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

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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 June 30, 2022 included:

Revenues increased 41.1%, or $1.2 billion, to $4.23 billion as compared to consolidated revenues of $3.0 billion for the three months ended June 30, 2021;
Operating income increased 28.9%, or $46.7 million, to $208.4 million as compared to $161.7 million for the three months ended June 30, 2021;
Net income attributable to common stock decreased 24.8%, or $29.0 million, to $88.0 million as compared to $117.0 million for the three months ended June 30, 2021, and was substantially impacted by a $41.7 million ($34.7 million net of tax) unrealized loss related to the change in fair value of our investment in a publicly traded company. Additionally, incremental earnings from recently acquired businesses were substantially offset by an $86.7 million increase in amortization expense attributable to recent acquisitions, primarily Blattner;
Diluted earnings per share decreased 27.2%, or $0.22, to $0.59 as compared to $0.81 for the three months ended June 30, 2021;
EBITDA (a non-GAAP financial measure) increased 35.3%, or $89.8 million, to $344.2 million, as compared to $254.4 million for the three months ended June 30, 2021, and adjusted EBITDA (a non-GAAP financial measure) increased 50.0%, or $140.8 million, to $422.1 million, as compared to $281.3 million for the three months ended June 30, 2021;
Net cash provided by operating activities decreased by 37%, or $70.2 million to $118.7 million, as compared to net cash provided by operating activities of $188.9 million for the three months ended June 30, 2021;
Remaining performance obligations increased 17.4%, or $1.02 billion, to $6.92 billion as of June 30, 2022 as compared to $5.90 billion as of December 31, 2021; and
Total backlog (a non-GAAP financial measure) increased 3.0%, or $576.0 million, to $19.85 billion as of June 30, 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 June 30, 2022, our results reflected certain significant operational trends and events as compared to the three months ended June 30, 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 21.1% to $2.20 billion, as compared to $1.82 billion.
Operating income increased by 12.2% to $232.2 million, as compared to $207.0 million, and operating margin decreased to 10.6%, as compared to 11.4%.
Revenues increased primarily due to increased spending by our utility customers on grid modernization and hardening, as well as approximately $80 million in revenues attributable to acquired businesses.
The increase in operating income was primarily due to the increase in revenues.
The decrease in operating margin was primarily due to the normal variability associated with the overall timing of projects and project mix, as well as inefficiencies attributable to supply chain disruptions impacting certain operations and elevated consumables costs.

Renewable Energy Infrastructure Solutions Segment

*•*Revenues increased by 178.4% to $924.2 million, as compared to $332.0 million.

Operating income increased by 172.9% to $81.7 million, as compared to $29.9 million, and operating margin decreased to 8.8%, as compared to 9.0%.

*•*Revenues increased primarily due to approximately $490 million in revenues attributable to acquired businesses, mainly Blattner, which was acquired in October 2021.

*•*The increase in operating income was primarily due to the increase in revenues.

The decrease in operating margin was attributable to significant additional costs arising from delays on a large transmission project in Canada that were due to the continued negative impact of the COVID-19 pandemic from the first quarter.

Underground Utility and Infrastructure Solutions Segment

Revenues increased by 30.1% to $1.11 billion, as compared to $852.0 million.
Operating income increased by 275.7% to $89.9 million, as compared to $23.9 million, and operating margin increased to 8.1%, as compared to 2.8%.
Revenues increased primarily due to higher demand from our gas utility and industrial customers, which was largely due to increased demand in connection with previously deferred maintenance and capital spending which had been negatively impacted by the COVID-19 pandemic, as well as an increase in revenues associated with execution on certain large pipeline projects in Canada.
Operating income and operating margin increased in the three months ended June 30, 2022 due to the increase in revenues and improved performance across the segment, particularly with respect to our industrial services operations. The three months ended June 30, 2021 also included the recognition of a $23.6 million provision for credit loss related to receivables from a customer that declared bankruptcy in July 2021 and its affiliate.

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, including in response to federal reliability standards and in preparation for emerging technologies, such as EVs, utilities are also integrating smart grid technologies into distribution systems to improve grid management and create efficiencies.

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 is 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. These services include 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.

