Segment Information

3 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION:

Quanta presents its operations under two reportable segments: (1) Electric Power Infrastructure Services and (2) Pipeline and Industrial Infrastructure Services. This structure is generally based on the broad end-user markets for Quanta’s services. See Note 1 for additional information regarding Quanta’s reportable segments.

Quanta’s segment results are derived from the types of services provided across its operating units in each of its end user markets. Quanta’s entrepreneurial business model allows multiple operating units to serve the same or similar customers and to provide a range of services across end user markets. Quanta’s operating units are organized into one of two internal divisions: the Electric Power Infrastructure Services Division and the Pipeline and Industrial Infrastructure Services Division. These internal divisions are closely aligned with the reportable segments, and operating units are assigned to divisions based on the predominant type of work performed.

Reportable segment information, including revenues and operating income by type of work, is gathered from each operating unit for the purpose of evaluating segment performance in support of Quanta’s market strategies. Classification of operating unit revenues by type of work for segment reporting purposes can require judgment on the part of management. Quanta’s operating units may perform joint projects for customers in multiple industries, deliver multiple types of services under a single customer contract or provide service offerings to various industries. For example, Quanta performs joint trenching projects to install distribution lines for electric power and natural gas customers.

In addition, Quanta’s integrated operations and common administrative support for its operating units require that certain allocations be made to determine segment profitability, including allocations of shared and indirect costs (e.g., facility costs), indirect operating expenses (e.g., depreciation), and general and administrative costs. Certain corporate costs are not allocated and include payroll and benefits, employee travel expenses, facility costs, professional fees, acquisition costs and amortization related to intangible assets.

Summarized financial information for Quanta’s reportable segments is presented in the following table (in thousands):



	Three Months Ended
	March 31,
	2020			2019
Revenues:
Electric Power Infrastructure Services	$	1,767,027		$	1,664,023
Pipeline and Industrial Infrastructure Services	997,068			1,143,236
Consolidated revenues	$	2,764,095		$	2,807,259
Operating income (loss):
Electric Power Infrastructure Services	$	128,758		$	161,617
Pipeline and Industrial Infrastructure Services	31,277			40,699
Corporate and non-allocated costs	(79,298		)	(82,829		)
Consolidated operating income	$	80,737		$	119,487
Depreciation:
Electric Power Infrastructure Services	$	28,713		$	25,251
Pipeline and Industrial Infrastructure Services	21,535			22,555
Corporate and non-allocated costs	4,162			4,410
Consolidated depreciation	$	54,410		$	52,216

Quanta has concluded to pursue an orderly exit of its operations in Latin America. Electric Power Infrastructure Services revenues for the three months ended March 31, 2020 and 2019 included $4.7 million and $27.8 million related to Latin American operations. Electric Power Infrastructure Services operating income for the three months ended March 31, 2020 and 2019 included $16.3 million and $0.6 million of operating loss related to Latin American operations.

Separate measures of Quanta’s assets and cash flows by reportable segment, including capital expenditures, are not produced or utilized by management to evaluate segment performance. Quanta’s fixed assets, which are held at the operating unit level, include operating machinery, equipment and vehicles, office equipment, buildings and leasehold improvements, and are used on an interchangeable basis across its reportable segments. As such, for reporting purposes, total depreciation expense is allocated each quarter among Quanta’s reportable segments based on the ratio of each reportable segment’s revenue contribution to consolidated revenues.

Foreign Operations

During the three months ended March 31, 2020 and 2019, Quanta derived $496.0 million and $606.6 million of its revenues from foreign operations. Of Quanta’s foreign revenues, 77% and 80% were earned in Canada during the three months ended March 31, 2020 and 2019. In addition, Quanta held property and equipment of $291.4 million and $314.1 million in foreign countries, primarily Canada, as of March 31, 2020 and December 31, 2019.