obtained in exchange for lease financing transaction liabilities | $ | 51,224 | $ | 69,731 | $ | 26,969 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Additional supplemental cash flow information related to income taxes paid, net of refunds, is as follows (in thousands):
| Year Ended | ||||||||
| December 31, 2025 | ||||||||
| Cash paid during the year for income taxes, net of refunds | ||||||||
| U.S. Federal | $ | (232,596) | ||||||
| U.S. State and Local | (77,173) | |||||||
| Foreign | (37,428) | |||||||
| Total cash paid during the year for income taxes (1) | $ | (347,197) |
(1) Income taxes paid during the year ended December 31, 2025 includes $16.2 million for the purchase of transferable tax credits from third parties. Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include $232.6 million paid for U.S. Federal income taxes and $33.0 million paid for Australian income taxes.
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Cash (paid) received during the period for: | ||||||||||||||
| Income taxes paid | $ | (136,755) | $ | (248,527) | ||||||||||
| Income tax refunds | $ | 5,595 | $ | 6,483 |
Cash paid for interest was as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Interest paid | $ | (217,358) | $ | (166,333) | $ | (175,782) |
Accrued capital expenditures were $26.9 million, $27.3 million and $15.7 million as of December 31, 2025, 2024 and 2023. The impact of these items has been excluded from Quanta’s capital expenditures in the accompanying consolidated statements of cash flows due to their non-cash nature.
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