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

General

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 2022 Annual Report, which was filed with the SEC on February 23, 2023 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 2022 Annual Report.

Overview

Our second quarter 2023 results reflect increased demand for our services, as revenue increased in all of our segments as compared to the second quarter of 2022.

With respect to our Electric Power Infrastructure Solutions (Electric Power) segment, utilities are continuing to invest significant capital in their electric power delivery systems through multi-year grid modernization and reliability programs, as well as system upgrades and hardening programs in response to recurring severe weather events. We have also experienced high demand for new and expanded transmission, substation and distribution infrastructure needed to reliably transport power.

With respect to our Renewable Energy Infrastructure Solutions (Renewable Energy) segment, the transition to a reduced-carbon economy is continuing to drive demand for renewable generation and related infrastructure (e.g., high-voltage electric transmission and substation infrastructure), as well as interconnection services necessary to connect and transmit renewable-generated electricity to existing electric power delivery systems. Our acquisition of Blattner Holding Company and its operating subsidiaries (collectively, Blattner) in the fourth quarter of 2021, has had a significant incremental impact on our ability to perform these services. Despite these positive longer-term trends, certain of our customers experienced supply chain challenges during 2022 and into the first half of 2023 that resulted in delays and shortages of, and increased costs for, materials necessary for certain projects, particularly sourcing restrictions related to solar panels necessary for the utility scale solar industry. Based on indications within this market during the second quarter of 2023, we expect the supply chain challenges and sourcing restrictions related to solar panels to improve throughout the remainder of the year.

With respect to our Underground Utility and Infrastructure Solutions (Underground and Infrastructure) segment, in 2022 and through the second quarter of 2023 we experienced strong demand for our services focused on utility spending, in particular our gas distribution services to natural gas utilities that are implementing modernization programs, and our downstream industrial services, as these customers continued to move forward with certain maintenance and capital spending that was deferred during the course of the COVID-19 pandemic. Additionally, during the first half of 2023 we generated increased revenues associated with large pipeline projects in Canada.

During the six months ended June 30, 2023, increased revenues resulted in $165.8 million of net cash provided by operating activities. Available commitments under our senior credit facility and cash and cash equivalents as of June 30, 2023 were $1.77 billion.

We expect the strong demand for our services will continue. Our remaining performance obligations and backlog were $12.48 billion and $27.20 billion as of June 30, 2023, representing increases of 41.8%, and 12.9% relative to December 31, 2022. For a reconciliation of backlog to remaining performance obligations, the most comparable financial measure prepared in conformity with generally accepted accounting principles in the United States (GAAP), see Non-GAAP Financial Measures below.

Significant Factors Impacting Results

Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Item 1. Business and Item 1A. Risk Factors of Part I of our 2022 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 for certain projects 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 and earthquakes. Climate change has the potential to increase the frequency and extremity of severe weather events. 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 due to failure of electrical power or other infrastructure on which we have performed services. However, severe weather events can also increase our emergency restoration services, which typically yield higher margins due in part to higher equipment utilization and absorption of fixed costs.

Demand for services. We perform the majority of our services under existing contracts, including MSAs and similar agreements pursuant to which our customers are not committed to specific volumes of our services. 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. Examples of items that may cause demand for our services to fluctuate materially from quarter to quarter include: the financial condition of our customers, their capital spending and their access to capital; acceleration of any projects or programs by customers (e.g., modernization or hardening programs); economic and political conditions on a regional, national or global scale, including availability of renewable energy tax credits; interest rates; governmental regulations affecting the sourcing and costs of materials and equipment; other changes in U.S. and global trade relationships; and project deferrals and cancellations.

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. 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; and the performance of third parties. 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, the incurrence of losses on a project or the issuance of change orders and/or assertion of contract claims against customers. See Revenue Recognition - Contract Estimates and Changes in Estimates in Note 3 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report.

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

Results of Operations

Consolidated Results

Three months ended June 30, 2023 compared to the three months ended June 30, 2022

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). The results of acquired businesses have been included in the following results of operations since their respective acquisition dates.

