Earnings call transcript Q1 2023

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Operator

Welcome to MasTec's First Quarter 2023 Earnings Conference Call initially broadcast on Friday May 5th, 2023.

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

At this time, I'd like to turn the call over to our host Marc Lewis MasTec's Vice President of Investor Relations. Marc?

Marc Lewis

Thanks Ali and good morning everyone. quarter call. first MasTec's to XXXX conference Welcome The Harbor the for is made Private the Safe pursuant to forward-looking XXXX. Litigation Act following Reform statement Securities of statements described in

statements and of these are expectations that call statements In this the company MasTec's plans, industries company's in results, the on not of undertake anticipated future may conference knowledge. These where we make we regarding are looking operate. initial such does communications, broadcast forward the update on as trends the day expectations these and the subsequent certain forward-looking statements or events to based

any Various and prove incorrect, our results uncertainties, more press one these underlying may in our actual or results from differ in releases should and of implied these risks, uncertainties expressed of are filings. communications. or or Should assumptions assumptions SEC risks significantly detailed or materialize

reconciled release today's by financial management, we'll be adjusted discussing schedules. press in metrics supporting In yesterday's remarks and

certain in may addition financial the non-GAAP In conference call. we use measures

reconciliation can not the financial any GAAP in our comparable most these comments measure to A financial found release reconciled as non-GAAP earnings well. in be measures of

today Mas, and Dimarco, Officer. Officer; Jose by EVP financial from Jose Chief Executive a review Paul be Financial the we Paul. The remarks and us Chief call of now and have our format will our the With open followed by

as section guidance of a well. there our posted is webcast new and audio in sheet can Investor presentation back just our The website be webcast and to below Relations embedded have also We earnings presentation link. earnings the downloaded page the

XX with We call session of about. Q&A things a the to had by another These last discussions be followed quarter and we will expect talk important lot good to minutes. about a

So, I'm and Jose. ahead go it Jose? hand going to over to

Jose Mas

and markets quarter morning XXXX first Good MasTec's for we providing as welcome reviewing the first well results call. our Today, my will outlook serve. I to be Marc. as quarter Thanks

$X.XX, at Revenue in $XX.X $XXX a the billion, expectations. end per backlog and for adjusted ahead EPS line our highlights. first some negative were quarter and record EBITDA summary, revenue, $X.XXX EBITDA, of with was was earnings quarter results adjusted was million, quarter First, slightly In was level. billion, share

I'd specifics, business perspective into my on getting MasTec's to today. like offer Before

Over the about initiatives and few we've talked years, the the our course oil to our and of markets. exposure the last extensively gas reduce to business diversify

the Since serve markets the worked of we've the acquisitively position both in significant like to XXXX, hard and and take we organically made. to progress opportunities we've quickly highlight I'd MasTec to advantage

ended and is we $X.X to XXXX like revenues This just with of each progress to we double a in than in ago, I'd months two of transition our just significant XXXX. years non-Oil This billion more and XX just $XX.X non-Oil the we've Gas year over over Just expect made be highlight billion, Gas and revenues. segments.

to XXXX. revenue to Despite grow organic last to a segment's year improvements XXXX expect $X.X expected deliver $X.X XX% the to approximately Communications this is Our two XXXX in continued growth rate, just both this under nearly over margin over years. mostly billion aggressive, we and increase billion compared

threefold billion year, Power over distribution just Early XXXX. this we first our $X large revenue acquisition. Our Delivery revenue. XXXX, we to in in That's transmission segment $X segment billion And generated of approximately generate made know performance, grow in and second this now expect businesses. pleased the of And last are expected to in year the our lots improvement. We're our and are years we year-over-year. of with areas while acquired operations of over for there increase we're two margins a

expected in doubled this under last year. $X acquisition -- do just presence. of of billion of Energy significantly to and is lot opportunities than IEA, XXXX late to The year Clean continue a improve post-transaction which billion that have been make our Our efficiency are the which offering to do just able to revenue to Infrastructure cultivate $X segment, more better our generated we've And and while competitive, original our work we market expectations.

deck near-term segment. revenue on today, slide provided levels we have we a the In slide by opportunity

Our Infrastructure segment largest near-term Clean Energy and shows potential. our

potential our $X from billion has traps, previous is While unchanged target as XXXX significantly achieving early increased. the target that for as

best across these opportunities continue with grow pleased have we're business. to we is While our of our the our part progress segments, continued the to story

permitting in our some is plans with higher our are face of costs, chain, we services transition in long-term energy both a interest are visibility future the and our particularly the the diversifying While broadband long-term number with trends, and into made services, around engaged markets, segments, challenges of very we demand strong. all earnings customers the of believe, and on continue to and excellent we've working into us macro gives incredibly supply large our infrastructure revenue Across opportunities. growth. coupled We

