MTZ - Earnings call transcript Q3 2019

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Operator

Welcome to MasTec’s Third Quarter 2019 Earnings Conference Call. Initially broadcast on November 1, 2019.

Let me remind participants that today’s call is being recorded.

At this time, I would like to turn the call over to Marc Lewis, MasTec’s Vice President of Investor Relations. Mark, please go ahead.

Marc Lewis

Savannah. you, Thank and everyone MasTec’s Quarter Third Good welcome Call. Conference morning to Act to is the Harbor Reform statement following the Private XXXX. made Litigation in The described pursuant Safe statements for Securities of forward-looking as the we may plans statements forward-looking, future In these we statements trends operate. make MasTec’s in communications, regarding anticipated where that certain are such industries and results, update on the These broadcast of initial events the day company not various and forward-looking does of risks, statements based SEC. releases are in assumptions the company’s filings these undertake knowledge, or are to call with the subsequent our expectations and expectations and on uncertainties this press detailed differ of our expressed or significantly Should more these one of or implied in should underlying these uncertainties or incorrect, materialize communications. prove any may from or assumptions results risks results actual

remarks today’s and discussed supporting in In discussing be management, will metrics schedules. by adjusted release as financial yesterday’s and press reconciled we

use A be News to or in in comparable posted In our these the measures comments financial addition, the financial any may our release, and earnings located not in in PowerPoint in measures sections can measure at of Investors certain of financial website GAAP our located reconciliation presentation we reconciled non-GAAP call. found most conference XX-Q mastec.com. this non-GAAP

about our period followed last call Jose George. by a today, of by followed the format financial expect The and and XX With be Vice have George minutes. remarks discussions we the Chief a Mas, analysis These us Officer. Financial President be review CEO; call Jose we Pita, Q&A and to will our Executive by opening from will

important quarter, talk have to today. We had about things great lot a of another

going. to turn Jose So, to over I’ll Jose? it get now

Jose Mas

morning results well serve. third and the the Thanks, quarter providing be I’ll call. quarter reviewing Mark. markets as my we as our for third XXXX outlook Today, MasTec’s Good welcome

highlights. quarter third some First,

from per cash was for $X.XX $XXX $X.XX, million, the earnings was flow billion, end operations million was at and was EBITDA backlog is billion. adjusted share quarter Revenue quarter $XXX year-to-date adjusted $X.X

excellent year. and on another In record summary, are for had another track we quarter

More of most size that XXst Verizon and number infrastructures importantly, ultimately the century. of for opportunities The said CEO increase. XG the it seems continues technology one like important to is the recently of

one We consumer, periods The both for technologies deployment of entering and of for unprecedented. expected the are the our changer is length history customers cycle the exciting XG XG in a most of are of game MasTec. spending telecommunications. the budgets truly and CapEx The wireless

XG In opportunity. cycle of for and we Over XG the MasTec capabilities to front evolution XG out has market changes in from developing each the of years to now LTE the next the needing have with technology witnessed XG. significant each cycle, been deployment

no have longer larger is always remained cutting edge this much cycle We of and and on capabilities the different.

as the that abroad, Today, wireless are during Through and on pleased of true services. focused located we QuadGen wireless company announce acquired optimization we and XXX domestically engineers fourth MasTec engineering, integration tools. end-to-end are their both uniquely proprietary a quarter, QuadGen using a adding acquisition, which we this positions software Wireless. to is network provider

think the enhances construction based number MasTec Each perform. to viewed do elements the added those refer I’ll we add around services behind With that involved. enhances it as of can added physical the networks, intellectual number significantly we XG Historically, network the networks the require muscle of opportunities on the work resources, elements the services. activity. our total of helps I been as has for these significant always MasTec what

majority selling up available a is wireless a historically to we typically that difficult the in We I local services product. very have the is of operation. are rely had now which reason muscle opportunities addition incremental heavily market, since on the truly labor, our a The brain us time this to and U.S. services in internationally bring

to sell work in geography our our deploying any coupled with now services extensive both do carrier allows services and front-end to these us teams expertise in by wireless across and the engineering conjunction Our abroad. or on ability U.S. data with maintenance optimization

on XG is, required those Based the activity is around to level a of how deploy much denser networks world the network unparalleled.

Our expertise be in us position and leader reputation, history to uniquely deployment. a XG

also the positioned feel bigger, more be maintenance just This well requirements won’t increased network. and long-term of cycle but complex deployment, driven about initial we’re dense, the be also the incredibly opportunities. by maintenance We a for will evolving

the to for future. ramp we resources the as term, continue In prepare we near

expect as growth scale and margin come utilization. full years the to We with improvement significant in strong we reach

Dish are the merger. plans. Sprint Network, anxiously all build T-Mobile, of awaiting also and Sprint significant have T-Mobile, completion We the

plans our on expect of company not decided, that build this is quickly each see demand. second in a fate acquisition plan of Once significant has a or if contingent a different we acquisition the the industry While the dynamic resulted industry. slower XXXX increase across are acquisition, the the doesn’t; will in has happens half