						Three Months Ended June 30,																								Change
						2023												2022												$						%
Revenues						$	5,048,610					100.0		%				$	4,232,003					100.0		%				$	816,607					19.3		%
Cost of services						4,324,511						85.7						3,607,413						85.2						717,098						19.9		%
Gross profit						724,099						14.3						624,590						14.8						99,509						15.9		%
Equity in earnings of integral unconsolidated affiliates						9,370						0.2						18,565						0.4						(9,195)						(49.5)		%
Selling, general and administrative expenses						(384,171)						(7.6)						(323,245)						(7.6)						(60,926)						18.8		%
Amortization of intangible assets						(70,025)						(1.4)						(107,945)						(2.6)						37,920						(35.1)		%
Asset impairment charges						—						—						(2,800)						(0.1)						2,800						(100.0)		%
Change in fair value of contingent consideration liabilities						—						—						(809)						—						809						(100.0)		%
Operating income						279,273						5.5						208,356						4.9						70,917						34.0		%
Interest and other financing expenses						(48,189)						(1.0)						(28,639)						(0.7)						(19,550)						68.3		%
Interest income						1,448						—						222						—						1,226						552.3		%
Other income (expense), net						3,419						0.2						(42,527)						(1.0)						45,946						*
Income before income taxes						235,951						4.7						137,412						3.2						98,539						71.7		%
Provision for income taxes						69,367						1.4						41,252						0.9						28,115						68.2		%
Net income						166,584						3.3						96,160						2.3						70,424						73.2		%
Less: Net income attributable to non-controlling interests						685						—						8,140						(0.2)						(7,455)						(91.6)		%
Net income attributable to common stock						$	165,899					3.3		%				$	88,020					2.1		%				$	77,879					88.5		%

• The percentage change is not meaningful.

Revenues. Revenues increased due to a $465.1 million increase in revenues from our Renewable Energy segment, a $215.8 million increase in revenues from our Electric Power segment and a $135.7 million increase in revenues from our Underground and Infrastructure segment. See Segment Results below for additional information and discussion related to segment revenues.

Cost of services. Costs of services primarily includes wages, benefits, subcontractor costs, materials, equipment, and other direct and indirect costs, including related depreciation. The increase in cost of services generally correlates to the increase in revenues.

Equity in earnings of integral unconsolidated affiliates. The decrease in equity in earnings was primarily driven by the timing of completion of projects associated with certain of our integral affiliates, as well as the reimbursement of certain large costs to LUMA by the owner of the transmission and distribution system during the three months ended June 30, 2022.

Selling, general and administrative expenses. The increase was partially attributable to an aggregate $28.7 million increase in the following items to support business growth: compensation expense, largely associated with increased salaries due primarily to headcount growth; and travel and related expenses. Also contributing to the increase was a $14.2 million increase in deferred compensation liabilities primarily driven by fair market value increases and an $11.9 million increase in legal and other consulting services. The fair market value changes in deferred compensation liabilities were largely offset by changes in the fair value of corporate-owned life insurance (COLI) assets associated with the deferred compensation plan, which are included in “Other (expense) income, net” as discussed below.

Amortization of intangible assets. The decrease was primarily related to a $40.7 million reduction of amortization of intangible assets associated with backlog for Blattner, which was fully amortized by the third quarter of 2022.

Operating income. Operating income was positively impacted by a $13.0 million decrease in corporate and non-allocated costs, which includes amortization expense, as well as a $11.9 million increase in operating income for our Electric Power segment, a $28.8 million increase in operating income for our Renewable Energy segment and a $17.3 million increase in operating income for our Underground and Infrastructure segment. Results for each of our business segments and corporate and non-allocated costs are discussed in the Segment Results section below.