Now, some I'd specifics. cover to like industry

was the the for XX% for was quarter year-over-year at end revenue level. Backlog increase. segment record quarter billion, a $X.X million, a Communications $XXX Our

customers as from a this to are significant expansion continue to to coming demand and we to demand over related expect experiencing We invest increasing the amount in increase continue our we fiber years. of opportunities our capabilities,

ecosystem, Rural The Act. going communications to Digital Internet seeing transform usage. the impact the Reduction the to XG ever-increasing with be of to expanded data available Fund, related and Inflation the are for revolution and exponentially federal industry are the demand we increase continues networks RDOF, to of requiring and While to meet Bill Opportunity current the Infrastructure grants upgraded to funding amount the

must and millions of and Not only small new power. micro be equipment must including cell added and existing fiber to cells connected, be built towers, new

only presence significant will require a not but maintenance new service, and of creating All to they ongoing points maintenance need be of opportunity. these long-term built,

year's segment. million $XXX quarter. Moving to Power last Delivery our first Revenue $XXX versus million in was

along customers usage providing energy electric the United an on transforming challenges are for to of utilities connectivity the have achieve and of and and to we charging the helping transition history play customers' uniquely performance States power focus the demand needs the renewable a We believe reliability, in with able in role us meeting been in our energy midst of vehicle safety, position developers. hardening, significant meet and We of to our grid. the are scale

efforts off acquired on our integration are now our last organization. focused current base throughout assets of growth we years of on the margin complete, over our the two mostly With improvements and driving

expect growth ability the range low We with XXXX, improved the next for slightly our confident over organic few to in year years. and double-digit double-digit improve revenue are margins in the to margins

multi-hundred opportunities kV project transmission we growth. been equipment. on and and feel to we got We have a dollar project. long-term have related significant great to future heavily near- We million in off XXX our well The positioned investing for resources began business construction a and and transmission are growing start recently

our pro X.X% EBITDA $XX had last this and first was acquisition below was have of in Energy year. segment EBITDA segment. the due Clean our Moving negative EBITDA first quarter on the expectations. the been X% would Revenue It's and for $XXX million for forma important was a reported to basis loss. was the Most million quarter that IEA versus increase to million year's to of Infrastructure the prior a in note quarter $XXX IEA. as

still our IEA was it margins year-over-year year. much While estimates improvement, below And leading forma improved, original pro a the while had was showed nice loss. into it

starts project supply inefficiencies. at chain and delays which Margins IEA created delayed by project were impacted

about of are the full organic about in compare Energy, revenue. growth about balance XX% As achieve ability forma $X the our $X.X represent confident This to for year annual on XXXX a to and we forma in look. year would pro roughly a we pro Clean billion on think billion basis

And while expect Backlog we increased significant the segment. $XXX coming at this quarters. record in build million over backlog sequentially levels,

confident and over the segment approach our next guidance to mid- high margins improve While will year margin or double-digits for is we X%, this are two.

scale flex the to have We considerably.

utilization, is serve I stated billion With to to and stated we the well of as clearer. market. earlier, resources are lock profitably market we the And the reaching visibility our in our customers' overall to positioned demand goal $X really feel much revenue desire earlier, increased our

financially mining truly believe both our are that and building for While integration are our are product we a service early we in we synergies operationally efforts, and tremendous and customers. confident differentiated

year. last segment. line $XXX up in Revenue ramp as Moving increased by utilization are expected lower in Oil was million revenues the second we this generally of for was quarter. nearly to $XXX impacted was Backlog segment activity EBITDA and to the for up sequentially was with Gas year. increase quarter our and balance and further by XX% the almost million million third $XXX in versus growth

project is sequestration build opportunities we future revenue give level. levels in active, off a activity very hydrogen previously with we've carbon This years. to approaching XXXX great us coupled projects, shared, few haven't our and of As seen

year's revenue by and we to growth newer grow XXXX low to While opportunities, versus we in a XXXX, sources still solid pipelines. this over by are we XX% believe transported are revenue fuel watermark be confident have as expect continues

for planned started and impact we beginning what this our the of the last holds over significant I are financial MasTec. results see I confident recap, the that just year the begin the we've years, to truly potential. about demonstrate to To believe, MasTec's future will transformation as accomplished few year I'm am we and excited

of by to thank, and recognized honesty safety, at customers, project and growth stewardship, great women in integrity, to a to the the our it's ourselves men our such our best MasTec great continued for of because value. providing success. and are I'm The women values These position like to people's and group. committed MasTec. we've lead great-quality work have been the customers of of honored men traits I'd environmental been able privileged that a and and

over financial call our the Paul turn Paul? now I'll to for review.

Paul Dimarco

performance with Communications Thanks, share billion million with was adjusted results, and Jose revenue $X.X our and quarter in with year's or from EBITDA an our a revenue X% XX% first margin versus the This Beginning million revenue of segment $XX revenue, of of last ahead margin morning, $X.XX. $XXX and executed loss points adjusted of above good million XXXX. of over EBITDA of basis quarter guidance, market X.X%. of slightly to approaching growth expansion and From XXX half segment diluted expectations, our perspective, or per adjusted first a of expansion with first benefiting everyone. was the equates $XXX of efforts,

line million revenue of adjusted and Our was generating in segment $XXX guidance, million $XX generally EBITDA. Oil with and of Gas

to XXXX, lower While cost revenue project led fixed absorption. activity large contribution QX versus of was up from less

roughly Clean Energy margin was in adjusted only with EBITDA expectations, our X.X%. line was quarter revenue but First

including, Clean we projects experienced we are quarter IEA evaluating a potential recovery. effects rework primarily at certain we for inefficiencies on future expected first on While Energy, that challenging costs design related to for third-party

the we loss. they but Coming off to a QX expected loss a have a ended in IEA positive slight with to quarter, first XXXX, contribution up

we our realizing progress good the quarters. on making begin efforts benefits in are of integration We initiatives, the and expect these coming to