We of also fiber MSOs be to from These and expect customers by networks new will future telcos, of these networks. we independent fiber out to continue support aggressively wireline that demand have increase. are in operators supported to building a number

in awarded the million announce were that to quarter, We’re during approximately fiber third new $XXX happy awards. we

that Despite large impacted & segment. fourth were were quarter we Oil strong Revenues revenues. this strong these in very We margins that delays at and impact been fourth regulatory and another also margins project will to quarter expect by maintain have the delay better. on quarter. Moving to delay, could Gas had our one levels

main long-haul facility utility performance broad-based construction. work, strong and midstream enjoying are and replacements projects, integrity our across We

of customers diversity top versus the less our two revenues year last made highlighting We diversification, than XX% our our mix. improved a up customer have of quarter

year, expect amount coupled XXXX. visibility another Gas verbally to solid being significant project by we what of a have great Group We but next This year million Oil in work our with signed. our approximately the large sets stage be & revenue for delay not pushed with of into awarded $XXX for

the have visibility better backlog account a number yet in QX than was of this verbal not segment when had today. the signed, not you never record awards we take do levels, While into we

also encouraged of fluctuations, beyond for oil are by continue see to market price we very we We and number to gas come. opportunities XXXX. robust years are commodity Despite a seeing the

transmission of we had this better strong another last we in Our a XXXX transition than to very be group solid will quarter leading we have a while what were of be the been XXXX were business, couple quarters more into expecting. expecting year believe

We and great the strong the improving strengthening about expect driving general Market spending and including growth prospects and country in we the energy, around our natural been are including strong shift of XXXX. especially and to light into are and continue aging over to clean next business enhancements, have conditions quarters. disasters Margins infrastructure. replacing the a the there backlog that expect undergrounding grid across of catalysts few feel the trend number and

year’s backlog be Generation our Since than Generation almost of Power from billion in revenues with year; growth. XXXX group expected Our Power strong $X a to group and nearly revenue XXXX from from this have number million delivered third also of $X XX% should more quarter. strong growth. grew XXXX, another year in billion last Revenues tripled awards, $XXX

growth. our by impacted high been have Margins

about X,XXX in workforce base doubling members XXXX, this since year. Gen about have our from We added year-end almost our Power team of segment a

to return next to segment this mid-to-high single expect digit year. margins We

great increase having guidance improving with over XXXX we’re in period. same XXXX, year-over-year our recap, XXX a points EBITDA represents To margins for a basis XX% that

all in expect privileged of our As we grow believe position as to forward to we are look we a XXXX, next year. we truly segments

revenue expect While in somewhere ready we the approaching to not levels. we’re to XXXX would digit with growth this range guidance, low-double give year’s margins be

financial the to We leader are we’re The excited itself longer-term be evolving, markets we we XXXX of and positioned and confident record performance, more MasTec our prospects. year about to expect be serve. a changing growing across segments but all has another we’re of serve

I’d take work for and safety, sacrifices. the this thank to commitment to their their of their like and hard men MasTec to women opportunity

of our future. are so about it’s and important excited most bullish our people performance that Our asset and I’m because their

to for the our review. turn call over now I’ll financial George George?

George Pita

flow, guidance XXXX. our Thanks, well good And cover third including everyone. for morning as I’ll and earnings structure as quarter cash liquidity results, Jose. increased expectation financial Today, capital

indicated can our be measures non-GAAP of financial and the results of include our earnings the of beginning on discussion SEC details and adjusted guidance at release, will non-GAAP call, or and found As on on our adjusted website Marc press EBITDA. Reconciliation our filings.

Here XXXX our are third highlights few quarter performance. regarding

a Gas strong caused per and lower portion XXXX. share XXXX the this summary, than In Oil guidance adjusted gas diluted levels, by than affording pushing us raise segment record expected new project our earnings by delays, opportunity quarter expected trend and regulatory $X.XX & third better to is despite half large revenue had of XXXX a earnings second we oil to into

trend sheet record expanded, extended, balance credit senior favorably the continued we facility. cash from during side, the operations On and quarter, our flow re-priced and our

We ordinary levels flow operations annual million collection XXXX expect record through from course of $XXX approaching cash activity.

with of of full flexibility pricing combination and us The liquidity, third structure metrics factors ample quarter capital advantage leverage our allowing take these improved comfortable opportunities. leaves future to growth

by exceeding adjusted year compared expectation XXXX diluted last share. period a of to adjusted our new million basis of EBITDA grew Adjusted XXX of last revenue quarter EBITDA per quarterly rate share same diluted earnings $X.XX to Third $XXX adjusted $X.XX record increased the and over year, level. points margin represented by XX.X% per XX%

Third EBITDA rate quarter margin and adjusted XXXX exceeded both expectation. adjusted EBITDA our

regarding will segment results. I third more Now, some cover quarter detail

expectations, segment a XXXX delays period some on XXXX last our regulatory below delays move half revenue quarter that lower by decreased second primarily the activity project year, caused XXXX. to Oil compared to project slightly to – due & the same revenue Third caused large Gas X%

was period due basis large performance the XX% on cost with importantly segment mix plus and of the exceeding adjusted year, our reported lower activity levels XXX XX.X%, projects. to for combination over the last of margin Oil expectation project numerous & small EBITDA project productivity pipeline XXXX project quarter same Third rate a point with strong improvement Gas this

estimated have project on rate project becomes margin clear, segment with adjusted until the startup anticipate multiple forward high revenue Oil range. and XXXX look As EBITDA At activity we of into in the that will & digit an great XXXX we grow activity. visibility we range point this Gas high-single significant XXXX, in teens the timing

to year $XXX same last approximately quarter X% Third Communications increased XXXX the revenue million. approximately to compared period segment

EBITDA second Third Communications improvement of margin quarter. a points XX was compared to sequential of X.X% basis rate adjusted XXXX segment revenue, quarter the

in Third trends services, services. partially growth fiber continued decreases continued Communications characterized and wireline by by install-to-the-home revenue are in XXXX quarter double-digit segment wireless offset

Communications to in capacity segment Communications segment in initiatives growth potential. maximize margin to rate as project fiber in invest capacity ramp-up EBITDA to and continue to adjusted costs Third our startup order future performance related quarter reflect XXXX costs crew continues we XXXX

adjusted revenue, rate will compared increases adjusted and to segment Communications when EBITDA We EBITDA expect annual continue XXXX to XXXX. show strong margin