Interest and other financing expenses. The increase primarily resulted from the impact of higher interest rates on our outstanding variable rate debt during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Other income (expense), net. The net other expense for the three months ended June 30, 2022 included a $41.7 million unrealized loss that resulted from the remeasurement of the fair value of our investment in Starry Group Holdings, Inc. (Starry). The increase in other income, net for three months ended June 30, 2023 compared to the three months ended June 30, 2022 also resulted from a $13.4 million favorable mark-to-market valuation of the COLI assets associated with our deferred compensation plans, partially offset by $9.1 million lower equity in earnings of non-integral affiliates.

Provision for income taxes. The effective tax rates for the three months ended June 30, 2023 and 2022 were 29.4% and 30.0%.

Comprehensive income. See Statements of Comprehensive Income in Item 1. Financial Statements of Part I of this Quarterly Report. Comprehensive income increased by $125.2 million in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, primarily due to a $70.4 million increase in net income and a $55.0 million increase in foreign currency translation gains. The predominant functional currencies for our operations outside the U.S. are Canadian and Australian dollars. The increase in foreign currency translation gains primarily resulted from strengthening of the Canadian dollar against the U.S. dollar for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

EBITDA and adjusted EBITDA. See Non-GAAP Financial Measures below for a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure. EBITDA increased 26.8%, or $92.1 million, to $436.3 million as compared to $344.2 million for the three months ended June 30, 2022, and adjusted EBITDA increased 11.8%, or $50.0 million, to $472.1 million as compared to $422.1 million for the three months ended June 30, 2022.

Six months ended June 30, 2023 compared to the six months ended June 30, 2022

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):

															Six Months Ended June 30,																								Change
																											2023												2022												$						%
Revenues																																							$	9,477,436					100.0		%				$	8,197,528					100.0		%				$	1,279,908					15.6		%
Cost of services (including related depreciation)																																							8,180,142						86.3						7,024,767						85.7						1,155,375						16.4		%
Gross profit																																							1,297,294						13.7						1,172,761						14.3						124,533						10.6		%
Equity in earnings of integral unconsolidated affiliates																																							18,990						0.2						33,717						0.4						(14,727)						(43.7)		%
Selling, general and administrative expenses																																							(768,723)						(8.1)						(648,132)						(7.9)						(120,591)						18.6		%
Amortization of intangible assets																																							(142,428)						(1.5)						(223,696)						(2.7)						81,268						(36.3)		%
Asset impairment charges																																							—						—						(2,800)						—						2,800						(100.0)		%
Change in fair value of contingent consideration liabilities																																							—						—						(5,978)						(0.1)						5,978						(100.0)		%
Operating income																																							405,133						4.3						325,872						4.0						79,261						24.3		%
Interest and other financing expenses																																							(89,882)						(0.9)						(53,367)						(0.7)						(36,515)						68.4		%
Interest income																																							2,964						—						291						—						2,673						918.6		%
Other income (expense), net																																							11,285						0.1						(43,800)						(0.5)						55,085						*
Income before income taxes																																							329,500						3.5						228,996						2.8						100,504						43.9		%
Provision for income taxes																																							65,946						0.7						47,808						0.6						18,138						37.9		%
Net income																																							263,554						2.8						181,188						2.2						82,366						45.5		%
Less: Net income attributable to non-controlling interests																																							2,609						—						8,527						0.1						(5,918)						(69.4)		%
Net income attributable to common stock																																							$	260,945					2.8		%				$	172,661					2.1		%				$	88,284					51.1		%

• The percentage change is not meaningful.

Revenues. Revenues increased due to a $597.8 million increase in revenues from our Renewable Energy segment, a $413.2 million increase in revenues from our Electric Power segment and a $268.9 million increase in revenues from our Underground and Infrastructure segment. See Segment Results below for additional information and discussion related to segment revenues.

Cost of services. Costs of services primarily includes wages, benefits, subcontractor costs, materials, equipment, and other direct and indirect costs, including related depreciation. The increase in cost of services generally correlates to the increase in revenues.

Equity in earnings of integral unconsolidated affiliates. The decrease in equity in earnings was primarily driven by the timing of completion of projects associated with certain of our integral affiliates, as well as the reimbursement of certain large costs to LUMA by the owner of the transmission and distribution system during the six months ended June 30, 2022.

