Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the financial condition and results of operations of Quanta Services, Inc. (together with its subsidiaries, Quanta, we, us or our) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our 2021 Annual Report, which was filed with the SEC on February 25, 2022 and is available on the SEC’s website at www.sec.gov and on our website at www.quantaservices.com. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in Cautionary Statement About Forward-Looking Statements and Information above, in Item 1A. Risk Factors of Part II of this Quarterly Report and in Item 1A. Risk Factors of Part I of our 2021 Annual Report.

Overview

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

Beginning with the three months ended December 31, 2021, we report our results under three reportable segments: (1) Electric Power Infrastructure Solutions, (2) Renewable Energy Infrastructure Solutions and (3) Underground Utility and Infrastructure Solutions. In conjunction with this change, certain prior period amounts have been recast to conform to this new segment reporting structure. This structure is generally focused on broad end-user markets for our services. Included within the Electric Power Infrastructure Solutions segment are the results related to our communications infrastructure services.

Current Quarter Financial Results and Significant Operational Trends and Events

Key consolidated financial results for the three months ended March 31, 2022 included:

• Revenues increased 46.7%, or $1.26 billion, to $3.97 billion as compared to consolidated revenues of $2.70 billion for the three months ended March 31, 2021;

• Operating income increased 3.3%, or $3.8 million, to $117.5 million as compared to $113.7 million for the three months ended March 31, 2021;

• Net income attributable to common stock decreased 5.7%, or $5.1 million, to $84.6 million as compared to $89.8 million for the three months ended March 31, 2021;

• Diluted earnings per share decreased 8.1%, or $0.05, to $0.57 as compared to $0.62 for the three months ended March 31, 2021;

• EBITDA (a non-GAAP financial measure) increased 52.3%, or $105.0 million, to $305.8 million, as compared to $200.8 million for the three months ended March 31, 2021, and adjusted EBITDA (a non-GAAP financial measure) increased 56.9%, or $125.3 million, to $345.5 million, as compared to $220.2 million for the three months ended March 31, 2021;

• Net cash provided by operating activities decreased by 32%, or $40.5 million to $85.1 million, as compared to net cash provided by operating activities of $125.6 million for the three months ended March 31, 2021;

• Remaining performance obligations increased 16.1%, or $947.2 million, to $6.84 billion as of March 31, 2022 as compared to $5.90 billion as of December 31, 2021; and

• Total backlog (a non-GAAP financial measure) increased 6.1%, or $1.18 billion, to $20.5 billion as of March 31, 2022, as compared to $19.27 billion as of December 31, 2021.

For a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure, and a reconciliation of backlog to remaining performance obligations, the most comparable GAAP financial measure, see Non-GAAP Financial Measures below.

As described below, during the three months ended March 31, 2022, our results reflected certain significant operational trends and events as compared to the three months ended March 31, 2021, with certain of our segment results of operations recast to conform to our current segment reporting structure.

Electric Power Infrastructure Solutions Segment

• Revenues increased by 27.6% to $2.14 billion, as compared to $1.68 billion.

• Operating income increased by 32.3% to $203.4 million, as compared to $153.7 million, and operating margin increased to 9.5%, as compared to 9.2%.

• Revenues increased primarily due to increased spending by our utility customers on grid modernization and hardening, resulting in increased demand for our electric power services, as well as approximately $75 million of revenues attributable to acquired businesses.

• Operating income and operating margin increased in the three months ended March 31, 2022 due to the increase in revenues, which contributed to higher levels of fixed cost absorption, as well as improved performance by our telecommunications operations which experienced losses on projects during the three months ended March 31, 2021. The increase in operating margin was also attributable to a $10.0 million increase in equity in earnings from LUMA and other integral affiliates.

Renewable Energy Infrastructure Solutions Segment

*•*Revenues increased by 128.0% to $875.6 million, as compared to $384.1 million.

• Operating income increased by 54.4% to $69.9 million, as compared to $45.3 million, and operating margin decreased to 8.0%, as compared to 11.8%.

*•*Revenues increased primarily due to a $470 million increase in revenues attributable to acquired businesses, mainly Blattner, which was acquired in October 2021. The remaining increase in revenues was primarily due to increased transmission and interconnection construction services related to renewable generation infrastructure.

• The increase in operating income was primarily due to higher revenues associated with the acquisition of Blattner. The decrease in operating margin was primarily due to the change in the mix of work due to the acquired revenues as well as favorable close-out of certain projects during the three months ended March 31, 2021, and the normal variability associated with the timing of projects.

Underground Utility and Infrastructure Solutions Segment

• Revenues increased by 47.8% to $951.2 million, as compared to $643.5 million.

• Operating income increased by 446.6% to $48.2 million, as compared to $8.8 million, and operating margin increased to 5.1%, as compared to 1.4%.

• Revenues increased primarily due to higher demand from our gas utility and industrial customers, as well as an increase in revenues associated with larger pipeline projects.

• Operating income and operating margin increased in the three months ended March 31, 2022 due to the increase in revenues, which contributed to higher levels of fixed cost absorption. Also contributing to the increases were improved performance across the segment, including in our industrial services operations due to the reduced negative impacts of the COVID-19 pandemic as compared to the same period in 2021, as well as favorable project timing and project mix.

See Business Environment, Results of Operations and Liquidity and Capital Resources below for additional information and discussion related to consolidated and segment results.

Business Environment

We believe there are long-term growth opportunities across our industries, and we continue to have a positive long-term outlook. Although not without risks and challenges, including those discussed in Cautionary Statement About Forward-Looking Statements and Information, Item 1A. Risk Factors of Part II of this Quarterly Report and Item 1A. Risk Factors of Part I of our 2021 Annual Report, we believe, with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to capitalize on opportunities and trends in our industries.

Electric Power Infrastructure Solutions. Utilities are continuing to invest significant capital in their electric power delivery systems, particularly transmission, substation and distribution infrastructure, through multi-year, multi-billion dollar grid modernization and reliability programs, which have provided, and are expected to continue to provide, demand for our services. While the COVID-19 pandemic resulted in a short-term overall decline in electricity usage in 2020, primarily related to commercial and industrial users, demand recovered and continued to increase in 2021, and we expect demand for electricity in North America to grow over the long term and believe that certain segments of the North American electric power grid are not adequate to efficiently serve the power needs of the future. Furthermore, to the extent that electrification trends increase, including through, among other things, electric vehicle (EV) adoption, demand for electricity could be greater than currently anticipated. To accommodate this growth, we expect continued demand for new or expanded transmission, substation and distribution infrastructure to reliably transport power to meet demand driven by electrification and the modification and reengineering of existing infrastructure as existing coal and nuclear generation facilities are retired or shut down. In order to reliably and efficiently deliver power, and in response to federal reliability standards, utilities are also integrating smart grid technologies into distribution systems to improve grid management and create efficiencies, and in preparation for emerging technologies, such as EVs.