$XXX less was higher-than-anticipated was points Revenue exceeding QX. restoration for by our improved X.X% expectations XXX were by exceeds approximately million segment Delivery Delivery adjusted results than emergency and XX%, Power services, and albeit guidance. production margin levels. guidance EBITDA Power XXXX Our approximately driven basis over

Acquisition the and also year. approximately is incurred incremental $XX in in The trending completed this quarter integration asset pursuant as first quarter expected, integration and the small integration purchase of we a expense, costs IEA were to incurred million. first

revenue represented Communications $XX.X for new revenue, XXXX demonstrating what total billion, our for service from backlogs from was million approximately depending which broad-based on of plus few a first quarter level derived First markets. master agreements QX is XX% going up Backlog with increases and and for year-over-year. a Energy, quarter of timing end of year-end $XXX further XX% the diversification and the our Clean each at we record certain or and levels MasTec forward projects. segment minus, expect record consistent percent the was

fluctuations of timing While this diversification should contract an signing introduce element backlog project variability. can new less the of still result in quarter-to-quarter

or operations cash Days was to XX net higher-than-anticipated flow capital. XX levels rose and driven at days used our days outstanding million of by DSO QX by year-end. loss working GAAP up from $XX sales

are impact While with its DSO on and contributed of cash growth a XX% efficiency. our performance including the invested free capital factors in increase disappointed number we flow to March monthly revenue

mid-XXs the was I Treasurer quarters. and over towards in expect course subsequent will of DSO XXXX further improvement We a long the to return to work time. for MasTec's

expectation have us that very investors' I the our respect utilize for to So healthy the funds afforded of a cost we efficiently. capital and

contributed assets I and to fixed for management attractive in cash pro to fourth flow bring internal generating increase also our invested receivable X.X QX's times, XXXX of forma of plan quarter capital and on this focus on to effective debt for acquisition accounts net critical the objective. slight IEA. returns leverage our is more a performance

at $X strong the remained billion. quarter Liquidity for

and basis billion margin adjusted revenue expected For EBITDA the per of we of to EBITDA approximately XX second year-over-year $X.XX. $XXX net be This growth income X.X% expansion. XX% and points of expect or Adjusted revenue. revenue quarter, of is adjusted $X million, to share equates

segment quarter second our at performance. Looking

million growth and than to segment last adjusted low in Communications expected with double is quarter. to approximately Our the margins equates generate year-over-year revenue This EBITDA digits. in approximately slightly second $XXX year's higher margins XX% revenue

and Expectations of start-up we in across $XXX costs We this strength first new the year-over-year. Delivery Power quarter revenue construction by and second of XX% XXXX. the wireless up about the are driven that million market anticipate level quarter segment incurred will both continued wireline in elimination approximate segment

of to margin consistency costs single-digit results reflects margins companies. the quarter. the in EBITDA are operating expansion integration of previously reduce last segment undertaken Adjusted Guidance range benefits high enhance the acquired showing and versus second expected the year's to across be efforts

Oil Gas the reflect increase starts EBITDA margin first base. revenue quarter will versus significant adjusted through driven fixed cost XX% improvement achieve by second expectations double project digits. as leverage expect improving the to we approximately revenue more and higher new XXXX's QX with We Margin versus low quarter

both continue segment hurdles costs margins be impacted carrying the execute Mountain equipment for required will Valley pipeline to negatively and to regulatory labor However, this once in cleared. are by

Second segment This the margin low EBITDA margin accelerating quarter and execution. QX to is approach renewable versus driven adjusted project $X revenue range. improvement by billion Clean mid-X% in reflects to civil growth expected XX% and approximately strong with Energy

and we Yesterday, year increasing higher-than-anticipated revenue full guidance, points expenses a the XXX non-Oil reflects expectation $XX.X corporate range to basis revenue. billion to approximate results QX $XX our of revenue billion, updated Finally, Gas quarter to which of expected are first in segments. of our

remains range EBITDA billion. adjusted at $X.XX $X.X expected billion Our unchanged to

of the for low into each Our also Revenue accelerate expected the half. double and remains are segments digits forecasted guidance. the should for margins revenue margin half adjusted unchanged profile mix from reach XXXX EBITDA and previous segment for second all second to

Gas To XXXX's margin further XXXX to the second achieve basis and from year EBITDA the need to improve our expectations, margin guidance to point to segments half. in improvement XXX QX in cadence, the adjusted over This order illustrate compares non-Oil we XXX basis full same margins period. points our generated

We confident very execute levels. in at ability are our to these

range and depreciation based revised higher expected expectations We the EPS to from also revised timing to our $X.XX. guidance and driven The rates XXXX first of guidance $X.XX share adjusted asset quarter closer anticipated is earnings to higher by of purchase high adjusted to previously expense capital our on per our due expenditures interest end previous range, mentioned.