Selling, general and administrative expenses. The increase was partially attributable to an aggregate $50.9 million increase in the following items to support business growth: compensation expense, largely associated with increased salaries due primarily to headcount growth; and travel and related expenses. Also contributing to the increase was a $22.3 million increase in expense related to deferred compensation liabilities. The fair market value changes in deferred compensation liabilities were largely offset by changes in the fair value of COLI assets associated with the deferred compensation plan, which are included in “Other (expense) income, net” as discussed below. Additional items contributing to the increase were an $11.5 million increase in legal and other consulting services; a $7.8 million increase in expenses associated with acquired businesses; a $5.6 million increase in depreciation expense primarily related to our new corporate headquarters and a $5.5 million increase in provision for credit allowance.

Amortization of intangible assets. The decrease was primarily due to a $88.8 million reduction of amortization of intangible assets associated with backlog for Blattner, which was fully amortized by the third quarter of 2022.

Operating income. Operating income was positively impacted by a $30.5 million decrease in corporate and non-allocated costs, which includes amortization expense, as well as a $30.7 million increase in operating income for our Underground and Infrastructure segment and a $23.6 million increase in operating income for our Electric Power segment. Partially offsetting the

positive impact of these items was a $5.5 million decrease in operating income for our Renewable Energy segment. Results for each of our business segments and corporate and non-allocated costs are discussed in the Segment Results section below.

Interest and other financing expenses. The increase primarily resulted from the impact of higher interest rates on our outstanding variable rate debt during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Other income (expense), net. The net other expense for the six months ended June 30, 2022 was primarily due to an unrealized loss of $50.0 million that resulted from the remeasurement of the fair value of our investment in Starry. The increase in other income for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 resulted from a $20.7 million favorable mark-to-market valuation of the COLI assets associated with our deferred compensation plan, partially offset by a $12.9 million decrease in equity in earnings of non-integral affiliates.

Provision for income taxes. The effective tax rates for the six months ended June 30, 2023 and 2022 were 20.0% and 20.9%. The tax rate for the six months ended June 30, 2023 was favorably impacted by the recognition of a $32.4 million 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 $21.2 million associated with this tax benefit for the six months ended June 30, 2022.

Comprehensive income. See Statements of Comprehensive Income in Item 1. Financial Statements of Part I of this Quarterly Report. Comprehensive income increased by $125.0 million in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, primarily due to a $82.4 million increase in net income and a $41.8 million increase in foreign currency translation gains. The predominant functional currencies for our operations outside the U.S. are Canadian and Australian dollars. The increase in foreign currency translation gains primarily resulted from strengthening of the Canadian dollar against the U.S. dollar for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

EBITDA and adjusted EBITDA. See Non-GAAP Financial Measures below for a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure. EBITDA increased 11.4%, or $73.8 million, to $723.8 million as compared to $650.0 million for the six months ended June 30, 2022, and adjusted EBITDA increased 5%, or $36.8 million, to $804.4 million as compared to $767.6 million for the six months ended June 30, 2022.

Segment Results

We report our results under three reportable segments: Electric Power, Renewable Energy and Underground and Infrastructure. Reportable segment information, including revenues and operating income by type of work, is gathered from each of our operating companies. 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 corporate facility costs; non-allocated corporate salaries, benefits and incentive compensation; acquisition and integration costs; non-cash stock-based compensation; amortization related to intangible assets; asset impairments related to goodwill and intangible assets; and change in fair value of contingent consideration liabilities.