During 2020 and 2021, certain services in this segment, including our midstream and industrial services operations, were negatively impacted by the COVID-19 pandemic and broader economic challenges and uncertainties in the energy market, which resulted in decreased demand for refined products and reduced and deferred customer spending on regularly scheduled maintenance and capital projects. Demand for these services has improved in the first half of 2022 as customers are moving forward with their deferred maintenance and capital spending, and to the extent energy market conditions remain accommodating and shutdowns and other dislocations caused by the COVID-19 pandemic continue to subside, 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 and uncertainty around the energy policy needed to facilitate the transition to a reduced-carbon economy while maintaining energy reliability and availability. However, there has been an increase in activity in the Canadian large pipeline market during 2022, which is currently active with a number of major projects underway, and we continue to pursue 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 and for 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, shut-down orders and limitations on work site practices implemented by the Canadian and Australian governments continued to impact our business in 2021 and during the first half of 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 the COVID-19 pandemic has lessened significantly during 2022, certain of our Canadian projects have been significantly impacted. The broader and longer-term implications of the pandemic remain uncertain and variable. 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; 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 can be influenced by 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, during the first part of 2022, 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 caused some disruption in the solar panel supply chain and created uncertainty regarding the timing of development and/or financing of certain renewable energy projects. During the second quarter of 2022, the Biden Administration issued an executive order that exempted imported solar panels from these countries for 24 months to mitigate the uncertainty and impact caused in the near term. While we expect this order will provide time to allow U.S. solar project developers to adjust their solar panel supply chain, we are continuing to monitor the supply chain for these materials.

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 facilities 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 we 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, the cost of consumables and equipment for us and our customers has increased, and our results of operations could be impacted to the extent we are not able to manage or 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; 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, equipment and consumables that we or our customers utilize could impact 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 June 30, 2022 and 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 June 30, 2022 compared to the three months ended June 30, 2021


	Three Months Ended June 30,								Change
	2022				2021				$		%
Revenues	$	4,232,003	100.0	%	$	2,999,816	100.0	%	$	1,232,187	41.1	%
Cost of services (including depreciation)	3,607,413		85.2		2,552,105		85.1		1,055,308		41.4	%
Gross profit	624,590		14.8		447,711		14.9		176,879		39.5	%
Equity in earnings of integral unconsolidated affiliates	18,565		0.4		7,450		0.2		11,115		149.2	%
Selling, general and administrative expenses	(323,245)		(7.6)		(270,110)		(9.0)		(53,135)		19.7	%
Amortization of intangible assets	(107,945)		(2.6)		(21,291)		(0.6)		(86,654)		407.0	%
Asset impairment charges	(2,800)		(0.1)		(2,319)		(0.1)		(481)		20.7	%
Change in fair value of contingent consideration liabilities	(809)		—		210		—		(1,019)		*
Operating income	208,356		4.9		161,651		5.4		46,705		28.9	%
Interest and other financing expenses	(28,639)		(0.7)		(13,109)		(0.4)		(15,530)		118.5	%
Interest income	222		—		2,909		0.1		(2,687)		(92.4)	%
Other income (expense), net	(42,527)		(1.0)		8,471		0.2		(50,998)		*
Income before income taxes	137,412		3.2		159,922		5.3		(22,510)		(14.1)	%
Provision for income taxes	41,252		0.9		40,951		1.3		301		0.7	%


Net income	96,160		2.3		118,971		4.0		(22,811)		(19.2)	%
Less: Net income attributable to non-controlling interests	8,140		0.2		1,938		0.1		6,202		320.0	%
Net income attributable to common stock	$	88,020	2.1	%	$	117,033	3.9	%	$	(29,013)	(24.8)	%

The percentage change is not meaningful.

Revenues. Revenues increased due to a $592.2 million increase in revenues from our Renewable Energy Infrastructure Solutions segment, a $383.7 million increase in revenues from our Electric Power Infrastructure Solutions segment and a $256.3 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 in all segments 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, which accounts for the majority of the increase compared to the three months ended June 30, 2021. Additionally, the amount for the three months ended June 30, 2022 includes our portion of amounts earned by an entity that we acquired a 44% interest in during the fourth quarter of 2021 and 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 $56.1 million increase in expenses associated with acquired businesses, as well as an increase of $14.4 million in compensation expense, associated with increased salaries, incentive compensation and non-cash stock compensation expense due primarily to increased operational

performance and an increase in employees to support the growth of the business, and a $6.0 million increase in travel and related expenses. Partially offsetting these increases was a $24.3 million decrease in provision for credit loss, which was primarily attributable to the recognition of a $23.6 million provision for credit loss related to receivables owed by a customer that declared bankruptcy in July 2021 and its affiliate during the three months ended June 30, 2021, and a $13.7 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 COLI assets associated with the deferred compensation plan, which are included in “Other income (expense), 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, and was partially offset by reduced amortization expense associated with older acquired intangible assets, as certain of these assets became fully amortized.