We full $XXX depreciation of and interest expect expense $XXX year million of now million.

tranches our to enhance We maturity profile. monitor our interest opportunities to or capital of markets will capital refinance for structure, to the rate continue

approximately cash approximately generate net For of XXXX, from to operations with we expect CapEx $XXX cash of flow million, million. $XXX

Year-end made is XXXX expected to the anticipated XXXX. of rating. the investments impacted in diversify year reducing to the our part are Full markets, revenue low priority debt capital flow times. the net strategic committed estimates required off to we to fall a by as we've our are Coming end working leverage growth investment support latter our maintaining and investment-grade to cash leverage two

Investor these aligned We've of as leverage a guidance recent action. sheet comments have rating that by provides to assumptions with rating modeling We've the reduction plans agencies, Relations expressed detail on purposes. fact the Poor's evidenced website our our Standard affirmative posted who & for support, additional summarizes section and

transition are MasTec landscape, at front the To forefront in opportunities today. is well us we the the excited energy positioned conclude, of of by and

offerings to strong market drive and value. in results our shareholder unmatched are ability of us end long-term continue service provide and operating Our to confidence breadth and diversification

XX,XXX thankful all them tools sacrifice behalf hard to their of are excel forward work we their to We for and to look MasTec, members our and of team with all resources roles. required and on of in the providing

turn the for Q&A. now operator I'll back the to call

Operator

start and Please Alex question go with we'll And Riley. Instructions] [Operator you. B. go ahead. with Thank our first ahead Rygiel off from

Alex Rygiel

morning, expanded on Congratulations the the thank guidance. quarter Good and for and Paul. solid Jose you

Jose Mas

morning, Thank Alex. you. Good

Alex Rygiel

Good morning.

can a and as your to largest weighted with your within relates becomes Clean segment bidding comment the As on backlog back-end Energy environment it visibility projections? year, you margin

Jose Mas

when the Alex. the based think, total the closed that And question, think I about great demand last a surprised on fact At services, we're the somewhat IEA we year. of our It's we business, acquisition right.

I think fire. the market on is

build. think the is they want the I to of amount expectation to our customers projects significantly of increase

truly be supply There's all panel the in would projects my for outer in in is what would I are activity chain amount XXXX think what dwarf that the see facing there, be we're the the versus challenge question would available, years. we're XXXX. projects that to to if no availability mind what going of have constructible if wait

to and every So of expecting very spent we on that well where sure win mean, a what and our with expect project in I we the we're is, done and model. up we're doing making how time buildable we've that coming in lot that of supply XXXX from is that, books with they're customers, XXXX analyzing kind our understanding we that really we dialogue projects have built that that's

doable of year. for that, $X counted The customers' billion issues the we demands, we levels, based balance the see if is but in the even XXXX, front range it for us far is think exceed all supply that reality chain guidance our we would on that what's of our the actually of

we that our high what level a of hit we ability actually very visibility have, is number. for So think, to

Alex Rygiel

of guidance XXX? the can that some impact flow than or year either be cash discuss of also you to then, can your And full Paul, lower variables higher

Paul Dimarco

business. driver for visibility I the to Yes, we've us. working into the we mean mean, think I got capital profitability Alex. of going is be the main

that DSOs need So going from biggest improve getting balance effectively, there. where it's that the to company across to That's our making then we're diligent sheet back range making we're down the managing us, and down driver to for that sure stated be to and the in working regard. really be they sure getting

Alex Rygiel

Thank helpful. Very you.

Jose Mas

Thanks, Alex.

Operator

Justin Robert next Hauke W. with go Our will come question from Please, ahead. Baird.

Justin Hauke

morning. Good Great.

So, I margins that came or before obviously light. there about there in the I just legacy talked the improve? in are Clean projects curious, and guess, little a Energy, IEA mean, that my I'm off question burn is are bit to in can just, that need projects complete you

came you Henkels know status And kind segment of that legacy the was those. just work I all that curious also McCoy And was where & of some that from in had civil that challenged. is I'm on

Jose Mas

Yes. Hi, a Justin, so couple think I things. of

First, when project was, to you some what later means and that think bit what was of absorptions. about to deciding issues relative think one available starts their the QX a activity, and projects being project in knowing customers to little pushed I supply overall start

With good. all said, that was revenue

came or was of there activity So accelerated that project the end towards other projects. either

there farms construction arrive time were IEA panels, think I expected panels by especially projects number haven’t. customer some started and to that projects that without at they this a on, of were solar started

we're So that through those different projects. managing complexities for other are

think there portion to a off. obviously is work needs the I that the do in renewables of civil the and business both itself

been related year. built that. think we've all into I the to our way changes modeling that back there's to think I last any significant don't

to leverage suppliers And customers business all because again, some get -- have know that they we're projects going customers that where, are a over the obviously based their built. on have their have year in that panels,

the into think second think that make see you're industry significant a improvement the the it improves as it in supply chain quarter. the continues increase And I for seeing to as we projects margins. actually think the to across So as demand I I going pretty constructability in and start service

Justin Hauke

sensitivity my how I if question And, of have enough. and the going terms higher? much cash interest sensitivity expense in Fair you that's you rates that higher you comment what's just guess, is here rate have on to through just Can your variable go the kind and lower-than-expected here Okay. second continue flow. of from

Paul Dimarco

Justin. Yes,

looking at about rate mean, is think I markets and I probably to mentioned $X.X the of as and billion So, billion we're bond in at about looking the ways as the -- other today comments impact I we're $X interest the fixed profile.

we'll that. So continue to evaluate

at account capital assessment environment And XX% perspective. So markets it from other fixed roughly of into at take that today. of forward-looking we as look is the and we'll our look path interest a rate probably forward

Justin Hauke

Right. Thank you.