A number of utilities also continue to implement system upgrades and hardening programs in response to recurring severe weather events, such as hurricanes and wildfires. For example, utilities along the Eastern and Gulf Coasts of the United States are executing storm hardening programs to make their systems more resilient to hurricanes and other severe weather events, which we expect to continue for the foreseeable future. Additionally, there are significant system resiliency initiatives underway in California and other regions in the western United States that are designed to prevent and manage the impact of wildfires. While these resiliency initiatives provide additional opportunities for our services, they also increase our potential exposure to significant liabilities, as these events can be started by the failure of electric power and other infrastructure on which we have performed services. Utilities are also executing significant initiatives to underground critical infrastructure, including additional underground transmission and distribution initiatives by utilities in California, underground transmission projects in the northeast United States, underground distribution circuits along the U.S. coastlines and underground transmission lines for offshore wind generation projects.

With respect to our communications service offerings, which are focused on the North American market, consumer and commercial demand for communication and data-intensive, high-bandwidth wireline and wireless services and applications is driving significant investment in infrastructure and the deployment of new technologies. In particular, communications providers are in the early stages of developing new fifth generation wireless services (5G), which are intended to facilitate bandwidth-intensive services at high speeds for consumers and commercial applications. Additionally, recent legislative and regulatory initiatives, including the Rural Digital Opportunity Fund and the Infrastructure Investment and Jobs Act, have dedicated billions of dollars of funding to support broadband service to underserved markets. As a result of these industry trends, we believe there will be meaningful demand for our engineering and construction services.

Renewable Energy Infrastructure Solutions. We believe the transition to a carbon-neutral economy, which is being driven by consumer and investor preferences, increasing electrification trends, supportive public policy actions and declining levelized costs of renewable energy, will require sizeable long-term investment in renewable generation and related infrastructure, including meaningful repowering and modernization of existing assets. To that end, renewable energy developers are expected to continue to increase investments in wind and solar projects, as well as energy storage projects. Utilities have increased the percentage of renewable electricity bought through power purchase agreements (PPAs) with renewable energy developers, and we believe are in the early stages of investing directly in renewable generation facilities, which could expand significantly over time as they pursue clean energy strategies and emissions-reduction initiatives. Also, a growing number of corporate enterprises, particularly technology companies, are entering into PPAs with renewable energy developers to source renewable electricity to power their facilities and achieve their own carbon-reduction initiatives. We believe increased battery storage can support increased renewable energy development by providing shorter-term storage of electricity from renewable energy generation, particularly from solar facilities, which helps to manage the amount and timing of intermittent power placed on the grid from renewable generation. Though current battery storage capacity is much smaller than the amount of wind and solar capacity installed in North America, utility-scale battery storage capacity is expected to grow significantly and at higher rates over the longer term.

We believe these dynamics will generate significant demand for our renewable energy infrastructure services, including our generation construction services and engineering expertise in utility-scale solar, wind and battery storage projects, as well as our services related to the development and construction of related infrastructure, including high-voltage electric transmission and substation infrastructure, that are necessary to interconnect and transmit electricity from new renewable energy generation facilities into the existing electric power grid and enhance grid reliability. While in the short term and in any given period the demand for certain renewable energy services could fluctuate due to, among other things, supply chain and other logistical difficulties that could delay projects, the availability of production tax credits, permitting delays, or sourcing restrictions, tariffs, duties, taxes and other assessments on materials and components necessary for certain projects (e.g., solar panels), we believe

we are well positioned, through our acquisition of Blattner and our existing renewable energy and transmission services offerings, to capitalize on these growth trends over the long term.

Underground Utility and Infrastructure Solutions. Within this segment, we have focused on specialty services and industries that we believe are driven by regulated utility spending, regulation, replacement and rehabilitation of aging infrastructure and safety and environmental initiatives, including gas utility services, pipeline integrity and transmission services and downstream industrial services. We believe demand for our gas utility distribution services will increase as a result of customer desire to upgrade and replace aging infrastructure and increasing regulatory requirements. In particular, natural gas utilities have implemented multi-decade modernization programs to replace aging cast iron, bare steel and plastic system infrastructure with modern materials for safety, reliability and environmental purposes. We believe there are also growth opportunities for our pipeline integrity, rehabilitation and replacement services, as regulatory measures have increased the frequency and stringency of pipeline integrity testing requirements that require our customers to test, inspect, repair, maintain and replace pipeline infrastructure to ensure that it operates in a safe, reliable and environmentally conscious manner. Further, permitting challenges associated with construction of new pipelines can make existing pipeline infrastructure more valuable, motivating owners to extend the useful life of existing pipeline assets through integrity initiatives. Additionally, we believe there are significant long-term opportunities for our downstream industrial services, including our high-pressure and critical-path turnaround services, as well as our capabilities with respect to instrumentation and electrical services, piping, fabrication and storage tanks services, and other industrial services, and that processing facilities located along the U.S. Gulf Coast region should have certain long-term strategic advantages due to their proximity to competitively priced and abundant hydrocarbon resources.

Certain of these services were impacted in 2020 and 2021 by the COVID-19 pandemic and broader economic challenges and uncertainties in the energy market. For example, demand for our midstream and industrial services operations declined substantially in 2020 and 2021 as customers reduced and deferred regularly scheduled maintenance and capital projects due to lack of demand for refined products and economic uncertainty. Demand for these services has improved in the first part of 2022 as customers are moving forward with their deferred maintenance and capital spending, and to the extent energy market conditions remain accommodating and the global economy continues to recover, we believe the outlook for these services will continue to improve throughout 2022. Additionally, in any given period, downstream processing facilities can be negatively impacted due to severe weather events, such as hurricanes, tropical storms and floods. Furthermore, the broader oil and gas industry is cyclical and subject to price and production volume volatility, which can impact demand for certain of our ancillary and pipeline services. particularly in markets where the price of oil is influential, such as Australia, the Canadian Oil Sands and certain oil-driven U.S. shale formations. Revenues related to larger U.S. pipeline projects have declined significantly over the last few years as the pipeline and related infrastructure development necessary to support U.S. shale formations has largely been completed. Additionally, the development of new larger pipeline projects continues to be negatively impacted in the United States by a more challenging permitting and regulatory environment, as well as challenging economic and market conditions caused by the COVID-19 pandemic. However, there has been an increase in activity in the Canadian large pipe market which is currently active with a number of major projects underway, and we continue to pursue these larger pipeline project opportunities to the extent they satisfy our margin and risk profiles and support the needs of our customers. We believe our strategic decision to increase our focus on specialty services and industries that are driven by regulated utility spending, regulation, replacement and rehabilitation of aging infrastructure and safety and environmental initiatives should provide a greater level of business sustainability and predictability and help to offset the cyclicality of our larger pipeline project business.

