Welcome to MasTec's First Quarter 2021 Earnings Conference Call, initially broadcast on Friday, May 7, 2021. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc.

Thanks, Lauren. Good morning everyone and welcome to MasTec's first quarter call. The following statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. With these communications, we may make certain statements that are forward-looking, such as statements regarding MasTec's future results, plans, and anticipated trends in the industry in which we operate. These forward-looking statements are the company's expectations on the day of initial broadcast of this conference call and the company does not undertake to update these expectations based on subsequent events or knowledge. Various uncertainties, risks, and assumptions are detailed in our press releases and filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in these communications. In today's remarks by management, we will be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. In addition, we may use certain non-GAAP financial measures on this conference call. A reconciliation of the non-GAAP financial measures not reconciled in these comments to the most comparable GAAP measure can be found in our earnings press release, our 10-Q posted in the PowerPoint presentation located in the Investors and News section of our website at mastec.com. With us today, we have Jose Mas, our CEO; and George Pita, our Executive Vice President and CFO. The format of the call will include opening remarks and analysis by Jose, followed by a financial review from George. These discussions will be followed by a Q&A period. We expect the call to last about 60 minutes. We had another beat-and-raise quarter and have a lot of important things to talk about today. So, I'll now turn it over to Jose. Jose.

Thanks Marc. Good morning and welcome to MasTec's 2021 first quarter call. Today, I'll be reviewing our first quarter results as well as providing my outlook for the markets we serve. I'd like to thank you for joining us today and I hope and pray that you and your loved ones are healthy and safe. I'd like to start today by highlighting how proud I am of the men and women of MasTec. Their sacrifices, resilience, creativity, and commitment during this pandemic have been inspiring. Millions of families throughout the US relied on the power, communications, entertainment, and other services we help our customers provide. Our team has again safely delivered. And I'd like to thank the men and women of MasTec for their sacrifices and their hard work. Before getting to the quarterly results, this week we announced the acquisition of INTREN. INTREN is one of the largest private electrical utility contractors in the United States. We believe the changes in electrical distribution needs led by grid modernizations and hardening coupled with the transition toward increased electrical vehicle usage will have an enormous impact on the last mile distribution of electricity. With over 2000 team members, INTREN significantly expands our electric distribution and transmission capabilities and footprint. With a strong presence in both the Midwest and the West Coast areas, traditionally underserved by MasTec, this combination will enhance INTREN's capabilities as it continues to expand and allows MasTec to sell its full suite of services including renewable power generation, substation construction, and gas distribution to a relatively new customer base. With trailing 12-month revenues of approximately $550 million and strong opportunities for future growth, we are very excited about our future opportunities. The purchase price of approximately $420 million represents a purchase price multiple of roughly seven times, without taking into account tax benefits that on a net present value basis represent over a full multiple turn. We believe based on their prospects, the potential synergies, and the cross-sell opportunities that while it's on the higher end of historical multiples for MasTec, we got very good value. On our year-end call, we announced two other acquisitions that closed during the first quarter. In addition to INTREN, we've acquired two other companies during the second quarter. The first, Phoenix Industrial, is a heavy industrial contractor that enhances our concrete, piping, and electrical capabilities with a strong West Coast presence. The other is Byers Engineering, one of the largest outside plant telecommunication engineering firms in the country. With approximately 900 employees across 31 states, Byers brings new capabilities to MasTec that we've typically outsourced. With significant investments in fiber construction supported by both private and public investments, including the Rural Digital Opportunity Fund, Smart City Funds, the 5G fund for rural America, and potential further telecom infrastructure spend, we expect engineering services to be a critical path to success. Being able to control schedule and resources will not only allow us to enjoy the engineering growth opportunities, but it will also allow us to bundle construction services along with engineering and hopefully significantly expand our market share. On behalf of our team members, Board of Directors, and shareholders, I'd like to welcome all of these new team members to the MasTec family. Now some first quarter highlights. Revenue for the quarter was $1,775,000,000, adjusted EBITDA was $204 million, adjusted earnings per share was $1.10, cash flow from operations was $257 million, and backlog at quarter end was $7.9 billion. In summary, we had another excellent quarter and are on track for another great year. Over the last few quarters, we've talked about our strategic long-term goals and our future business mix. Considering the pandemic challenges on the oil and gas industries, we laid out a path to achieving an annual revenue target of $10 billion with double-digit margins. One of our key highlights of 2020 was our ability to grow non-oil and gas revenues and EBITDA. Our guidance that we provided today, including our most recent acquisition, reflects continued diversification as we expect our non-oil and gas business to grow approximately 27% in revenues and over 40% in EBITDA in 2021, with significant acceleration in the second half of 2021. We are encouraged by the size and scale of the growth opportunities in front of us. Now I'd like to cover some industry specifics. Our communication revenue for the quarter was $568 million and margins improved 70 basis points year-over-year. Highlights for the quarter include our growth with T-Mobile, whose revenues increased fourfold over last year's first quarter and for the first time broke into our top 10 customer list. Comcast revenues were also very strong in the quarter, increasing 61% from last year's first quarter. That growth was offset with expected declines in both our Verizon and AT&T business, which were both down approximately 35%. Both AT&T and Verizon were vocal about the importance of the 5G spectrum auctions in their business. We expect revenues for these two customers, especially AT&T to accelerate in the second half of the year with significant growth opportunities heading into 2022. We're also very excited with recent developments around the planned increase investments in the telecommunications wireline networks. The Rural Digital Opportunity Fund or RDOF, which is a follow-up to the Connect America Fund, will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in underserved rural areas. Additionally, in October of 2020, the FCC established the 5G fund for rural America which will provide up to an additional $9 billion in funding over the next decade to bring 5G wireless broadband connectivity to rural America. In addition, the early drafts of the infrastructure bill included additional direct investments in enhancing telecommunications networks, including 5G. I believe we are entering one of the most exciting periods in the history of telecommunications and that the deployment of 5G wireless technologies and the associated networks is truly a game changer for the consumer, our customers, and for MasTec. Moving to our Electrical Transmission segment, revenue was $134 million versus $128 million in last year's first quarter. We have now begun one of the larger projects we had been previously awarded and expect a much better margin profile for the balance of 2021. We also expect backlog to improve, as we've been awarded new MSA agreements and are in late stages of negotiations on a number of larger projects. We believe we are well positioned for 2021 and beyond as the drivers for this segment remain intact, which include aging infrastructure, reliability, renewable integration, and system hardening. Moving to our oil and gas pipeline segment, revenue was $726 million. We had a strong start to the year as we were working on projects that had been delayed in 2020. Based on our current backlog levels, we expect a strong 2021 and our guidance assumes some project activity will be pushed into 2022 because of regulatory delays. Last year, we forecasted a longer-term recurring revenue target of $1.5 billion to $2 billion a year assuming a continued depressed oil and gas market. As a reminder, over the last 3 years, only 6% of our revenues have come from oil pipelines, with the majority of our business being tied to natural gas. We continue to see strong demand for integrity services, gas distribution, and line replacement activity. We are focused on continuing to diversify our revenues in this segment. Moving to our clean energy and infrastructure segment, revenue was $350 million for the first quarter versus $286 million in the prior year, a 22% year-over-year increase. We expect full year's revenues to approximate $2.1 billion, a 37% increase over 2020. Backlog was up sequentially by nearly $360 million and more importantly, subsequent to quarter end, we've already been awarded approximately $550 million of new projects. While backlog was already at record levels in Q1 in this segment, we expect backlog to continue to increase over the coming quarters. We have made significant investments in this segment to profitably grow our business through organic opportunities in addition to our smaller tuck-in acquisitions. We continue to add talent and resources to meet the increasing demand for our services. We added nearly 2000 new team members in this segment from the end of the first quarter in 2020 to the end of the first quarter in 2021. With the new administration and a clear focus on clean energy, we have seen a significant increase in planned clean energy investments from both traditional customers as well as oil and gas companies that are trying to improve their carbon footprint. As a leading clean energy contractor and partner, MasTec is uniquely positioned to benefit from these investments. I'd like to highlight the diversification within our clean energy and infrastructure segment. While we got our start in wind, today we are capable of meeting any of our customers' demands. We are actively working on base load gas generation projects, renewable biofuel projects, and are seeing significant demand as we continue to quickly expand our solar capabilities and footprint. To recap, we had an excellent first quarter and are very excited about the opportunities in the markets we serve. We are encouraged by the recent developments related to an infrastructure bill. With a significant presence in the telecommunications market, which includes significant 5G built-out capabilities coupled with our exposure to the clean energy market including wind, solar, biofuels, hydrogen and storage, and our recent expansion into heavy infrastructure including Road and Heavy Civil, we feel we are uniquely positioned to benefit from this anticipated infrastructure spend. We are confident we can hit our growth targets primarily through private investments in infrastructure, but do recognize the potential acceleration in our markets with significant government spending. I'd like to again congratulate and thank the men and women of MasTec for their fantastic performance. I am honored and privileged to lead such a great group. The men and women of MasTec are committed to the values of safety, environmental stewardship, integrity, honesty, and in providing our customers with a great quality project at the best value. These traits have been recognized by our customers. And it's because of our people's great work that we've been able to deliver these outstanding financial results in a challenging environment and position ourselves for continued growth and success. I'll now turn the call over to George for our financial review.