Operator

Goldman ahead. comes Please question Mehta with Sachs. Neil Next from go

Neil Mehta

additional course segment And also margins could you. the to just over sometimes Jose, customer conversations, revenue I'd like area conversation to you're super the progression of have as the guidance you. I want reiterate about talk helpful how this the the year? where about And you thinking Thank and we shift less Communications Thank visibility. and here. both the if of to

Jose Mas

Sure.

RDOF. it, had the dollars growth the is business beginning of significant Significant lot So into performed starting has government relative a I a feels think, the come to what I of to years seen to the other where well with is all the Neil, that really the quarters think reality only year-over-year in we've legislation broadband. like now. nice right? going business we've I federal obviously, business dealt for in the just that now of And couple capital see we're past really where of think way have that any impacted

customers. in we're -- a have we constant dialogue our with So

lot a basis. go-forward of We that plans a customers have on massive have

the over I country the continued by competing going fiber overbuild think other. with see carriers each you're all different to

up And it. it's tremendous for not geared I We've great MasTec for for think industry, demand. the but just

gear there what to that for believe beginning of our I the starting continue we're really numbers We're And comfortable opportunity just with is to see again, to what XXXX. be. We going up. are truly the

Neil Mehta

of other show that affected do about some feel there And the bottlenecks are will initiatives really momentum potentially pacing have alleviated? then you that the when how those issues being talk about bottlenecks And some how like XG in up? and been have

Jose Mas

Sure.

where there's competitive need a speeds you they fast to for in today. a no think One, the wireless really think question market. allocating the that about their things. be dollars area There's bang how they get couple do in the of I buck the question really biggest carriers can are

much most had I stages think So I we're don't than gone XG expected. at deployment. of -- very has I early think XG lower still

I think customers amount infrastructure on money obviously of a wired wireless. have side of spent considerable the

continue going we're think still see that. I to to

and challenges I have think one in of small the power. fiber the been cells for need

that see we're think build increase going continues as to to an out I So there.

I best of still to So think the years yet come. wireless are

see across I think to we're substantial going But in over place the coming the the in we of I technology. more is into really be driving country. put increase And that think that's CapEx going the not on to deployment So continued today to think XG broadband wired side again we're fiber as years. infrastructure a business what's right? the and a bad on gets wireless see the ground investments

Neil Mehta

Thanks, guys.

Jose Mas

Thanks, Neil.

Operator

with Jamie go will Credit from Suisse. question come Please Next ahead. Cook

Jamie Cook

Nice morning. color well. the Good Hi. the I guidance appreciate on start do as and

guess that business guys you -- very it SunZia going distribution synergy win the that -- transmission business. a successful at I your of and the having of be tremendous sort have right across for both two renewable like larger So renewables questions. the you now transmission now acquisition done is you both you a that opportunity One look that you if business your you proves of have the yesterday business Jose, to distribution with have some if Quanta's look of larger given at strategy

right? big side on. comfort right to transmission that early both and the your of that could renewable terms both win winning now both not and jobs you of transformational on with acquisition projects So that given question acquisition right of the side will are bidding sort -- you a to and new you integrate size challenges on my do that you challenges level some is now leverage you but its in on we're still have the having the It's these are

level. So and first the your question comfort my opportunity that's

And on to capital your on of more gets comments focusing invested on me. sort second resonated with then question my back return

targets? So include return sort in as compensation? capital that Do deeper a of little on that a have on color go can invested you well. Just there? you more you little Will just

Jose Mas

Sure.

time when at first long our customers look of the acted So period on at they the the assets. think assets, at I they've piece renewable that look way in over the times transmission a we they look many

Sometimes those But are separately. those jobs bid for the interrelated. most were part projects

separately. would and bid bid really renewable portion transmission jobs renewable most they for So would the of the part the projects to contractors those be

what think see done I really the a you full saw go to and the us yesterday customers And well. able that from that and from the into product. is deals think customers Quanta sell you what opportunity receiving are those that I be turnkey we've to

wins will have have that. we our think and absolutely I opportunities our related to

that resonating I think of think coupled that's that's have that's a with renewable few think can we with well to big assets. positive I that. that development the the something people industry. business do relative the transmission size our And And I there's very

group and about us very we're puts pretty it that. small excited in So a

about focused dollars our our deals. team or think excuses really investments do of to When lot three capital really that the be coming relative around integrate course the our And and has able been Paul that. deals our a these takes make we the of I that's we'll how about over the part to to of on to I long-term made important years. yes, announce working our So, think over acquisitions own think that not an think comments and last of strategy. quarters It time we two number a

on working question an no we've that that organization managing feel focus lost some capital. we There's as

of and over it one expect definitely tied months. for years. in relative metrics. know of into and more peer strengths group. And pride led one we've all It the group categories We every this of goal to will think more this Paul's lot to is to it. be back peer improvements. that get our and see take to a We those the on single the on those will and that definitely is been something it, of Compensation again I I role. there talking across in I significant he's and make lead about hyper-focused coming the is refocus last more few organization

Jamie Cook

Thank you.