Third margin quarter segment EBITDA This range high approximately XXXX quarter marks strong to revenue, year of of year. compared Transmission to rate Transmission the to $XXX segment period the was and improvement rate last we Adjusted Electrical approximately XXXX adjusted margin growth X% in million. to the segment continue X.X% revenue compared this period expect XXX the EBITDA Electrical for point revenue basis beyond. same a last adjusted same second consecutive and in EBITDA and single-digit increased

million. Power XXXX and increased revenue $XXX approximately to quarter Generation Industrial XX% Third segment

growth managing revenue, margin our activity to adverse expectation some as weather a as approximating on well year-to-date EBITDA rate primarily X.X% at inefficiencies project Adjusted impacts operating selected XXXX to XX%. related of was rate due below

We very that Generation third renewable and and by continue Industrial as XXXX market Power evidenced $X quarter record experience segment levels activity approach a billion. backlog project to active

growth we range. in towards segment with expect look rate in XXXX, show improved mid margin XXXX we performance revenue will high continue single-digit this the adjusted As coupled to EBITDA to

revenue. Now, our of offerings summary of largest a service approximately XX% wireline install-to-the-home separate XXXX fiber wireless services I revenue a three XX XX% third combined will services and basis, for as derived top total the these AT&T and On approximately from period quarter our discuss was revenue. approximately was a totaled of customers percentage X%.

note to within independently organization budgeted under these corporate that managed important universe. offerings and one while a falling umbrella corporate are that us diversification As is remainder, it AT&T within giving that

activity And was each Phillips Epic lower project Equitrans Iberdrola, the Corporation large reflecting Company oil X%. and and Transfer previously on gas NextEra was were to year Energy Pipeline a Verizon Morgan, Midstream X%. Energy XX% compared XX, last were each and X%; Southern Kinder XX% as discussed. at levels

XXXX levels third XXXX comprised service the construction of or quarter Individual X% compared with and third the as master a and second decrease approximately revenue over project sequential large this of backlog comprising the to of last compared XX-month activity. the when year. projects higher X% XX% agreements of was decrease $X.X the third quarter so mix XX% past quarter billion, our quarter, year trend a reflects to

third primarily includes months, power the Communications and driven Thus, XXXX quarter. approximate during third during activity backlog beyond by XX strong a $XXX quarter. backlog segment quarter awards an increase industrial and while sequential significant Notable million substantially backlog total in sequential Communications segment third increase the in generation a the XX-month segment backlog Communications during segment, decline small increased sequential showed backlog quarter total

thus that As and project beyond we with note ultimately period. unduly those were segments. year million year-over-year storm the last led backlog restoration awards work the that It services $XXX XX-month XX-month for Transmission to revenue XX-month awarded comparisons also backlog million Rican performed is backlog $XXX is important included impacts significant to and which for reported each in generation of never be expected to segments approximately Communications Puerto Electrical

Lastly, can this in time we years, it third and new single come XXXX quarter evident Oil should & is Gas have be indicated large awards trend lumpy point large only be segment burn quarter into noted backlog off our as in a and at contracts for backlog. contract as backlog each

growth backlog our the performance end markets sizable which optimism exhibiting support In strength opportunities. summary, our and multiyear our trends are regarding of

Now, capital working I cash and will flow, discuss capital usage investments. liquidity,

structure no maturities. solid rates Our near-term significant is low long-term capital with and

liquidity. level billion. credit Liquidity increased advantage million as $X During facility at market borrowing cash this the And ample increasing with stands took capacity. approximately our favorable defined further third our now we hand conditions quarter, is $XXX by of senior on and

billion support I of would as continued less times. thank X.X debt net ended of We $X.XX like of book the cash to for quarter partnership. our leverage quarter-end to third take this opportunity a debt, with and approximately members their our total bank group and ratio defined

flexibility end we of opportunities that value. should summary, give XXXX any shareholder advantage In full expect ample a liquidity growth strong capital potential us maximize with to structure and take to to

had cash remaining performance, end the record programs. our trend quarter, we of strong on from approximately to As $XXX $XXX million XXXX third cash of during of regard quarter our With flow repurchase we level the performance third and represented XXXX the a MasTec. flow open continued share million operations year-to-date for

stated with quarter DSOs days ended at our range. We XX the third within target

from income. record CapEx, expect $XXX XXXX We again continue free will approaching adjusted that cash defined cash flow annual less operations from XXXX new to million that once flow cash reach as level net operations a and flow cash net exceed

XXXX flow As a and billing collection activity. and annual based reminder, year-to-date expected performance are course, ordinary metrics cash on

on incurred cash we in during CapEx, disposals cash spending million of equipment approximately the of net XXXX, $XX our as additional quarter we net leases. Regarding and $XX third finance purchased an CapEx defined million equipment under in equipment

to approximately to $XXX that million leases. million $XXX year under will acquire expect approximately $XX we also We million for the expect period, and net equipment XXXX finance in incur cash CapEx full in

expect year our we on $X.X XX.X% EBITDA to $XXX adjusted diluted Based adjusted revenue $X.XX current XXXX revenue trend, earnings annual are $X.XX our increase. share, adjusted strong million guidance. billion. to to now increasing per earnings our of of XXXX our and Moving We or full guidance XXXX guidance

guidance at adjusted at XXXX estimated earnings now billion adjusted XX.X% revenue of quarter $X.XX with at adjusted guidance revenue and is or diluted million EBITDA $XXX share. Fourth $X.X per

performance. activity lower Gas some In segment due current second large move gas guidance well regulatory delays rate half that on & strong as will summary, as to EBITDA revenue margin and project incorporates oil our into expectation adjusted XXXX XXXX continued a project Oil

in for to In we are guidance the expected expectation operations. position XXXX, flow as from raise cash full-year XXXX to to and pleased record be XXXX, earnings end of new to move adjusted our levels towards we summary, record confirm

for another beyond, and multiyear record we our yet Importantly, and as we be expanding year MasTec. markets afford believe look opportunities us XXXX that expect strongly to significant towards XXXX growth we and

concludes for the to now turn operator That I remarks Q&A. and Operator? prepared back will it our

Operator

take Rygiel Riley Please And ahead. from Instructions] FBR. will with our first [Operator we Alex go question B.

