PWRQuanta Services

We note that EBITDA includes adjustments for the equity in (earnings) losses of nonintegral unconsolidated affiliates and interest, taxes, depreciation and amortization of integral unconsolidated entities. Tell us what consideration you gave to Question 103.01 of the Non-GAAP Financial Measures C&DIs when determining that these adjustments were appropriate to arrive at a measure labeled EBITDA.

Rest of the question

Please also advise us how the $9,994 equity in losses of unconsolidated affiliates has been recorded in your financial statements, as the amount does not reconcile to the discussion of Other income (expense), net found on page 44. 10. Income Taxes, page 98

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Tell us what consideration you gave to Question 103.01 of the Non-GAAP

Financial Measures C&DIs when determining that these adjustments were appropriate to arrive at a measure labeled EBITDA.

The Company notes the Staff’s comment and will no longer calculate and present EBITDA to reflect an adjustment for equity in (earnings) losses of non-integral unconsolidated affiliates in future filings that include an EBITDA measure, beginning with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the Commission on May 7, 2021 (the “Form 10-Q”).

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The adjustment for equity in (earnings) losses of non-integral unconsolidated affiliates will now be reflected in our calculation of adjusted EBITDA. Set forth below is the Company’s reconciliation of EBITDA and adjusted EBITDA included on page 59 of the

Form 10-Q, which reflects the revised presentation.

Non-GAAP

Reconciliations

EBITDA and Adjusted EBITDA

The following table shows dollars in thousands.

Three Months Ended

March 31,

2021

2020

Net income attributable to common stock (GAAP as reported)

$

89,761

38,686

Interest expense

12,475

14,006

Interest income

(117

)

(759

Provision for income taxes

13,724

16,160

Depreciation expense

62,107

54,410

Amortization of intangible assets

21,355

17,908

Income taxes and depreciation included in equity in earnings of integral unconsolidated affiliates

1,501

—

EBITDA (a)

200,806

140,411

Non-cash stock-based compensation

18,687

14,912

Acquisition and integration costs

1,761

1,883

Equity in (earnings) losses of non-integral unconsolidated

(685

2,683

Change in fair value of contingent consideration liabilities

(363

2,758

Adjusted EBITDA

220,206

162,647

(a)

The calculation of EBITDA for the three months ended March 31, 2020 has been amended to conform to the current period’s calculation of EBITDA.

With respect to integral unconsolidated affiliates, the Company determined, after consideration of the facts and circumstances, that certain of its unconsolidated affiliates are operationally integral to its consolidated operations. As such, the results associated with these unconsolidated affiliates have been included as a component of Operating income within the Company’s Consolidated Statements of Operations, beginning in the second quarter of 2020 and upon the commencement of certain affiliate operations. In light of the operational nature of these unconsolidated affiliates, which are integral to our core operations, the Company has identified and included the income taxes and depreciation associated with the integral unconsolidated affiliates as an adjustment within our calculation of EBITDA in the same manner as our consolidated operations.

Please also advise us how the $9,994 equity in losses of unconsolidated affiliates has been recorded in your financial statements, as the amount does not reconcile to the discussion of Other income (expense), net found on page 44.

The $10.0 million of equity in losses of non-integral unconsolidated affiliates is included as a component of Other income (expense), net within the Company’s Consolidated Statements of Operations. The Company’s discussion and analysis of the results included within Other income (expense), net addressed $8.7 million of impairments, which were a component of the $10.0 million of equity in losses of non-integral unconsolidated affiliates. The remaining activity of $1.3 million within equity in losses of non-integral unconsolidated affiliates during the year ended December 31, 2020 was not considered material to describe the changes within Other income (expense), net during the period, and therefore was not included in the discussion and analysis found on page 44 of the Form 10-K.

10. Income Taxes, page 98

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We note that your valuation allowance decreased $60.9 million from December 31, 2019 to December 31, 2020. Given that your effective tax rate reconciliation indicates that the change in the valuation allowance impacted the reconciliation by approximately $31.1 million please please provide us with an understanding of the differences impacting both schedules.

Rest of the question

Furthermore, we note your disclosure that $45.1 million of the $60.9 million decrease in the valuation allowance related to certain foreign tax credits. Given that your foreign tax credits decreased by only $4.4 million, please further explain the facts and circumstances that led to the $45.1 million decrease in the valuation allowance related to the foreign tax credits. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.

