MasTec, Inc. (collectively with its subsidiaries, “MasTec” or the “Company”) is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The Company’s primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy, utility and other infrastructure, such as: wireless, wireline/fiber and customer fulfillment activities; petroleumpower generation, including from clean energy and natural gasrenewable sources; pipeline infrastructure; electrical utility transmission and distribution; power generation, including from renewable sources; heavy civil; and industrial infrastructure. MasTec’s customers are primarily in these industries. MasTec reports its results under 5 reportable segments: (1) Communications; (2) Clean Energy and Infrastructure; (3) Oil and Gas; (3)(4) Electrical Transmission; (4) Power Generation and Industrial; and (5) Other. See Note 13 - Segments and Related Information.

The accompanying consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying consolidated balance sheet as of December 31, 20192020 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 20192020 contained in the Company’s 20192020 Annual Report on Form 10-K (the “2019“2020 Form 10-K”). In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these consolidated financial statements are adequate to make the information not misleading.

The accompanying consolidated financial statements include MasTec, Inc. and its subsidiaries and include the accounts of all majority owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Other parties’ interests in entities that MasTec consolidates are reported as non-controlling interests within equity, except for mandatorily redeemable non-controlling interests, which are recorded within liabilities. Net income or loss attributable to non-controlling interests is reported as a separate line item below net income or loss. The Company’sCompany applies the equity method of accounting for its investments in entities for which the Companyit does not have a controlling financial interest, but over which it has the ability to exert significant influence, are accounted for using the equity methodinfluence. See Note 4 - Fair Value of accounting.Financial Instruments. For equity investees in which the Company has an undivided interest in the assets, liabilities and profits or losses of an unincorporated entity, but does not exercise control over the entity, the Company consolidates its proportional interest in the accounts of the entity.

The assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at period-end exchange rates, with resulting translation gains or losses included within other comprehensive income or loss. Revenue and expenses are translated into U.S. dollars at average rates of exchange during the applicable period. Substantially all of the Company’s foreign operations use their local currency as their functional currency. For foreign operations for which the local currency is not the functional currency, the operation’s non-monetary assets are remeasured into U.S. dollars at historical exchange rates. All other accounts are remeasured at current exchange rates. Gains or losses from remeasurement are included in other income or expense, net. Currency gains or losses resulting from transactions executed in currencies other than the functional currency are included in other income or expense, net.

In these consolidated financial statements, “$” means U.S. dollars unless otherwise noted.

Key estimates include: the recognition of revenue and project profit or loss, which the Company defines as project revenue, less project costs of revenue, including project-related depreciation, in particular, on construction contracts accounted for under the cost-to-cost method, for which the recorded amounts require estimates of costs to complete and the amount and probability of variable consideration included in the contract transaction price; fair value estimates, including those related to acquisitions, valuations of goodwill and intangible assets, acquisition-related contingent consideration and other liabilities, equity investments;investments and other long-lived assets; allowances for credit losses; asset lives used in

During the first quarter of 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The COVID-19 pandemic disrupted business activities and significantly affected global economic conditions in 2020 and continuing into 2021 as federal, state and local governments imposed restrictions and mitigation measures to address the public health crisis, the effects of which resulted in workforce, supply chain and production disruptions and created significant uncertainties in the U.S. and global economies. While the adverse effects of these restrictions and mitigation measures partially subsided in the second half of 2020 and into 2021, the possibility of future restrictions remains in the event of a rise in the number of COVID-19 cases in the future.

As a provider of essential services, all of the Company’s business segments continued to operate throughout 2020 and into 2021, and where safe and possible, the Company’s customers generally directed it to maintain normal work schedules. The Company’s business model has, thus far, proven resilient, and management believescontinues to adapt to the changing operational and economic environment that such estimateshas resulted from the COVID-19 pandemic. Management’s top priority has been to take appropriate actions to protect the health and safety of its employees, customers and business partners. The Company has adjusted its standard operating procedures within its business operations to ensure employee and customer safety, and is continually monitoring evolving health guidelines and responding to changes as appropriate. The COVID-19 pandemic had a negative impact on the Company’s operations in 2020 and is expected to continue to affect its business activities in 2021. These impacts include lost productivity from governmental permitting approval delays, reduced crew productivity due to social distancing, other mitigation measures and other factors, the health and availability of work crews or other key personnel, including subcontractors or supply chain disruptions, and/or delayed project start dates or project shutdowns or cancellations that may be mandated or requested by governmental authorities or others, all of which could result in lower revenue or higher operating costs and/or create lower levels of overhead cost absorption.