Thanks, Jose and good morning everyone. Today, I'll cover our first quarter financial results and our updated annual 2021 guidance expectation inclusive of the recently announced INTREN acquisition. As Marc indicated at the beginning of the call, our discussion of financial results and guidance will include non-GAAP adjusted earnings and adjusted EBITDA. Reconciliation and details of non-GAAP measures can be found in our press release on our website or in our SEC filings. In summary, we had strong first quarter results with record revenue for approximately $1.8 billion, a 25% increase over last year; record adjusted EBITDA of approximately $204 million, a 73% increase over last year; and record cash flow from operations of approximately $257 million, a 27% increase over last year. First quarter results exceeded our expectations with revenue exceeding expectations by approximately $125 million, adjusted EBITDA exceeding our expectations by approximately $32 million, and adjusted diluted earnings per share exceeding expectations by $0.30. We expect that $70 million of revenue and $20 million in adjusted EBITDA related to our first quarter beat represents an increase to our annual 2021 view with the balance representing accelerated quarterly project timing within 2021. We continued our strong cash flow performance during the first quarter, reducing our net debt levels by approximately $65 million to approximately $815 million, despite funding approximately $90 million for acquisitions during the quarter. This equates to a book leverage ratio of less than one-time and we ended the first quarter with a record level of liquidity of approximately $1.7 billion. This balance sheet position coupled with continued strong cash flow performance allowed us to easily fund the second quarter 2021 INTREN acquisition while maintaining ample liquidity and comfortable leverage metrics. Now, I will cover some detail regarding our first quarter segment results and guidance expectations for the balance of 2021. First quarter communication segment performed generally in line with our expectations, which incorporated the expected impact of lower wireless services due to the timing of recent C-band spectrum auctions. As Jose already mentioned, recently awarded C-band spectrum is expected to begin deployment in the latter part of 2021 and is expected to drive significant revenue opportunities for multiple years. First quarter communication segment adjusted EBITDA margin rate was 8.6% of revenue, a 70 basis point improvement compared to the same period last year. Our annual 2021 communication segment expectation is that revenue will approximate $2.7 billion to $2.8 billion with annual 2021 adjusted EBITDA margin rate improving 90 basis points to 110 basis points over 2020 levels. This includes the expectation that both revenue and adjusted EBITDA margin rate improvement will accelerate during the second half of 2021 as C-band spectrum deployment initiates. First quarter clean energy and infrastructure segment or clean energy performed generally as expected during a seasonally slow quarterly revenue period. Clean energy segment revenue was $350 million and adjusted EBITDA was approximately $11 million or 3.1% of revenue. Looking forward towards the balance of 2021, we expect continuation of a very active bidding market in both the clean energy and infrastructure markets. We continue to expect annual 2021 clean energy segment revenue will grow in the high 30% range and approach $2.1 billion with annual 2021 adjusted EBITDA margin rate improvement in the 70 basis points to 110 basis point improvement over the prior year. First quarter oil and gas segment revenue exceeded our expectations with revenue at $726 million and adjusted EBITDA at $168 million. As expected, we initiated activity on selective large projects during the quarter and we exceeded our estimated production. As I previously mentioned, a portion of this first quarter beat represents an expected improvement to annual 2021 results, while another portion represents an acceleration of expected project activity within the year. We currently expect annual 2021 oil and gas segment revenue will range between $2.4 billion to $2.5 billion with the continued expectation that annual 2021 adjusted EBITDA margin rate for this segment will be in the high teens range. This expectation includes the assumption that selected large project activity over the last half of 2021 will move into 2022 due to permitting approval delays, and thus second half 2021 oil and gas segment revenue is expected to approximate second half 2020 levels with a greater level of project activity expected during the third quarter and a lesser level during the fourth quarter due to the expected timing of project winter breakup activity. First quarter electrical transmission segment generally performed as expected with revenue at $134 million and adjusted EBITDA margin rate at 2.7%, reflecting a seasonally slow quarterly revenue period coupled with the continued impact of project inefficiencies discussed last quarter as we move towards project completion. Looking forward to the balance of 2021, including the expected partial year operations of the INTREN acquisition, we expect annual 2021 revenue for the electrical transmission segment to approximate $950 million and annual 2021 adjusted EBITDA margin rate to approximate 7.5% of revenue. And this guidance includes approximately $330 million of revenue at a double-digit adjusted EBITDA margin rate for the recent acquisition of INTREN, which became effective in May 2021. Now, I'll discuss a summary of our top 10 largest customers for the first quarter period as a percentage of revenue, Enbridge revenue was approximately 25% comprised of Canadian station and other project activity as well as a large project initiated during the first quarter that will resume in the latter part of the second quarter once road frost bans are lifted. AT&T revenue derived from wireless and wireline fiber services was approximately 8% and install-to-the-home services was approximately 3%. On a combined basis, these three separate service offerings totaled approximately 11% of our total revenue. As previously indicated, this revenue level includes lower wireless services revenue due to the temporary impact of the C-band