Asset impairment charges. During the three months ended June 30, 2022, we recognized a $2.8 million asset impairment charge primarily related to the expected discontinued use of the right-of-use asset associated with our existing corporate headquarters in connection with our planned move to a new headquarters by the end of 2022. During the three months ended June 30, 2021, we recognized a $2.3 million asset impairment charge related to certain equipment that was not utilized in our core operations and was subsequently sold.

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 June 30, 2022 primarily due to higher levels of debt and, to a lesser extent, higher interest rates. Our long-term debt increased significantly at the end of 2021 in connection with our acquisition of Blattner.

Interest income. Interest income decreased in the three months ended June 30, 2022 primarily due to interest received in the three months ended June 30, 2021 related to a settlement with a customer.

Other income (expense), net. The net other expense for the three months ended June 30, 2022 included an unrealized loss of $41.7 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 June 30, 2022. Also included in other income (expense), net for the three months ended June 30, 2022 was $10.2 million of expense associated with our deferred compensation plan, as compared to $3.9 million of income during the three months ended June 30, 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. During the three months ended June 30, 2021, we also recognized a $2.5 million benefit from a COLI policy held in connection with our deferred compensation plan. Additionally, equity in earnings of non-integral affiliates for three months ended June 30, 2022 was $9.6 million as compared to $0.7 million for the three months ended June 30, 2021.

Provision for income taxes. The effective tax rates for the three months ended June 30, 2022 and 2021 were 30.0% and 25.6%. The effective tax rate for the three months ended June 30, 2022 was unfavorably impacted by the unrealized loss on our investment in Starry described above, for which a valuation allowance was recorded. The lower rate for the three months ended June 30, 2021 was impacted by the recognition of a $4.2 million benefit associated with deferred compensation plan investments.

Other comprehensive income (loss), net of taxes. See Statements of Comprehensive Income (Loss) in Item 1. Financial Statements of Part I of this Quarterly Report. Other comprehensive income (loss) 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 loss in the three months ended June 30, 2022 was impacted primarily by the strengthening of the U.S. dollar against both the Canadian and Australian dollars as of June 30, 2022 when compared to March 31, 2022. The gain in the three months ended June 30, 2021 was impacted primarily by the weakening of the U.S. dollar against the Canadian dollar as of June 30, 2021 when compared to March 31, 2021.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021


	Six Months Ended June 30,		Change
		2022	2021				$		%
Revenues			$	8,197,528	100.0	%	$	5,703,397	100.0	%	$	2,494,131	43.7	%
Cost of services (including depreciation)			7,024,767		85.7		4,882,796		85.6		2,141,971		43.9	%
Gross profit			1,172,761		14.3		820,601		14.4		352,160		42.9	%
Equity in earnings of integral unconsolidated affiliates			33,717		0.4		12,633		0.2		21,084		166.9	%
Selling, general and administrative expenses			(648,132)		(7.9)		(513,462)		(9.0)		(134,670)		26.2	%
Amortization of intangible assets			(223,696)		(2.7)		(42,646)		(0.8)		(181,050)		424.5	%
Asset impairment charges			(2,800)		—		(2,319)		—		(481)		20.7	%
Change in fair value of contingent consideration liabilities			(5,978)		(0.1)		573		—		(6,551)		*
Operating income			325,872		4.0		275,380		4.8		50,492		18.3	%
Interest and other financing expenses			(53,367)		(0.7)		(25,584)		(0.4)		(27,783)		108.6	%
Interest income			291		—		3,026		0.1		(2,735)		(90.4)	%
Other income (expense), net			(43,800)		(0.5)		12,143		0.1		(55,943)		*
Income before income taxes			228,996		2.8		264,965		4.6		(35,969)		(13.6)	%
Provision for income taxes			47,808		0.6		54,675		0.9		(6,867)		(12.6)	%


Net income			181,188		2.2		210,290		3.7		(29,102)		(13.8)	%
Less: Net income attributable to non-controlling interests			8,527		0.1		3,496		0.1		5,031		143.9	%
Net income attributable to common stock			$	172,661	2.1	%	$	206,794	3.6	%	$	(34,133)	(16.5)	%

The percentage change is not meaningful.