Lastly, we believe there are additional longer-term opportunities that may arise in this segment. For example, we believe natural gas, due to its expected abundant supply and attractive price over the long-term, will remain a fuel of choice for both primary power generation and backup power generation for renewable power plants in North America. We believe the favorable characteristics of natural gas could also position North America as a leading competitor in the global LNG export market, which could provide additional opportunities for our pipeline infrastructure services. We also believe that customers in this segment are implementing strategies to reduce carbon emissions produced from their operations, which are providing incremental opportunities for our services, including developing infrastructure for blending hydrogen into natural gas flow to customers, carbon capture projects, which could include building or repurposing pipeline infrastructure.

COVID-19 Pandemic and Impact. The effects of the COVID-19 pandemic continue to significantly impact certain aspects and geographies of the global economy due to, among other things, workforce and travel restrictions and supply chain, production and other logistical disruptions. While we have continued to operate substantially all of our activities as a provider of essential services, during the course of the pandemic our operations and financial results have been adversely impacted by reduced customer spending and demand for certain of our services (including as described above), as well as governmental responses to the COVID-19 pandemic, including shut-down orders and limitations on work site practices implemented by governments, certain of which in Canada and Australia continued to impact our business in 2021 and early 2022. Additionally, we continue to monitor governmental and customer vaccination and testing standards or requirements related to COVID-19, as well as certain standards and guidance as to preventing the spread of COVID-19. While the overall impact of these standards,

requirements and guidance has lessened during the first part of 2022, we expect that requirements in certain jurisdictions and with respect to certain customers will remain in place and additional requirements could arise in the future to the extent the COVID-19 pandemic continues or worsens.

The broader and longer-term implications of the COVID-19 pandemic on our results of operations and overall financial performance and position remain highly uncertain and variable, and we expect continued operational challenges for portions of our operations in the future. The future impact that the pandemic, or any resulting market disruption and volatility, will have on our business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the duration and severity of the pandemic; the actions taken by governmental authorities, customers, suppliers and other third parties in response to the pandemic and the consequences of those actions; our workforce availability; and the timing and extent to which normal economic and operating conditions resume and continue.

Regulatory Challenges and Opportunities. The regulatory environment creates both challenges and opportunities for our business, and in recent years our margins have been impacted by regulatory and permitting delays, as well as private legal challenges related to regulatory requirements, particularly with respect to large transmission and large pipeline projects. As a result, regulatory and environmental permitting processes continue to create uncertainty for projects and negatively impact customer spending. However, we believe that there are also several existing, pending or proposed legislative or regulatory actions that may alleviate certain regulatory and permitting issues and positively impact long-term demand, particularly in connection with electric power infrastructure and renewable energy spending. For example, regulatory changes affecting siting and right-of-way processes could potentially accelerate construction for transmission projects, and state and federal reliability standards are creating incentives for both electrical and pipeline system investment and maintenance. Additionally, as described above, we consider renewable energy, including solar and wind generation and battery storage facilities, to be an ongoing opportunity; however, demand for our services depends on policy and economic incentives designed to support and encourage such projects and any tariffs, duties, taxes, assessments, or other limitations on the availability or sourcing of materials or components for such projects can increase costs for customers and create variability of project timing. For example, we are monitoring the U.S. Department of Commerce’s investigation into an antidumping and countervailing duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand and Cambodia, which is disrupting the solar panel supply chain and creating uncertainty regarding the timing of development and/or financing of certain renewable energy projects in the near term.

Labor Resource Availability and Cost. We continue to address the longer-term need for additional labor resources in our markets, as our customers continue to seek additional specialized labor resources to offset an aging utility workforce and longer-term labor availability issues, increasing pressure to reduce costs and improve reliability, and increasing duration and complexity of their capital programs. We believe these trends will continue, possibly to such a degree that demand for labor resources will outpace supply. Furthermore, the increased demand for our services based on the dynamics described above can create shortages of qualified labor in our markets. Our ability to capitalize on available opportunities is limited by our ability to employ, train and retain the necessary skilled personnel, and therefore we are taking proactive steps to develop our workforce, including through strategic relationships with universities, the military and unions and the expansion and development of our training facility and postsecondary educational institution. Although we believe these initiatives will help address workforce needs, meeting our customers’ demand for labor resources could prove challenging.

Additionally, we monitor our labor markets and expect labor costs to continue to increase based on increased demand for our services. Our labor costs are passed through in certain of our contracts, and the portion of our workforce that is represented by labor unions typically operate under multi-year collective bargaining agreements, which provide some visibility into future labor costs. While we do not currently believe this environment will materially impact our profitability and would expect to be able to adjust contract pricing with certain customers to the extent wages and other labor costs increase, whether due to renegotiation of collective bargaining agreements or market conditions, meaningful increases in our labor costs could have a material adverse effect on our business, financial condition, results of operations or cash flows to the extent we cannot do so. Furthermore, increased labor costs could impact our customers' decision-making with respect to the viability or timing of certain projects.

Materials and Equipment Procurement. We continue to monitor supply chain and other logistical challenges, global trade relationships (e.g., tariffs, duties, taxes, sourcing restrictions) and other general market and political conditions (e.g., inflation) with respect to availability and costs of certain materials and equipment necessary for the performance of our business and for materials necessary for our customers’ projects, including, among other things, steel, copper, aluminum, and components for renewable energy projects. Increased costs and delays can impact project construction schedules and the performance of our services. For example, we believe some participants in the renewable energy market are experiencing supply chain challenges, resulting in delays and shortages of, and increased costs for, materials necessary for the construction of certain renewable energy projects in the near term, including as a result of sourcing restrictions related to solar panels manufactured in China and the Department of Commerce investigation described above. While we believe many of our renewable energy customers are generally better equipped to manage near-term supply chain disruptions than their smaller competitors, these challenges could

delay our customers’ ongoing projects or impact their future project schedules, which in turn could impact the timing of or demand for our renewable energy services. While these delays are not anticipated to result in exposure to liquidated damages or commodity risks, such delays could cause customers to cancel projects as higher than expected costs impact project profitability projections.

Additionally, based on, among other things, the significant worldwide shortage of semiconductors, vehicle manufacturers are experiencing production delays with respect to new vehicles for our fleet (both on-road and specialty vehicles) and vehicle parts (e.g., tires), all of which we utilize in our operations, and certain of our vehicle delivery orders scheduled for delivery in 2022 have been delayed or cancelled. While we believe we have taken steps to secure delivery of a sufficient amount of vehicles in the near term and do not anticipate any significant disruptions with respect to our fleet, to the extent the production issues become worse than expected or become longer-term in nature, our operations could be negatively impacted. In addition, as a result of the recent inflationary pressure, including with respect to the cost of materials, equipment and fuel, our results of operations could be materially impacted to the extent we are not able to pass such costs through to our customers.