Alex Rygiel

quarter. a on Jose great and George, congratulations

Jose Mas

Good Alex. Thank you, morning.

Alex Rygiel

regards next about your When and flow, guidance I with question million next year, expectation less of be cash even First uses and I year, of suspect, this $XXX plus. think greater less see we year to would fantastic cash.

as allocation how comment you can pertains of XXXX to amount think on So you about it in this capital massive flow generation? cash

Jose Mas

Sure.

don’t I think changed. have So, anything’s obviously We’ve really opportunistic. been

that’s we’ve going for to big dividends think we So this us. quarter acquisition a great in made pay

our uses are cash different no right. think than So, I they’ve of been

think I in our reinvest we��re business. to trying

opportunities, us a think go-forward in and ton continue XX we a I we a of that seen be be over think will we’ve more have shares basis. so. acquisition and whether We or I then related very terms on more organic decide And got that to opportunities months the we’ve or little in active to back And at significant been that buying nature. looking growth of think bit be last opportunistic opportunistic you’ve want methodical more

Alex Rygiel

Secondly, exciting. your and is of about upbeat in projects and component XXXX that commentary from awards pretty next delays verbal year. some includes big very very, year this A to

So regulatory light are – visibility comfortable more with of how that you or in permitting do how broader of uncertainties. the you

Jose Mas

is number than in today. has been think business, a position changed, misses we’ve of we there our our ever we no question better Look, backlog don’t that We are right. which that component think

forward going were a and customers far about advance. advance, work they’re the not until when think understanding in signing a forward. get those contracts awarding having, have So that they gas going if how are There they months regulatory but they’re XX the necessarily in going of in full you they’re issues and oil work fully whereas year, realized that on what’s industry specifically, contracting

we think I there’s between but have so bit, business why out I like, what we this what proceeds, had. a there notice we’re around think is frame specifically That’s story. going in our impacting is fantastic than we’re looks why don’t the that So upbeat. gas we’ve we That’s to limited know changed and backlog backlog, business, oil lot a XXXX. more to has that a of a is short-term concern time think verbal awards, which visibility have little ever today

queue XXXX. today visibility that even is more that There than have XXXX are are the of importantly for have beyond fantastic. we projects lot a some that and in But that, for There be are don’t XXXX, think push we’re in the that will have of XXXX. we all may that and into quite be for backlog going that in verbal completed frankly, we our to XXXX awards work we in

we’re in that So spot in great today. business a

always very when We’re with very on able think we to lower sustainable; go-forward we’re profile which happy probably the guide it, we’ll a that been slightly achieve think we’ve how but We in basis, we’ve encouraged, it’s very there. excited we margin done is be obviously business. we’re to typically I conservative, guide

conversations think it’s telecom, And of our levels them I going that we’re similar, you think far activity having to we’re huge there. about When customers I see actually right. and in think increase advance deploying with a things in

that We’re we what’s impacting for carriers not or and way there yet, and well. we to heavy it’s be there, acceleration finalized as get this three light happen really important market to as acquisition to on because think between other, one very pretty going in there’s is be going Sprint a T-Mobile it the

Alex Rygiel

you. quarter. Thank Great

Jose Mas

Alex. you, Thank

Operator

with will go Kaplowitz we ahead. Please Citi. Next, Andrew from hear

Andrew Kaplowitz

Good morning, quarter. guys, nice

Jose Mas

morning, thank you. Andy, Good

Andrew Kaplowitz

Sprint, gave question, you project the gas and specific on guidance growth growth oil communications, about that and won’t that what’s close talked that guidance, level large at And Are up low-teens for grow actually still thinking Alex’s T-Mobile average George the you XXXX? oil the year, for is up underlying Jose, in in can in early in Communications your growth. digits. the XXXX of gas company conviction until single understanding then just revenue high next following with

Jose Mas

Yes.

reality the we stories of things; on been us Gas the really conservative projects going that unknown, side, that it’s base, continue, has in & feel guidance to actually go, when can I So, to expect projects comfortable the XXXX can existing extremely haul in think we couple project there’s that, go point of actually there for we’ve streets the everything to nice large a projects of the us lot that lot – for the pipelines. think I the from large those be We be think than is – long segment that Oil the time. grow, but the opportunities we better think were this diversification about, I revenue go, we that that of if one rehabbing do at all portion think the given, I is way a in it’s all think cities of prudent down a of the to the working across in

perspective, second strongly of be half Communications fantastic. I going is the XXXX the From to feel really that

three a all for pretty to lead those think in large we sure soon deal, I think are capital are being three a that three – going per that and se, related Because not MasTec. of we XXX% decisions allocation maybe that, irrespective customers we’re that right, it. as it’s to right. the gets acquisition because traditionally about think big carriers their very there’s way as been when Those it customers haven’t again, from goes, way; them affected big are of

about more it is So than base our that’s growth story our about business.