spectrum auction. Also as a reminder, it is important to note that these offerings while falling under one AT&T corporate umbrella are managed and budgeted independently within that organization giving us diversification within that corporate universe. NextEra Energy was 7%; WhiteWater Midstream was 6%; Comcast was 5%; Verizon and Energy Transfer were each at 3%; Duke Energy, T-Mobile, and Pattern Energy were each at 2% of revenue. Individual construction projects comprise 72% of our first quarter revenue with master service agreements comprising 28%. With the combination of expected resurgence in wireless MSA work coupled with the INTREN acquisition whose revenue was virtually all MSA driven, future MSA revenue is expected to increase as a percentage of our total revenue highlighting an increase of MasTec revenue expected to be derived on a recurring basis. At March 31, 2021, our backlog was approximately $7.9 million, essentially flat to $7.9 billion as of year-end 2020. For the sake of clarity, reported first quarter backlog does not include any amounts for the recently announced INTREN acquisition. Lastly, as we've indicated for years, backlog can be lumpy as large projects burn off each quarter and new large contract awards only come into backlog at a single point in time. Now, I will discuss our cash flow, liquidity, working capital usage, and capital investments. During the first quarter, we generated record level $257 million in cash flow from operations and ended the quarter with net debt of $815 million which equates to a book leverage ratio of 0.9 times adjusted EBITDA. We ended the first quarter with DSOs at 80 just below our expected DSO range in the mid to high 80s. We are proud of our continued strong cash flow from operations and believe this performance highlights the strength, resiliency, and consistency of MasTec's cash flow profile. We ended the first quarter with $512 million in cash on hand as well as record liquidity defined as cash plus borrowing availability of approximately $1.7 billion. During the first quarter, we reduced our net debt by $64 million despite approximately $90 million in first quarter acquisition funding. During the second quarter of 2021, given the working capital associated with an expected $320 million increase in sequential quarterly revenue coupled with the cash outflow for the INTREN acquisition, we expect that our leverage will temporarily increase during the quarter, while still maintaining substantial liquidity of approximately $1 billion and comfortable leverage metrics within our target range. As we look forward past the second quarter to the balance of 2021, we expect continued strong cash flow generation, despite the working capital associated with our planned 2021 revenue growth. With net debt at year-end expected to reduce from second quarter levels and approximate $1.1 billion, leaving us with ample liquidity and an expected book leverage ratio slightly over one times adjusted EBITDA. In summary, our long-term capital structure is extremely solid with low interest rates, no significant near-term maturities, and ample liquidity. This combination gives us full flexibility to take advantage of any potential growth opportunities to maximize shareholder value. We are pleased to significantly increase our annual 2021 guidance. We now project annual 2021 revenue of $8.2 billion with adjusted EBITDA of $930 million or 11.3% of revenue and adjusted diluted earnings of $5.40 per share. This represents a $400 million increase in revenue guidance, a $55 million increase in adjusted EBITDA, and a $0.40 increase in adjusted diluted earnings per share comprised of the combination of our strong first quarter performance and the benefit of the INTREN acquisition. As we have previously provided some color as to our annual 2021 segment expectations, I will briefly cover other guidance expectations. We anticipate lower levels of net cash CapEx spending in 2021 at approximately $100 million with an additional $180 million to $200 million to be incurred under finance leases and this expectation is inclusive of expected capital additions for first and second quarter acquisitions. As we have previously indicated as our end-market operations shift with non-oil and gas segments becoming a larger portion of our overall revenue, our capital spending profile should reduce as the oil and gas segment has historically required the largest level of capital investment. We continue to expect annual 2021 interest expense levels to approximate $58 million with this level including over $500 million in first and second quarter 2021 M&A activity. We expect to maintain a strong cash flow profile with annual 2021 free cash flow once again exceeding adjusted net income, despite the working capital requirements related to our projected $1.9 billion increase in annual 2021 revenue. For modeling purposes, our estimate for 2021 share count continues at $74 million shares. We expect annual 2021 depreciation expense to approximate 4.1% of revenue inclusive of first and second quarter M&A activity. As we have previously indicated, this expectation incorporates an increased level of 2021 oil and gas segment depreciation expense when compared to 2020 as we are utilizing conservative depreciation lives and salvage values on previous capital additions to protect against potential market uncertainties. Given these trends, we anticipate that next year annual 2022 depreciation expense as a percentage of revenue will decrease when compared to 2021 levels and approximate 3.5% of revenue. We expect annual 2021 corporate segment adjusted EBITDA to be a net cost of approximately 1% of overall revenue. Lastly, we expect that annual 2021 adjusted income tax rate will approximate 25%. Our second quarter revenue expectation is $2.1 billion with adjusted EBITDA of $229 million or 10.9% of revenue and earnings guidance at $1.25 per adjusted diluted share. In terms of some additional color on the expected timing of second half 2021 revenue performance, we expect third quarter consolidated revenue growth in the mid to high 30% range over the prior year with third quarter 2021 consolidated adjusted EBITDA margin rate approximating 12% of revenue. That concludes our remarks. Now, I will turn the call back to the operator for questions and answers.

