QUANTA SERVICES INC
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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7. Goodwill and Other Intangible Assets
- GOODWILL AND OTHER INTANGIBLE ASSETS:
Goodwill
The changes in the carrying amount of goodwill of each of Quanta’s reportable segments were as follows (in thousands):
| Electric PowerSegment | Renewable Energy Segment | Underground and Infrastructure Segment | Total | |
|---|---|---|---|---|
| Balance at December 31, 2021: (1) | $1,387,418 | $1,461,192 | $680,276 | $3,528,886 |
| Goodwill related to acquisition completed in 2022 | 12,225 | — | — | 12,225 |
| Purchase price allocation adjustments (2) | 962 | 64,874 | 580 | 66,416 |
| Foreign currency translation adjustments | (4,464) | (7,917) | (8,401) | (20,782) |
| Balance at December 31, 2022:(1) | 1,396,141 | 1,518,149 | 672,455 | 3,586,745 |
| Goodwill related to the acquisitions completed in 2023 | 189,777 | 263,854 | — | 453,631 |
| Purchase price allocation adjustments | 338 | — | — | 338 |
| Foreign currency translation adjustments | 1,243 | 2,185 | 1,763 | 5,191 |
| Balance at December 31, 2023:(1) | $1,587,499 | $1,784,188 | $674,218 | $4,045,905 |
(1) Included in the Underground and Infrastructure segment for the years ended December 31, 2023, 2022, and 2021 was accumulated impairment of $96.1 million, $96.1 million and $96.9 million.
(2) Goodwill included in the Renewable Energy segment increased by $64.9 million during the year ended December 31, 2022 as a result of certain post-closing consideration adjustments associated with Quanta’s acquisition of Blattner.
In connection with the 2023 and 2022 annual goodwill assessments, management performed a qualitative impairment assessment of Quanta’s reporting units, which indicated that the fair value of its reporting units was greater than their carrying value including goodwill. Accordingly, a quantitative goodwill impairment test was not required, and no goodwill impairment was recognized in 2023 or 2022.
Other Intangible Assets
Quanta’s identifiable intangible assets and the remaining weighted average amortization periods related to its intangible assets subject to amortization were as follows (in thousands except for weighted average amortization periods, which are in years):
| As of December 31, 2023 · As of December 31, 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Remaining Weighted Average Amortization Period in Years | IntangibleAssets | AccumulatedAmortization | IntangibleAssets, Net | IntangibleAssets | AccumulatedAmortization | IntangibleAssets, Net | |
| Customer relationships | 4.5 | $1,852,249 | $(842,184) | $1,010,065 | $1,741,679 | $(600,841) | $1,140,838 |
| Backlog | 2.1 | 336,149 | (297,868) | 38,281 | 282,483 | (282,397) | 86 |
| Trade names | 12.7 | 378,428 | (87,572) | 290,856 | 355,855 | (63,190) | 292,665 |
| Non-compete agreements | 5.0 | 59,464 | (48,687) | 10,777 | 52,356 | (44,570) | 7,786 |
| Patented rights, developed technology, process certifications and other | 1.1 | 32,985 | (29,605) | 3,380 | 32,969 | (26,281) | 6,688 |
| Curriculum | 4.6 | 14,794 | (8,741) | 6,053 | 13,488 | (5,920) | 7,568 |
| Total intangible assets subject to amortization | 6.2 | 2,674,069 | (1,314,657) | 1,359,412 | 2,478,830 | (1,023,199) | 1,455,631 |
| Engineering license | 3,000 | — | 3,000 | 3,000 | — | 3,000 | |
| Total intangible assets | $2,677,069 | $(1,314,657) | $1,362,412 | $2,481,830 | $(1,023,199) | $1,458,631 | |
Amortization expense for intangible assets was $289.0 million, $354.0 million and $165.4 million for the years ended December 31, 2023, 2022 and 2021.
The estimated future aggregate amortization expense of intangible assets subject to amortization as of December 31, 2023 is set forth below (in thousands):
| Year Ending December 31: | |
|---|---|
| 2024 | $283,627 |
| 2025 | 268,052 |
| 2026 | 246,111 |
| 2027 | 220,349 |
| 2028 | 160,270 |
| Thereafter | 181,003 |
| Total | $1,359,412 |
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