comprised be strong. So, going It’s year. going business, AT&T to next is Verizon, more of our base that’s up to and very be which

on we the think the for us, being all throw business very base So, it able in you of we’re potential confident book about only to better. just I when talk expect be where gets of to in opportunities

Andrew Kaplowitz

That’s growth really power has helpful, your strong. generation then been Jose. And

sense. what do makes of mean, a profitability the book I ramp-up mentioned much lower the the you. the workforce, of a But point for margin You business concerned now, in is much you larger the of big business just in issue than it’s which

to or can we bit about that you at year going is achieve you’ve talked the forward of it something sort a need you business. when profitability look So, should that you next When in and high really profitability, expect. more to you the margin growth think stabilize business it, mid do single-digit

Jose Mas

in which is huge Obviously, in did last where members Andy, margins terms past. disappointing, growth on little business, been year, got next a especially a for lot in of year you’re we bit another it’s team this I more this of obviously, it’s more has cycle had we XXXX. X% been. from opportunities a further about the great than the We’ve growth a year; seeing the substantial investment growth in think year yet an been part in what is improvement

that where they With change the said, issues are. that know the if would that we on profile. the what those are come are know help number number are project what to – margins There exactly, margin fruition of we a know orders projects project, we by of a outstanding

all we based the timing project in backlog out just matter have, to book in can we’re that I the of way at a said, the With itself it’s XXXX. back and that business we has on mix have, think the and based of on least get that we comfortable that laid levels XXXX XXXX

Andrew Kaplowitz

Thanks, Jose.

Jose Mas

Thank Andy. you,

Operator

next, will Please Stifel. we Dilts with And go ahead. hear from Noelle

Noelle Dilts

good and on quarter. nice the morning Thanks, congratulations

Jose Mas

Good Thank morning, you. Noelle.

Noelle Dilts

answers Permian little this on you’re down of could your in Jose. a touched you that some hoping in some little I and doing work question, you So, bit bit but the just the Pumpco. the drill deeper midstream was with comments of into a to the

good performing worry seeing year. well. the of because you’re it about about but that it’s businesses, most visibility You just like really one And talked levels seems of your across that’s I pipeline exceptionally probably folks having activity this there all think the

you thinking So, into have next discuss sustainability can those confidence how and visibility gives of just margins? about you the much into what how that year you’re business, you just

Jose Mas

Sure.

Gas the excellent than We’ve for won’t booked business. customers. that no of with it’s think I got conversations in based year even start plan Oil that XXXX until got XXXX on So, area. & rest We’ve different our actually, work

think that and of solid don’t So, really XXXX, about a beyond. of we years really But today, XXXX – haven’t are the conversations a in lot had relative couple usually have we next I visibility lifetime the going we particular basin. that’s beyond to

opportunities well think our different for seeing I segment. we’re of within basins Oil our of as groups expansion Gas provide & that all

a slowdown don’t business we So, expect year. in next that

really XXXX XXXX. to good have different a perspective; a from We it no into than year is margin the we work of think that expect profile going the was revenue in

So very bullish. we’re again,

Noelle Dilts

been How the terms And grid like maybe Rico. it then terms should Thanks. of some sounds about progress in upgrade of we in Puerto MasTec? think for in some of opportunity there initiatives that has funding

Jose Mas

So, Puerto a comparable backlog Rico is when from really year’s what taken last for had it, out that interesting look it’s Puerto right, it at worse with backlog, of us, is. associated million we work $XXX Rico we’ve unfortunately making look perspective, than it

what arrested, So, in ready started, comments was was involved, that were it today, making in we’ve lot other contracts the excited what I the a charged. are an they’ve get been those obviously, issuing the work, contract related won and involved to more Puerto to is excellent paper. FEMA backlog it that were further and project criminally and to We been actually thought were Rico. people the and they than The seems we was we on our stronger think reason it in as backlog

All cleaned has of up. that been

work. to really contractor, feel who think one well relative doing that a We is I going of do is no on to there. inflow significant counting backlog; there’s that not think on a into there’s than over it. sizable the us anybody not It’s portion we’re good dollars and basis, that So, be the of We in a do the we’re to we think longer go-forward again, island time don’t of positioned. better positioned island work majority on

doing work. some We are

that be we’ve going with flow actually to it’s it. there if they all we in done long a well work now We’re doing time. that than do really in more the will flow said, and With in, about dollars

Noelle Dilts

you. Thank

Operator

will ahead. from with we hear Cook go Suisse. Next, Please Jamie Credit

Jamie Cook

morning. good Hi,

Jose Mas

Jamie. morning, good Hey,

Jamie Cook

business sort for congrats of follow-up, Good mad a you’re just just guess of ramp Jose thinking outlook, – a and as The and that get you so top-line expecting Communications, you’re is doesn’t level I guess, and on the about strong, second more in two been and can the think how again, Mark of been – anything generation at within one questions, mean the versus particular just of and next could the I quicker? XXXX. talk year I too. & me. then morning required sort Transmission to one do Gas and guess the flow quarter investment as Thanks. level there one And nice we question, there investment couple is sort your meet could very operating targets about of your story of the your ignite headcount have about you in improve XXXX levels Electric within of I profit Communications or Or my earnings mean has drivers strategic story XXXX question there? growth. the just the profit cash Oil I inorganic business that operating PG&I

Jose Mas

Sure.