Given that your effective tax rate reconciliation indicates that the change in the valuation allowance impacted the reconciliation by approximately $31.1 million please provide us with an understanding of the differences impacting both schedules.

The $60.9 million decrease in valuation allowance from December 31, 2019 to

December 31, 2020 is composed of the following items (in millions):

Valuation Allowance as of December 31, 2019

104.2 a. Increase related to certain new deferred tax assets generated in 2020

14.0 b.

Rest of the answer

Decrease related to updated information regarding certain foreign tax credits

(45.1 c. Decrease related to removal of certain loss carryforwards

(29.4 d. Currency revaluation of prior year valuation allowances

(0.4

Valuation Allowance as of December 31, 2020

43.3

In the table above, Item (a) relates predominantly to state and foreign net operating losses generated during 2020 that the Company assessed would more likely than not be unrealizable based on operations in the specific jurisdictions in which such losses were generated. Item (b) relates to the reversal of the valuation allowance for certain foreign tax credits. During the quarter ended December 31, 2020, certain new facts and positive evidence became available, and in management’s view it is now more likely than not that such foreign tax credits will be realized. The changes in the valuation allowance from December 31, 2019 arising from Items (a) and (b) account for the $31.1 million reduction in valuation allowance on deferred tax assets included in the table reconciling the effective tax rate on page

100 of the Form 10-K.

In the table above, Item (c) relates to certain loss carryforwards that are no longer available for use, which are primarily associated with the termination of a telecommunications project in Peru and the disposition of certain other operations. The deferred tax assets, and the related valuation allowance, for losses generated by specific entities conducting these operations were reversed in the Company’s Consolidated Balance Sheets as of December 31, 2020. As such, the disclosure on page 100 of the Form

10-K, which reflects the deferred tax assets and the valuation allowance, did not include the $29.4 million of certain loss carryforwards. Additionally, the reversals of both the deferred tax assets and the related valuation allowance are not reflected in the valuation allowance included in the effective tax rate reconciliation on page 100 of the Form 10-K because the reversals were equal and offsetting in the provision for income taxes for the year ended December 31, 2020.

Furthermore, we note your disclosure that $45.1 million of the $60.9 million decrease in the valuation allowance related to certain foreign tax credits. Given that your foreign tax credits decreased by only $4.4 million, please further explain the facts and circumstances that led to the $45.1 million decrease in the valuation allowance related to the foreign tax credits.

The Company regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain pursuant to Accounting Standards Codification (“ASC”)

740-10-30-16 and ASC

740-10-30-17. The Company considers projected future taxable income and tax planning strategies in making this evaluation as permitted by ASC 740-10-30-18 through ASC 740-10-30-20. During the quarter ended December 31, 2020, the Company completed a financial restructuring. After considering the impact of the financial restructuring on forecasted foreign source income, the Company concluded that as of December 31, 2020, based on the weight of all available evidence, the Company would more likely than not realize the benefit of its deferred tax assets for certain foreign tax credit carryforwards. As a result, the related $45.1 million valuation allowance was reversed during the quarter ended December 31, 2020. The estimated utilization of such foreign tax credits in the Company’s U.S. federal income tax return for the year ended December 31, 2020 was $4.4 million, which resulted in a decrease in the deferred tax asset for such foreign tax credits in the table of deferred tax assets and liabilities on page 100 of the Form 10-K. The remaining balance of these tax credits will remain in the table of deferred tax assets and liabilities until they are utilized on a tax return.

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Income Taxes, page 98 1. We note your response to comment 2. In future filings, please ensure your disclosures clearly disclose any material changes impacting your valuation allowance including the facts and circumstances that drove those changes.

Rest of the question

To the extent material differences exist between your income tax rate reconciliation and the overall change in the valuation allowance, your disclosures should highlight such material changes including the reasons for such changes.

The Company acknowledges the Staff’s comment and in future filings will disclose any material changes impacting our valuation allowance, including the facts and circumstances that drove such material changes. The Company will also ensure that in future filings disclosure is provided to highlight and explain any material differences between the Company’s income tax rate reconciliation and the overall change in the Company’s valuation allowance. Read in the reply ↗