Several relief measures have been enacted in response to the effects of the COVID-19 pandemic, including the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the Coronavirus Response and Relief Supplemental Appropriations Act (the “Coronavirus Relief Act”).  The CARES Act permitted deferral and/or reduction of certain federal and payroll tax amounts, certain of which the Company pursued, including the deferral of approximately $59 million of payroll taxes, half of which are reasonable when considered in conjunctiondue by December 31, 2021, with the remainder due by December 31, 2022. The Company will continue to monitor and evaluate the potential effects, usefulness of, and qualification for, additional COVID-19 relief measures on the Company’s consolidated financial position, and results of operations and cash flows.

Notwithstanding moderation of the COVID-19 pandemic and easing of governmental and other restrictions, the Company may continue to experience negative effects on its business and operations from possible longer-term changes in consumer and customer behavior, and/or from continuing negative economic conditions. The Company believes that it has taken appropriate steps to mitigate the impacts of the COVID-19 pandemic on its business; however, the potential effects of the COVID-19 pandemic are uncertain, as a whole, actualthey depend upon numerous evolving factors that management may not be able to accurately predict. The availability of effective treatments and vaccines, the speed with which they can be administered to the public, the degree to which the public is willing to be vaccinated and the degree that vaccines are effective in preventing infection or illness from existing or new strains of COVID-19, along with the length and extent of any continuing economic and market disruptions are unknown, and, therefore, any future impacts on our business, financial condition and/or results could differ materially from those estimates.of operations cannot be quantified or predicted with specificity.

The Company recognizes revenue from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is primarily

For certain master service and other service agreements under which the Company performs installation and maintenance services, primarily for install-to-the-home service providers in its Communications segment, revenue is recognized at a point in time. This is generally when the work order has been fulfilled, which is typically the same day the work is initiated. Point in time revenue accounted for approximately 5% and 6% of consolidated revenue for both the three month periods ended March 31, 2021 and 2020, and 2019.respectively. Substantially all of the Company’s other revenue is recognized over time.

The total contract transaction price and cost estimation processes used for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s profit recognition. Changes in these factors could result in revisions to revenue in the period in which the revisions are determined, which could materially affect the Company’s consolidated results of operations for that period. Provisions for losses on

The Company may incur certain costs that can be capitalized, such as initial set-up or mobilization costs. Such costs, which are amortized over the life of the respective projects, were not material in either$3.7 million and $5.5 million as of the three month periods ended March 31, 2020 or 2019.2021 and December 31, 2020.

Remaining performance obligations represent the amount of unearned transaction prices under contracts for which work is wholly or partially unperformed, including the Company’s share of unearned transaction prices from its proportionately consolidated non-controlled joint ventures. As of March 31, 2020,2021, the amount of the Company’s remaining performance obligations was $5.7$5.0 billion. Based on current expectations, the Company expects to recognize approximately $4.5$4.0 billion of its remaining performance obligations as revenue during 2020,2021, with the remaindermajority of the remaining balance to be recognized primarily in 2021.2022.

As of March 31, 20202021 and December 31, 2019,2020, the Company included approximately $35$59 million and $27$51 million, respectively, of change orders and/or claims in transaction prices for certain contracts that were in the process of being resolved in the ordinary course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments, when earned, are included within contract assets or accounts receivable, net of allowance, as appropriate. As of both March 31, 20202021 and December 31, 2019,2020, these change orders and/or claims were primarily related to certain projects inacross the Company’s Oil and Gas segment.segments. The Company actively engages with its customers to complete the final approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final agreement by customers could be higher or lower than such estimated amounts.

See the recent accounting pronouncementsThe discussion below for information pertaining todescribes the effects of recently adopted and other recent accounting pronouncements, as updated from the discussion in the Company’s 20192020 Form 10-K.