Revenues. Revenues increased due to a $1.08 billion increase in revenues from our Renewable Energy Infrastructure Solutions segment, a $846.3 million increase in revenues from our Electric Power Infrastructure Solutions segment and a $564.0 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 primarily due to the increase in revenues in all segments 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, which accounts for the majority of the increase as compared to the six months ended June 30, 2021. Additionally, the amount for the six months ended June 30, 2022 includes our portion of amounts earned by an entity that we acquired a 44% interest in during the fourth quarter of 2021 and 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 $116.4 million increase in expenses associated with acquired businesses, as well as a $24.0 million increase in compensation expense, associated with increased salaries, incentive compensation and non-cash stock compensation expense due primarily to increased operational performance and an increase in employees to support the growth of the business, and a $11.8 million increase in travel and related expenses. Partially offsetting these increases was a $24.2 million decrease in provision for credit loss, which was primarily attributable to the recognition of a $23.6 million provision for credit loss related to receivables owed by a customer that declared bankruptcy in July 2021 and its affiliate during the six months ended June 30, 2021, and a $20.0 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 COLI assets associated with the deferred compensation plan, which are included in “Other income (expense), 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.

Asset impairment charges. During the six months ended June 30, 2022, we recognized a $2.8 million asset impairment charge primarily related to the expected discontinued use of the right-of-use asset associated with our existing corporate headquarters in connection with our planned move to a new headquarters by the end of 2022. During the six months ended June 30, 2021, we recognized a $2.3 million asset impairment charge related to certain equipment that was not utilized in our core operations and was subsequently sold.

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 six months ended June 30, 2022 primarily due to higher levels of debt and, to a lesser extent, higher interest rates. Our long-term debt increased significantly at the end of 2021 in connection with our acquisition of Blattner.

Interest income. Interest income decreased in the six months ended June 30, 2022 primarily due to interest received in the six months ended June 30, 2021 related to a settlement with a customer.

Other income (expense), net. The net other expense for the six months ended June 30, 2022 included an unrealized loss of $50.0 million resulting from the remeasurement of the fair value of our investment in a publicly traded broadband technology provider, Starry, based on the market price of Starry’s common stock as of June 30, 2022. Also included in other income (expense), net was $14.3 million of expense associated with our deferred compensation plan, as compared to $5.5 million of income during the six months ended June 30, 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. The net other income for the six months ended June 30, 2021 was also favorably impacted by a $2.5 million benefit recognized from a COLI policy held in connection with our deferred compensation plan. Partially offsetting these expenses was a gain of $6.7 million as a result of our sale of a non-controlling ownership interest in a technology company. Additionally equity in earnings of non-integral affiliates for six months ended June 30, 2022 was $14.9 million as compared to $1.3 million for the six months ended June 30, 2021.

Provision for income taxes. The effective tax rates for the six months ended June 30, 2022 and 2021 were 20.9% and 20.6%. The tax rate for the six months ended June 30, 2022 was impacted by the recognition of a $21.2 million tax benefit that resulted from equity incentive awards vesting at a higher fair market value than their grant date fair market value, as compared to the recognition of $18.4 million associated with this tax benefit for the six months ended June 30, 2021.

Other comprehensive income (loss), net of taxes. See Statements of Comprehensive Income (Loss) in Item 1. Financial Statements of Part I of this Quarterly Report. Other comprehensive income (loss) results from translation of the balance sheets of our foreign operating units, which are primarily located in Canada and Australia and have functional currencies other than the U.S. dollar, and therefore are affected by the strengthening or weakening of the U.S. dollar against such currencies. The loss in the six months ended June 30, 2022 was impacted primarily by the strengthening of the U.S. dollar against both the Canadian and Australian dollars as of June 30, 2022 when compared to December 31, 2021. The gain in the six months ended June 30, 2021 was impacted by the weakening of the U.S. dollar against the Canadian dollar as of June 30, 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.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

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


	Three Months Ended June 30,								Change
	2022				2021				$		%
Revenues:


Electric Power Infrastructure Solutions	$	2,199,430	52.0	%	$	1,815,762	60.5	%	$	383,668	21.1	%
Renewable Energy Infrastructure Solutions	924,236		21.8		332,013		11.1		592,223		178.4	%
Underground Utility and Infrastructure Solutions	1,108,337		26.2		852,041		28.4		256,296		30.1	%
Consolidated revenues	$	4,232,003	100.0	%	$	2,999,816	100.0	%	$	1,232,187	41.1	%
Operating income (loss):




Electric Power Infrastructure Solutions	$	232,150	10.6	%	$	206,967	11.4	%	$	25,183	12.2	%
Renewable Energy Infrastructure Solutions	81,687		8.8	%	29,932		9.0	%	51,755		172.9	%
Underground Utility and Infrastructure Solutions	89,943		8.1	%	23,937		2.8	%	66,006		275.7	%
Corporate and Non-Allocated costs	(195,424)		(4.6)	%	(99,185)		(3.3)	%	(96,239)		97.0	%
Consolidated operating income	$	208,356	4.9	%	$	161,651	5.4	%	$	46,705	28.9	%

Electric Power Infrastructure Solutions Segment Results

The increase in revenues for the three months ended June 30, 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 $80 million in revenues attributable to acquired businesses.