And we'll take our first question from Alex Rygiel with B. Riley.

Jose, the cash flow was strong, the balance sheet continues to have tons of capacity on it. Can you talk a little bit more about your M&A pipeline and which segments of your business you're focused on there?

Yes, look, we talked about it going into last year. As the year progressed, we were really excited about what we were seeing on the M&A front for lots of reasons. Last year got complicated with COVID. I think you're seeing a number of deals clear early in 2021 based on the activity we had in '20. The pipeline is incredibly strong; there are a number of very active targets that we're in the middle of negotiations with, so I'm very excited about what's happening. We laid out the most important segments for us at the end of '20, and that hasn't really changed. So we're really focused on everything that's clean energy related, everything that's electric grid related, and then to a lesser extent Telecom because we think we've got a great presence, followed by infrastructure. So those are the four areas that we're really focused on. Great opportunities out there. I think that one of the things that we're really focused on is how we meet all of our customers' demand and the growth that's coming and how we best position ourselves to execute on that. That's what we've been hyper-focused on. A lot of that will be organic, but there will definitely be some acquisition opportunities to make sure we're ready for what's coming.

And to follow up, growth in clean energy has been real strong. Can you talk about some of the larger projects? I know you mentioned a few earlier in your prepared remarks, but can you give a little bit deeper into that segment and exactly what you're working on there and talk a little bit more about the prospects?

Sure. So a couple of areas. First, when you think about the traditional renewable type projects that we've done, whether it's wind or solar, those projects are getting a lot bigger. Our customers are building larger farms which are a lot more expensive, require more people and more assets on the projects. The growth in solar that we're seeing is spectacular and I think it's going to last for a long time. The plans for two to three years out are pretty phenomenal. So the truth is that we're in a period of significant ramp. We're hiring a lot of people; we're bringing a lot of people on board; and we're really investing in the business to take advantage of what we think is going to be a very, very strong multi-year opportunity. It's costing us money today to do it, it's costing us margins today to do it. What you see in our clean energy business from a revenue perspective is nowhere near where we ultimately think we can achieve, and that's why we're making these investments. I think we'll see the margins of the business really begin to improve in the second half. We have significant ramp in that business throughout the year. Our second quarter will probably be 50% bigger than our first quarter from a revenue perspective. Our second half of the year is probably going to be 40% bigger than our first half of the year. So we're just going through unbelievable growth in that business today. The opportunities are fantastic and we're going to continue to invest to take advantage of them. Project size is getting bigger. I think it's very manageable. And again, I think customers are looking for key partners that they can trust and I think we're definitely one of them.

Our next question comes from Steven Fisher with UBS.

Good morning. I wanted to follow up on the clean energy discussion. It's great to see the strong prospects starting to materialize. I'm curious how you assess the risk associated with these projects. With so many different opportunities available, how do you differentiate a worthwhile project from one that comes with excessive risk?