it’s think growth. upfront, but I We’ve goes premium answer it’s your significant I acquisitive with is and you earnings two which you a harder is through are but it for it’s the acquire well things done for right, financials, when you you spend So, first, in it we nature three that than Gen question the of you takes accretive pay especially, lot is, do part, businesses. businesses I’ll that your the obviously, start look most company, tripled into things years. looking growth business. forward a there a but there Power It the part longer second expensive, money, the and don’t much those the of as do, organic a acquire yes, done harder When you easy lot is, inorganic worked answer right at, think we’ve two immediately; what profits that the The your smaller we can to are that again, books. as is not organically are organically, in you at

inorganic number of the really grow years are So, really great growth after experienced inorganic story because that cost scale, to organic; gotten an come differences in and one now. feel margins know and that we and size solution, are more the think We’ve I story we with lot where to I we’ve has going said, good a and that’s With less. there the time, and it. of them about some enjoyed us a more really think the over that’s been selectively them we’ve organically, We a organic going been been MasTec. it’s picking to and are opportunities long-term, than we going the for can an

you your question, that can’t the do we which & are what when work ramp in With think the comes. one first ago was the ramp of is in the how part of relative your we to question Oil a numbers and business things we a do really ramp Gas XXXX, learned years of

we’re if we’re too trying to ramp XXXX, So, late. in

So been what we’ve ramping right. into cycle, been doing going is we’ve the

a we’re money it down reason is because then it’s that which ramping the organically the I obviously, the play decision. comes, a then our be bad XXXX come, great out doesn’t sure growth are if decision. that So, to growth think that spending and will, in it we’re margins business if, fairly will If

take to coming. us for required that’s investments the the of lot work a advantage of think I So,

making. already We’re

and ramp I think the the look I is actually rather the go with way that in an to been now because get the do, we than think it future. decrease ramp. it credit to actually we taking more increase, will to going at having than and those and lumps we’ve into benefit allocation for XXXX capital the aggressive

Jamie Cook

back in queue. I’ll get you. Thank

Jose Mas

Thanks, Jamie.

Operator

Thalhimer from go Davis. will Thompson Next, with we Adam ahead. Please hear

Adam Thalhimer

morning fiber guys. the I good Hey, wanted to start Jose, awards. on

those QX. the were in on some You talked backlog? give about in those Can $XXX color then QX you million us and

Jose Mas

good morning. So, Adam,

a that goes were significant backlog, actually backlog very revenue XX-month of of period. So, small beyond a in them portion the portion

not that is of most in $XXX So, backlog. million

Robert Apple

XX million from couple Yes, gone to over quarter last at obligations a performance really of we Adam. hundred it, that when months shows. million has you just this $XXX what number remaining that’s have look quarter, it

Adam Thalhimer

And today for an is this customer is an you Are fiber that add-on? work and doing for existing? that

Jose Mas

Yes.

Adam Thalhimer

I fit do Okay. And Jose wanted just revenue about How it how then much QuadGen. for to ask my you strategically follow-up, does expect? and

Jose Mas

business. we acquisition it’s do. opens us that lot fantastic that business. to a whole – us, a small completely of our a think, industry. I new like for a strategically, within that within today for that it’s out other not do the contract to But portions we people, it’s world other We of it business It’s it’s that us, foreign, some So, almost

back really business done these make the that these complex, partners on looking to and think support think in to I and work carriers historically, that the business huge you is been it’s one other amount as for have to of that’s growing, it’s optimize especially at that’s the work and and them support need, that something them to networks I one of have more a become that capacity networks OEMs where end the them make been changing of engineering vendor the endeavor. makeup them It’s best. their

still, obviously, multiples think I it. high that. it’s business but today carries, the leaders with relatively a they’re a that of very They’re associated small in company one typically

the with offering blows So, capable really, it’s We hard right the doors try fit. think how our just time. bought us, the right been what and to think value strategically customers right we we’re find contract to off and our we at we for differently it the and over really of for company can customers

OEMs the almost to and end-to-end sell have think able competitors different; like is benefit. that carrier to really at carrier to talked Each they are this bit no something we little full really about really us approach edge with being really trying time. a to going and length really thinks that’s relative an carriers the compete the as and procure different to we’re how that Every services that about we’ve these gives and over

Adam Thalhimer

Okay. Thanks, guys.

Jose Mas

Thanks, Adam.

Operator

Thielman Brent hear D.A. Next, Davidson. from with Go you will ahead.

Brent Thielman

you. thank Congrats. Hey,

Jose Mas

Thanks, Brent.

Brent Thielman

of and or quarters, both prior sort this Jose, it transmission and wondering few large. kind peers frankly, seems last from small of like and CapEx hearing we’re yourselves cycles comparable and than larger about feel you’ve even wave I’m experienced? The more work, more

Jose Mas

been think finally talked to about coming fruition. It’s long I it’s for a time.

I a drivers today, pushing think lot that right. a of of lot are there’s different just it and catalysts

the disasters the I have think East a ago, I to couple of these all going thought replacement. think, grid of on impact natural have we significant would energies what grid West having on a years than impact bigger coasts on are clean that and a we’re seeing

a So, lot a work. of of there’s just activity, lot

cycle to it. industry well I think the and really relative I do the is early going think very in we’re again, to

Brent Thielman

wave. and a and and pickup orders about a results then question infrastructure of on structures is lot this And ordered are contractors signs the that is telecom, and second sort needed this in well encouraging, guess XG services all the hearing a wondering of some of required? and you’re for when decent I’m in I just Okay. equipment support advance of frankly, And but for results hasn’t materialized ultimately we’re seeing yet, of take I kind is why

Jose Mas

Well, double-digit clear, be We’ve months been to growth. we’ve now quarter-over-quarter. enjoying XX growth enjoyed double-digit for

So, like growth it’s there isn’t not there.