Operating income increased for the three months ended June 30, 2022 primarily due to increased revenues explained above. Operating margin decreased during the three months ended June 30, 2022 primarily due to the normal variability associated with the overall timing of projects and project mix, as well as inefficiencies attributable to supply chain disruptions impacting certain operations and elevated consumables costs. The decrease in operating margin was partially offset by improved performance on various communication projects and an $11.1 million increase in equity in earnings from LUMA and other integral unconsolidated affiliates as compared to the three months ended June 30, 2021.

Renewable Energy Infrastructure Solutions Segment Results

The increase in revenues for the three months ended June 30, 2022 was primarily due to approximately $490 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 customer demand for renewable transmission and interconnection construction services.

The increase in operating income during the three months ended June 30, 2022 was primarily due to the increase in revenues. The decrease in operating margin was attributable to significant additional costs arising from delays on a large transmission project in Canada that were due to the continued negative impact of the COVID-19 pandemic from the first quarter, which was exacerbated by the remote locations of the project, as well as less favorable results associated with the normal variability of overall project timing and project mix. The decrease in operating margin was partially offset by the favorable acceleration of a transmission project by the customer.

Underground Utility and Infrastructure Solutions Segment Results

The increase in revenues for the three months ended June 30, 2022 was primarily due to increased revenues associated with higher demand from our gas utility and industrial customers, which began to move forward with certain deferred

maintenance and capital spending during the three months ended June 30, 2022, as well as an increase in revenues associated with certain large pipeline projects in Canada and approximately $20 million in revenues attributable to acquired businesses.

The increases in operating income and operating margin during the three months ended June 30, 2022 were 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 more favorable results associated with the normal variability of overall project timing and project mix. Additionally, our performance in this segment was impacted less by the COVID-19 pandemic and challenges in the overall energy market during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. The three months ended June 30, 2021 also included the recognition of a $23.6 million provision for credit loss related to receivables from a customer that declared bankruptcy in July 2021 and its affiliate, as well as a $2.3 million asset impairment charge related to the planned sale of certain equipment that was not utilized in our core operations and was subsequently sold.

Corporate and Non-Allocated Costs

The increase in corporate and non-allocated costs during the three months ended June 30, 2022 was primarily related to an $86.7 million increase in intangible asset amortization, largely associated with the acquisition of Blattner, a $12.6 million increase in acquisition and integration costs related to recent acquisitions and a $6.9 million increase in salaries, incentive compensation and non-cash stock compensation expense. Included in acquisition and integration costs during the three months ended June 30, 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 $13.7 million decrease in expense related to deferred compensation liabilities due to market fluctuations.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021


	Six Months Ended June 30,				Change
		2022	2021				$		%
Revenues:


Electric Power Infrastructure Solutions			$	4,338,127	52.9	%	$	3,491,808	61.2	%	$	846,319	24.2	%
Renewable Energy Infrastructure Solutions			1,799,868		22.0		716,087		12.6		1,083,781		151.3	%
Underground Utility and Infrastructure Solutions			2,059,533		25.1		1,495,502		26.2		564,031		37.7	%
Consolidated revenues			$	8,197,528	100.0	%	$	5,703,397	100.0	%	$	2,494,131	43.7	%
Operating income (loss):




Electric Power Infrastructure Solutions			435,569		10.0	%	360,706		10.3	%	74,863		20.8	%
Renewable Energy Infrastructure Solutions			151,629		8.4	%	75,228		10.5	%	76,401		101.6	%
Underground Utility and Infrastructure Solutions			138,118		6.7	%	32,750		2.2	%	105,368		321.7	%
Corporate and Non-Allocated Costs			(399,444)		(4.9)	%	(193,304)		(3.4)	%	(206,140)		106.6	%
Consolidated operating income			$	325,872	4.0	%	$	275,380	4.8	%	$	50,492	18.3	%

Electric Power Infrastructure Solutions Segment Results

The increase in revenues for the six months ended June 30, 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 $155 million in revenues attributable to acquired businesses.