Acquisitions and Investments. We believe potential acquisition and investment opportunities exist in our industries and adjacent industries, primarily due to the highly fragmented and evolving nature of those industries and inability of many companies to expand due to capital or liquidity constraints. While the desirability of certain of these opportunities could be impacted by the recent inflationary pressure in the short term, we continue to evaluate opportunities that are expected to, among other things, broaden our customer base, expand our geographic area of operations and grow and diversify our portfolio of services.

Significant Factors Impacting Results

Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Business Environment above and Item 1A. Risk Factors of Part I of our 2021 Annual Report, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below.

Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs. These seasonal impacts are typical for our U.S. operations, but seasonality for our international operations may differ. For example, revenues in Canada are typically higher in the first quarter because projects are often accelerated in order to complete work while the ground is frozen and prior to the break up, or seasonal thaw, as productivity is adversely affected by wet ground conditions during warmer months.

Weather, natural disasters and emergencies. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events, natural disasters or other emergencies, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, post-wildfire floods and debris flows, pandemics (including the ongoing COVID-19 pandemic, as described above) and earthquakes. These conditions and events can negatively impact our financial results due to, among other things, the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities. However, severe weather events can also increase our emergency restoration services, which typically yield higher margins due in part to higher equipment utilization and absorption of fixed costs, and in 2020 and 2021 we had record levels of emergency restoration services.

Demand for services. We perform the majority of our services under existing contracts, including master service agreements (MSAs) and similar agreements pursuant to which our customers are not committed to specific volumes of our services. Therefore our volume of business can be positively or negatively affected by fluctuations in the amount of work our customers assign us in a given period, which may vary by geographic region. For example, to the extent our customers accelerate grid modernization or hardening programs or face deadlines to meet regulatory requirements for rehabilitation, reliability or efficiency, our volume of work could increase under existing agreements. Also, as described above in Business Environment, we have experienced reductions in demand for certain services as a result of uncertainties and challenges in the energy market and overall economy caused by the COVID-19 pandemic. Examples of other items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital

spending and their access to capital; economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships; and project deferrals and cancellations.

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

Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the volume or type of work performed, the pricing structure under the project contract or job productivity. Additionally, our productivity and performance on a project can vary period to period based on a number of factors, including unexpected project difficulties or site conditions (including in connection with difficult geographic characteristics); project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; the performance of third parties; and the impact of the COVID-19 pandemic. Moreover, we currently generate a significant portion of our revenues under fixed price contracts, and fixed price contracts are more common in connection with our larger and more complex projects that typically involve greater performance risk. Under these contracts, we assume risks related to project estimates and execution, and project revenues can vary, sometimes substantially, from our original projections due to a variety of factors, including the additional complexity, timing uncertainty or extended bidding, regulatory and permitting processes associated with these projects. These variations can result in a reduction in expected profit or the incurrence of losses on a project or the issuance of change orders or assertion of contract claims against customers. See Revenue Recognition - Contract Estimates and Changes in Estimates in Note 4 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report for further information regarding changes in estimated contract revenues and/or project costs, including any significant project gains or losses in connection with fixed price contracts that have impacted our results, and determinations with respect to the recognition of change orders and claims as contract price adjustments.

Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease margins. In recent years, we have subcontracted approximately 20% of our work to other service providers. Our customers are usually responsible for supplying the materials for their projects. However, under some contracts, including contracts for projects where we provide engineering, procurement and construction (EPC) services, we agree to procure all or part of the required materials. Margins may be lower on projects where we furnish a significant amount of materials, as our markup on materials is generally lower than our markup on labor costs, and in a given period an increase in the percentage of work with greater materials procurement requirements may decrease our overall margins. Furthermore, as discussed further in Business Environment, fluctuations in the price or availability of materials and equipment we or our customers utilize could impact demand for our services or costs to complete projects.

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

Results of Operations

A discussion of the changes in our consolidated and segment results of operations between the three months ended March 31, 2022 and March 31, 2021 is included below, with certain of our segment results of operations recast to conform to our current segment reporting structure. The results of acquired businesses have been included in the following results of operations since their respective acquisition dates.

The following table sets forth selected statements of operations data, such data as a percentage of revenues for the periods indicated, as well as the dollar and percentage change from the prior period (dollars in thousands):

Consolidated Results

						Three Months Ended March 31,																								Change
						2022												2021												$						%
Revenues						$	3,965,525					100.0		%				$	2,703,581					100.0		%				$	1,261,944					46.7		%
Cost of services (including depreciation)						3,417,354						86.2						2,330,691						86.2						1,086,663						46.6		%
Gross profit						548,171						13.8						372,890						13.8						175,281						47.0		%
Equity in earnings of integral unconsolidated affiliates						15,152						0.4						5,183						0.2						9,969						192.3		%
Selling, general and administrative expenses						(324,887)						(8.2)						(243,352)						(9.0)						(81,535)						33.5		%
Amortization of intangible assets						(115,751)						(2.9)						(21,355)						(0.8)						(94,396)						442.0		%
Change in fair value of contingent consideration liabilities						(5,169)						(0.1)						363						—						(5,532)						*
Operating income						117,516						3.0						113,729						4.2						3,787						3.3		%
Interest and other financing expenses						(24,728)						(0.6)						(12,475)						(0.5)						(12,253)						98.2		%
Interest income						69						—						117						—						(48)						(41.0)		%
Other income (expense), net						(1,273)						(0.1)						3,672						0.2						(4,945)						*
Income before income taxes						91,584						2.3						105,043						3.9						(13,459)						(12.8)		%
Provision for income taxes						6,556						0.2						13,724						0.5						(7,168)						(52.2)		%
Net income						85,028						2.1						91,319						3.4						(6,291)						(6.9)		%
Less: Net income attributable to non-controlling interests						387						—						1,558						0.1						(1,171)						(75.2)		%
Net income attributable to common stock						$	84,641					2.1		%				$	89,761					3.3		%				$	(5,120)					(5.7)		%

• The percentage change is not meaningful.

Revenues. Revenues increased due to a $491.6 million increase in revenues from our Renewable Energy Infrastructure Solutions segment, a $462.7 million increase in revenues from our Electric Power Infrastructure Solutions segment and a $307.7 million increase in revenues from our Underground Utility and Infrastructure Solutions segment. See Segment Results below for additional information and discussion related to segment revenues.

Gross profit. Gross profit increased due primarily to the increase in revenues and improved utilization and fixed cost absorption in both our Electric Power Infrastructure Solutions segment and Underground Utility and Infrastructure Solutions segment. See Segment Results below for additional information and discussion related to segment operating income (loss).