The following table provides details underlying the Company’s earnings per share calculations for the periods indicated (in thousands):

For the three month periods ended March 31, 20202021 and 2019,2020, the Company’s consolidated results of operations included acquisition-related revenue of approximately $49.5$86.8 million and $39.7$49.5 million, respectively, and included acquisition-related net lossincome of approximately $1.2 million and $6.1acquisition-related net losses of approximately $1.2 million, respectively, based on the Company’s consolidated effective tax rates. These acquisition-related results do not include amortization of intangible assets and exclude the effects of acquisition costs orand interest expense associated with consideration paid for the related acquisitions.

The Company’s financial instruments include cash and cash equivalents, accounts and notes receivable, cash collateral deposited with insurance carriers, life insurance assets, equity investments, certain other investments, deferred compensation plan assets and liabilities, accounts payable and other current liabilities, acquisition-related contingent consideration, mandatorily redeemable non-controlling interests, convertible debentures and debt obligations.

Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions.

Acquisition-related contingent consideration and other liabilities is composed of Earn-outs,earn-outs, which represent the estimated fair value of future amounts payable for businesses, including for mandatorily redeemable non-controlling interests (together, “Earn-outs”), that are contingent upon the acquired business achieving certain levels of earnings in the future. As of March 31, 20202021 and December 31, 2019,2020, the estimated fair value of the Company’s Earn-out liabilities totaled $176.0$134.8 million and $173.2$135.2 million, respectively, of which $52.9$47.9 million and $54.1$48.1 million, respectively, was included within other current liabilities. The fair values of the Company’s Earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models, both of which incorporate significant inputs not observable in the market (Level 3 inputs), including management’s estimates and entity-specific assumptions, and are evaluated on an ongoing basis. Key assumptions include the discount rate, which, as of March 31, 2021, ranged from 12.0% to 24.7%20.0%, with a weighted average rate of 14.0%13.1% based on the relative fair value as of March 31, 2020,each instrument, and probability-weighted projections of earnings before interest, taxes, depreciation and amortization (“EBITDA”). Significant changes in any of these assumptions could result in significantly higher or lower potential Earn-out liabilities. The ultimate payment amounts for the Company’s Earn-out liabilities will be determined based on the actual results achieved by the acquired businesses. As of March 31, 2020,2021, the range of potential undiscounted Earn-out liabilities was estimated to be between $60$56 million and $256$174 million; however, there is no maximum payment amount.

Earn-out activity consists primarily of additions from new business combinations; changes in the expected fair value of future payment obligations; and payments. Measurement period adjustments for Earn-out liabilities, which are fair value adjustments relating to new information obtained about the facts and circumstances existing as of the date of acquisition for a period of up to one year, are recorded to goodwill. Other revisions to the expected fair values of the Company’s traditional earn-out liabilities are reflected as income or expense, as appropriate, and, for the mandatorily redeemable non-controlling interest, are recorded as interest expense, net. Earn-out payments, to the extent they relate to estimated liabilities as of the date of acquisition, are reflected within financing activities in the consolidated statements of cash flows. Payments in excess of acquisition date liabilities are classified within operating activities.

The Company’s equity investments as of March 31, 20202021 include: (i) the Company’s 33% equity interests in Trans-Pecos Pipeline, LLC (“TPP”) and Comanche Trail Pipeline, LLC (“CTP,” and together with TPP, the “Waha JVs”), which are accounted for as equity method investments;; (ii) a $15 million investment15% equity interest in Cross Country Infrastructure Services, Inc. (“CCI”); (iii) the Company’s 50% equity interests in certain proportionately consolidated non-controlled contractual joint ventures;each of FM Technology Holdings, LLC, FM USA Holdings, LLC and All Communications Solutions Holdings, LLC, collectively “FM Tech”; (iv) the Company’s equity interests in American Virtual Cloud Technologies, Inc. (formerly Pensare Acquisition Corp. (“Pensare”)), or “AVCT”; (v) the Company’s interests in certain proportionately consolidated non-controlled contractual joint ventures; and (v)(vi) certain other equity investments.