Operating income increased for the six months ended June 30, 2022 primarily due to the increase in revenues explained above. Operating margin decreased during the six months ended June 30, 2022 as a result of normal variability of the overall timing of projects and project mix, inefficiencies attributable to supply chain disruptions impacting certain operations, elevated consumables costs, and lower margins on a large transmission project in Canada that experienced substantial productivity impacts from the COVID-19 pandemic during the first quarter of 2022. The decrease in operating margin was partially offset by improved performance on various communication projects and a $21.1 million increase in equity in earnings from LUMA and other integral unconsolidated affiliates as compared to the six months ended June 30, 2021.

Renewable Energy Infrastructure Solutions Segment Results

The increase in revenues for the six months ended June 30, 2022 was primarily due to approximately $960 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 customer demand for renewable transmission and interconnection construction services.

The increase in operating income was primarily due to the increase in revenues associated with the acquisition of Blattner. The decrease in operating margin was attributable to extensive schedule delays on a large transmission project in Canada that were due to the effect of the COVID-19 pandemic, which was exacerbated by the remote locations of the project, as well as less favorable results associated with the normal variability of overall project timing and project mix. Additionally, there were more favorable close-outs of certain projects during the six months ended June 30, 2021 as compared to the six months ended June 30, 2022.

Underground Utility and Infrastructure Solutions Segment Results

The increase in revenues for the six months ended June 30, 2022 was primarily due to increased revenues associated with higher demand from our gas utility and industrial customers, which began to move forward with certain deferred maintenance and capital spending during the six months ended June 30, 2022, as well as an increase in revenues associated with certain large pipeline projects in Canada and approximately $25 million in revenues attributable to acquired businesses.

The increase in operating income and operating margin 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 more favorable results associated with the normal variability of overall project timing and project mix. Additionally, our performance in this segment was impacted less by the COVID-19 pandemic and challenges in the overall energy market during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Also, the six months ended June 30, 2021 included the recognition of a $23.6 million provision for credit loss related to receivables from a customer that declared bankruptcy in July 2021 and its affiliate, as well as a $2.3 million asset impairment charge related to the planned sale of certain equipment that was not utilized in our core operations and was subsequently sold.

Corporate and Non-Allocated Costs

The increase in corporate and non-allocated costs during the six months ended June 30, 2022 was primarily due to a $181.1 million increase in intangible asset amortization, largely associated with the acquisition of Blattner, a $26.0 million increase in acquisition and integration costs related to recent acquisitions and a $13.2 million increase in salaries, incentive compensation and non-cash stock compensation expense. Included in acquisition and integration costs during the six months ended June 30, 2022 was $23.0 million of expenses associated with change of control payments as a result of the acquisition of Blattner. These increases were partially offset by a $20.0 million 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, the operations of which are not operationally integral to Quanta; (iv) unrealized mark-to-market adjustments on our investment in a publicly traded company vary from period to period based on fluctuations in the market price of such company’s common stock; (v) gains and losses on the sale of investments vary from period to period depending on activity; (vi) asset impairment charges can vary from period to period

depending on economic and other factors; and (vii) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses and the effect of present value accretion on fair value calculations. 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				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income attributable to common stock (GAAP as reported)	$	88,020	$	117,033	$	172,661	$	206,794
Interest and other financing expenses	28,639		13,109		53,367		25,584
Interest income	(222)		(2,909)		(291)		(3,026)
Provision for income taxes	41,252		40,951		47,808		54,675
Depreciation expense	73,959		62,757		144,913		124,864
Amortization of intangible assets	107,945		21,291		223,696		42,646
Interest, income taxes and depreciation included in equity in earnings of integral unconsolidated affiliates	4,579		2,150		7,840		3,651
EBITDA	344,172		254,382		649,994		455,188
Non-cash stock-based compensation	28,090		23,923		51,082		42,610
Acquisition and integration costs (1)	14,191		1,567		29,322		3,328
Equity in earnings of non-integral unconsolidated affiliates	(9,611)		(658)		(14,949)		(1,343)
Unrealized loss from mark-to-market adjustment on investment (2)	41,654		—		50,047		—
Gain on sale of investment (3)	—		—		(6,696)		—
Asset impairment charges (4)	2,800		2,319		2,800		2,319
Change in fair value of contingent consideration liabilities	809		(210)		5,978		(573)
Adjusted EBITDA	$	422,105	$	281,323	$	767,578	$	501,529

(1) The amounts for the three and six months ended June 30, 2022 include, among other things, $11.5 million and $23.0 million of expenses that are associated with change of control payments as a result of the acquisition of Blattner.