Equity in earnings of integral unconsolidated affiliates. The amounts include our portion of amounts earned by integral unconsolidated affiliates and primarily relate to our portion of amounts earned by LUMA. Additionally, the amount for the three months ended March 31, 2022 includes our portion of amounts earned by an entity that we acquired a 44% interest in during the fourth quarter of 2021 that provides right-of-way solutions, including site preparation and clearing, materials delivery and installation and management of permitting requirements and traffic control. For additional information regarding these investments, see Note 8 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Selling, general and administrative expenses. The increase was primarily attributable to a $58.4 million increase in expenses associated with acquired businesses; an $11.4 million increase in compensation expense, largely associated with increased incentive and non-cash stock compensation expense as a result of higher levels of operating performance and an increase in salaries and benefits due to increased personnel to support business growth; and a $5.8 million increase in travel and related expenses. Partially offsetting these increases was a $6.2 million decrease in expense related to deferred compensation liabilities. The fair market value changes in deferred compensation liabilities were offset by changes in the fair value of the

company-owned life insurance (COLI) policies associated with the deferred compensation plan, which are included in other income, net as discussed below.

Amortization of intangible assets. The increase was primarily due to amortization of intangible assets associated with recently acquired businesses, driven by the acquisition of Blattner, partially offset by reduced amortization expense associated with older acquired intangible assets, as certain of these assets became fully amortized.

Change in fair value of contingent consideration liabilities. Contingent consideration liabilities are payable in the event certain performance objectives are achieved by acquired businesses during designated post-acquisition periods. The change in fair value associated with these liabilities was primarily due to the effect of present value accretion on fair value calculations and to a lesser extent, changes in performance in post-acquisition measurement periods by certain acquired businesses. Further changes in fair value are expected to be recorded periodically until the contingent consideration liabilities are settled. For additional information regarding these liabilities, see Notes 6 and 17 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

Interest and other financing expenses. Interest and other financing expenses increased for the three months ended March 31, 2022 primarily due to higher levels of debt. Our long-term debt increased significantly at the end of 2021 in connection with our acquisition of Blattner, resulting in an increase in interest and other financing expenses.

Other income (expense), net. The net other expense for the three months ended March 31, 2022 included a loss of $8.4 million resulting from the remeasurement of the fair value of our investment in a publicly traded broadband technology provider, Starry Group Holdings, Inc. (Starry), based on the market price of Starry’s common stock as of March 31, 2022. Partially offsetting this loss was a gain of $6.7 million as a result of our sale of a non-controlling ownership interest in a technology company. Equity in earnings of non-integral affiliates for three months ended March 31, 2022 was $5.3 million as compared to $0.7 million for the three months ended March 31, 2021, primarily due to an increase in the valuation of an investment in a transmission pipeline. Also included in other income (expense), net for the three months ended March 31, 2022 was $4.1 million of expense associated with our deferred compensation plan, as compared to $1.6 million of income during the three months ended March 31, 2021. The amounts associated with the deferred compensation plan were largely offset by corresponding changes in the fair market value of the liabilities associated with our deferred compensation plan, which are recorded in selling, general, and administrative expenses, as discussed above.

Provision for income taxes. The effective tax rates for the three months ended March 31, 2022 and 2021 were 7.2% and 13.1%. The lower rate for the three months ended March 31, 2022 was primarily due to the recognition of an $20.3 million tax benefit resulting from non-cash stock-based compensation awards vesting at higher fair market value than their grant date fair value, as compared to the recognition of an $18.0 million tax benefit for the three months ended March 31, 2021.

Other comprehensive income, net of taxes. Other comprehensive income results from translation of the balance sheets of our foreign operating companies, which are primarily located in Canada and Australia and have functional currencies other than the U.S. dollar, and therefore are affected by the strengthening or weakening of the U.S. dollar against such currencies. The gain in the three months ended March 31, 2022 was impacted primarily by the weakening of the U.S. dollar against both the Canadian and Australian dollars as of March 31, 2022 when compared to December 31, 2021. The gain in the three months ended March 31, 2021 was impacted primarily by the weakening of the U.S. dollar against the Canadian dollar as of March 31, 2021 when compared to December 31, 2020.

Segment Results

Reportable segment information, including revenues and operating income by type of work, is gathered from each of our operating companies for the purpose of evaluating segment performance. Classification of our operating company revenues by type of work for segment reporting purposes can at times require judgment on the part of management. Our operating companies may perform joint projects for customers in multiple industries, deliver multiple types of services under a single customer contract or provide service offerings to various industries. For example, we perform joint trenching projects to install distribution lines for electric power and natural gas customers. Integrated operations and common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs as well as general and administrative costs. Certain corporate costs are not allocated, including facility costs, 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 table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated, as well as the dollar and percentage change from the prior period. Operating margins are calculated by dividing operating income by revenues. Management utilizes operating margins as a measure of profitability, which can be helpful for

monitoring how effectively we are performing under our contracts. Beginning with the three months ended December 31, 2021, we report our results under three reportable segments: (1) Electric Power Infrastructure Solutions, (2) Renewable Energy Infrastructure Solutions and (3) Underground Utility and Infrastructure Solutions. In conjunction with this change, certain prior period amounts have been recast to conform to this new segment reporting structure. Management also believes operating margins are a useful metric for investors to utilize in evaluating our performance. The following table shows dollars in thousands.

						Three Months Ended March 31,																								Change
						2022												2021												$						%
Revenues:
Electric Power Infrastructure Solutions						$	2,138,697					53.9		%				$	1,676,046					62.0		%				$	462,651					27.6		%
Renewable Energy Infrastructure Solutions						875,632						22.1						384,074						14.2						491,558						128.0		%
Underground Utility and Infrastructure Solutions						951,196						24.0						643,461						23.8						307,735						47.8		%
Consolidated revenues						$	3,965,525					100.0		%				$	2,703,581					100.0		%				$	1,261,944					46.7		%
Operating income (loss):
Electric Power Infrastructure Solutions						$	203,419					9.5		%				$	153,739					9.2		%				$	49,680					32.3		%
Renewable Energy Infrastructure Solutions						69,942						8.0		%				45,296						11.8		%				24,646						54.4		%
Underground Utility and Infrastructure Solutions						48,175						5.1		%				8,813						1.4		%				39,362						446.6		%
Corporate and Non-Allocated costs						(204,020)						(5.1)		%				(94,119)						(3.5)		%				(109,901)						116.8		%
Consolidated operating income						$	117,516					3.0		%				$	113,729					4.2		%				$	3,787					3.3		%

Electric Power Infrastructure Solutions Segment Results

The increase in revenues for the three months ended March 31, 2022 was primarily due to increased spending by our utility customers on grid modernization and hardening, resulting in increased demand for our electric power services, as well as approximately $75 million in revenues attributable to acquired businesses.