Three months ended June 30, 2023 compared to the three months ended June 30, 2022

The following table sets forth segment revenues, segment operating income (loss) and operating margins for the periods indicated. Operating margin is calculated by dividing operating income (loss) by revenues. The following table also includes the dollar and percentage change from the prior period (dollars in thousands):

						Three Months Ended June 30,																								Change
						2023												2022												$						%
Revenues:
Electric Power Infrastructure Solutions						$	2,415,254					47.9		%				$	2,199,430					52.0		%				$	215,824					9.8		%
Renewable Energy Infrastructure Solutions						1,389,368						27.5						924,236						21.8						465,132						50.3		%
Underground Utility and Infrastructure Solutions						1,243,988						24.6						1,108,337						26.2						135,651						12.2		%
Consolidated revenues						$	5,048,610					100.0		%				$	4,232,003					100.0		%				$	816,607					19.3		%
Operating income (loss):
Electric Power Infrastructure Solutions						$	244,017					10.1		%				$	232,150					10.6		%				$	11,867					5.1		%
Renewable Energy Infrastructure Solutions						110,487						8.0		%				81,687						8.8		%				28,800						35.3		%
Underground Utility and Infrastructure Solutions						107,207						8.6		%				89,943						8.1		%				17,264						19.2		%
Corporate and Non-Allocated Costs						(182,438)						(3.6)		%				(195,424)						(4.6)		%				12,986						(6.6)		%
Consolidated operating income						$	279,273					5.5		%				$	208,356					4.9		%				$	70,917					34.0		%

Electric Power Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the three months ended June 30, 2023 was primarily due to increased spending by our utility customers on grid modernization and hardening and approximately $80 million in revenues attributable to acquired businesses.

Operating Income. Operating income increased for the three months ended June 30, 2023 primarily due to the increase in revenues. Operating margin decreased during the three months ended June 30, 2023 partially due to $9.2 million of lower equity in earnings from our integral unconsolidated affiliates as discussed above, as well as lower than expected utilization of resources in Canada, which is expected to continue throughout the rest of the year. The negative impact of these items on operating margin was partially offset by improved operating margin associated with telecommunications projects.

Renewable Energy Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the three months ended June 30, 2023 was primarily due to increased demand and improved supply chain dynamics, as well as approximately $75 million in revenues attributable to acquired businesses.

Operating Income. The increase in operating income was primarily due to the increase in revenues during the three months ended June 30, 2023. The decrease in operating margin during the three months ended June 30, 2023 was primarily attributable to increased unabsorbed costs related to higher levels of fixed costs for resources required to support the expected increase in project activity in the second half of 2023 and into 2024. Additionally, operating margin during the three months ended June 30, 2022 benefited from the favorable acceleration of a transmission project by the customer.

Underground Utility and Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the three months ended June 30, 2023 was due to higher demand from our gas utility services customers, and to a lesser extent, increased revenues associated with large pipeline projects in Canada. These increases were partially offset by approximately $20 million as a result of unfavorable foreign currency exchange rates.

Operating Income. The increase in operating income and operating margin for the three months ended June 30, 2023 was primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption.

Corporate and Non-Allocated Costs

The decrease in corporate and non-allocated costs during the three months ended June 30, 2023 was primarily due to a $37.9 million decrease in intangible asset amortization, largely associated with the acquisition of Blattner, which was fully amortized by the third quarter of 2022; and an $11.9 million decrease in acquisition and integration costs related to recent acquisitions. These decreases were partially offset by an aggregate increase of $36.8 million primarily related to deferred compensation liabilities due to market fluctuations; compensation expense, primarily related to salaries due partially to growth in business; and consulting fees.

Six months ended June 30, 2023 compared to the six months ended June 30, 2022

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 (dollars in thousands):

												Six Months Ended June 30,																								Change
																		2023												2022												$						%
Revenues:
Electric Power Infrastructure Solutions																														$	4,751,291					50.1		%				$	4,338,127					52.9		%				$	413,164					9.5		%
Renewable Energy Infrastructure Solutions																														2,397,668						25.3						1,799,868						22.0						597,800						33.2		%
Underground Utility and Infrastructure Solutions																														2,328,477						24.6						2,059,533						25.1						268,944						13.1		%
Consolidated revenues																														$	9,477,436					100.0		%				$	8,197,528					100.0		%				$	1,279,908					15.6		%
Operating income (loss):
Electric Power Infrastructure Solutions																														459,166						9.7		%				435,569						10.0		%				23,597						5.4		%
Renewable Energy Infrastructure Solutions																														146,143						6.1		%				151,629						8.4		%				(5,486)						(3.6)		%
Underground Utility and Infrastructure Solutions																														168,780						7.2		%				138,118						6.7		%				30,662						22.2		%
Corporate and Non-Allocated Costs																														(368,956)						(3.9)		%				(399,444)						(4.9)		%				30,488						(7.6)		%
Consolidated operating income																														$	405,133					4.3		%				$	325,872					4.0		%				$	79,261					24.3		%