(2) The amounts for the three and six months ended June 30, 2022 represent decreases in the fair value of our investment based on the market price of our stock investment in Starry, a publicly traded company.

(3) The amount for the six months ended June 30, 2022 represents a gain as a result of the sale of our non-controlling ownership interest in a technology company.

(4) The amount for the three and six months ended June 30, 2022 represents a $2.8 million asset impairment charge primarily related to the expected discontinued use of the right-of-use asset associated with our existing corporate headquarters in connection with our planned move to a new headquarters by the end of 2022. The amount for the three and six months ended June 30, 2021 represents an asset impairment charge related to certain equipment that was not utilized in our core operations and was subsequently sold.

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 June 30, 2022 and December 31, 2021, MSAs accounted for 55% and 55% of our estimated 12-month backlog and 66% 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):


	June 30, 2022				December 31, 2021
	12 Month		Total		12 Month		Total
Electric Power Infrastructure Solutions
Remaining performance obligations	$	2,149,469	$	2,779,227	$	2,002,862	$	2,769,106
Estimated orders under MSAs and short-term, non-fixed price contracts	4,230,888		8,945,444		4,492,038		9,447,765
Backlog	$	6,380,357	$	11,724,671	$	6,494,900	$	12,216,871

Renewable Energy Infrastructure Solutions
Remaining performance obligations	$	2,299,898	$	2,911,835	$	2,178,846	$	2,428,408
Estimated orders under MSAs and short-term, non-fixed price contracts	52,345		90,553		65,618		120,237
Backlog	$	2,352,243	$	3,002,388	$	2,244,464	$	2,548,645

Underground Utility and Infrastructure Solutions
Remaining performance obligations	$	1,023,556	$	1,229,157	$	637,843	$	697,881
Estimated orders under MSAs and short-term, non-fixed price contracts	1,820,560		3,894,014		1,934,826		3,810,829
Backlog	$	2,844,116	$	5,123,171	$	2,572,669	$	4,508,710

Total
Remaining performance obligations	$	5,472,923	$	6,920,219	$	4,819,551	$	5,895,395
Estimated orders under MSAs and short-term, non-fixed price contracts	6,103,793		12,930,011		6,492,482		13,378,831
Backlog	$	11,576,716	$	19,850,230	$	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 June 30, 2022, our cash requirements from contractual obligations that are due within the twelve months subsequent to June 30, 2022 and thereafter, excluding certain amounts discussed below (in thousands):


	Due by June 30, 2023		Due Thereafter		Total
Long-term debt, including current portion - principal	$	25,838	$	3,878,519	$	3,904,357
Long-term debt - cash interest (1)	64,295		624,132		688,427

Operating lease obligations (2)	81,677		175,147		256,824
Operating lease obligations that have not yet commenced (3)	1,070		17,994		19,064
Finance lease obligations (2)	1,422		2,011		3,433

Short-term lease obligations (4)	14,619		—		14,619

Deferral of employer portion of payroll tax payments	54,435		—		54,435
Equipment purchase commitments (5)	159,312		—		159,312
Capital commitment related to investments in unconsolidated affiliates (6)	733		11,163		11,896
Total cash requirements from contractual obligations	$	403,401	$	4,708,966	$	5,112,367

(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 $583.2 million of outstanding revolving loans under our senior credit facility bear interest at variable market rates and such amount is not included due to its variability. Assuming the principal amount outstanding and interest rate in effect as of June 30, 2022 with respect to this variable rate debt remained the same, the annual cash interest expense would be approximately $40.3 million, payable until October 8, 2026, the maturity date of our senior credit facility. 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 London Interbank Offered Rate (LIBOR), which is expected to be complete by mid-2023.

(2) Amounts represent undiscounted operating and finance lease obligations as of June 30, 2022. The corresponding amounts recorded on our June 30, 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 June 30, 2022. The operating lease obligations will be recorded on our condensed consolidated balance sheet beginning on the commencement date of each lease.

(4) Amount represents short-term lease obligations that are not recorded on our June 30, 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) Amount 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 represent 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 June 30, 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 the 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 Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of the 2021 Annual 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 the 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 and/or debt securities. Our industry is capital intensive, and we expect substantial capital expenditures and commitments for equipment purchases and equipment lease and rental arrangements to be needed into the foreseeable future in order to meet anticipated demand for our services. We expect capital expenditures for property and equipment purchases for the year ended December 31, 2022 to be approximately $400 million. In line with our past practices, which are 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 and/or debt securities.