Equity investments, other than those accounted for as equity method investments or those that are proportionately consolidated, are measured at fair value if their fair values are readily determinable. Equity investments that do not have readily determinable fair values are measured at cost, adjusted for changes from observable market transactions, if any, less impairment (“adjusted cost basis”). As of March 31, 20202021 and December 31, 2019,2020, the aggregate carrying value of the Company’s equity investments, totaled approximately $195 million and $196 million, respectively, including approximately $18 million of equity investments measured on an adjusted cost basis, astotaled approximately $242 million and $220 million, respectively. As of both March 31, 20202021 and December 31, 2019.2020, equity investments measured on an adjusted cost basis, including the Company’s $15 million investment in CCI, totaled approximately $18 million and $17 million, respectively. There were 0 impairments of, or material changes in the fair valuevalues of, or impairments related to, these investments during either of the three month periods ended March 31, 20202021 or 2019.2020.

The Waha JVs are party to separate non-recourse financing facilities, each of which are secured by pledges of the equity interests in the respective entities, as well as a first lien security interest over virtually all of their assets. The Waha JVs are also party to certain interest rate swaps (the “Waha JV swaps”), which are accounted for as qualifying cash flow hedges. The Company reflects its proportionate share of any unrealized fair market value gains or losses from fluctuations in interest rates associated with these swaps within other comprehensive income or loss, as appropriate. For the three month periodsperiod ended March 31, 2020 and 2019,2021, the Company’s proportionate share of unrecognized unrealized activity on these interest ratethe Waha JV swaps totaled gains of approximately $17.3 million, or $13.1 million, net of tax, and for the three month period ended March 31, 2020, totaled losses of approximately $30.3 million, or $23.0 million, net of tax, and $7.2 million, or $5.5 million, net of tax, respectively.

As of both March 31, 2021 and December 31, 2020, the aggregate fair value of the Company’s investments in AVCT therefore,approximated $17 million. For the shares are measuredthree month period ended March 31, 2021, the Company recorded unrealized fair value measurement losses, net, on an adjusted cost basis. The initial warrants, which are derivative financial instruments, and the AVCT securities within other expense totaling approximately $1.0 million, primarily related to the AVCT shares, for which the fair value was not readily determinable as of both March 31, 2020 and December 31, 2019 due to the nature of the restrictions, are included within other long-term assets in the Company’s consolidated financial statements. The fair value of the initial warrants is determined based on observable and unobservablethe market price of identical securities, adjusted for the restrictions on sale, which is a Level 3 inputs, including market volatility andinput. Unrealized fair value measurement gains on the rights and obligationsAVCT convertible debentures as determined based on Monte Carlo simulations, a Level 3 input, which were recognized within other comprehensive income, totaled approximately $1.0 million, or $0.8 million, net of the warrants. For bothtax, respectively, for the three month periodsperiod ended March 31, 2020 and 2019, there2021. There were no material changes in the fair value of the Company’s investment in AVCT.AVCT for the three month period ended March 31, 2020.

The Company has equity interests in 3certain telecommunications entities that are accounted for as equity method investments, for which the Company had an aggregate investment of $21 million and $19 million, respectively, including $17 million and $16 million, respectively, for FM Tech, as of March 31, 2021 and December 31, 2020. The initial investment in FM Tech provided for an additional $9 million of purchase price upon resolution of certain contingencies, of which $2 million was paid in the first quarter of 2021. As of March 31, 2021, approximately $3 million of contingent payment liabilities were included within other current liabilities. For the three month period ended March 31, 2021, the Company made equity contributions of approximately $2 million related to these entities, and for the three month period ended March 31, 2020, the Company made 0 equity contributions. Certain of these entities provide certain services to MasTec. ExpenseFor the three month periods ended March 31, 2021 and 2020, expense recognized in connection with services provided by these arrangementsentities totaled $1.8 million and $2.7 million, respectively, and related amounts payable totaled $0.3 million and $0.2 million as of March 31, 2021 and December 31, 2020, respectively. In addition, the Company has an employee leasing arrangement with one of these entities. Charges to this entity were de minimis for the three month period ended March 31, 2021, and related amounts receivable totaled $0.5 million and $0.4 million as of March 31, 2021 and December 31, 2020, respectively. Amounts advanced to these entities totaled $0.2 million for the three month period ended March 31, 2020, and related amounts payable were $2.1 million2021, which amount was outstanding as of March 31, 2020.