Electric Power Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the six months ended June 30, 2023 was primarily due to increased spending by our utility customers on grid modernization and hardening and approximately $145 million in revenues attributable to acquired businesses.

Operating Income. Operating income increased for the six months ended June 30, 2023 primarily due to the increase in revenues. Operating margin decreased during the six months ended June 30, 2023 partially due to $14.7 million of lower equity in earnings from our integral unconsolidated affiliates as discussed above, as well as lower than expected utilization of resources in Canada, which is expected to continue throughout the rest of the year. The negative impact of these items on operating margin was partially offset by improved operating margin associated with telecommunications projects.

Renewable Energy Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the six months ended June 30, 2023 was primarily due to increased demand and improved supply chain dynamics, as well as approximately $110 million in revenues attributable to acquired businesses. These increases were partially offset by approximately $29 million as a result of unfavorable foreign currency exchange rates.

Operating Income. Operating income and operating margin during the six months ended June 30, 2023 were negatively impacted by normal variability in overall project timing and increased unabsorbed costs related to higher levels of fixed costs for resources required to support the expected increase in project activity in the second half of 2023 and into 2024. Additionally, the six months ended June 30, 2022 was negatively impacted by significant additional costs arising from delays on the large renewable transmission project in Canada that were due to the continued negative impact of the COVID-19 pandemic, which was exacerbated by the remote locations of the project.

Underground Utility and Infrastructure Solutions Segment Results

Revenues. The increase in revenues for the six months ended June 30, 2023 was primarily due to higher demand from our gas utility services customers, and to a lesser extent, due to increased revenues associated with large pipeline projects in Canada. These increases were partially offset by approximately $42 million as a result of unfavorable foreign currency exchange rates.

Operating Income. The increase in operating income and operating margin for the six months ended June 30, 2023 was primarily due to the increase in revenues, which contributed to higher levels of fixed cost absorption.

Corporate and Non-Allocated Costs

The decrease in corporate and non-allocated costs during the six months ended June 30, 2023 was primarily due to a $81.3 million decrease in intangible asset amortization, largely associated with the acquisition of Blattner, which was fully amortized by the third quarter of 2022; and a $7.2 million decrease in acquisition and integration costs. These decreases were

partially offset by an aggregate increase of $58.0 million in costs primarily related to market fluctuations of deferred compensation liabilities; compensation expense, primarily related to non-cash stock compensation expense and salaries due partially to growth in business; travel and entertainment; and consulting fees.

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 and other financing expenses, 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 us 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 such affiliates, the operations of which are not operationally integral to us; (iv) unrealized mark-to-market adjustments on investments vary from period to period based on fluctuations in the market price of such company’s common stock; (v) gains and losses on the sale of investments vary from period to period depending on activity; (vi) asset impairment charges vary from period to period depending on economic and other factors; and (vii) change in fair value of contingent consideration liabilities varies from period to period depending on the performance in post-acquisition periods of certain acquired businesses, and the effect of present value accretion on fair value calculations. 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,
						2023						2022						2023						2022
Net income attributable to common stock (GAAP as reported)						$	165,899					$	88,020					$	260,945					$	172,661
Interest and other financing expenses						48,189						28,639						89,882						53,367
Interest income						(1,448)						(222)						(2,964)						(291)
Provision for income taxes						69,367						41,252						65,946						47,808
Depreciation expense						79,876						73,959						158,258						144,913
Amortization of intangible assets						70,025						107,945						142,428						223,696
Interest, income taxes, depreciation and amortization included in equity in earnings of integral unconsolidated affiliates						4,412						4,579						9,282						7,840
EBITDA						436,320						344,172						723,777						649,994
Non-cash stock-based compensation						34,607						28,090						62,058						51,082
Acquisition and integration costs (1)						2,284						14,191						22,172						29,322
Equity in losses (earnings) of non-integral unconsolidated affiliates						(468)						(9,611)						(2,085)						(14,949)
Unrealized loss from mark-to-market adjustment on investment (2)						—						41,654						—						50,047
Gains on sales of investments (3)						(674)						—						(1,496)						(6,696)
Asset impairment charges						—						2,800						—						2,800
Change in fair value of contingent consideration liabilities						—						809						—						5,978
Adjusted EBITDA						$	472,069					$	422,105					$	804,426					$	767,578