I think one of the strengths of MasTec for a long time has been managing risk on projects. I think that's really set us apart. If you look at our performance over the course of the last five years for sure, we've done a great job of mitigating risk, of understanding contract structures, of really putting ourselves in a position to succeed and I think you've seen that based on the strength of our earnings and our ability to forecast our business over a long period of time, which I think we've been exceptionally good at. One of the strengths in our business, quite frankly, is the customer base. If you look at the blue chip customers that we're working for today, we're working for some of the biggest utilities in the country, we're supporting them in their generation endeavors of all kinds, which I think is just a growing market that's changing and it's very different than it's ever been. So I think based on the sophistication of our customers and based on our ability to mitigate risk, I think we're in great shape. We're not chasing new developers, we're not chasing projects that need funding. We're working with blue chip customers that have been doing this for a long time that understand the business that want us as their partner to be successful and I think it's a perfect match.

Great. And then just on the telecom side, what does that AT&T in particular and the Verizon acceleration in the second half depend upon? I mean, it sounds like C-band is really the driver, but what then is that dependent on, how are they thinking about those decisions there on spending, and how confident can we be that this doesn't push out further into 2022?

We're highly confident. I think if you see what's happened, those two customers in particular have talked a lot about the spectrum auctions at the end of the year. We saw a significant decline in their business because of it. They definitely shifted strategy, waited for those auctions to complete. They have now completed. Everybody knows what they're going to build. Everybody is now in the front end process of that. So we're talking - we're in the midst of engineering and obviously site prep and site act for a lot of that work. We know that work is coming, we know the plans, we see the acceleration of the business when it should hit. So I think that - I think that quite frankly there is not much left. I think there's certainty in it. I think the ramp plans are coming. It's definitely going to be a lot bigger in '22 than it will be in '21. I think we'll start seeing the acceleration of that business in the second half of this year. We have really nice growth second half, the first half in our comms business. We're going to be - we'll grow at north of 20% second half versus first half, which will be the beginning of the ramp. And I think we're going to go into 2022 with incredible momentum in that business.

Our next question comes from Brent Thielman with DA Davidson.

Jose, does INTREN come with its own pipeline of potential deals that it might have been cultivating prior to the sale that you might look to pursue over the near term?

It does. We haven't done a lot of work around that yet. There is definitely a pretty solid pipeline that they brought to the table that they've been talking to. So we'll start - we'll start that process here in the next few weeks as we start getting them under our belt. We have our own pipeline, so we're incredibly busy right now. So our job is to sit through the best opportunities and really try to do the things that make the most sense for us, but it's a good question and, yes, they do.

Yes. Okay. And then for oil and gas, you had some tough year-on-year comparison bookings, but I'd still say pretty healthy this quarter and I guess with some of the spillover of the large project work into 2022 that you're alluding to in the guidance plus the opportunity set in front of you, do you think '22 revenue in that segment can look similar to what you expect this year?

Well, we're going to have a great '21. So, George in his prepared remarks talked about '24 to '25, it's going to be front-end loaded. So if you look at the second half of the year in oil and gas, it's going to be roughly $1 billion to $1.1 billion, very similar to where it was last year. I think when you take into account our guidance and you make those assumptions around oil and gas, it really shows the strength of our non-oil and gas business in the second half of 2021. With that said, I think that we're not really changing the longer-term outlook that we've put out. We've talked about being at $1.5 billion to $2 billion in our oil and gas business. Even if you pick the midpoint of that for '22, I'd say 1.75 billion. I think that's how we're modeling our own business. We'll come back to that in a second, but even - and really everything we've done over the last year is really trying to prepare ourselves in case that happens, in case this oil and gas market deteriorates to those levels, even at that level, we think we can achieve a $9 billion revenue target or approximately $9 billion revenue target for 2022 at roughly the midpoint of our range. Now, with that said, when you look at the earnings results of a lot of our oil and gas customers over the course of the last couple of days, I mean, their earnings have been phenomenal. I think they're making great strides in terms of debt repayment, which has been their stated goal. We are talking about a lot of projects that had been mothballed. So we're definitely seeing a lot more activity in that business than we've seen, whether that hits in '22 or not, we don't know. Obviously, the stuff that's pushing into '22 will help that business. So if anything, we're probably being a little too conservative in our '22 thoughts around oil and gas. But again, our story, I think MasTec's story, what we've really been telling the Street is our non-oil and gas business has so much potential. And I think that as you see our results in the second half of the year, as you see what we're planning to do in 2022, I think as the oil and gas comparables get easier, quite frankly, you'll see the growth in that business really drive the growth of the total Company.

Our next question comes from Andy Kaplowitz with Citigroup.

Jose, I just want to follow up on INTREN in the sense that maybe a little more color around historical growth in margin characteristics you gave us. And then, could you talk a little bit more about the synergies you expect between INTREN and your legacy electric transmission business? It's interesting because you talked about the complementary geographic fit, but as you know it's been a little bit more difficult sledding in terms of execution for your legacy electrical business. So do you think the increased scale of electrical influx of new management can help with the overall execution in that segment?