The year we’ve are and it half. it active what started that last it’s scaled and really in today will. a We is barely been than more the and reality hasn’t

that to. back type the the here there standards the set growth of day, all isn’t hoping So, see everybody the of end and we’re agrees to isn’t at of a go But to it’s yet. coming; you expecting still – way that

their but everybody’s very early kind thing. of doing innings, own So, in we’re

going I start to I falling and see half of significant And to think into second think XXXX, a going of place. we’re going XXXX to that beyond. start again, the ramps lot is into

something possibly through it And again, really as will. to I I that’s well very think early. we positioned again, we’re be. So numbers think but don’t want as rolling it’s think we yet, it’s anybody’s could

Brent Thielman

you. Thank

Jose Mas

Thanks.

Operator

Inc. from Hirschman Blake Stephens we hear Next, will with

Blake Hirschman

guys. good morning, Yes.

Jose Mas

Good morning, Blake.

Blake Hirschman

think think in has get on. to something year get get some there like XXXX? can the there things you this probably sounds of run On like to the in won’t sales, the billion with you telecom target rate going been Do piece, you it $X I

Jose Mas

Yes.

Blake Hirschman

hardening power play the all and you do you it. Do and that. storm west, then Thanks. you capture Electrical guys of out on think Got all much that some work? the out And shutdowns the Transmission there and could out situation there and

Jose Mas

hasn’t market lot it of but impacted, next we that. going some we this going year, over a think help, a a of heavy I I been focus of I FP&L to know the like build recently we’ve there last also hit couple for important we’re just obviously us. years. $XX know they’re the had lot weren’t in passed as and Historically, – There’s that Bahamas think we’ve can some think they’re we out undergrounding start that, XX think Florida harder. the working State also were things but to on years years. billion of a lot East Coast a had it’s hurricane role play on in need evaluating big we Obviously, to do

time the them spend. which through incremental legislature. allowing it incredible issue. So, ever pass put rate gotten huge amount first a in they’ve is the to of It’s base an that that It’s

So, there we we’re and just reflected country, seeing not we for West are happening in think us Coast, West well. things what’s prayers, the opportunities is in there’s obviously, those as all the out all over but of in yes, terrible, people our keep Coast the that do

Operator

next KeyBanc move Markets. Capital our Sean on to And Eastman we question from with will

Sean Eastman

It’s some levels. color. may Hi all dynamic interesting job appreciate up activity Communications merger get on on be around Sprint, the holding the really here. team, nice T-Mobile this I the to update an

reflects huge AT&T but sense would is pieces, this as that in seeing down The from customer? get whether trajectory other is tons moving year-over-year XXXX, budget next obviously, on with curious budget there big we element on in kind of be MasTec’s just get CapEx just after guidance that exposure of a see questions you a to you year kind the set it change a this for there any opportunity formalized of

Jose Mas

moving in it Sure. basis Obviously, with revenue A Good things down. is morning, in lots of a there’s year-over-year pieces us. of couple on for Sean. our AT&T,

increase revenues been seen offset, the we’ve a are business. and driver is which has that less on they’re primary been the business Our double-digit the again, the our of pretty on fact down. where installation fiber has then is side nice historically spent the wireless vocal about than AT&T down pretty they’ve of spending

public total of us hasn’t about for XG AT&T general. plans, build it the to has kind really want story in wireless that it’s changed, they’re all same to year. significant what So do, they in is related that and very their

of off generate obviously will the think those about day, which own wireless longer selling a have activists, reinvest that to significant of the positive. with cash, reason it in of they be the give more all talking encountered issues think as a assets. arena we number think that them them. they’re the we end I is will they’ve think obviously, businesses of bent of At We their towards, one they

expect well to them, matter really of So, us, that it’s with a active going story. we the And to really, that things continue. are we we growth slowdown haven’t on part and seen our and businesses they’re very

Sean Eastman

Okay, thanks.

Next one from me targeted range is just, leverage below obviously, here.

there, but this didn’t powder, the of next allocation some color capital So, international QuadGen’s here? how QuadGen, for buybacks Any build outlay we big pick on kind Communications on there are out there or you be on year, opportunity more curious do up I exactly would just is dry in do great. focus

Jose Mas

paid our Q, about we’ve million QuadGen. in – we got $XX for So

Sean Eastman

Okay.

Jose Mas

I at. to opportunities long. kind size we there of going of think do the price cash the perspective, again, these inorganic From stay out there That’s allocation that at of transaction. we’re are leverage some we’re an think looking for levels don’t

greater So, more shareholder I ways where and it’s we capital deploy return. meaningful think us provides do to in a expect

Sean Eastman

much. thanks very Okay,

Jose Mas

Thank you.

Operator

Chad Deutsche go hear ahead. will we Dillard with from Bank. Next, Please

Chad Dillard

Hi, guys. good morning

Jose Mas

morning, Chad. Good

Chad Dillard

So, wanted of the understand to some guidance your and takes for revenue I puts XXXX for just Communications.

will a comps be. guess get next trough just this to the how versus just on fiber-to-the-home be about I any decline when and Just year? thinking are when easier do how How the component install-to-home year the when or drag will big think that of sense you FirstNet you trending

Jose Mas

Sure.

I outside to what we’re down not hope majority to We’d could of million doing probably will than perspective, be it think the the probably it’s what possibly today be work to the down. potential again, we’re of next next ready FirstNet the FirstNet. $XX think would year. installation to year, So still part I of be end From in business better as I million that’s plan, full of book that the think that, liability. it is high if range $XXX but But relate it’s the guidance give that

that’s think continue. I going to

cutting fairly we had that’s is still think of back happening on that lot that something commentary additive further they’re it’s XG not not with what’s and the a they’re on spending CapEx something to I just that obviously So, that AT&T on, expect the future and we’re their that we you to of that are. and what to into. they’re back investment their add going needs business cut sure It’s the the grow confident on that side their continue them in to CapEx when one

feel great we it. about So,

Chad Dillard

Great. And fiber-to-the-home?