Jose Mas

Jamie. Thanks,

Operator

from Next with ahead. go Brent Please question D.A. Davidson. comes Thielman

Brent Thielman

completely Hey, Power obviously Jose, very we're market not headed. and where thanks. the we're backlog Good good Delivery morning. the kind maybe of of in that representative

to there's ultimately comments Maybe your way here? year? from love on through going of just as I'd So work we back. where you're seeing anything that get that But our that the if trajectory the holding backlog

Jose Mas

recurring mind I it's The acquisitions last of important made of First, in the today think we're that the two keep is in a maintenance-type doing bulk number work work. to we years. right

and really what So bulk it's not book today. that important. driven unit is everyday which business It's That's does of burn by large the projects.

I to arms fair everything think customers rationalize earn a opportunity it wage. make with to give we're get really acquired our an the that working the was around we business that sure that us important

So we're that. I doing think

I the the the X.X think two last of course focus years. years that's over been

we've think made I great improvements.

the the groups at those quite frankly lot but not look you If of just than margin that dispersion business, improvements is margin each think has. amongst a ever it business, in I the tighter performing

improvement, work. lot the which about think about project has tremendous important. opportunities work we've a been started but there, think feel but we on for We making larger that the there, one made We good quarter call on fourth critically really based gearing I for large there's on a the we investments recurring-type we're project. is some lot think about talked our We're it. we of differences progress still there's the really where it

win expect others. We to

part into what's today. our part definitely it's numbers the that's of but I of mix rolled necessarily So think not

think see I we've recurring layering what bulk that we've and course work bulk the of start on had the over maintenance of year or think focused I the I done project two. has think the next the the been the work that success roll type you'll in and of some on really we'll of

Brent Thielman

that. appreciate on And I in guess Okay. Clean that the business overshadow momentum the Energy then some obviously I things you the just do renewables business. of other in

a IEA. now the You large do fairly have combination business of with infrastructure

monetized? be company bookings, Just term you or Jose, that And you I that curious, contribution what the where been Obviously, an long have is think business business a helpful. be see be has would of core to headed? could Act the Infrastructure the it

Jose Mas

good It's question. a

so the group's I performance. in think performance been overall our that far has better civil than

very business. actually the of we're that pleased with So direction

Our backlog been there strong. has growth extremely

prospects tremendous that have going We business forward. in

all like that one that the got there. It's we've but still business I a we're in toe feel still said we've learning. we think today, just what along feel water we it's our sizable

is -- think better today be initial I business we the my reaction think than I would the expected. performing dramatically

I think more than expected. it's got we upside dramatic

much to actually date the it really business still that going jury we're think be put I XXXX. and investment have very performing to we how behind that is ultimately out. that solid expect where whether willing well to a to goes? But and is Now

Brent Thielman

you. Thank

Operator

Andy Kaplowitz Please Our will Citigroup. with next question from come go ahead.

Andy Kaplowitz

morning. Hey, good

Jose Mas

Good Morning Andy.

Andy Kaplowitz

is should Jose think considerably the you variability the I last one answered between by really of And next variability quarter mentioned performance questions E&C and of diminish still significant separator first MasTec's a the your you year's peers. quarter. you

So, can a you that with talk variability can that you business. mitigate the conviction do that seasonal level about understanding you have your

it? mitigate to doing you are what So

Jose Mas

is at business it's think I also each a in where point Well, time.

back the year. the today, right? the versus So, almost over the Gas especially that to Gas we go had because which Oil years years business just comps in did $XXX $XXX our difficult in first XXXX, been million year have million the of early strength two the was last and ago, of few Oil very if us, quarter and for So, early

start third When way had were to one the we fact the that that into starting XXXX projects was we the were challenges in out of knew quarter that renewable the second quarter. going renewable a about pushed into meaningful coming we projects still in forward going look

But is right of this going the half where to really comp kind year XXXX it be in look quite of renewable actually supply that XXXX fixed versus was easy. year's chain year first strong the quarter think in when next activity is project when at we we first making

us I in pipeline same in are historical the pipeline And and lows. This quarter right? happening -- for is year's first business. first off historical thing business, is year's the think lows the We're quarter last this

with projects to year's. better and on is I think be that next coming going year's in we've quarter the than first this got that considerably queue

when of year's versus take a So, in to amount that look year, revenue the significant this away I in particular it's with those you first appreciation next think going at seasonality. businesses two quarter significant

historically QX for hadn't we that last we So, the that. losses years posted in done two

of it and do businesses that I businesses the think think those away and has those two I a with variability goes in lot to XXXX.