Yes, it's a great question Andy. So we've got, as we think about our business, we obviously have our transmission piece which is mostly a union business, which will complement INTREN really well. We've got a non-union distribution business which is within our communications segment which historically been there, which is a very strong business as well. So we've got a really nice presence across a lot of different customers across the country. There is no doubt that INTREN's reputation, their workforce gives us a ton of potential. One of the things that we really like about the INTREN deal is their customers' base need for gas infrastructure work. So it's an area that INTREN hasn't really focused on in the past scenario that we think we're really good at. Again, we think it opens up a huge market for us for the rest of the MasTec businesses that can operate in that space. So I think there's going to be tons of cross-sell opportunities even for on the power generation side for a number of their customers whether they're doing renewable projects or different kind of projects, it's a whole new customer base that opens up for us that we haven't had tremendous exposure to in the past. So I think there's a lot of benefits, obviously a lot of intangible ones. We've only talked about the tangible ones for now. They're a great company on its own. They've been growing at 20% over the course of the last 10 years. So it's just a really good company with great metrics and growth profile and we expect them to continue operating at those levels.

And then, Jose, I got to ask you about, you threw out this $9 billion target for '22 in May here which suggests good confidence in the growth and I think we all understand. If I do a little bit of math, it looks like maybe something like high single-digit organic growth. So maybe you can talk a little bit more about that if I'm right in thinking about that and is it just because you have such good visibility in that communications ramp? We already talked about clean energy and obviously the acquisitions ramping up.

Yes. I think if you - so let me address one of your points in your question. If you look at what we're saying for '22 and you start with the premise that our oil and gas business would be at a mid-point. That means it would be down $700 million to $800 million next year and we're talking about the business being up $800 million. So the business in totality would be up $1.7 billion in 2020 versus 2021 with roughly 500-600 of that being acquisition driven from INTREN. So the balance of that would be growth. So I think the 9% would be off. I think it would be strong double-digit growth across the balance of our business and I think that's what we're seeing. So that's what we're managing to; we're trying to prepare. And then, if you actually model that out to '23 with the organic growth rates that we have in the non-oil and gas business with an oil and gas business that has a pretty easy comp in '23 versus '22, I think you begin to see what the growth profile of MasTec could become, and that's really what - I mean, that's what we're managing to. That's how we're preparing ourselves, that's how we're trying to grow our resources and really prepare ourselves for the future.

Our next question comes from Noelle Dilts with Stifel.

I wanted to go back to the engineering acquisition, the Buyers Engineering acquisition. Could you discuss if engineering capabilities are becoming more important to your customers in any of your key end markets and if there are any other areas of the business where you're looking at potentially bringing more of those engineering capabilities in-house? Thanks.

Sure Noelle. So what we're seeing especially in the telecom market with all of this new investment that's coming in, there's new players. Even the existing players that have been in the market for a long time, their business is changing. So you have these massive fiber builds that are going to happen all over the country by a lot of different players, some incumbent, some new, with an engineering subset of people and resources that hasn't really changed in a long time. So there is no question that even in the last couple of years when we saw those heavy fiber builds, one of the big issues going into it was the engineering side of the business. It was hard to find qualified engineers. It was hard to get in front of the engineering. So I think that's only going to exacerbate and get much worse. So the ability to have that on staff and, more importantly, help them manage their business and grow into it. So we're super excited about that acquisition. It's obviously on a dollar perspective, it wasn't that big of a deal, but it comes with a lot of people. There 900 people, that number has grown substantially just in the last few months. Our challenge with that business is, we've got to significantly scale even from where it's at today. So '21 is going to be a year of significant investment in that business. I don't think that we're not going to get great returns out of that business in '21 because we're going to really focus on scaling it. We're going to look at how we can focus on some of the other engineering assets we have in-house and some of our India capabilities to really help them propel their business. But the reality is the opportunity there for that business to be dramatically bigger than it is today. And with the right investments, we think we're going to put ourselves in a really unique position. You couple that with the market opportunity which isn't just doing engineering services, but going to our customers and telling them, look, we can give you a full turnkey approach. You need the engineering services, but we want to bundle that with construction, there's less handoffs, there's one choke to throat, that's really resonating within the customer subset that we've been talking to. So, again, with what's coming which is substantial and our ability to gear up in our ability to perform multiple services, I think this is going to be a fantastic deal for us.

Okay, great. Very helpful. And then on the oil and gas business, you mentioned that there is still pretty robust demand for maintenance and replacement work. Could you give us a sense of, as you look out to that $1.5 billion to $2 billion steady state revenue for that business, how much you're thinking - how you're thinking about the more recurring or maintenance element of that revenue and if you're actively working to grow that side of the business? Thanks.

Look, I think, 2/3rds of it will end up being maintenance driven and 1/3rd of it will be project driven. Again, it's hard to know what's going to happen two years out, a year and a half out. I think what we're seeing in the business today is an improving environment. There is no question that the financials of these companies have improved. The sentiment today is completely different than it was 9 months ago. So does it mean that they're building projects today? No. Do I think they are talking about - do I think they're looking at their capital plans and reassessing based on the strength of their financial condition? Absolutely, they are, because we see it every day. So our hope over time is that the targets that we've put out end up being really conservative, but I don't think we're ready to call that yet. We're comfortable with the targets we put out, we're comfortable with our ability to continue to build on the maintenance side of the business that we have today, and we think that the levels that we're talking are very achievable.

Our next question comes from Adam Thalhimer with Thompson Davis.

Jose, I wanted to start on the wireline opportunity and RDOF. What's your latest thoughts on the timing there.

Yes, good morning Adam. Look, I think it's like everything else. Everybody gets really excited and then we realize there is a lot of work to do before some of this stuff actually hits the ground. It's really active. I mean, we're extremely active in that business. We're in the middle of lots of different type of work with lots of different types of customers. I think we're going to see construction activity in the second half of 2021 with significant ramps going into that third, fourth quarter into '22. I think '22 is going to be just an unbelievable year relative to what we're seeing in the market. Again, I think we start a lot of that work in Q3, Q4, but the reality is '22, it's going to be an awesome year relative to that.