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 and delayed 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 June 30, 2022 were as follows (in thousands):


	June 30, 2022
Total capacity available for revolving loans and letters of credit	$	2,640,000
Less:
Borrowings of revolving loans	583,185
Letters of credit outstanding	430,493
Available commitments for issuing revolving loans or new letters of credit	1,626,322
Plus:
Cash and cash equivalents	150,653
Total available commitments under senior credit facility and cash and cash equivalents	$	1,776,975

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 LIBOR, which is expected to be complete by mid-2023. The credit agreement for our senior credit facility includes LIBOR benchmark replacement provisions, including, among others, the Secured Overnight Financing Rate, and we anticipate selecting an alternative benchmark rate prior to the transition away from LIBOR. While we do not expect our interest rate to be materially affected in future periods by this transition, the ultimate impact remains unknown and is subject to numerous factors, including the final determination and behavior of a replacement benchmark rate.

Sources and Uses of Cash and Cash Equivalents During the Three and Six Months Ended June 30, 2022 and 2021

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net cash provided by operating activities	$	118,731	$	188,948	$	203,821	$	314,561
Net cash used in investing activities	$	(117,949)	$	(96,371)	$	(211,018)	$	(319,177)
Net cash provided by (used in) financing activities	$	(87,466)	$	(81,753)	$	(70,916)	$	31,236

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 and six months ended June 30, 2022 was negatively impacted by increased working capital requirements, associated with higher levels of revenues as well as increases associated with two large transmission projects in Canada. For additional information about the change orders and claims associated with these projects, see 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. These increases in working capital needs were partially offset by an increase in net income adjusted for non-cash items compared to the three and six months ended June 30, 2021.

Net cash provided by operating activities during the three and six months ended June 30, 2021 was negatively impacted by high working capital requirements, including the ramp up of the two large transmission projects in Canada described above.

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 June 30, 2022 was 81 days, which was lower than DSO of 83 days as of June 30, 2021 and our five-year historical average DSO of 82 days. This decrease in DSO as compared to June 30, 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 large 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 June 30, 2022 included $121.6 million of capital expenditures, partially offset by $15.6 million of proceeds from the sale of property and equipment. Net cash used in investing activities in the six months ended June 30, 2022 included $231.5 million of capital expenditures, partially offset by $24.4 million of proceeds from the sale of property and equipment and $16.9 million of cash received from investments, which primarily related to proceeds received from the sale of a non-controlling ownership interest in a technology company.

Net cash used in investing activities in the three months ended June 30, 2021 included $74.9 million of capital expenditures and $35.3 million used for acquisitions, some of which relates to acquisitions that closed in prior periods. Partially

offsetting these items was $11.4 million of proceeds from the sale of property and equipment. Net cash used in investing activities in the six months ended June 30, 2021 included $158.4 million of capital expenditures; $114.3 million of cash paid for equity and other investments, which primarily related to the acquisition of a minority interest in the broadband technology provider, Starry; and $68.1 million used for acquisitions, the majority of which related to acquisitions that closed in prior periods. These items were partially offset by $18.7 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 used in financing activities in the three months ended June 30, 2022 included $84.9 million of cash payments for common stock repurchases, $65.0 million of cash payments related to tax withholding for non-cash stock-based compensation and $10.1 million of cash payments for dividends and dividend equivalents. These items were partially offset by $74.1 million of net borrowings under our senior credit facility. Net cash used in financing activities in the six months ended June 30, 2022 included $94.4 million of cash payments for common stock repurchases, $76.2 million of cash payments to satisfy tax withholding obligations associated with stock-based compensation, $20.9 million of cash payments for dividends and cash dividend equivalents and $15.6 million of net repayments of short-term debt. These items were partially offset by $142.1 million of net borrowings under our senior credit facility.

Net cash used in financing activities in the three months ended June 30, 2021 included $36.6 million of payments to satisfy tax withholding obligations associated with stock-based compensation, $29.4 million of cash payments for common stock repurchases and $8.4 million of cash payments for dividends and cash dividend equivalents. Net cash provided by financing activities in the six months ended June 30, 2021 included $169.2 million of net borrowings under our senior credit facility, partially offset by $60.5 million of cash payments to satisfy tax withholding obligations associated with stock-based compensation, $48.9 million of cash payments for common stock repurchases and $17.2 million of cash payments for dividends and cash dividend equivalents.

We expect to continue to utilize cash for similar financing activities in the future, including repayments under our senior credit facility, payment of cash dividends and repurchases of our common stock and/or debt securities.

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 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 in Part II of the 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.

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