As of both March 31, 20202021 and December 31, 2019,2020, the gross carrying amount of the Company’s 4.875%4.50% senior notes due MarchAugust 15, 20232028 (the “4.875%“4.50% Senior Notes”), which are measured at fair value on a non-recurring basis, totaled $400 million. As of March 31, 2020$600 million, and December 31, 2019, thetheir estimated fair value, of the 4.875% Senior Notes,as determined based on an exit price approach using Level 1 inputs, totaled $372.0$618.0 million and $404.5$625.5 million, respectively.

Contract billings represent the amount of performance obligations that have been billed but have not yet been collected. Contract assets consist of unbilled receivables and retainage. Unbilled receivables represent the estimated value of unbilled work for projects with performance obligations recognized over time. Retainage represents a portion of the contract amount that has been billed, but for which the contract allows the customer to retain a portion of the billed amount until final contract settlement (generally, from 5% to 10% of contract billings). For the three month period ended March 31, 2021, provisions for credit losses totaled a recovery of $7.7 million, resulting from successful collection efforts for previously reserved amounts. For the three month period ended March 31, 2020, provisions for credit losses totaled $1.6 million and impairmentmillion. Impairment losses on contract assets were not material.

Contract liabilities consist primarily of deferred revenue. Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Contract liabilities also include the amount of any accrued project losses. Total contract liabilities, including accrued project losses, totaled approximately $204.3$259.5 million and $206.2$228.4 million as of March 31, 20202021 and December 31, 2019,2020, respectively, of which deferred revenue comprised approximately $181.4$240.8 million and $184.1$203.0 million, respectively. For the three month periodperiods ended March 31, 2021 and 2020, the Company recognized revenue of approximately $146.8 million and $105.6 million, respectively, related to amounts that were included in deferred revenue as of December 31, 2020 and 2019, respectively, resulting primarily from the advancement of physical progress on the related projects during the period.related periods.

The Company is party to non-recourse financing arrangements in the ordinary course of business, under which certain receivables are settled with the customer’s bank in return for a nominal fee. Discount charges related to these arrangements, which are included within interest expense, net, totaled approximately $1.8$0.8 million and $2.9$1.8 million for the three month periods ended March 31, 20202021 and 2019,2020, respectively.

The following table provides details of property and equipment, net, including property and equipment held under finance leases as of the dates indicated (in millions):

The Company’s senior secured credit facility (the “Credit Facility”) has aggregate borrowing commitments totaling approximately $1.75 billion, as of March 31, 2020,which amount is composed of $1.35 billion of revolving commitments and a term loan in the aggregate principal amount of approximately $400 million. The term loan is subject to amortization in quarterly principal installments of $2.5 million, commencingwhich commenced in December 2020, which2020. This amount will increase to $5.0 million commencing in December 2021. Quarterly principal installments on the term loan are subject to adjustment, if applicable, for certain prepayments.

As of March 31, 20202021 and December 31, 2019,2020, outstanding revolving loans, which included $125$45 million and $138$33 million, respectively, of borrowings denominated in foreign currencies, accrued interest at weighted average rates of approximately 2.47%1.77% and 3.50%1.87% per annum, respectively. The term loan accrued interest at rates of 2.24%1.36% and 3.05%1.40% as of March 31, 20202021 and December 31, 2019,2020, respectively. Letters of credit of approximately

As of March 31, 20202021 and December 31, 2019,2020, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $2.8$4.8 million and $7.5$12.4 million, respectively. For additional information pertaining to the Company’s debt instruments, including its 4.875% Senior Notes, see Note 7 - Debt in the Company’s 20192020 Form 10-K.

In the ordinary course of business, the Company enters into agreements that provide financing for machinery and equipment and for other of its facility, vehicle and equipment needs, including related party leases. As of March 31, 2020,2021, the Company’s leases have remaining lease terms of up to nineeight years. Lease agreements may contain renewal clauses, which, if elected, generally extend the term of the lease for one to five years for both equipment and facility leases. Certain lease agreements may also contain options to purchase the leased property and/or options to terminate the lease. In addition, lease agreements may include periodic adjustments to payment amounts for inflation or other variables, or may require payments for taxes, insurance, maintenance or other expenses, which are generally referred to as non-lease components. The Company’s lease agreements do not contain significant residual value guarantees or material restrictive covenants.