(1) The amounts for the three and six months ended June 30, 2022 include $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 are unrealized losses from decreases in fair value of our investment in Starry.

(3) The amount for the six months ended June 30, 2022 is a gain as a result of the sale of a non-marketable equity security interest equity in a technology company.

Remaining Performance Obligations and Backlog

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

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

As of June 30, 2023 and December 31, 2022, MSAs accounted for 46% and 52% of our estimated 12-month backlog and 57% and 65% of our 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 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, 2023												December 31, 2022
						12 Month						Total						12 Month						Total
Electric Power Infrastructure Solutions
Remaining performance obligations						$	2,584,140					$	4,128,988					$	2,124,820					$	3,033,472
Estimated orders under MSAs and short-term, non-fixed price contracts						4,948,080						9,454,858						5,415,427						10,049,435
Backlog						$	7,532,220					$	13,583,846					$	7,540,247					$	13,082,907
Renewable Energy Infrastructure Solutions
Remaining performance obligations						$	5,048,636					$	6,801,436					$	3,183,568					$	4,638,115
Estimated orders under MSAs and short-term, non-fixed price contracts						118,333						206,102						57,555						84,094
Backlog						$	5,166,969					$	7,007,538					$	3,241,123					$	4,722,209
Underground Utility and Infrastructure Solutions
Remaining performance obligations						$	1,184,061					$	1,546,395					$	1,038,543					$	1,129,837
Estimated orders under MSAs and short-term, non-fixed price contracts						1,755,797						5,057,435						1,973,982						5,158,814
Backlog						$	2,939,858					$	6,603,830					$	3,012,525					$	6,288,651
Total
Remaining performance obligations						$	8,816,837					$	12,476,819					$	6,346,931					$	8,801,424
Estimated orders under MSAs and short-term, non-fixed price contracts						6,822,210						14,718,395						7,446,964						15,292,343
Backlog						$	15,639,047					$	27,195,214					$	13,793,895					$	24,093,767

The increases in remaining performance obligations and backlog from December 31, 2022 to June 30, 2023 were primarily attributable to multiple new project awards.

Liquidity and Capital Resources

Overview

We plan to fund our working capital, capital expenditures, debt service, dividends and other cash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Management monitors financial markets and national and global economic conditions for factors that may affect our liquidity and capital resources.

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. We intend to fund these requirements primarily with cash flow from operating activities, as well as debt financing as needed.

Cash Requirements and Capital Allocation

During the six months ended June 30, 2023, there were no material changes outside the ordinary course of business in the specified contractual obligations or changes to our capital allocation priorities as set forth in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of the 2022 Annual Report. We anticipate that our future cash flows from operating activities, cash and cash equivalents on hand, existing borrowing capacity under our senior

credit facility and commercial paper program and ability to access capital markets for additional capital will provide sufficient funds to enable us to meet our cash requirements for the next twelve months and over the longer term.