Okay. And then, INTREN obviously a little bit more distribution focused and transmission focused. Can you talk about how that changes your transmission segment over time, the risk profile?

Well, it's mostly MSA driven recurring work. So I think it's from a - I don't know the ones more riskier than the other. I think they're both very good businesses that obviously makes the business very consistent. So I think it's important to participate in both. I think both are going to have tremendous growth opportunities and I think it maximizes the efficiency of that business. I think there will be opportunities again for cross-sell and also for career path for employees. So it's going to really strengthen that side of the market for us. It gives us scale, which I think we've been lacking. I think that's been one of the issues in our market. So and again, it was a business that we already expected and anticipated growth. And so we had set out a $1 billion target in that business irrespective of acquisitions. INTREN makes that bigger or probably makes our ultimate goals in that business bigger as well, but I think it just allows us to grow that business at a faster pace starting now.

Our next question comes from Jamie Cook with Credit Suisse.

I guess, Jose, obviously, the quarter was very strong and earnings have been very strong, but the comments I get from clients are still the majority of the profits are driven by oil and gas versus the segments that people want to see, the profit dollars, from just on a relative basis. So when do you think is that tipping point where the other businesses comprise a bigger part of the profitability? And then my second question, obviously, that acquisition you did was a nice acquisition; I'm just wondering, do you see line of sight of a couple more of these that you could tuck in that could accelerate the margin growth in the non-oil and gas segments? Thanks.

Yes, it's a great question, Jamie. We know that concern exists. It's what we've been talking about since the third quarter of last year. I think if I take a step back out of the - we obviously live this day to day, but I think we're in the midst of remarkable transformation of MasTec. If you would have thought that our oil and gas business was going to do what we're projecting it to do and we'd still be able to grow our business and produce record results, I don't think anybody would have believed this a year ago. And I think we're in the middle of that. It's not like you turn on the switch, but I think we've laid out the plan and I think we're laying out the timeline that we think is very achievable. If you look at our second half of 2021, and I think this is at the crux of the MasTec's story, when we look at our third and fourth quarter, we expect non-oil and gas revenues from last year, so '21 to '20, they increased 44% from a topline perspective and almost 75% from an EBITDA perspective. So I think you're going to see it in '21. I think we're on the cusp of really starting to deliver significant earnings in our non-oil and gas business and enter 2022 with incredible momentum. And that's - and we believe that. We see the investments that we're making, we see how our jobs are lining up, we've got tremendous growth in the second half of the year versus the first half of the year in our non-oil and gas businesses. So our job is to execute. Our job is to perform on those jobs and deliver the margin profiles that we can. We don't have any expectations of dramatically outsized margins. These are, we think, very realistic expectations and it gets us to those growth levels. And I think if we can achieve those growth levels, I think the story speaks for itself and I'm highly confident we will. To your second question on acquisitions, look, I mean, INTREN was a big deal for us from a pure purchase price perspective. Are there other deals of that size out there? The answer is yes. There's also a lot of other deals that aren't as big. So there is a really nice mix of deal opportunities that exist out there. Again, we're trying to pick the ones that we think make the most sense for us. One of the things that I am incredibly proud of, if you look at the acquisitions that we made in the first quarter, we spent roughly $90 million. We paid down debt in the first quarter. We fully funded the price of those acquisitions with cash flow from operations in the quarter. And I think that's remarkable. We're going to have great cash flow for the balance of the year. George talked about our cash flow exceeding our net income. Even the acquisitions that we made in the second quarter, we're going to make great strides in paying off the majority of those acquisitions in 2021 with cash flow generated from the business. Again, that's a remarkable story. It changes the profile of our business. We're using cash flow from operations to fund a lot of these acquisitions. We're going to be in a great profile from a balance sheet perspective at year-end. We think we have a lot of capacity to do more of these and we're going to do to the extent that they make sense for our business and they put us in a position to continue to grow and deliver for our customers. We're going to be aggressive around that. So, again, I think, I know we keep saying it, but we're truly in a privilege spot and it's very exciting times at MasTec.

Our next question comes from Justin Hawk with Robert W. Baird.

I was just trying to understand the organic guidance change a little bit more. I mean, it sounds like about $70 million of revenue and $20 million of EBITDA is that side of INTREN, but you beat by more than that in the first quarter. And I guess if I look at communications, your revenue expectations a little bit lower than what you had and so is the margin on clean energy. So I'm just trying to understand, organically, was it just flowing through in the first quarter or is anything changed in your outlook for the balance of the year?

Yes, I mean, there is no question that some of our oil and gas pushed into Q1. We did do some work in Q1 that we would have expected to do in later quarters. That makes up the piece of earnings that didn't flow through in the year. But again, I think what's really important and I know there's a lot of modeling out there, but the reality is when you look at the second half of the year, our oil and gas business will be probably flattish from a topline perspective. If you talk - if you look at the margin profile that we've laid out for oil and gas for the year, you're going to come to high teens margins for the oil and gas business in the second half, that compares to high 20 margins in the second half of last year. So if you look at the consensus analyst estimates out there in our oil and gas business in the second half of the year, we're going to be down roughly $150 million in EBITDA in our oil and gas business in Q3 and Q4, and we're making that up in the rest of our business. And I think that's the transformation that we're talking about. So our non-oil and gas organic growth in the second half of 2021 is off the charts. And when we deliver on that, I think that the story comes together perfectly. And that's what we've been saying since the third quarter of last year. We're going to execute to that. And I think that will become very tangible and visible as we keep reporting our quarters out for the year.