Andy Kaplowitz

you Thanks then on just maybe Communications, but questions got And Jose. that of couple for a following up.

continue You that in book business. to backlog

that in some than maybe you number more So, view? about about? toward much that $X talk your their Has continue talking trends? of to it be your billion in anything of in sort so customers you've is bullish about your of CapEx changed are talked conviction why And terms growth level there maybe near-term continued

Jose Mas

what number next not business build is years in significantly we're that plans what What We're but right? mentioning We're we a not couple the middle of over and not So, in very XXXX. but feel XXXX about we've quite in frankly middle seeing them. of expanding about second means of their in the publicly we're got large the have that of really of awards and We're it customers' negotiations. plans, terms of just customers names, the good a half for tremendous the networks. talking XXXX means for program

that's to them. think going up ramp I with only discussions in And

see of more even dollars available, we're As think going I become to that. federal more

I So, incredibly that again, business think is healthy.

starting the I that business ultimately beginning is to to think just we're going what see become. of

players. see to to continue We in that the market new core break into addition players existing

that think that way We're growth We to while in taking We in I to so So, growth again, our think that to margin that's trying space us. have front far. bullish to growth. appreciation, going have continue that space. solid We're think we a appropriately. continued we're we're where manage into just we're into can is trying to we've growing. manage And executed really of not everything

Andy Kaplowitz

it Appreciate Jose.

Jose Mas

Thanks Andy.

Operator

Next question will ahead. come Davis. from with go Please Adam Thalhimer Thompson

Adam Thalhimer

Hey good morning guys.

Jose Mas

Adam. morning Good

Adam Thalhimer

us would the customers insight of at construction insight that are any your the you they Energy conversations into on years? you the all And few customers? give next your side, with need into Hey for your give Jose, some can say us Clean getting resources can some you concerned about

Jose Mas

the of that somewhat customers that's because capability going amount concerned I dwarf understand amount is delivering our demand be in of there, the if it. out think should they my that's of to out market work the the very be, And are the concerned. aren't to industry's mind customers going there,

think a why, time, -- been how we've long that's for matters. I we talking and about scale scale

have resources, the resources, huge a think huge to more us. as commit trying importantly, I out long-term And continue a to we the customers to and in up in It's to resources. it's and to today long-term I that market. one lock XXXX. differentiator think committing a of yes, shift trying it's demonstrate that plays are number for And we'll XXXX XXXX

I we're think critical to to is that's until significant of really going not the IRA the of benefits one XXXX. things really about see think

So, why accomplish, advantage going and felt take we're impact those what I be to numbers out out to significant. long be the And the IRA it's but in for industry of to XXXX and pretty is hopefully the And keep that rates think we you perspective growth still kind in positioning need later quarter. majority this kind is have to beyond. a model healthy of put think an continue it's of and invest reality XXXX is waiting to is should you be going ourselves it's in to what really and when to going we business impact the of all for time. in guidance coming the But bonus or is, the XXXX, late going

Adam Thalhimer

when energy you line going opportunities, that does when really double-digits feel start double-digits of those up? so be in like clean a margins you things light where should talk stretch or to to these And about is

Jose Mas

a stretch and it's we from get today where Well, that. are we

over approach couple to the -- of think course we said what is next we've years. the So of there's an double-digits opportunity

our drive margins all in we think don't of But industry out obviously to and out trends should without put think business. there we much the goals favor achieved either lofty the I are get I having that.

for mid is our goal to this to high-Xs. get So, year

think is approaching here we're lot to the for the than goal that larger, players goal not ultimately to the here We're question to ends coming we're get investments fundamentals including being we saying. that no we can do want and end to start -- realistic but And Our double-digits faster and all making. to up I don't hopefully the hype And in market to can allow the give to us of the years hopefully, story. a industry better we're a are that take returns accomplish. going there's what the view as we that the on

Adam Thalhimer

Jose. Thanks

Jose Mas

Adam. Thanks

Operator

Marc Cowen. from ahead. TD Please Bianchi comes with question go Next

Marc Bianchi

the the Hey. that just have Thank $XXX disposals. for about wanted CapEx you. to of start clarifying I you something net here guidance million by

just $XX So if page would I to confirm proceeds, and CapEx million number million look at that been want the have then million we're quarter. same quarter, $XX $XX so net first there. of for of the on I the

Jose Mas

Yes, that's correct, Marc.

Marc Bianchi

Great. Okay. Thanks.

the know well. million I M&A. guess how low of the is, on standards look has if basis become by at a the question historical as is an So grown annual then business finance kind I large with piece considering I the $XXX take has that lease

just CapEx asset maybe of time, sort difference at it larger basis should business? to finance aggregation part a on as is longer-term the the lease of over be leases of the to the look holistically what in that's a maybe that going CapEx. But finance So and run piece constitute proceeds you

Jose Mas

as depreciation higher the values of group. peer of at Marc, it's our and if good than high in us I at entirety and to cost a most our you anybody. its -- depreciation current it's original we our look as look PP&E even you to from you question, relative MasTec group, right? a When PP&E when our peer run think compare probably revenue, perspective,

fleet. great a I place think our relative in we're So to

we've financials. what think fleet want to our to of into plays our got of a flexibility do with to I relative relative lot we that how kind

of made it. to ourselves to We've we've said that we're last So the years couple in made, in. we've investments over prepare significant be the position

high quite depreciation and start we or it's think relative revenue all that of then basis utilizations the peer CapEx time books. to us a can our so the and a frankly work enjoying equipment to that mining balance going put amount on relative that. the to and company I group of on But with I get through make think our determinations that's there the fleet to isn't it in size of

in us So better bit line rationalize with little we we other bring that think actually peers. need a to more and

Marc Bianchi

Thanks. year good XX if quarter first assume for or of for of the number in should a year remainder to the Paul just finance assume Okay. what the maybe on there? we And the number could you the is guidance any lease

Paul Dimarco

number. reasonable Yes, that's a

year. said million the we've about think the full for expectation before finance the I leases is $XXX on

Marc Bianchi

much. you I’ll Thank turn it so Super. back.