Jose Mas

it’s perspective, of very business today. a From small our piece AT&T’s

really don’t we So, XXXX from see much that XXXX on side. difference to

Chad Dillard

Got it.

with then sticking just of question. Communications, And Okay. similar kind

parts moving on the through the talk could you side. if Just margin

With you the but signed guidance revenue mean, actually can not you for yet. – order just let’s think do say, hit are awarded, secondly, that on the the And year? of mean revenue then gave the give color magnitude I that I XXXX. initial you double-digit quite you can any margins long-haul of next projects

Jose Mas

Yes.

how we hit obviously, feel on going somewhat low-end levels we think that, our quickly historical back of dependent would answer goal into that probably Communications that’s in at business. to be Longer-term, the get expect But of going those I that we can it’s some opportunities year. we comfortable what first, the margins, to be think to a ramp. do So, double-digit

$XX excess of million into I of take the the a growth in it’s $X that But changed – the we hasn’t of to account, well $XX long-term the expecting, hit business. guidance from our to – on you be expect able digits be of would really that step business. that we’re work still billion. It’s million long-haul double if in side we to So, all think first great

Chad Dillard

along. I’ll pass Great, it thanks guys.

Jose Mas

you. Thank

Operator

will from Please ahead. go with UBS. we Steven Next, Fisher hear

Steven Fisher

Thanks, good morning.

the give a QX Wondering made work cost to then quarter. color earnings Just plus sustain little margin just and perspective what And the QX? the was down margin executed if side. in could about the to because more higher potential lower that the a work work backlog compared that this strong you you what’s the the on even margin versus pipeline higher of was it that us from different on backlog

Jose Mas

Yes.

couple is that cost a going the to we have other plus work affect things, So again the work a we of have. of that margins basis have our of of signed, of on backlog is that only versus quarter-over-quarter a measurement we what’s amount business right. types Part

any I any current a the versus the project, we think We we profile we the margin be work will question will where little look cost-plus absolutely think are much will margins to project of of groupings down profile particular will do QX today. believe drive in relative work be rest So, that how bit don’t the the through different, at when the cost the of plus XXXX. we margin hold

going we’re expect So we year when biggest MVP, our plus at to size we contract, $XXX it when about about or like million for to cost XXXX, looked which think finish this cost XXXX, we doing and value. is plus similar be contract;

year, the very hopeful – that margin again profile, moving projects we we are there are can we’re into So similar until have that some but around. going

which But year. than right the approach So we the much teens, probably I is guided be would be the conservative it into anything think and high conservative greater by call we’ve that ever going way. before

Steven Fisher

give follow-up people period? rolling the XX-month then XXX that question, just amount then $XXX are the your a all Is adding plan I on shifting on within the to quarter? still work a bit there us more every How quarter you falls to of million. certain timing staffing is work the Communications. that recognize incremental a the just And over follow-up wonder could Okay. detail of if just a you little and

Jose Mas

falls in your So XX-month within yes, period, the answer the we first that up. it part is pick of work

this we’re the where markets of lot to some, existing add-on currently work is in. – is it So a

So it’s kind of project phases.

detailed we it falls we’ll in. as very and a it as plan to to expect when got adding be work we’ve So execute that in

period, We continue down point to staffing at do hire On to some pace. slow that we that the expect at pace.

commentary earlier, of heavy down and year to ramp it us we a So slows hopefully be to in XXXX. for expect the XXXX then

Steven Fisher

Perfect, thank you.

Jose Mas

Thank you.

Operator

take question with Andrew Baird. Please Wittmann final from our We will go ahead.

Andrew Wittmann

question. taking I to for as Gas guys here well. about wanted my Thanks great. Okay, & ask Oil

specifically they are environmental these contracted. Are waiting gas Are get get Do ask economics or fall that your You trying basis heavily sense? on wanted make sense and bunch mentioned differentials on and off-take they the need agreements permits? of waiting that are to to shippers. are contracted awards about prices there about, those the oil to to so to I line, ones needs what to yet. from And that happen in those a verbal

to sense things a likelihood move Just trying forward? get to break for those to the of actually way your in need that the

Jose Mas

will very start, of I that of So in regulatory LNG we what almost – the it’s and all so go you likely missing it’s feel we’re of but signing tighter issue, bit projects got to to for highly we’re nature more to customers little that a it’s that what think that’s time is trying again, a are estimates that’s permits frames of being not – are I’d of about. look before future a outer good give years into right lot are a in about, most customers you it’s try their accurate estimates they majority not talking them say happen, these full actually you projects talking and contracts, actually wait of contracts, when we’re want permitting, they of around possible pricing, talking we to lot are think we’re And not are these, to the about experiencing. about that, before

again, looking these where we’re be very those projects. we’ll But over highly think we the lock that into that is to really feel will next view to be start, conservative key as we XXXX. months a XX-month the projects think virtually window So, in to XX able all where exactly at we’re confident I how of in taking

commentary any able with to regardless comfortable project. the happens today, particular So of what very feel with being achieve made we’ve we

Andrew Wittmann

had. Have helpful. that’s I day. That’s And nice a all

Jose Mas

Thank you.

Operator

closing to And with call to turn no further additional questions, remarks. any for back I’d like Mr. or the Mas

Jose Mas

our forward for third quarter. and this call who thank next our Thank supported like everyone to us look call to So, year-end and I’d you. year. the participated concludes we here

Operator

disconnect. your participation. may for Thank And now this conference. And you concludes today’s you

MasTec (MTZ) 1 Nov 192019 Q3 Earnings call transcript