Okay. I appreciate that. My second question is more of a clarification on the purchase price for INTREN is seven times, is that based on the cash purchase price, the $420 million. and can you maybe talk about the earn-outs, how much is that, and what's that tied to just to kind of think about that?

The earn-out is solely for 2021 performance. So based on their performance in 2021, if it exceeds trailing EBITDA, then there is a kicker. So whatever we pay in addition in the earn-out will actually be dilutive to the purchase price multiple.

Our next question comes from Sean Eastman with KeyBanc Capital Markets.

Just following up on that last one. I'd just like to try and flesh out the targets you have set for INTREN maybe over the next 12 or 24 months and also I'm trying to figure out how accretive it's going to be next year with a full-year contribution? But I guess just looking back over the historical period 23% growth CAGR over 10 years, what are you expecting to do with that and do you think you can get margin expansion relative to the standalone performance?

Yes, so, I mean, to your question. We've talked about it being $550 million trailing 12 months, we would expect them to grow at double digits. It's a good market. That's not inclusive of any cross-sell opportunities that we can create at MasTec. So the reality is that on a full-company basis, we expect really strong growth in this business. For 2021, we've got built about $330 million of revenue for the balance of the year then the terms that will own it. Again, for '22, we would probably expect somewhere in the $600 million range. We do think we can improve their margins over time. And again, I mean, when we're looking at '22, it's important to look at the total Company. So what we're saying is we expected a down year in oil and gas in '22 offset by a lot of growth across all of our businesses, inclusive of INTREN. So if we can hit a $9 billion revenue number in an environment where oil and gas went down $700 million-ish, again, it's a $1.5 billion of growth. Obviously, the difference between the 330 that we'll have in this year and what we think they can do in the full year of '20 would be part of that and the balance would be the organic growth in the rest of our business.

Okay, helpful. And a bit of a more abstract one, but I was just thinking about the opportunity for oil and gas even to be retooled toward this decarbonization agenda, reading a lot about carbon capture, and how that will require a lot of piped infrastructure to transport the CO2. What are you seeing there? Is that interesting?

Yes, super interesting and it's a great opportunity. And the challenges, again, not getting out of the story. So I think when you look at the customer subset that we traditionally work for, these were companies with amazing profiles within their own financials. A lot of them have significant balance sheet capabilities, especially if they continue to pay off debt at the levels that they're paying it off, these companies aren't going away. I think the idea that these companies won't be around in a couple of years, to me is somewhat insane. So those companies will keep growing their business and, more importantly, they'll retool their businesses for the opportunities that exist. And in those - in that retooling of those businesses, there are going to be lots of opportunities for MasTec and we're going to capture them. So I'm very bullish about that business over the longer term. I just think it's important to set out realistic expectations versus where the market is. And again, hopefully, we're conservative. Hopefully, we can be talking in the next 6, 9 months how our view of our oil and gas business ended up being more conservative than it should have been.

And I'm just curious with the C-band deployment ramping up here, whether QuadGen is going to be playing an interesting role, whether that acquisition has got more interesting as we look out over the back half of the year?

Look, they've done really well. I mean, it's been a very good acquisition for us to have an excellent 2020. They actually had a decent start to '21. They're touching lots of different parts of the whole 5G infrastructure. There are lots of different things that we're doing that haven't traditionally been necessarily the strength of our business, but they're a phenomenal company. They've got great resources. There are lots of things that we can offer our customers relative to their skill set and that's only going to continue to grow.

And our final question comes from Noelle Dilts with Stifel.

So when I look at all of these drivers of the market, you've got RDOF, wireless picking up, potentially this infrastructure bill coming through. It just seems like not just in telecom, but across the business, that you really could see a very tight labor market and strong demand for capacity. First, I guess, how are you thinking about that and are you starting to ramp resources in training again? And second, what do you think this could mean? From a price perspective, it feels like it's been a while since we really talked about pricing coming through. But with all of the demand out there, it feels like it's a possibility over the next few years. So any thoughts on that would be great. Thanks.

Look, we view ourselves as an employer of choice in the market. We've done a lot to really bring in talent and grow talent and really train people. And I think we've done that consistently over the years; we've talked a lot about it. We continue to do that. There's different points in times where we scale up one business more than the other. There are parts of our business today that we've got significant training going on. There are other parts of our business where we feel comfortable where we're at today and we know that that's going to change over time. So I think we're very good at adapting to the requirements of the market and of bringing in the right people to help us. I think that's part of our margin profile. And some of the challenges that we've had in some of these businesses from a margin perspective have just been the significant additions that we've been doing to our team in terms of adding people and training people. With all of that said, our customers recognize that this is a significant issue. Our customers are fully aware of the fact that labor is going to be a constraint in the coming years. And I think we position ourselves with our customers as a true thought leader behind that and one that can really help them execute their projects. So I think that - I don't think pricing will ever be an issue around that. I think it's a well-recognized issue. I think over time when you get into very tight markets, it tends to be a better situation for contractors. At the end of the day, we're here to service our customers for a long period of time, so we're going to work with them. But that's a good position to be in, to be what we think as an employer of choice, working for a great company where you can build a career, not just a job, and at the same time for us to be able to fulfill our customers' needs. We think those combined make a lot of sense together.

And that concludes today's question-and-answer session. I would like to turn the conference back to Jose Mas for any additional or closing remarks.

Again, just want to thank everybody for participating today and we look forward to updating you on our second quarter call. Thank you.

And that does conclude today's conference. We thank you for your participation. You may now disconnect.