Paul Dimarco

Thanks.

Operator

ahead. Next Jaroslawicz question will come with from go Please Avi UBS.

Avi Jaroslawicz

Hey, everyone. on morning, Fisher. for Steve Avi good

teens. – we of got so you for to potential low to we double-digit margins when think Delivery, going Just Power the near-term good the when morning,

other from Just at of some of how improvements? absorption would the be were expansion higher that margin about talking mix versus versus operational much project revenue levels you

Jose Mas

it's operate for create one the But that still of may range different, improvement we've I Well I that since clusters ever to the opportunities business. margins. think necessarily think under a in especially we lot all about of overly entity. of positive much different points think wide one a business we actually it's it's We've dispersion, was made that geographical we it's not earlier operate amongst we – right? think while at see where businesses. we – don't we've When acquired units. of those margin acquisitions, because the I tighter And as it. first, seem talked shows been and can than right? that But tried We that

six So tells while need of as anywhere margins XX. aren't is to improvement. tremendous a dispersed, And end on number still opportunities that areas fix what run continue from to low that those they to there's the us

and that that change costs your of portion really only satisfied the made. day. absorb fixed that's Again, although, of I the think added some faster. we've to and grow this underperforming think of project in progress we're by markets So with revenues ability improvements a do the And from I comes to mix

combination So I think a it's all. of

I rely don't need margin think projects new on for only we to expansion.

I think of some available base opportunities. then and both within there's newer to obviously with margin us our the business expansion

Avi Jaroslawicz

some and as of that. terms fuels the the potential catalysts. you being mentioned Gas and near-term Oil Appreciate of the so opportunities in Okay. And for capture then segment, carbon

of some have. of if kind What market? see scale you you the So seeing might that could color of any that Just the in projects? developing the starting time line, wondering the of who's these to what about would projects maybe you're part talk you're

Jose Mas

starts over Well, still We've discussions XXXX We're there's I hopeful, very we're activity been I in in on fronts. XXXX. lot think it think But a lot one of quarters coming hear a more more talking projects players. start of our when about is that. I of will the -- number and start. in a of activity and that assurances talk you're think we hesitations lot to publicly seeing us multiple those about a having projects with those just, strong prolonged going

Avi Jaroslawicz

Understood. Thank you.

Jose Mas

Thanks.

Operator

Our last go Sean ahead. from question Please KeyBanc. will with Eastman come

Sean Eastman

message to rural so the largely broadband trying just me in for just bridge lens the Thanks number, back just wanted here. the the potential, of are kind through of that the the I you Maybe exactly there? it to guys me to it's outlook. bridges or guys. to to come understand near-term Communications us really communicate I $X that that Hi understand help fitting opportunity is what billion

Jose Mas

now. reality we I bridge kind the we of ago is billion small to a we just a while mean, put Well, that, I that would argue kind is, $XX as that of achieve give how revenue. out to of pathway performed

in not, XX% that's comps imagination year do revenue any is The is to we growth. So by stretch $X.X $X get billion of that to just aggressive. billion reality this and

probably anymore. So right a midterm the that's goal probably us It's larger. lot for not

all type -- at to roughly entire of The come right? With business business don't, we from of a that. rate should actually that growth be the that said, close lifting components naturally should

So target goal. that as probably out I we're a think, a very laying again, it's there conservative

Sean Eastman

XXXX high you as XXXX transition the a maybe year And were how MasTec? you. year -- would characterize kind Street through we for Got Okay. framing last just to level closing a in want one. If of

Jose Mas

radically we markets. the that and we transformative a of look was XXXX size different the the think as the I year for business feel the changed MasTec Well, and were in

earnings somewhat a is XXXX of think year. to I a be but still it's of an more year mind my -- transition transition in going

the So MasTec further right power in earnings give the look seeing in quarter second start potential augmented coming that to long-term. what business outlook people of through QX then and the I for and the think going and is the is the you'll QX

will what show can think on a to While somewhat do think this going And will a business basis the I XXXX. of to MasTec half than in color a give the full that great XXXX second one radically I that you it of today. seasonal year see business different performance be still is from quarter-to-quarter

Sean Eastman

Thanks leave it I'll Jose. there.

Jose Mas

Sean. All right. Thanks,

Operator

or the call conclude further for closing would does no over in Mas, That remarks. back to additional for any Jose are I queue. turn There like now the our session today. questions question-and-answer to

Jose Mas

Just for and And quarter interest participating to call. everybody want second forward look to our updating on we their Thank today. everybody soon. you. thank Talk

Operator

today's Thank your does for With call. that, participation. conclude that you

You may now disconnect.

MasTec (MTZ) 5 May 232023 Q1 Earnings call transcript