Segment Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

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						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenues:
Electric Power Infrastructure Services	$	1,792,918		$	1,734,336		$	3,559,945		$	3,398,359
Pipeline and Industrial Infrastructure Services	713,313			1,104,863			1,710,381			2,248,099
Consolidated revenues	$	2,506,231		$	2,839,199		$	5,270,326		$	5,646,458
Operating income (loss):
Electric Power Infrastructure Services	$	183,896		$	92,935		$	312,654		$	254,552
Pipeline and Industrial Infrastructure Services	21,250			69,943			52,527			110,642
Corporate and non-allocated costs	(92,230		)	(84,298		)	(171,528		)	(167,127		)
Consolidated operating income	$	112,916		$	78,580		$	193,653		$	198,067
Depreciation:
Electric Power Infrastructure Services	$	28,987		$	26,714		$	57,700		$	51,965
Pipeline and Industrial Infrastructure Services	21,432			22,734			42,967			45,289
Corporate and non-allocated costs	4,107			4,363			8,269			8,773
Consolidated depreciation	$	54,526		$	53,811		$	108,936		$	106,027

Quanta has concluded to pursue an orderly exit of its operations in Latin America. Electric Power Infrastructure Services revenues included $2.4 million and a negative $20.8 million related to Latin American operations for the three months ended June 30, 2020 and 2019 and $7.1 million and $7.0 million related to Latin American operations for the six months ended June 30, 2020 and 2019. Latin American revenues for the three and six months ended June 30, 2019 reflect the reversal of $48.8 million of revenues in connection with the terminated telecommunications project in Peru, a portion of which related to prior periods. Electric Power Infrastructure Services operating income included $15.2 million and $79.3 million of operating losses related to Latin American operations for the three months ended June 30, 2020 and 2019 and $31.5 million and $79.9 million of operating losses related to Latin American operations for the six months ended June 30, 2020 and 2019.

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 June 30, 2020 and 2019, Quanta derived $298.4 million and $277.3 million of its revenues from foreign operations. During the six months ended June 30, 2020 and 2019, Quanta derived $794.4 million and $883.9 million of its revenues from foreign operations. Of Quanta’s foreign revenues, 71% and 73% were earned in Canada during the three months ended June 30, 2020 and 2019 and 75% and 78% were earned in Canada during the six months ended June 30, 2020 and 2019. In addition, Quanta held property and equipment of $297.4 million and $314.1 million in foreign countries, primarily Canada, as of June 30, 2020 and December 31, 2019.