Operating income and operating margin increased for the three months ended March 31, 2022 primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption. Operating income and operating margin also increased for the three months ended March 31, 2022 due to improved performance by our telecommunication operations which experienced losses on certain projects during the three months ended March 31, 2021 resulting from poor subcontractor performance, challenging site conditions and weather and seasonal impacts. The increase in operating margin was also attributable to a $10.0 million increase in equity in earnings from LUMA and other integral affiliates as compared to the three months ended March 31, 2021. These increases in operating margin were partially offset by lower margins on certain Canadian projects, as our productivity was substantially impacted by the COVID-19 pandemic.

Renewable Energy Infrastructure Solutions Segment Results

The increase in revenues for the three months ended March 31, 2022 was primarily due to $470 million in revenues attributable to acquired businesses, primarily Blattner, which was acquired in October 2021. The remaining increase in revenues was primarily due to increased renewable transmission and interconnection construction services.

The increase in operating income was primarily due to higher revenues associated with the acquisition of Blattner. Blattner’s operating margin was in line with our legacy business results, primarily attributable to transmission and interconnection construction services. The decrease in operating margin was primarily due to the favorable close-out of certain projects during the three months ended March 31, 2021, as well as the normal variability associated with the timing of projects and project mix.

Underground Utility and Infrastructure Solutions Segment Results

The increase in revenues for the three months ended March 31, 2022 was primarily due to increased revenues associated with higher demand from our gas utility and industrial customers, which have begun to move forward with their deferred maintenance and capital spending during the three months ended March 31, 2022, as well as an increase in revenues associated with securing large pipeline projects.

The increase in operating income and operating margin during the three months ended March 31, 2022 was primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption. Also contributing to the increases were improved performance across the segment, particularly with respect to our industrial services operations, and favorable project

timing and project mix. Additionally, during the three months ended March 31, 2022, operating income was not as significantly impacted by the COVID-19 pandemic and challenges in the overall energy market as compared to the three months ended March 31, 2021.

Corporate and Non-Allocated Costs

The increase in corporate and non-allocated costs during the three months ended March 31, 2022 was primarily related to a $94.4 million increase in intangible asset amortization, largely associated with the acquisition of Blattner, and a $13.4 million increase in acquisition and integration costs related to recent acquisitions. Included in acquisition and integration costs during the three months ended March 31, 2022 was $11.5 million of expenses associated with change of control payments as a result of the acquisition of Blattner. These increases were partially offset by a decrease in expense related to deferred compensation liabilities due to market fluctuations.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA, financial measures not recognized under GAAP, when used in connection with net income attributable to common stock, are intended to provide useful information to investors and analysts as they evaluate our performance. EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA is defined as EBITDA adjusted for certain other items as described below. These measures should not be considered as an alternative to net income attributable to common stock or other financial measures of performance that are derived in accordance with GAAP. Management believes that the exclusion of these items from net income attributable to common stock enables it and our investors to more effectively evaluate our operations period over period and to identify operating trends that might not be apparent when including the excluded items.

As to certain of the items below, (i) non-cash stock-based compensation expense varies from period to period due to acquisition activity, changes in the estimated fair value of performance-based awards, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition and integration costs vary from period to period depending on the level of our acquisition activity; (iii) equity in (earnings) losses of non-integral unconsolidated affiliates varies from period to period depending on the activity and financial performance of non-integral unconsolidated affiliates, including gain or loss on sales of investments accounted for using the equity method of accounting; (iv) gains and losses on the sale of investments vary from period to period depending on activity; (v) unrealized mark-to-market adjustments on our investment in a publicly traded company vary from period to period based on fluctuations in the market price of such company’s common stock; and (vi) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations. Because EBITDA and adjusted EBITDA, as defined, exclude some, but not all, items that affect net income attributable to common stock, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income

attributable to common stock, and information reconciling the GAAP and non-GAAP financial measures, are included below. The following table shows dollars in thousands.

						Three Months Ended
						March 31,
						2022						2021
Net income attributable to common stock (GAAP as reported)						$	84,641					$	89,761
Interest and other financing expenses						24,728						12,475
Interest income						(69)						(117)
Provision for income taxes						6,556						13,724
Depreciation expense						70,954						62,107
Amortization of intangible assets						115,751						21,355
Interest, income taxes and depreciation included in equity in earnings of integral unconsolidated affiliates						3,261						1,501
EBITDA						305,822						200,806
Non-cash stock-based compensation						22,992						18,687
Acquisition and integration costs (a)						15,131						1,761
Equity in (earnings) losses of non-integral unconsolidated affiliates						(5,338)						(685)
Gain on sale of investment (b)						(6,696)						—
Unrealized loss from mark-to-market adjustment on investment (c)						8,393						—
Change in fair value of contingent consideration liabilities						5,169						(363)
Adjusted EBITDA						$	345,473					$	220,206

(a) The amount for the three months ended March 31, 2022 includes, among other things, $11.5 million of expenses that are associated with change of control payments as a result of the acquisition of Blattner.

(b) The amount for the three months ended March 31, 2022 represents a gain as a result of the sale of our non-controlling ownership interest in a technology company.

(c) The amount for the three months ended March 31, 2022 represents a decrease in the fair value of our investment based on the market price our stock investment in Starry, a publicly traded company.

Remaining Performance Obligations and Backlog

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

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

As of March 31, 2022 and December 31, 2021, MSAs accounted for 54% and 55% of our estimated 12-month backlog and 65% and 67% of total backlog. Generally, our customers are not contractually committed to specific volumes of services under our MSAs, and most of our contracts can be terminated on short notice even if we are not in default. We determine the estimated backlog for these MSAs using recurring historical trends, factoring in seasonal demand and projected customer needs based upon ongoing communications. In addition, many of our MSAs are subject to renewal, and these potential renewals are considered in determining estimated backlog. As a result, estimates for remaining performance obligations and backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies (including the ongoing

COVID-19 pandemic) and adverse weather conditions; and final acceptance of change orders by customers. These factors can cause revenues to be realized in periods and at levels that are different than originally projected.

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

						March 31, 2022												December 31, 2021
						12 Month						Total						12 Month						Total
Electric Power Infrastructure Solutions
Remaining performance obligations						$	2,071,266					$	2,731,572					$	2,002,862					$	2,769,106
Estimated orders under MSAs and short-term, non-fixed price contracts						4,308,992						9,443,108						4,492,038						9,447,765
Backlog						$	6,380,258					$	12,174,680					$	6,494,900					$	12,216,871
Renewable Energy Infrastructure Solutions
Remaining performance obligations						$	2,311,389					$	2,947,942					$	2,178,846					$	2,428,408
Estimated orders under MSAs and short-term, non-fixed price contracts						70,199						132,959						65,618						120,237
Backlog						$	2,381,588					$	3,080,901					$	2,244,464					$	2,548,645
Underground Utility and Infrastructure Solutions
Remaining performance obligations						$	979,652					$	1,163,118					$	637,843					$	697,881
Estimated orders under MSAs and short-term, non-fixed price contracts						1,763,478						4,035,483						1,934,826						3,810,829
Backlog						$	2,743,130					$	5,198,601					$	2,572,669					$	4,508,710
Total
Remaining performance obligations						$	5,362,307					$	6,842,632					$	4,819,551					$	5,895,395
Estimated orders under MSAs and short-term, non-fixed price contracts						6,142,669						13,611,550						6,492,482						13,378,831
Backlog						$	11,504,976					$	20,454,182					$	11,312,033					$	19,274,226

Liquidity and Capital Resources

Management monitors financial markets and national and global economic conditions for factors that may affect our liquidity and capital resources. As set forth below, we have various short-term and long-term cash requirements and capital allocation priorities, and we intend to fund these requirements primarily with cash flow from operating activities and debt financing.