Significant Sources of Cash

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, regulatory, market and political factors that may affect customer spending 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 16 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, 2023 were as follows (in thousands):

						June 30, 2023
Total capacity available for revolving loans, credit support for commercial paper program and letters of credit						$	2,640,000
Less:
Borrowings of revolving loans						217,440
Commercial paper program notes outstanding(1)						699,200
Letters of credit outstanding						312,700
Available commitments for revolving loans, credit support for commercial paper program and letters of credit						1,410,660
Plus:
Cash and cash equivalents (2)						361,966
Total available commitments under senior credit facility and cash and cash equivalents						$	1,772,626

(1) Represents unsecured notes issued under our commercial paper program, which allows for the issuance of notes up to a maximum aggregate face amount of $1.0 billion outstanding at any time. Available commitments for revolving loans under our senior credit facility must be maintained to provide credit support for notes issued under our commercial paper program, and therefore such notes effectively reduce the available borrowing capacity under our senior credit facility.

(2) Further information with respect to our cash and cash equivalents is set forth below and in Note 15 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements of Part I of this Quarterly Report. This amount includes $93.5 million in jurisdictions outside of the U.S., principally in Canada and Australia. There are currently no legal or economic restrictions that would materially impede our ability to repatriate cash.

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. 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 8 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, 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.

Sources and Uses of Cash, Cash Equivalents and Restricted Cash During the Six Months Ended June 30, 2023 and 2022

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

												Six Months Ended
												June 30,
																		2023						2022
Net cash provided by operating activities																		$	165,822					$	203,821
Net cash used in investing activities																		$	(567,367)					$	(211,018)
Net cash provided by (used in) financing activities																		$	336,294					$	(70,916)

Operating Activities

Net cash provided by operating activities of $165.8 million and $203.8 million in the six months ended June 30, 2023 and 2022 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital: “Accounts and notes receivable,” “Contract assets,” “Prepaid expenses and other current assets,” “Accounts payable and accrued expenses,” and “Contract liabilities.” The net cash provided by operating activities during the six months ended June 30, 2023 and 2022 was negatively impacted by incremental working capital requirements related to the large renewable transmission project in Canada and the timing of the associated billings.

As discussed above, cash flow provided by operating activities is primarily influenced by demand for our services and operating margins but is also influenced by working capital needs. 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, as well as change orders and claims. 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., regulatory and other actions that impact the supply chain for certain materials).

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, and divided by average revenues per day during the quarter. DSO as of June 30, 2023 was 78 days, which was lower than DSO of 81 days as of June 30, 2022 and lower than our five-year historical average DSO of 82 days. This decrease in DSO as compared to June 30, 2022 was partially due to an increase in contract liabilities related to favorable billing terms on certain large projects, as well as increased revenues. The favorable impact on operating cash flow related to the decrease in DSO was partially offset by our prepayment of amounts to suppliers for certain project materials that require a long lead time and increased working capital requirements primarily related to increased unapproved change orders included in contract assets from the aforementioned large renewable transmission project in Canada.

Investing Activities

Net cash used in investing activities in the six months ended June 30, 2023 included $452.3 million related to acquisitions and $185.6 million of capital expenditures. Partially offsetting these items were $42.3 million of proceeds from the sale of non-integral equity investments and $35.0 million of proceeds from the sale of, and insurance settlements related to, property and equipment.

Net cash used in investing activities in the six months ended June 30, 2022 included $231.5 million of capital expenditures and $16.7 million of cash used for investments, partially offset by $25.4 million of proceeds from the sale of, and insurance settlements related to, 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.

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 for the foreseeable future in order to meet anticipated demand for our services. In addition, we expect to continue to pursue strategic acquisitions and investments, although we cannot predict the timing or amount of the cash needed for these initiatives.

Financing Activities

Net cash provided by financing activities in the six months ended June 30, 2023 included $491.7 million of net borrowings under our senior credit facility and commercial paper program, partially offset by $110.8 million of cash payments to satisfy tax withholding obligations associated with stock-based compensation and $24.5 million of cash payments for dividends.

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 and $20.9 million of cash payments for dividends. These items were partially offset by $142.1 million of net borrowings under our senior credit facility.

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

Critical Accounting Estimates

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 Note 2 of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data in Part II of the 2022 Annual Report and should be read in conjunction with the accounting policies identified that we believe affect our more significant judgments and estimates detailed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of our 2022 Annual Report.