Cash Requirements and Capital Allocation

Cash Requirements. The following table summarizes, as of March 31, 2022, our cash requirements from contractual obligations that are due within the twelve months subsequent to March 31, 2022 and thereafter, excluding certain amounts discussed below (in thousands):

						Due by March 31, 2023						Thereafter						Total
Long-term debt, including current portion - principal						$	20,613					$	3,822,932					$	3,843,545
Long-term debt - cash interest (1)						64,110						648,644						712,754
Operating lease obligations (2)						84,270						182,899						267,169
Operating lease obligations that have not yet commenced (3)						712						14,267						14,979
Finance lease obligations (2)						1,374						2,134						3,508
Short-term lease obligations (4)						16,539						—						16,539
Deferral of employer portion of payroll tax payments						54,435						—						54,435
Equipment purchase commitments (5)						104,000						17,281						121,281
Capital commitment related to investments in unconsolidated affiliates (6)						1,686						11,162						12,848
Total cash requirements from contractual obligations						$	347,739					$	4,699,319					$	5,047,058

(1) Amounts represents cash interest and other financing expenses associated with our fixed-rate, long-term debt, which primarily includes our senior notes and financing transactions arising from the exercise of our equipment rental purchase options. Our $750.0 million term loan and $522.9 million of outstanding revolving loans under our senior credit facility bear interest at variable market rates. Assuming the principal amount outstanding and interest rate in effect as of March 31, 2022 with respect to this variable rate debt remained the same, the annual cash interest expense would be approximately $23.8 million, payable until October 8, 2026, the maturity date of our senior credit facility. Such amount has not been included above due to its variability. However, the recent increase in the federal funds interest rate, as well as expected additional increases to such rate during the remainder of 2022, is expected to increase the variable interest rate on amounts borrowed under our senior credit facility in future periods. Additionally, as discussed further in Significant Sources of Cash below, our cash interest and other financing expenses may also be impacted in future periods due to the transition in financial markets away from LIBOR, which is expected to be complete by mid-2023.

(2) Amounts represent undiscounted operating and finance lease obligations as of March 31, 2022. The corresponding amounts recorded on our March 31, 2022 condensed consolidated balance sheet represent the present value of these amounts.

(3) Amounts represent undiscounted operating lease obligations that have not commenced as of March 31, 2022. The operating lease obligations will be recorded on our condensed consolidated balance sheet beginning on the commencement date of each lease.

(4) Amount represent short-term lease obligations that are not recorded on our March 31, 2022 condensed consolidated balance sheet due to our accounting policy election. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because we are unable to accurately predict future rental amounts.

(5) Amounts represents capital committed for the expansion of our vehicle fleet. Although we have committed to the purchase of these vehicles/equipment at the time of their delivery, we expect that these orders will be assigned to third-party leasing companies and made available to us under certain of our master equipment lease agreements.

(6) Amounts represents outstanding capital commitments associated with investments in unconsolidated affiliates.

Contingent Obligations. We have various contingent obligations that could require the use of cash or impact the collection of cash in future periods; however, we are unable to accurately predict the timing and estimate the amount of such contingent obligations as of March 31, 2022. These contingent obligations generally include, among other things:

• contingent consideration liabilities and changes to consideration related to acquisitions and purchase price allocations, including liabilities assumed related to change of control provisions, which are described further in Note 6 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report;

• undistributed earnings of foreign subsidiaries and unrecognized tax benefits, which are described further in Note 12 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report and Note 12 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of our 2021 Annual Report;

• collective bargaining agreements and multiemployer pension plan liabilities, as well as liabilities related to our deferred compensation and other employee benefit plans, which are described further in Notes 15 and 16 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report; and

• obligations relating to our investments in affiliates and other entities, lawsuits and other legal proceedings, uncollectible accounts receivable, insurance liabilities, obligations relating to letters of credit, bonds and parent guarantees, obligations relating to employment agreements, indemnities and assumed liabilities, and residual value guarantees, which are described further in Note 16 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report and Note 16 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of our 2021 Annual Report.

Capital Allocation. Our capital deployment priorities that require the use of cash include: (i) working capital to fund ongoing operating needs, (ii) capital expenditures to meet anticipated demand for our services, (iii) acquisitions and investments to facilitate the long-term growth and sustainability of our business, and (iv) return of capital to stockholders, including through the payment of dividends and repurchases of our outstanding common stock. Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for our services. We expect capital expenditures for the year ended December 31, 2022 to be approximately $400 million. In line with our past practices, and as set forth in further detail below, we also expect to continue to allocate significant capital to strategic acquisitions and investments, as well as to pay dividends and to repurchase our outstanding common stock.

Significant Sources of Cash

We anticipate that our future cash flows from operating activities, cash and cash equivalents on hand, existing borrowing capacity under our senior credit facility and ability to access capital markets for additional capital will provide sufficient funds to enable us to meet our cash requirements described above for the next twelve months and over the longer term.

Cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by the timing of working capital needs associated with the various types of services that we provide. Our working capital needs may increase when we commence large volumes of work under circumstances where project costs are required to be paid before the associated receivables are billed and collected. Additionally, operating cash flows may be negatively impacted as a result of unpaid change orders and claims. Changes in project timing due to delays or accelerations and other economic factors that may affect customer spending, including the potential continued impact of the COVID-19 pandemic, could also impact cash flow from operating activities. Further information with respect to our cash flow from operating activities is set forth below and in Note 19 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report*.*

Our available commitments under our senior credit facility and cash and cash equivalents as of March 31, 2022 were as follows (in thousands):

						March 31, 2022
Total capacity available for revolving loans and letters of credit						$	2,640,000
Less:
Borrowings of revolving loans						522,878
Letters of credit outstanding						324,143
Available commitments for issuing revolving loans or new letters of credit						1,792,979
Plus:
Cash and cash equivalents						238,258
Total available commitments under senior credit facility and cash and cash equivalents						$	2,031,237

We consider our investment policies related to cash and cash equivalents to be conservative, as we maintain a diverse portfolio of what we believe to be high-quality cash and cash equivalent investments with short-term maturities. Further information with respect to our cash and cash equivalents is set forth in Note 18 of the Notes to Condensed Consolidated

Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report*.* Additionally, subject to the conditions specified in the credit agreement for our senior credit facility, we have the option to increase the capacity of our senior credit facility, in the form of an increase in the revolving commitments, term loans or a combination thereof, from time to time, upon receipt of additional commitments from new or existing lenders by up to an additional (i) $400.0 million plus (ii) additional amounts so long as the Incremental Leverage Ratio Requirement (as defined in the credit agreement) is satisfied at the time of such increase. 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. Further information with respect to our debt obligations is set forth in Note 10 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report*.*

We may also seek to access the capital markets from time to time to raise additional capital, increase liquidity as necessary, refinance or extend the term of our existing indebtedness, fund acquisitions or otherwise fund our capital needs. While our financial strategy and consistent performance have allowed us to maintain investment grade ratings subsequent to recent financing transactions, including the senior notes issuance and increase in the capacity of our senior credit facility in connection with our acquisition of Blattner during the fourth quarter of 2021, our ability to access capital markets in the future depends on a number of factors, including our financial performance and financial position, our credit ratings, industry conditions, general economic conditions, our backlog, capital expenditure commitments, market conditions and market perceptions of us and our industry.

Furthermore, our interest expense may be impacted in future periods due to the transition in financial markets away from the London Interbank Offered Rate (LIBOR), which is expected to be complete by mid-2023. While the credit agreement for our senior credit facility includes LIBOR benchmark replacement provisions, the ultimate impact of the transition away from LIBOR remains unknown and is subject to numerous factors, including determination of a replacement benchmark, and could materially and adversely affect our interest expense in future periods.

Sources and Uses of Cash and Cash Equivalents During the Three Months Ended March 31, 2022 and 2021

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

						Three Months Ended
						March 31,
						2022						2021
Net cash provided by operating activities						$	85,090					$	125,613
Net cash used in investing activities						$	(93,069)					$	(222,806)
Net cash provided by financing activities						$	16,550					$	112,989

Operating Activities

As discussed above, cash flow from operating activities is primarily influenced by demand for our services and operating margins but is also influenced by working capital needs. Our working capital needs may increase when we commence large volumes of work under circumstances where project costs, primarily labor, equipment and subcontractors, are required to be paid before the associated receivables are billed and collected and when we incur costs for work that is the subject of unpaid change orders and claims. Accordingly, changes within working capital in accounts receivable, contract assets and contract liabilities are normally related and are typically affected on a collective basis by changes in revenue due to the timing and volume of work performed and variability in the timing of customer billings and payments. Additionally, working capital needs are generally higher during the summer and fall due to increased demand for our services when favorable weather conditions exist in many of our operating regions. Conversely, working capital assets are typically converted to cash during the winter. These seasonal trends can be offset by changes in project timing due to delays or accelerations and other economic factors that may affect customer spending, including market conditions or the impact of certain unforeseen events (e.g., COVID-19 pandemic).

Net cash provided by operating activities during the three months ended March 31, 2022 was negatively impacted by increased working capital requirements, which were primarily attributable to progress on two larger transmission projects in Canada and the timing of the associated billings on such projects. These increases in working capital needs were partially offset by an increase in cash earnings compared to the three months ended March 31, 2021.

During the three months ended March 31, 2021, our working capital needs increased due to an overall increase in the pace of our projects due to lesser impacts related to the COVID-19 pandemic including the two larger transmission projects in Canada and the timing of associated billings on such projects.

Days sales outstanding (DSO) represents the average number of days it takes revenues to be converted into cash, which management believes is an important metric for assessing liquidity. A decrease in DSO has a favorable impact on cash flow from operating activities, while an increase in DSO has a negative impact on cash flow from operating activities. DSO is calculated by using the sum of current accounts receivable, net of allowance (which includes retainage and unbilled balances), plus contract assets less contract liabilities, divided by average revenues per day during the quarter. DSO as of March 31, 2022 was 80 days, which was lower than DSO of 89 days as of March 31, 2021 and our five-year historical average DSO of 82 days. This decrease in DSO as compared to March 31, 2021 was primarily due to the favorable impact of the acquisition of Blattner, which has historically had a lower DSO than certain of our other larger operating companies. This decrease was partially offset by increased working capital requirements primarily related to the two larger transmission projects in Canada and the timing of the associated billings on such projects.

Investing Activities

Net cash used in investing activities in the three months ended March 31, 2022 included $109.9 million of capital expenditures and $8.3 million of cash paid for equity and other investments. Partially offsetting these items was $16.5 million of cash received from investments, which primarily related to proceeds received from the sale of an investment, and $8.8 million of proceeds from the sale of property and equipment.

Net cash used in investing activities in the three months ended March 31, 2021 included $114.0 million of cash paid for equity and other investments, which primarily related to the acquisition of our non-controlling interest in Starry; $83.5 million of capital expenditures; and $32.8 million used for acquisitions, primarily related to acquisitions closed in prior periods. These items were partially offset by $7.2 million of proceeds from the sale of property and equipment.

Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for our services. We also have various other capital commitments that are detailed in Cash Requirements and Capital Allocation above. In addition, we expect to continue to pursue strategic acquisitions and investments, although we cannot predict the timing or amount of the cash needed for these initiatives.

Financing Activities

Net cash provided by financing activities in the three months ended March 31, 2022 included $68.0 million of net borrowings under our senior credit facility. These net borrowings were partially offset by $15.7 million of net repayments of short-term debt, $11.3 million of cash payments related to tax withholding for non-cash stock-based compensation, $10.8 million of cash payments for dividends and dividend equivalents and $9.5 million of cash payments for common stock repurchases.

Net cash provided by financing activities in the three months ended March 31, 2021 included $171.7 million of net borrowings under our senior credit facility, partially offset by $23.9 million of cash payments to satisfy tax withholding obligations associated with non-cash stock-based compensation, $19.5 million of cash payments for common stock repurchases and $8.8 million of cash payments for dividends and cash dividend equivalents.

Critical Accounting Estimates and Policies Update

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. Certain information and footnote disclosures normally included in annual financial statements, which are prepared in accordance with GAAP, have been condensed or omitted pursuant to those rules and regulations. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist as of the date the condensed consolidated financial statements are published and the reported amounts of revenues and expenses recognized during the periods presented. We review all significant estimates affecting our condensed consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Judgments and estimates are based on our beliefs and assumptions derived from information available at the time such judgments and estimates are made. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements. There can be no assurance that actual results will not differ from those estimates. Management has reviewed its development and selection of critical accounting estimates with the audit committee of our Board of Directors. Our accounting policies are primarily described in Notes 2 and 4 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of Part II of our 2021 Annual Report and should be read in conjunction with our critical accounting estimates detailed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of our 2021 Annual Report.